x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 45-4685158 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Name of Each Exchange on Which Registered | |
Series ES operating partnership units | NYSE - Arca | |
Series 60 operating partnership units | NYSE - Arca | |
Series 250 operating partnership units | NYSE - Arca | |
Securities registered pursuant to Section 12(g) of the Act: | ||
None |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
Emerging Growth Company o |
EMPIRE STATE REALTY OP, L.P. | ||
FORM 10-K | ||
TABLE OF CONTENTS | ||
PAGE | ||
PART I. | ||
1. | Business | |
1A. | Risk Factors | |
1B. | Unresolved Staff Comments | |
2. | Properties | |
3. | Legal Proceedings | |
4. | Mine Safety Disclosures | |
PART II. | ||
5. | Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities | |
6. | Selected Financial Data | |
7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
7A. | Quantitative and Qualitative Disclosure about Market Risk | |
8. | Financial Statements and Supplementary Data | |
9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | |
9A. | Controls and Procedures | |
9B. | Other Information | |
PART III | ||
10. | Directors, Executive Officers and Corporate Governance | |
11. | Executive Compensation | |
12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
13. | Certain Relationships and Related Transactions, and Director Independence | |
14. | Principal Accounting Fees and Services | |
PART IV | ||
15. | Exhibits, Financial Statements and Schedules | |
16. | Form 10-K Summary | |
• | "annualized rent" represents annualized base rent and current reimbursement for operating expenses and real estate taxes; |
• | "formation transactions" mean a series of transactions pursuant to which we acquired, substantially currently with the completion of the Offering through a series of contributions and merger transactions, our portfolio of real estate assets that were held by the existing entities, the ownership interests in the certain management entities of our predecessor and one development parcel; |
• | "fully diluted basis" means all outstanding shares of Empire State Realty Trust, Inc.'s Class A common stock at such time plus shares of Class A common stock that may be issuable upon the exchange of operating partnership units on a one-for-one basis and shares of Class A common stock issuable upon the conversion of Class B common stock on a one-for-one basis, which is not the same as the meaning of “fully diluted” under generally accepted accounting principles in the United States of America, or "GAAP"; |
• | "enterprise value" means all outstanding shares of Empire State Realty Trust, Inc.'s Class A common stock at such time plus shares of Class A common stock that may be issuable upon the exchange of operating partnership units on a one-for-one basis and shares of Class A common stock issuable upon the conversion of Class B common stock on a one-for-one basis multiplied by the Class A common share price at December 31, 2018, plus private perpetual preferred units plus consolidated debt at December 31, 2018; |
• | "Malkin Group” means all of the following, as a group: Anthony E. Malkin, Peter L. Malkin and each of their spouses and lineal descendants (including spouses of such descendants), any estates of any of the foregoing, any trusts now or hereafter established for the benefit of any of the foregoing, or any corporation, partnership, limited liability company or other legal entity controlled by Anthony E. Malkin or any permitted successor in such entity for the benefit of any of the foregoing; provided, however that solely with respect to tax protection rights and parties who entered into the contribution agreements with respect to the formation transactions, the Malkin Group shall also include the lineal descendants of Lawrence A. Wien and his spouse (including spouses of such descendants), any estates of the foregoing, any trusts now or hereafter established for the benefit of any of the foregoing, or any corporation, partnership, limited liability company or other legal entity controlled by Anthony E. Malkin for the benefit of the foregoing; |
• | the "Offering" means the initial public offering of our Class A common stock which was completed on October 7, 2013; |
• | "our company," "we," "us" and "our" refer to Empire State Realty OP L.P., a Delaware limited partnership, together with its consolidated subsidiaries; |
• | "securityholder" means holders of our Series ES, Series 250, Series 60 and Series PR operating partnership units, including those units held by Empire State Realty Trust, Inc.; |
• | "traded OP Units" mean our Series ES, Series 250 and Series 60 operating partnership units. |
• | Irreplaceable Portfolio of Office Properties in Midtown Manhattan. Our Manhattan office properties are located in one of the most prized office markets in the world due to a combination of supply constraints, high barriers to entry, near-term and long-term prospects for job creation, vacancy absorption and rental rate growth. Management believes these properties could not be replaced today on a cost-competitive basis, if at all. As of December 31, 2018, we owned nine Manhattan office properties (including three long-term ground leasehold interests) encompassing approximately 7.6 million rentable square feet of office space, including the Empire State Building, our flagship property. Unlike traditional office buildings, the Empire State Building provides us with a significant source of income from its observatory and broadcasting operations. All of these properties include premier retail space on their ground floor and/or contiguous levels, which comprise 513,606 rentable square feet in the aggregate and some of which have recently undergone significant redevelopments. We believe the high quality of our buildings, services and amenities, their desirable locations and commuter access to mass transportation should allow us to increase rents and occupancy to generate positive cash flow and growth. |
• | Expertise in Repositioning and Redeveloping Manhattan Office Properties. We have substantial expertise in redeveloping and repositioning Manhattan office properties, having invested through December 31, 2018 a total of approximately $865.7 million (excluding tenant improvement costs and leasing commissions) in our Manhattan office properties since we assumed full control of the day-to-day management of these properties beginning with One Grand Central Place in November 2002 through 2006. We have substantial experience in upgrading, redeveloping and modernizing building lobbies, corridors, bathrooms, elevator cabs and old, antiquated spaces to include new ceilings, lighting, pantries and base building systems (including electric distribution and air conditioning), as well as enhanced tenant amenities. We have successfully aggregated and are continuing to aggregate smaller spaces to offer larger blocks of space, including multiple floors, that are attractive to larger, higher credit-quality tenants and to offer new, pre-built suites with improved layouts. As part of this program, we have converted some or all of the second and third floor office space of certain of our Manhattan office properties to higher rent retail space. We believe that the post-redevelopment high quality of our buildings and the service we provide also attract higher credit-quality tenants for larger spaces at rents above similar vintage buildings, and below new construction, thus defining a new price point and allowing us to drive superior returns on invested capital per square foot. In addition, we believe that, based on the results of our base building energy efficiency retrofit, and energy efficient tenant build-outs, at the Empire State Building, the lessons of which we are applying throughout our portfolio, we derive cost savings through innovative energy efficiency retrofitting and sustainability initiatives, reducing direct and indirect energy costs paid both by tenants and by us throughout our other Manhattan office properties and greater New York metropolitan area office properties, which improves our competitive position. |
• | Leader in Energy Efficiency Retrofitting. We have pioneered certain practices in energy efficiency, and at the Empire State Building we have partnered with the Clinton Climate Initiative, Johnson Controls Inc., Jones Lang LaSalle and the Rocky Mountain Institute to create and implement a groundbreaking, replicable process for integrating energy efficiency retrofits in the existing built environment. The reduced energy consumption lowers costs for us and our tenants, and we believe creates a competitive advantage for our properties. We believe that higher quality tenants in general place a higher priority on sustainability, controlling costs, and minimizing contributions to greenhouse gases. We believe our expertise in this area gives us the opportunity to attract higher quality tenants at higher rental rates, in addition to lowering our expenses. As a result of our efforts, approximately 84.0% of our portfolio square feet is Energy Star certified, including the Empire State Building. As a result of the energy efficiency retrofits, we estimate that the Empire State Building has reduced energy use by 45% of its pre-retrofit level of energy use, resulting in over $5.2 million of annual energy cost savings at pre-retrofit utility rate levels. Johnson Controls Inc. has guaranteed minimum energy cost savings of $2.2 million annually, from 2010 through 2025, with respect to certain of the retrofits in which Johnson Controls Inc. was project leader. Actual 2017 energy cost savings was $6.1million for the whole building retrofits, out of which $5.3 million savings was achieved against the guaranteed savings. We are implementing cost justified energy efficiency retrofit projects in our Manhattan and greater New York metropolitan area office properties based on our work at the Empire State Building. Finally, we maintain a series of management practices utilizing recycling of tenant and construction waste, recycled content carpets, low off-gassing paints and adhesives, “green” pest control and cleaning solutions and recycled paper products throughout our office portfolio. We believe that our portfolio’s attractiveness is enhanced by these practices and that this should result in higher rental rates, longer lease terms and higher quality tenants. |
• | Attractive Retail Locations in Densely Populated Metropolitan Communities. As of December 31, 2018, our portfolio also included six standalone retail properties and retail space at the ground floor and/or lower levels of our Manhattan office properties, encompassing 719,354 rentable square feet in the aggregate, which were approximately 90.8% occupied in the aggregate. All of these properties are located in dynamic retail corridors with convenient access to mass transportation, a diverse tenant base and high pedestrian traffic and/or main destination locations. Our retail portfolio includes 697,913 rentable square feet located in Manhattan and 21,441 rentable square feet located in Westport, Connecticut. Our current retail rents are below current market rents, and as we recapture and redevelop retail space, we are able to drive strong positive spreads on newly leased space. We have retail expirations in the coming years that will allow us to further increase our cash flows. Our retail tenants cover a number of industries, and include Bank of America; Bank Santander (Sovereign Bank); Best Buy Mobile; Charles Schwab; Chipotle; Dr. Martens AirWair USA; Duane Reade/Walgreen's; FedEx; FootLocker; HSBC; JP Morgan Chase; Lululemon; New Cingular Wireless; Panera Bread; Potbelly Sandwich Works; Sephora; Shake Shack; Sprint; Starbucks; Target; Theory; TJ Maxx; and Urban Outfitters. Our Westport, Connecticut retail properties are located on Main Street, the main pedestrian thoroughfare in Westport, Connecticut, and have the advantage of being adjacent to one of the few available large-scale parking lots in town. |
• | Experienced and Committed Management Team with Proven Track Record. Our senior management team is highly regarded in the real estate community and has extensive relationships with a broad range of brokers, owners, tenants |
• | Strong Balance Sheet Supportive of Future Growth. As of December 31, 2018, we had total debt outstanding of approximately $1.9 billion, with a weighted average interest rate of 3.84% and a weighted average maturity of 8.1 years. Additionally, we had approximately $1.1 billion of available borrowing capacity under our unsecured revolving and term credit facility as of December 31, 2018. We had cash and cash equivalents and short-term investments of $605.0 million at December 31, 2018. Our consolidated net debt represented 23.4% of enterprise value. Excluding principal amortization, we have approximately $250.0 million of debt maturing in 2019 and no debt maturing in 2020. We continue to extend and ladder our debt maturities, increase our access to a variety of capital sources and maintain low leverage with significant capacity on our balance sheet. This low level of leverage gives us flexibility to cover our capital program and to take advantage of opportunities to acquire additional properties as and when we see compelling opportunities. We believe that lower levered companies outperform over the long term. |
• | Vacating, Redeveloping, and Leasing of Redeveloped Space at Our Manhattan Office Properties. As of December 31, 2018, our Manhattan office properties (excluding the retail component of these properties) were approximately 88.8% occupied, or 92.7% leased including signed leases not commenced, and had approximately 0.5 million rentable square feet of available space (excluding signed leases not commenced). Our program of redevelopment necessarily includes vacating older less desirable suites, demolishing them for re-leasing as full or multi-floor blocks, or as new pre-built suites, and re-leasing them. We believe our redevelopment and repositioning program for our Manhattan office properties results in our leasing space to better credit tenants and higher rents, while achieving returns of approximately 8%. Over time, as we have created and redeveloped large blocks of available space, we have leased them to higher quality tenants at higher rents, and intend to continue to execute on this program over the years to come. To date we believe these efforts have accelerated our ability to lease space to new higher credit-quality tenants, many of which have expanded the office space they lease from us over time. We also employ a pre-built suite strategy in selected portions of some of our properties to appeal to many credit-worthy smaller tenants by fitting out some available space with new ceilings, lighting, pantries and base building systems (including electric distribution and air conditioning) for immediate occupancy. These pre-built suites deploy energy efficiency strategies developed in our work at the Empire State Building and are designed with efficient layouts sought by a wide array of users which we believe will require only minor painting and carpeting for future re-leasing thus reducing our future costs. We expect to achieve returns on investment of approximately 8% on our pre-built suites. Over time, as we have redeveloped the spaces in our buildings, we believe we will increase our occupancy. |
• | Increase Existing Below-Market Rents. The purpose of our redevelopment is to sign leases for larger amounts of space to better credit tenants at higher rents. To date, we have capitalized on this opportunity and we believe we have significant embedded, de-risked growth that we can capture as we execute on the successful repositioning of our Manhattan office portfolio and improving market fundamentals to increase rents. For example, we expect to benefit from the re-leasing of 6.1%, or approximately 464,792 rentable square feet (including month-to-month leases), of our Manhattan office leases expiring during 2019, which we generally believe are currently at below market rates. These expiring leases represent a weighted average base rent of $54.33 per square foot based on current measurements. As older leases expire, we expect to continue to upgrade certain space to further increase rents. Our concentration in Manhattan and the greater New York metropolitan area should also enable us to benefit from increased rents associated with current and anticipated near-term improvements in the financial and economic environment in these areas. We also expect to benefit from our price positioning, as we command prices that are above comparable vintage properties due to the quality of our newly developed space and our attractive amenities but below new construction. |
• | Complete the Redevelopment and Repositioning of Our Current Portfolio. We intend to continue to increase occupancy, improve tenant quality and enhance cash flow and value by completing the redevelopment and repositioning of our Manhattan office properties. We intend selectively to continue to allow leases for smaller spaces to expire or relocate smaller tenants in order to aggregate, demolish and re-demise existing office space into larger blocks of vacant space, which we believe will attract higher credit-quality tenants at higher rental rates. We apply rigorous underwriting analysis to determine if aggregation of vacant space for future leasing to larger tenants will improve our cash flows over the long term. In addition, we are a leader in developing economically justified energy efficiency retrofitting and sustainability and have made it a portfolio-wide initiative. We believe this makes our properties desirable to high credit-quality tenants at higher rental rates and longer lease terms. |
• | Pursue Attractive Acquisition and Development Opportunities. We will opportunistically pursue attractive opportunities to acquire office and retail properties. For the foreseeable future, we intend to focus our acquisition strategy primarily on Manhattan office properties and, to a lesser extent, office and multi-tenanted retail properties in densely populated communities in the greater New York metropolitan area and other markets we may identify in the future. We believe we can utilize our industry relationships (including well-known real estate owners in Manhattan), brand recognition, and our expertise in redeveloping and repositioning office properties to identify significant acquisition opportunities where we believe we can increase occupancy and rental rates. We also believe there is growth opportunity to acquire and reposition additional stand-alone retail spaces. Our strong balance sheet, access to capital, and ability to offer operating partnership units in tax deferred acquisition transactions should give us significant flexibility in structuring and consummating acquisitions. Further, we have a development site, Metro Tower at the Stamford Transportation Center, which is adjacent to our Metro Center property, which we believe to be one of the premier office buildings in Connecticut. All required zoning approvals have been obtained to allow development of an approximately 380,000 rentable square foot office tower and garage. We intend to develop this site when we deem the appropriate combination of market and other conditions are in place. |
• | Proactively Manage Our Portfolio. We believe our proactive, service-intensive approach to asset and property management helps increase occupancy and rental rates. We utilize our comprehensive building management services and our strong commitment to tenant and broker relationships and satisfaction to negotiate attractive leasing deals and to attract high credit-quality tenants. We proactively manage our rent roll and maintain continuous communication with our tenants. We foster strong tenant relationships by being responsive to tenant needs. We do this through the amenities we provide, the quality of our buildings and services, our employee screening and training, energy efficiency initiatives, and preventative maintenance and prompt repairs. Our attention to detail is integral to serving our clients and building our brand. Our properties have received numerous industry awards for their operational efficiency. We believe long-term tenant relationships will improve our operating results over time by reducing leasing, marketing and tenant improvement costs and reducing tenant turnover. We do extensive diligence on our tenants’ (current and prospective) balance sheets, businesses and business models to determine if we will establish long-term relationships in which they will both renew with us and expand over time. We have had 163 tenant expansions within our portfolio totaling over 1.2 million square feet since 2013. |
• | the financial condition of our tenants, many of which are consumer goods, financial, legal and other professional firms, may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or other reasons; |
• | significant job losses in the financial and professional services industries have occurred and may continue to occur, which may decrease demand for our office space, causing market rental rates and property values to be impacted negatively; |
• | our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities, engage in our redevelopment and repositioning activities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense; |
• | reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; |
• | reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital or make such access more expensive; and |
• | the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors. |
• | the availability and pricing of financing on favorable terms or at all; |
• | the availability and timely receipt of zoning and other regulatory approvals; |
• | the potential for the fluctuation of occupancy rates and rents at properties due to a number of factors, including market and economic conditions, which may result in our investment not being profitable; |
• | start up, repositioning and redevelopment costs may be higher than anticipated; |
• | the cost and timely completion of construction (including risks beyond our control, such as weather or labor conditions, or material shortages); |
• | the potential that we may fail to recover expenses already incurred if we abandon development or redevelopment opportunities after we begin to explore them; |
• | the potential that we may expend funds on and devote management time to projects which we do not complete; |
• | the inability to complete construction and leasing of a property on schedule, resulting in increased debt service expense and construction or redevelopment costs; and |
• | the possibility that properties will be leased at below expected rental rates. |
• | delay lease commencements; |
• | decline to extend or renew leases upon expiration; |
• | fail to make rental payments when due; or |
• | declare bankruptcy. |
• | even if we enter into agreements for the acquisition of properties, these agreements are subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction and other conditions that are not within our control, which may not be satisfied, and we may be unable to complete an acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; |
• | we may be unable to finance the acquisition on favorable terms in the time period we desire, or at all; |
• | we may spend more than budgeted to make necessary improvements or redevelopments to acquired properties; |
• | we may not be able to obtain adequate insurance coverage for new properties; |
• | acquired properties may be located in new markets where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures; |
• | we may be unable to integrate quickly and efficiently new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result our results of operations and financial condition could be adversely affected; |
• | market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and |
• | we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete. |
• | an inability to acquire a desired property because of competition from other well-capitalized real estate investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, commercial developers, partnerships and individual investors; and |
• | an increase in the purchase price for such acquisition property, in the event we are able to acquire such desired property. |
• | liabilities for clean-up of undisclosed environmental contamination; |
• | claims by tenants, vendors or other persons against the former owners of the properties; |
• | liabilities incurred in the ordinary course of business; and |
• | claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties. |
• | general market conditions; |
• | the market’s perception of our growth potential; |
• | our current debt levels; |
• | our current and expected future earnings; |
• | our cash flow and cash distributions; and |
• | the market price per share/unit of ESRT's Class A common stock and our traded OP units. |
• | our cash flow may be insufficient to meet our required principal and interest payments; |
• | we may be unable to borrow additional funds as needed or on favorable terms; |
• | we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; |
• | to the extent we borrow debt that bears interest at variable rates, increases in interest rates could materially increase our interest expense; |
• | we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; |
• | we may default on our obligations or violate restrictive covenants, in which case the lenders or mortgagees may accelerate our debt obligations, foreclose on the properties that secure their loans and/or take control of our properties that secure their loans and collect rents and other property income; |
• | we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations or reduce our ability to make, or prohibit us from making, distributions; and |
• | our default under any one of our mortgage loans with cross default provisions could result in a default on other indebtedness. |
• | redemption rights of qualifying parties; |
• | transfer restrictions on operating partnership units; |
• | ESRT's ability, as general partner, in some cases, to amend the partnership agreement and to cause us to issue units with terms that could delay, defer or prevent a merger or other change of control of us or ESRT without the consent of the limited partners; |
• | the right of the limited partners to consent to transfers of the general partnership interest and mergers or other transactions involving us under specified circumstances; and |
• | a redemption premium payable to the holders of our operating partnership’s preferred units if our operating partnership decides, at its option, to redeem preferred units for cash upon the occurrence of certain fundamental transactions, such as a change of control. |
Annualized | ||||||||||||||||
Rentable | Rent per | |||||||||||||||
Square | Percent | Annualized | Occupied | Number of | ||||||||||||
Property Name | Location or Sub-Market | Feet (1) | Occupied (2) | Rent (3) | Square Foot (4) | Leases (5) | ||||||||||
Manhattan Office Properties - Office | ||||||||||||||||
The Empire State Building (6) | Penn Station -Times Sq. South | 2,711,148 | 94.3 | % | $ | 150,529,864 | $ | 58.88 | 174 | |||||||
One Grand Central Place | Grand Central | 1,247,366 | 87.5 | % | 62,462,156 | 57.20 | 210 | |||||||||
1400 Broadway (7) | Penn Station -Times Sq. South | 914,162 | 80.5 | % | 36,996,042 | 50.29 | 29 | |||||||||
111 West 33rd Street (8) | Penn Station -Times Sq. South | 639,237 | 78.0 | % | 28,556,500 | 57.30 | 19 | |||||||||
250 West 57th Street | Columbus Circle - West Side | 468,525 | 80.3 | % | 22,355,109 | 59.41 | 54 | |||||||||
501 Seventh Avenue | Penn Station -Times Sq. South | 460,150 | 95.7 | % | 19,825,295 | 45.00 | 29 | |||||||||
1359 Broadway | Penn Station -Times Sq. South | 455,824 | 97.4 | % | 23,706,788 | 53.40 | 35 | |||||||||
1350 Broadway (9) | Penn Station -Times Sq. South | 373,205 | 84.1 | % | 18,005,509 | 57.36 | 60 | |||||||||
1333 Broadway | Penn Station -Times Sq. South | 292,835 | 89.4 | % | 13,732,665 | 52.48 | 10 | |||||||||
Manhattan Office Properties - Office | 7,562,452 | 88.8 | % | 376,169,928 | 55.99 | 620 | ||||||||||
Manhattan Office Properties - Retail | ||||||||||||||||
The Empire State Building (10) | Penn Station -Times Sq. South | 104,558 | 69.8 | % | 13,364,098 | 183.13 | 14 | |||||||||
One Grand Central Place | Grand Central | 68,732 | 79.0 | % | 6,402,538 | 117.91 | 13 | |||||||||
1400 Broadway (7) | Penn Station -Times Sq. South | 20,418 | 77.4 | % | 2,020,613 | 127.78 | 8 | |||||||||
112 West 34th Street (8) | Penn Station -Times Sq. South | 90,132 | 100.0 | % | 22,596,784 | 250.71 | 4 | |||||||||
250 West 57th Street | Columbus Circle - West Side | 67,927 | 100.0 | % | 9,974,747 | 146.85 | 8 | |||||||||
501 Seventh Avenue | Penn Station -Times Sq. South | 35,558 | 88.3 | % | 2,016,286 | 64.20 | 9 | |||||||||
1359 Broadway | Penn Station -Times Sq. South | 27,506 | 100.0 | % | 2,263,576 | 82.29 | 6 | |||||||||
1350 Broadway | Penn Station -Times Sq. South | 31,774 | 100.0 | % | 6,799,221 | 213.99 | 6 | |||||||||
1333 Broadway | Penn Station -Times Sq. South | 67,001 | 100.0 | % | 9,006,000 | 134.42 | 4 | |||||||||
Manhattan Office Properties - Retail | 513,606 | 89.3 | % | 74,443,863 | 162.24 | 72 | ||||||||||
Sub-Total/Weighted Average Manhattan Office Properties - Office and Retail | 8,076,058 | 88.9 | % | 450,613,791 | 62.78 | 692 | ||||||||||
Greater New York Metropolitan Area Office Properties | ||||||||||||||||
First Stamford Place (11) | Stamford, CT | 783,729 | 88.6 | % | 30,139,103 | 43.41 | 48 | |||||||||
Metro Center | Stamford, CT | 281,928 | 82.5 | % | 13,576,111 | 58.36 | 25 | |||||||||
383 Main Street | Norwalk, CT | 260,657 | 82.9 | % | 7,181,693 | 33.25 | 21 | |||||||||
500 Mamaroneck Avenue | Harrison, NY | 288,202 | 86.5 | % | 7,217,593 | 28.96 | 31 | |||||||||
10 Bank Street | White Plains, NY | 232,517 | 96.9 | % | 7,974,296 | 35.38 | 34 | |||||||||
Sub-Total/Weighted Average Greater New York Metropolitan Office Properties | 1,847,033 | 87.6 | % | 66,088,796 | 40.86 | 159 | ||||||||||
Standalone Retail Properties | ||||||||||||||||
10 Union Square | Union Square | 58,007 | 100.0 | % | 7,019,176 | 121.01 | 13 | |||||||||
1542 Third Avenue | Upper East Side | 56,250 | 100.0 | % | 3,895,512 | 69.25 | 4 | |||||||||
1010 Third Avenue | Upper East Side | 44,662 | 100.0 | % | 3,745,234 | 83.86 | 2 | |||||||||
77 West 55th Street | Midtown | 25,388 | 100.0 | % | 2,694,194 | 106.12 | 3 | |||||||||
69-97 Main Street | Westport, CT | 17,111 | 32.4 | % | 708,876 | 127.93 | 2 | |||||||||
103-107 Main Street | Westport, CT | 4,330 | 100.0 | % | 722,355 | 166.83 | 1 | |||||||||
Sub-Total/Weighted Average Standalone Retail Properties | 205,748 | 94.4 | % | 18,785,347 | 96.74 | 25 | ||||||||||
Portfolio Total | 10,128,839 | 88.8 | % | $ | 535,487,934 | $ | 59.57 | 876 | ||||||||
Total/Weighted Average Office Properties | 9,409,485 | 88.6 | % | $ | 442,258,724 | $ | 53.05 | 779 | ||||||||
Total/Weighted Average Retail Properties (12) | 719,354 | 90.8 | % | 93,229,210 | 142.77 | 97 | ||||||||||
Portfolio Total | 10,128,839 | 88.8 | % | $ | 535,487,934 | $ | 59.57 | 876 |
(1) | Excludes (i) 179,350 square feet of space across our portfolio attributable to building management use and tenant amenities and (ii) 69,789 square feet of space attributable to our observatory. |
(2) | Based on leases signed and commenced as of December 31, 2018 and calculated as (i) rentable square feet less available square feet divided by (ii) rentable square feet. |
(3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(4) | Represents annualized rent under leases commenced as of December 31, 2018 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 42,546 rentable square feet of space leased by our broadcasting tenants. |
(7) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 45 years (expiring December 31, 2063). |
(8) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 59 years (expiring May 31, 2077). |
(9) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to us, of approximately 32 years (expiring July 31, 2050). |
(10) | Includes 5,300 rentable square feet of space leased by WDFG North America, a licensee of our observatory. |
(11) | First Stamford Place consists of three buildings. |
(12) | Includes 513,606 rentable square feet of retail space in our Manhattan office properties. |
Diversification by Industry | Percent (1) | |
Arts and entertainment | 2.1 | % |
Broadcast | 1.3 | % |
Consumer goods | 21.8 | % |
Finance, insurance, real estate | 16.1 | % |
Government entity | 1.8 | % |
Healthcare | 1.7 | % |
Legal services | 3.7 | % |
Media and advertising | 3.9 | % |
Non-profit | 4.4 | % |
Professional services (not including legal services) | 10.8 | % |
Retail | 17.1 | % |
Technology | 9.5 | % |
Others | 5.8 | % |
Total | 100.0 | % |
(1) Based on annualized rent. |
Weighted | Percent of | ||||||||||||
Average | Total | Portfolio | Percent of | ||||||||||
Remaining | Occupied | Rentable | Portfolio | ||||||||||
Lease | Lease | Square | Square | Annualized | Annualized | ||||||||
Tenant | Property | Expiration (1) | Term (2) | Feet (3) | Feet (4) | Rent (5) | Rent (6) | ||||||
Global Brands Group | ESB, 1333 Broadway | Oct 2023-Oct. 2028 | 9.3 years | 668,942 | 6.4 | % | $ | 36,047,748 | 6.7 | % | |||
LinkedIn | Empire State Building | Feb. 2026 | 7.2 years | 312,947 | 3.0 | % | 18,349,123 | 3.4 | % | ||||
Coty Inc. | Empire State Building | Jan. 2030 | 11.1 years | 312,954 | 3.0 | % | 16,954,249 | 3.2 | % | ||||
PVH Corp. | 501 Seventh Avenue | Dec. 2018-Oct. 2028 | 9.3 years | 237,281 | 2.3 | % | 11,275,477 | 2.1 | % | ||||
Sephora | 112 West 34th Street | Jan. 2029 | 10.1 years | 11,334 | 0.1 | % | 10,457,709 | 2.0 | % | ||||
Li & Fung | 1359 Broadway | Oct. 2021-Oct. 2027 | 5.3 years | 149,436 | 1.4 | % | 7,471,631 | 1.4 | % | ||||
Urban Outfitters | 1333 Broadway | Sept. 2029 | 10.8 years | 56,730 | 0.5 | % | 7,103,124 | 1.3 | % | ||||
Federal Deposit Insurance Corp. | Empire State Building | Jan. 2020 | 1.1 years | 121,879 | 1.2 | % | 7,042,014 | 1.3 | % | ||||
Macy's | 111 West 33rd Street | May 2030 | 11.4 years | 131,117 | 1.3 | % | 6,947,109 | 1.3 | % | ||||
HNTB Corporation | Empire State Building | Feb. 2029 | 10.2 years | 105,143 | 1.0 | % | 6,661,814 | 1.2 | % | ||||
Duane Reade/Walgreen's | ESB, 1350 B'Way, 250 West 57th | Feb. 2021-Sept. 2027 | 5.9 years | 47,541 | 0.5 | % | 6,343,147 | 1.2 | % | ||||
Foot Locker | 112 West 34th Street | Sept. 2031 | 12.8 years | 34,192 | 0.3 | % | 6,258,212 | 1.2 | % | ||||
Legg Mason | First Stamford Place | Sept. 2024 | 5.8 years | 137,583 | 1.3 | % | 6,246,888 | 1.2 | % | ||||
WDFG North America | Empire State Building | Dec. 2025 | 7.0 years | 5,300 | 0.1 | % | 5,693,074 | 1.1 | % | ||||
Shutterstock | Empire State Building | Apr. 2029 | 10.3 years | 104,386 | 1.0 | % | 5,527,630 | 1.0 | % | ||||
The Michael J. Fox Foundation | 111West 33rd Street | Nov. 2029 | 10.9 years | 86,492 | 0.8 | % | 5,330,672 | 1.0 | % | ||||
ASCAP | 250 West 57th Street | Aug. 2034 | 15.8 years | 87,943 | 0.8 | % | 5,250,464 | 1.0 | % | ||||
Kohl's | 1400 Broadway | May 2029 | 10.4 years | 118,516 | 1.1 | % | 5,216,894 | 1.0 | % | ||||
The Gap, Inc. | 111West 33rd Street, OGCP | Dec. 2018-Jan. 2030 | 5.3 years | 83,408 | 0.8 | % | 4,770,844 | 0.9 | % | ||||
On Deck Capital | 1400 Broadway | Dec. 2018-Jan. 2026 | 8.0 years | 81,290 | 0.8 | % | 4,503,015 | 0.8 | % | ||||
Total | 2,894,414 | 27.7 | % | $ | 183,450,838 | 34.3 | % |
(1) | Expiration dates are per lease and do not assume exercise of renewal or extension options. For tenants with more than two leases, the lease expiration is shown as a range. |
(2) | Represents the weighted average lease term, based on annualized rent. |
(3) | Based on leases signed and commenced as of December 31, 2018. |
(4) | Represents the percentage of rentable square feet of our 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 our office and retail portfolios in the aggregate. |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
New and renewal leases entered into during the year (square feet) | 837,487 | 865,251 | 724,417 | ||||||||
Average cash rent per square foot for new and renewal leases executed during the year | $ | 61.39 | $ | 59.26 | $ | 58.83 | |||||
Average cash rent per square foot for previous leases | $ | 49.29 | $ | 43.70 | $ | 41.36 | |||||
Increase in mark-to-market rent | 24.5 | % | 35.6 | % | 42.2 | % |
Percent of | ||||||||||||||||
Rentable | Portfolio | Annualized | ||||||||||||||
Number | Square | Rentable | Percent of | Rent Per | ||||||||||||
of Leases | Feet | Square Feet | Annualized | Annualized | Rentable | |||||||||||
Year of Lease Expiration | Expiring (1) | Expiring (2) | Expiring | Rent (3) | Rent | Square Foot | ||||||||||
Available | — | 831,830 | 8.2 | % | $ | — | — | % | $ | — | ||||||
Signed leases not commenced | 22 | 307,407 | 3.0 | % | — | — | % | — | ||||||||
Fourth quarter 2018 | 17 | 114,473 | 1.1 | % | 6,041,172 | 1.1 | % | 52.77 | ||||||||
2019 | 140 | 725,758 | 7.2 | % | 38,192,092 | 7.1 | % | 52.62 | ||||||||
2020 | 136 | 841,127 | 8.3 | % | 46,705,137 | 8.7 | % | 55.53 | ||||||||
2021 | 106 | 698,038 | 6.9 | % | 40,003,243 | 7.5 | % | 57.31 | ||||||||
2022 | 96 | 540,111 | 5.3 | % | 34,473,377 | 6.4 | % | 63.83 | ||||||||
2023 | 86 | 688,230 | 6.8 | % | 41,363,802 | 7.7 | % | 60.10 | ||||||||
2024 | 62 | 608,298 | 6.0 | % | 34,863,683 | 6.5 | % | 57.31 | ||||||||
2025 | 56 | 380,877 | 3.8 | % | 28,328,373 | 5.3 | % | 74.38 | ||||||||
2026 | 42 | 951,180 | 9.4 | % | 52,892,285 | 9.9 | % | 55.61 | ||||||||
2027 | 45 | 579,433 | 5.7 | % | 33,227,941 | 6.2 | % | 57.35 | ||||||||
2028 | 28 | 977,740 | 9.7 | % | 52,696,279 | 9.8 | % | 53.90 | ||||||||
Thereafter | 62 | 1,884,337 | 18.6 | % | 126,700,550 | 23.8 | % | 67.24 | ||||||||
Total | 898 | 10,128,839 | 100.0 | % | $ | 535,487,934 | 100.0 | % | $ | 59.57 |
Percent of | ||||||||||||||||
Rentable | Portfolio | Annualized | ||||||||||||||
Number | Square | Rentable | Percent of | Rent Per | ||||||||||||
of Leases | Feet | Square Feet | Annualized | Annualized | Rentable | |||||||||||
Year of Lease Expiration | Expiring (1) | Expiring (2) | Expiring | Rent (3) | Rent | Square Foot | ||||||||||
Available | — | 549,316 | 7.3 | % | $ | — | — | % | $ | — | ||||||
Signed leases not commenced | 17 | 294,114 | 3.9 | % | — | — | % | — | ||||||||
Fourth quarter 2018 | 15 | 111,238 | 1.5 | % | 5,826,063 | 1.5 | % | 52.37 | ||||||||
2019 | 105 | 464,792 | 6.1 | % | 25,249,960 | 6.7 | % | 54.33 | ||||||||
2020 | 104 | 588,087 | 7.8 | % | 32,944,552 | 8.8 | % | 56.02 | ||||||||
2021 | 67 | 457,024 | 6.0 | % | 25,385,479 | 6.7 | % | 55.55 | ||||||||
2022 | 71 | 363,454 | 4.8 | % | 21,091,665 | 5.6 | % | 58.03 | ||||||||
2023 | 62 | 507,038 | 6.7 | % | 28,776,689 | 7.6 | % | 56.75 | ||||||||
2024 | 41 | 377,044 | 5.0 | % | 20,320,919 | 5.4 | % | 53.90 | ||||||||
2025 | 36 | 241,506 | 3.2 | % | 14,120,004 | 3.8 | % | 58.47 | ||||||||
2026 | 29 | 815,416 | 10.8 | % | 46,344,237 | 12.3 | % | 56.84 | ||||||||
2027 | 31 | 427,431 | 5.7 | % | 23,440,994 | 6.2 | % | 54.84 | ||||||||
2028 | 18 | 908,488 | 12.0 | % | 49,295,900 | 13.1 | % | 54.26 | ||||||||
Thereafter | 41 | 1,457,504 | 19.2 | % | 83,373,466 | 22.3 | % | 57.20 | ||||||||
Total | 637 | 7,562,452 | 100.0 | % | $ | 376,169,928 | 100.0 | % | $ | 55.99 |
Percent of | ||||||||||||||||
Rentable | Portfolio | Annualized | ||||||||||||||
Number | Square | Rentable | Percent of | Rent Per | ||||||||||||
of Leases | Feet | Square Feet | Annualized | Annualized | Rentable | |||||||||||
Year of Lease Expiration | Expiring (1) | Expiring (2) | Expiring | Rent (3) | Rent | Square Foot | ||||||||||
Available | — | 220,095 | 11.9 | % | $ | — | — | % | $ | — | ||||||
Signed leases not commenced | 4 | 9,373 | 0.5 | % | — | — | % | — | ||||||||
Fourth quarter 2018 | 1 | 2,772 | 0.2 | % | 133,135 | 0.2 | % | 48.03 | ||||||||
2019 | 29 | 234,759 | 12.7 | % | 8,990,325 | 13.6 | % | 38.30 | ||||||||
2020 | 24 | 224,778 | 12.2 | % | 10,172,305 | 15.4 | % | 45.25 | ||||||||
2021 | 31 | 210,934 | 11.4 | % | 9,586,651 | 14.5 | % | 45.45 | ||||||||
2022 | 15 | 116,525 | 6.3 | % | 4,398,892 | 6.7 | % | 37.75 | ||||||||
2023 | 14 | 126,488 | 6.8 | % | 5,752,523 | 8.7 | % | 45.48 | ||||||||
2024 | 10 | 203,298 | 11.0 | % | 8,901,687 | 13.5 | % | 43.79 | ||||||||
2025 | 12 | 102,046 | 5.5 | % | 3,275,709 | 5.0 | % | 32.10 | ||||||||
2026 | 5 | 65,413 | 3.5 | % | 2,058,298 | 3.1 | % | 31.47 | ||||||||
2027 | 6 | 64,229 | 3.5 | % | 2,340,864 | 3.5 | % | 36.45 | ||||||||
2028 | 6 | 64,515 | 3.5 | % | 2,277,599 | 3.4 | % | 35.30 | ||||||||
Thereafter | 6 | 201,808 | 11.0 | % | 8,200,808 | 12.4 | % | 40.64 | ||||||||
Total | 163 | 1,847,033 | 100.0 | % | $ | 66,088,796 | 100.0 | % | $ | 40.86 |
Percent of | ||||||||||||||||
Rentable | Portfolio | Annualized | ||||||||||||||
Number | Square | Rentable | Percent of | Rent Per | ||||||||||||
of Leases | Feet | Square Feet | Annualized | Annualized | Rentable | |||||||||||
Year of Lease Expiration | Expiring (1) | Expiring (2) | Expiring | Rent (3) | Rent | Square Foot | ||||||||||
Available | — | 62,419 | 8.7 | % | $ | — | — | % | $ | — | ||||||
Signed leases not commenced | — | 3,920 | 0.5 | % | — | — | % | — | ||||||||
Fourth quarter 2018 | 1 | 463 | 0.1 | % | 81,974 | 0.1 | % | 177.05 | ||||||||
2019 | 6 | 26,207 | 3.6 | % | 3,951,807 | 4.2 | % | 150.79 | ||||||||
2020 | 8 | 28,262 | 3.9 | % | 3,588,280 | 3.8 | % | 126.96 | ||||||||
2021 | 8 | 30,080 | 4.2 | % | 5,031,113 | 5.4 | % | 167.26 | ||||||||
2022 | 10 | 60,132 | 8.4 | % | 8,982,820 | 9.6 | % | 149.39 | ||||||||
2023 | 10 | 54,704 | 7.6 | % | 6,834,590 | 7.3 | % | 124.94 | ||||||||
2024 | 11 | 27,956 | 3.9 | % | 5,641,077 | 6.1 | % | 201.78 | ||||||||
2025 | 8 | 37,325 | 5.2 | % | 10,932,660 | 11.7 | % | 292.90 | ||||||||
2026 | 8 | 70,351 | 9.8 | % | 4,489,750 | 4.8 | % | 63.82 | ||||||||
2027 | 8 | 87,773 | 12.2 | % | 7,446,083 | 8.0 | % | 84.83 | ||||||||
2028 | 4 | 4,737 | 0.6 | % | 1,122,780 | 1.2 | % | 237.02 | ||||||||
Thereafter | 15 | 225,025 | 31.3 | % | 35,126,276 | 37.8 | % | 156.10 | ||||||||
Total | 97 | 719,354 | 100.0 | % | $ | 93,229,210 | 100.0 | % | $ | 142.77 |
Percent of | ||||||||||||||||
Rentable | Portfolio | Annualized | ||||||||||||||
Number | Square | Rentable | Percent of | Rent Per | ||||||||||||
of Leases | Feet | Square Feet | Annualized | Annualized | Rentable | |||||||||||
Year of Lease Expiration | Expiring (1) | Expiring (2) | Expiring | Rent (3) (7) | Rent | Square Foot | ||||||||||
Available | — | 135,233 | 5.0 | % | $ | — | — | % | $ | — | ||||||
Signed leases not commenced | 4 | 19,313 | 0.7 | % | — | — | % | — | ||||||||
Fourth quarter 2018 | 1 | 5,190 | 0.2 | % | 152,250 | 0.1 | % | 29.34 | ||||||||
2019 | 15 | 57,671 | 2.1 | % | 3,166,194 | 2.1 | % | 54.90 | ||||||||
2020 | 34 | 294,217 | 10.9 | % | 17,466,435 | 11.6 | % | 59.37 | ||||||||
2021 | 21 | 131,888 | 4.9 | % | 7,736,154 | 5.1 | % | 58.66 | ||||||||
2022 | 21 | 95,218 | 3.5 | % | 6,066,615 | 4.0 | % | 63.71 | ||||||||
2023 | 19 | 103,564 | 3.8 | % | 6,505,861 | 4.3 | % | 62.82 | ||||||||
2024 | 13 | 88,151 | 3.3 | % | 5,715,884 | 3.8 | % | 64.84 | ||||||||
2025 | 8 | 68,349 | 2.5 | % | 3,838,791 | 2.6 | % | 56.16 | ||||||||
2026 | 10 | 432,549 | 16.0 | % | 25,754,154 | 17.1 | % | 59.54 | ||||||||
2027 | 6 | 22,615 | 0.8 | % | 1,398,330 | 0.9 | % | 61.83 | ||||||||
2028 | 4 | 545,713 | 20.1 | % | 30,784,175 | 20.5 | % | 56.41 | ||||||||
Thereafter | 22 | 711,477 | 26.2 | % | 41,945,021 | 27.9 | % | 58.95 | ||||||||
Total | 178 | 2,711,148 | 100.0 | % | $ | 150,529,864 | 100.0 | % | $ | 58.88 |
Annualized | Percent of | |||||||||||||
Annualized | Expense | Annualized | Annualized | |||||||||||
Year of Lease Expiration | Base Rent (8) | Reimbursements | Rent (3) | Rent | ||||||||||
Fourth quarter 2018 | $ | 487,150 | $ | 121,034 | $ | 608,184 | 4.2 | % | ||||||
2019 | 212,240 | 44,297 | 256,537 | 1.8 | % | |||||||||
2020 | 828,209 | 146,340 | 974,549 | 6.7 | % | |||||||||
2021 | 55,685 | 105,905 | 161,590 | 1.1 | % | |||||||||
2022 | 1,124,545 | 297,964 | 1,422,509 | 9.7 | % | |||||||||
2023 | 82,480 | 25,301 | 107,781 | 0.7 | % | |||||||||
2024 | 47,271 | 57,223 | 104,494 | 0.7 | % | |||||||||
2025 | 1,496,090 | 208,282 | 1,704,372 | 11.7 | % | |||||||||
2026 | 799,969 | 91,984 | 891,953 | 6.1 | % | |||||||||
2027 | 768,750 | 67,825 | 836,575 | 5.7 | % | |||||||||
2028 | 253,050 | 27,637 | 280,687 | 1.9 | % | |||||||||
Thereafter | 6,313,154 | 938,246 | 7,251,400 | 49.7 | % | |||||||||
Total | $ | 12,468,593 | $ | 2,132,038 | $ | 14,600,631 | 100.0 | % |
(1) | If a lease has two different expiration dates, it is considered to be two leases (for the purposes of lease count and square footage). |
(2) | Excludes (i) 179,350 rentable square feet across our portfolio attributable to building management use and tenant amenities and (ii) 69,789 square feet of space attributable to our observatory. |
(3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
(4) | Excludes (i) retail space in our Manhattan office properties and (ii) the Empire State Building broadcasting licenses and observatory operations. |
(5) | Includes an aggregate of 513,606 rentable square feet of retail space in our Manhattan office properties. Excludes the Empire State Building broadcasting licenses and observatory operations. |
(6) | Excludes retail space, broadcasting licenses and observatory operations. |
(7) | Includes approximately $6.4 million of annualized rent related to physical space occupied by broadcasting tenants for their broadcasting operations. Does not include license fees charges to broadcast tenants. |
(8) | Represents license fees for the use of the Empire State Building mast and base rent for the physical space occupied by broadcasting tenants. |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table) | |||||||
Plan Category | |||||||||
Equity compensation plans approved by securityholders | N/A | N/A | 4,323,054 | ||||||
Equity compensation plans not approved by securityholders | — | — | — | ||||||
Total | N/A | N/A | 4,323,054 |
Year Ended December 31, | |||||||||||||||||||
(amounts in thousands, except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Operating Data | |||||||||||||||||||
Total revenues | $ | 731,511 | $ | 709,526 | $ | 677,353 | $ | 657,534 | $ | 635,267 | |||||||||
Operating expenses: | |||||||||||||||||||
Property operating expenses | 167,379 | 163,531 | 153,850 | 158,638 | 148,676 | ||||||||||||||
Ground rent expenses | 9,326 | 9,326 | 9,326 | 9,326 | 5,339 | ||||||||||||||
General and administrative expenses | 52,674 | 50,315 | 49,078 | 38,073 | 39,037 | ||||||||||||||
Observatory expenses | 32,767 | 30,275 | 29,833 | 32,174 | 31,413 | ||||||||||||||
Construction expenses | — | — | — | 3,222 | 38,596 | ||||||||||||||
Real estate taxes | 110,000 | 102,466 | 96,061 | 93,165 | 82,131 | ||||||||||||||
Acquisition expenses | — | — | 98 | 193 | 3,382 | ||||||||||||||
Depreciation and amortization | 168,508 | 160,710 | 155,211 | 171,474 | 145,431 | ||||||||||||||
Total operating expenses | 540,654 | 516,623 | 493,457 | 506,265 | 494,005 | ||||||||||||||
Operating income (loss) | 190,857 | 192,903 | 183,896 | 151,269 | 141,262 | ||||||||||||||
Other income (expense): | |||||||||||||||||||
Interest income | 10,661 | 2,942 | 647 | 100 | 59 | ||||||||||||||
Interest expense | (79,623 | ) | (68,473 | ) | (70,595 | ) | (65,743 | ) | (62,685 | ) | |||||||||
Loss on early extinguishment of debt | — | (2,157 | ) | (552 | ) | (1,749 | ) | (3,771 | ) | ||||||||||
Loss from derivative financial instruments | — | (289 | ) | — | — | — | |||||||||||||
Income before income taxes | 121,895 | 124,926 | 113,396 | 83,877 | 74,865 | ||||||||||||||
Income tax expense | (4,642 | ) | (6,673 | ) | (6,146 | ) | (3,949 | ) | (4,655 | ) | |||||||||
Net income | 117,253 | 118,253 | 107,250 | 79,928 | 70,210 | ||||||||||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | (936 | ) | (936 | ) | (476 | ) | |||||||||
Net income attributable to common unitholders | $ | 116,317 | $ | 117,317 | $ | 106,314 | $ | 78,992 | $ | 69,734 | |||||||||
Distribution declared and paid per unit | $ | 0.42 | $ | 0.42 | $ | 0.40 | $ | 0.34 | $ | 0.34 | |||||||||
Net income per common unit - basic and diluted | $ | 0.39 | $ | 0.39 | $ | 0.38 | $ | 0.29 | $ | 0.27 | |||||||||
Total weighted average units - basic | 297,258 | 296,455 | 276,848 | 265,914 | 254,506 | ||||||||||||||
Total weighted average units - diluted | 297,259 | 298,049 | 277,568 | 265,914 | 254,506 | ||||||||||||||
Balance Sheet Data | |||||||||||||||||||
Commercial real estate properties, at cost | $ | 2,884,486 | $ | 2,667,655 | $ | 2,458,629 | $ | 2,276,330 | $ | 2,139,863 | |||||||||
Total assets | $ | 4,195,780 | $ | 3,931,347 | $ | 3,890,953 | $ | 3,300,650 | $ | 3,283,497 | |||||||||
Debt | $ | 1,918,933 | $ | 1,688,721 | $ | 1,612,331 | $ | 1,632,416 | $ | 1,598.654 | |||||||||
Partners' capital | $ | 1,991,109 | $ | 1,977,737 | $ | 1,982,863 | $ | 1,372,686 | $ | 1,381,097 | |||||||||
Other Data | |||||||||||||||||||
Funds from operations attributable to common stockholders and non-controlling interests (1) | $ | 282,609 | $ | 276,491 | $ | 260,519 | $ | 249,924 | $ | 214,849 | |||||||||
Modified funds from operations attributable to common stockholders and non-controlling interests (2) | $ | 290,440 | $ | 284,322 | $ | 268,350 | $ | 257,755 | $ | 219,452 | |||||||||
Core funds from operations attributable to common stockholders and non-controlling interests (3) | $ | 290,440 | $ | 286,925 | $ | 269,000 | $ | 257,677 | $ | 227,422 | |||||||||
Net cash provided by operating activities | $ | 279,022 | $ | 194,202 | $ | 214,755 | $ | 208,675 | $ | 148,057 | |||||||||
Net cash used in investing activities | $ | (643,023 | ) | $ | (223,013 | ) | $ | (182,376 | ) | $ | (142,197 | ) | $ | (303,904 | ) | ||||
Net cash provided by (used in) financing activities | $ | 104,617 | $ | (56,877 | ) | $ | 470,941 | $ | (59,918 | ) | $ | 145,488 |
(1) | We compute Funds From Operations ("FFO") in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment writedowns of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures. FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another. For a reconciliation of FFO, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Funds from Operations." |
(2) | 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. |
(3) | Core FFO adds back to traditionally defined FFO the following items: acquisition expenses, severance expenses and retirement equity compensation expenses, private perpetual preferred exchange offering expenses, deferred tax asset write-off, acquisition expenses, loss on early extinguishment of debt, gain on settlement of lawsuit related to the Observatory, net of income taxes and ground lease amortization, construction severance expenses and acquisition break-up fee. We present Core FFO because we consider it an important supplemental measure of our operating performance in that it excludes items associated with the Offering and formation transactions. There can be no assurance that Core FFO presented by us 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. For a reconciliation of Core FFO, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Core Funds from Operations." |
• | Achieved net income attributable to the Company of $117.3 million. |
• | Core FFO was $290.4 million. |
• | Occupancy and leased percentages at December 31, 2018: |
• | Total portfolio was 88.8% occupied; including signed leases not commenced (“SLNC”), the total portfolio was 91.8% leased. |
• | Manhattan office portfolio (excluding the retail component of these properties) was 88.8% occupied; including SLNC, the Manhattan office portfolio was 92.7% leased. |
• | Retail portfolio was 90.8% occupied; including SLNC, the retail portfolio was 91.3% leased. |
• | Empire State Building was 93.4% occupied; including SLNC, the Empire State Building was 94.1% leased. |
• | Signed 156 leases, representing 1,003,806 rentable square feet across the total portfolio, achieving a 19.8% increase in mark-to-market cash rent over previous fully escalated cash rents on new, renewal, and expansion leases; 122 of these leases, representing 837,487 rentable square feet, were within the Manhattan office portfolio (excluding the retail component of these properties), achieving a 24.5% increase in mark-to-market cash rent over previous fully escalated cash rents on new, renewal and expansion leases. |
• | Signed 78 new leases representing 729,026 rentable square feet in 2018 for the Manhattan office portfolio (excluding the retail component of these properties), achieving an increase of 27.3% in mark-to-market cash rent over expired previous fully escalated cash rents. |
• | Amended our lease with our largest tenant and in the process increased our annual cash rent by approximately $4 million. |
• | Realized lease termination fee income of $20.8 million, or approximately $0.07 per fully diluted share, from a combination of broadcast and office tenants. This fee income was partially offset by the write-off of straight line rent receivables associated with the terminated leases of $2.1 million, or approximately $0.01 per fully diluted share. |
• | Opened the new Observatory entrance, which is the first phase of the fully reimagined Observatory experience. |
• | Achieved Empire State Building Observatory revenue growth of 3.2% to $131.2 million from $127.1 million in 2017 while net operating income increased 1.7% due to improved pricing partially offset by increased expenses related to Observatory redevelopment and public relations expense allocations. |
• | Issued long-term, fixed rate unsecured financing of $335 million that increased weighted average term to maturity to 8.1 years, from 6.2 years, at December 31, 2017. |
• | Authorized a $500 million stock and publicly traded operating partnership unit repurchase program through December 31, 2019. |
• | Declared and paid aggregate dividends of $0.42 per share during 2018. |
Year Ended December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Office leases | $ | 130,583 | 38.9 | % | $ | 127,389 | 40.5 | % | |||||
Retail leases | 7,483 | 2.2 | % | 7,932 | 2.5 | % | |||||||
Tenant reimbursements, lease termination fees and other income | 44,264 | 13.2 | % | 26,541 | 8.5 | % | |||||||
Observatory operations | 131,227 | 39.0 | % | 127,118 | 40.4 | % | |||||||
Broadcasting licenses and leases | 22,401 | 6.7 | % | 25,538 | 8.1 | % | |||||||
Total | $ | 335,958 | 100.0 | % | $ | 314,518 | 100.0 | % |
Years Ended December 31, | ||||||||||||||
2018 | 2017 | Change | % | |||||||||||
Revenues: | ||||||||||||||
Rental revenue | $ | 493,231 | $ | 483,944 | $ | 9,287 | 1.9 | % | ||||||
Tenant expense reimbursement | 72,372 | 73,679 | (1,307 | ) | (1.8 | )% | ||||||||
Observatory revenue | 131,227 | 127,118 | 4,109 | 3.2 | % | |||||||||
Lease termination fees | 20,847 | 13,551 | 7,296 | 53.8 | % | |||||||||
Third-party management and other fees | 1,440 | 1,400 | 40 | 2.9 | % | |||||||||
Other revenues and fees | 12,394 | 9,834 | 2,560 | 26.0 | % | |||||||||
Total revenues | 731,511 | 709,526 | 21,985 | 3.1 | % | |||||||||
Operating expenses: | ||||||||||||||
Property operating expenses | 167,379 | 163,531 | (3,848 | ) | (2.4 | )% | ||||||||
Ground rent expenses | 9,326 | 9,326 | — | — | % | |||||||||
General and administrative expenses | 52,674 | 50,315 | (2,359 | ) | (4.7 | )% | ||||||||
Observatory expenses | 32,767 | 30,275 | (2,492 | ) | (8.2 | )% | ||||||||
Real estate taxes | 110,000 | 102,466 | (7,534 | ) | (7.4 | )% | ||||||||
Depreciation and amortization | 168,508 | 160,710 | (7,798 | ) | (4.9 | )% | ||||||||
Total operating expenses | 540,654 | 516,623 | (24,031 | ) | (4.7 | )% | ||||||||
Operating income | 190,857 | 192,903 | (2,046 | ) | (1.1 | )% | ||||||||
Other income (expense): | ||||||||||||||
Interest income | 10,661 | 2,942 | 7,719 | 262.4 | % | |||||||||
Interest expense | (79,623 | ) | (68,473 | ) | (11,150 | ) | (16.3 | )% | ||||||
Loss on early extinguishment of debt | — | (2,157 | ) | 2,157 | 100.0 | % | ||||||||
Loss from derivative financial instruments | — | (289 | ) | 289 | 100.0 | % | ||||||||
Income before income taxes | 121,895 | 124,926 | (3,031 | ) | (2.4 | )% | ||||||||
Income tax expense | (4,642 | ) | (6,673 | ) | 2,031 | 30.4 | % | |||||||
Net income | 117,253 | 118,253 | (1,000 | ) | (0.8 | )% | ||||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | — | — | % | |||||||
Net income attributable to common unit holders | $ | 116,317 | $ | 117,317 | $ | (1,000 | ) | (0.9 | )% |
Years Ended December 31, | ||||||||||||||
2017 | 2016 | Change | % | |||||||||||
Revenues: | ||||||||||||||
Rental revenue | $ | 483,944 | $ | 460,653 | $ | 23,291 | 5.1 | % | ||||||
Tenant expense reimbursement | 73,679 | 73,459 | 220 | 0.3 | % | |||||||||
Observatory revenue | 127,118 | 124,814 | 2,304 | 1.8 | % | |||||||||
Lease termination fees | 13,551 | 7,676 | 5,875 | 76.5 | % | |||||||||
Third-party management and other fees | 1,400 | 1,766 | (366 | ) | (20.7 | )% | ||||||||
Other revenues and fees | 9,834 | 8,985 | 849 | 9.4 | % | |||||||||
Total revenues | 709,526 | 677,353 | 32,173 | 4.7 | % | |||||||||
Operating expenses: | ||||||||||||||
Property operating expenses | 163,531 | 153,850 | (9,681 | ) | (6.3 | )% | ||||||||
Ground rent expenses | 9,326 | 9,326 | — | — | % | |||||||||
General and administrative expenses | 50,315 | 49,078 | (1,237 | ) | (2.5 | )% | ||||||||
Observatory expenses | 30,275 | 29,833 | (442 | ) | (1.5 | )% | ||||||||
Real estate taxes | 102,466 | 96,061 | (6,405 | ) | (6.7 | )% | ||||||||
Acquisition expenses | — | 98 | 98 | 100.0 | % | |||||||||
Depreciation and amortization | 160,710 | 155,211 | (5,499 | ) | (3.5 | )% | ||||||||
Total operating expenses | 516,623 | 493,457 | (23,166 | ) | (4.7 | )% | ||||||||
Operating income | 192,903 | 183,896 | 9,007 | 4.9 | % | |||||||||
Other income (expense): | ||||||||||||||
Interest income | 2,942 | 647 | 2,295 | 354.7 | % | |||||||||
Interest expense | (68,473 | ) | (70,595 | ) | 2,122 | 3.0 | % | |||||||
Loss on early extinguishment of debt | (2,157 | ) | (552 | ) | (1,605 | ) | (290.8 | )% | ||||||
Loss from derivative financial instruments | (289 | ) | — | (289 | ) | — | % | |||||||
Income before income taxes | 124,926 | 113,396 | 11,530 | 10.2 | % | |||||||||
Income tax (expense) benefit | (6,673 | ) | (6,146 | ) | (527 | ) | (8.6 | )% | ||||||
Net income | 118,253 | 107,250 | 11,003 | 10.3 | % | |||||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | — | — | % | |||||||
Net income attributable to common unitholders | $ | 117,317 | $ | 106,314 | $ | 11,003 | 10.3 | % |
Financial Covenant | Required | December 31, 2018 | In Compliance | ||||
Maximum total leverage | < 60% | 24.4 | % | Yes | |||
Maximum secured debt | < 40% | 7.7 | % | Yes | |||
Minimum fixed charge coverage | > 1.50x | 4.8x | Yes | ||||
Minimum unencumbered interest coverage | > 1.75x | 7.1x | Yes | ||||
Maximum unsecured leverage | < 60% | 19.1 | % | Yes | |||
Minimum tangible net worth | $ | 1,252,954 | $ | 1,803,812 | Yes |
Years Ended December 31, | |||||||||||
Total New Leases, Expansions, and Renewals | 2018 | 2017 | 2016 | ||||||||
Number of leases signed(2) | 149 | 155 | 187 | ||||||||
Total square feet | 991,576 | 1,198,340 | 941,008 | ||||||||
Leasing commission costs(3) | $ | 19,523 | $ | 22,836 | $ | 15,408 | |||||
Tenant improvement costs(3) | 69,886 | 83,051 | 55,088 | ||||||||
Total leasing commissions and tenant improvement costs(3) | $ | 89,409 | $ | 105,887 | $ | 70,496 | |||||
Leasing commission costs per square foot(3) | $ | 19.69 | $ | 19.06 | $ | 16.37 | |||||
Tenant improvement costs per square foot(3) | 70.48 | 69.31 | 58.54 | ||||||||
Total leasing commissions and tenant improvement costs per square foot(3) | $ | 90.17 | $ | 88.37 | $ | 74.91 |
Years Ended December 31, | |||||||||||
Total New Leases, Expansions, and Renewals | 2018 | 2017 | 2016 | ||||||||
Number of leases signed(2) | 7 | 12 | 20 | ||||||||
Total Square Feet | 12,230 | 95,360 | 50,798 | ||||||||
Leasing commission costs(3) | $ | 331 | $ | 4,418 | $ | 2,847 | |||||
Tenant improvement costs(3) | 559 | 2,989 | 4,744 | ||||||||
Total leasing commissions and tenant improvement costs(3) | $ | 890 | $ | 7,407 | $ | 7,591 | |||||
Leasing commission costs per square foot(3) | $ | 27.08 | $ | 46.33 | $ | 56.03 | |||||
Tenant improvement costs per square foot(3) | 45.71 | 31.35 | 93.40 | ||||||||
Total leasing commissions and tenant improvement costs per square foot(3) | $ | 72.79 | $ | 77.68 | $ | 149.43 |
(1) | Excludes an aggregate of 513,606 rentable square feet of retail space in our Manhattan office properties. Includes the Empire State Building broadcasting licenses and observatory operations. |
(2) | Presents a renewed and expansion lease as one lease signed. |
(3) | 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. |
(4) | Includes an aggregate of 513,606 rentable square feet of retail space in our Manhattan office properties. Excludes the Empire State Building broadcasting licenses and observatory operations. |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Total Portfolio | |||||||||||
Capital expenditures (1) | $ | 135,017 | $ | 126,624 | $ | 80,043 |
(1) | Includes all capital expenditures, excluding tenant improvements and leasing commission costs, which are primarily attributable to the redevelopment and repositioning program conducted at our Manhattan office properties. |
Years Ended December 31, | |||||||||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Mortgages and other debt(1) | |||||||||||||||||||||||||||
Interest expense | $ | 73,893 | $ | 67,227 | $ | 67,030 | $ | 64,001 | $ | 59,685 | $ | 318,426 | $ | 650,262 | |||||||||||||
Amortization | 3,790 | 3,938 | 4,090 | 5,628 | 7,876 | 33,868 | 59,190 | ||||||||||||||||||||
Principal repayment | 250,000 | — | — | 265,000 | — | 1,355,422 | 1,870,422 | ||||||||||||||||||||
Ground lease | 1,518 | 1,518 | 1,518 | 1,518 | 1,518 | 68,298 | 75,888 | ||||||||||||||||||||
Tenant improvement and leasing commission costs | 68,578 | 19,823 | 34 | — | — | — | 88,435 | ||||||||||||||||||||
Total (2) | $ | 397,779 | $ | 92,506 | $ | 72,672 | $ | 336,147 | $ | 69,079 | $ | 1,776,014 | $ | 2,744,197 |
(1) | Assumes no extension options are exercised. |
(2) | Does not include various standing or renewal service contracts with vendors related to our property management. |
Year ended December 31, 2016 | 114,954 | |
Year ended December 31, 2017 | 126,963 | |
Year ended December 31, 2018 | 126,539 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 117,253 | $ | 118,253 | $ | 107,250 | |||||
Add: | |||||||||||
General and administrative expenses | 52,674 | 50,315 | 49,078 | ||||||||
Depreciation and amortization | 168,508 | 160,710 | 155,211 | ||||||||
Interest expense | 79,623 | 68,473 | 71,147 | ||||||||
Loss on early extinguishment of debt | — | 2,157 | — | ||||||||
Loss from derivative financial instruments | — | 289 | — | ||||||||
Acquisition expenses | — | — | 98 | ||||||||
Income tax expense | 4,642 | 6,673 | 6,146 | ||||||||
Less: | |||||||||||
Interest income | (10,661 | ) | (2,942 | ) | (647 | ) | |||||
Third-party management and other fees | (1,440 | ) | (1,400 | ) | (1,766 | ) | |||||
Net operating income | $ | 410,599 | $ | 402,528 | $ | 386,517 | |||||
Other Net Operating Income Data | |||||||||||
Straight line rental revenue | $ | 22,107 | $ | 26,544 | $ | 30,147 | |||||
Net increase in rental revenue from the amortization of above and below-market lease assets and liabilities | $ | 6,120 | $ | 5,721 | $ | 8,794 | |||||
Amortization of acquired below-market ground leases | $ | 7,831 | $ | 7,831 | $ | 7,831 |
Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net income | $ | 117,253 | $ | 118,253 | $ | 107,250 | ||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | (936 | ) | ||||||
Real estate depreciation and amortization | 166,292 | 159,174 | 154,205 | |||||||||
Funds from operations attributable to common stockholders and non-controlled interests | 282,609 | 276,491 | 260,519 | |||||||||
Amortization of below-market ground leases | 7,831 | 7,831 | 7,831 | |||||||||
Modified funds from operations attributable to common stockholders and non-controlled interests | 290,440 | 284,322 | 268,350 | |||||||||
Deferred tax asset write-off | — | 446 | — | |||||||||
Loss on early extinguishment of debt | — | 2,157 | 552 | |||||||||
Acquisition expenses | — | — | 98 | |||||||||
Core funds from operations attributable to common stockholders and non-controlled interests | $ | 290,440 | $ | 286,925 | $ | 269,000 | ||||||
Weighted average Operating Partnership units | ||||||||||||
Basic | 297,258 | 296,455 | 276,848 | |||||||||
Diluted | 297,259 | 298,049 | 277,568 |
1. | The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K. |
2. | The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K. |
Exhibit No. | Description |
101.INS* | XBRL Instance Document |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Document |
101.DEF* | XBRL Taxonomy Extension Definitions Document |
101.LAB* | XBRL Taxonomy Extension Labels Document |
101.PRE* | XBRL Taxonomy Extension Presentation Document |
Notes: | |
* Filed herewith. | |
+ Indicates management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K. |
Signature | Title | Date | ||
/s/ Anthony E. Malkin | Chairman of the Board of Directors and Chief Executive Officer | February 28, 2019 | ||
Anthony E. Malkin | ||||
(Principal Executive Officer) | ||||
/s/ David A. Karp | Executive Vice President and Chief Financial Officer | February 28, 2019 | ||
David A. Karp | ||||
(Principal Financial Officer) | ||||
/s/ Andrew J. Prentice | Senior Vice President, Chief Accounting Officer and Treasurer | February 28, 2019 | ||
Andrew J. Prentice | (Principal Accounting Officer) | |||
/s/ William H. Berkman | Director | February 28, 2019 | ||
William H. Berkman | ||||
/s/ Leslie D. Biddle | Director | February 28, 2019 | ||
Leslie D. Biddle | ||||
/s/ Thomas J. DeRosa | Director | February 28, 2019 | ||
Thomas J. DeRosa | ||||
/s/ Steven J. Gilbert | Lead Independent Director | February 28, 2019 | ||
Steven J. Gilbert | ||||
/s/ S. Michael Giliberto | Director | February 28, 2019 | ||
S. Michael Giliberto | ||||
/s/ James D. Robinson IV | Director | February 28, 2019 | ||
James D. Robinson IV |
PAGE | ||
Report of Independent Registered Public Accounting Firm | ||
Consolidated Balance Sheets as of December 31, 2018 and 2017 | ||
Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016 | ||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016 | ||
Consolidated Statements of Capital for the years ended December 31, 2018, 2017 and 2016 | ||
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 | ||
Notes to Consolidated Financial Statements | ||
Financial Statement Schedules: | ||
Schedule II - Valuation and Qualifying Accounts | ||
Schedule III - Real Estate and Accumulated Depreciation | ||
ASSETS | December 31, 2018 | December 31, 2017 | |||||
Commercial real estate properties, at cost: | |||||||
Land | $ | 201,196 | $ | 201,196 | |||
Development costs | 7,987 | 7,986 | |||||
Building and improvements | 2,675,303 | 2,458,473 | |||||
2,884,486 | 2,667,655 | ||||||
Less: accumulated depreciation | (747,304 | ) | (656,900 | ) | |||
Commercial real estate properties, net | 2,137,182 | 2,010,755 | |||||
Cash and cash equivalents | 204,981 | 464,344 | |||||
Restricted cash | 65,832 | 65,853 | |||||
Short-term investments | 400,000 | — | |||||
Tenant and other receivables, net of allowance of $488 and $1,422 in 2018 and 2017, respectively | 29,437 | 28,329 | |||||
Deferred rent receivables, net of allowance of $19 and $185 in 2018 and 2017, respectively | 200,903 | 178,629 | |||||
Prepaid expenses and other assets | 64,345 | 61,028 | |||||
Deferred costs, net | 241,223 | 262,701 | |||||
Acquired below market ground leases, net | 360,398 | 368,229 | |||||
Goodwill | 491,479 | 491,479 | |||||
Total assets | $ | 4,195,780 | $ | 3,931,347 | |||
LIABILITIES AND CAPITAL | |||||||
Liabilities: | |||||||
Mortgage notes payable, net | $ | 608,567 | $ | 717,164 | |||
Senior unsecured notes, net | 1,046,219 | 707,895 | |||||
Unsecured term loan facility, net | 264,147 | 263,662 | |||||
Unsecured revolving credit facility | — | — | |||||
Accounts payable and accrued expenses | 130,676 | 110,849 | |||||
Acquired below market leases, net | 52,450 | 66,047 | |||||
Deferred revenue and other liabilities | 44,810 | 40,907 | |||||
Tenants’ security deposits | 57,802 | 47,086 | |||||
Total liabilities | 2,204,671 | 1,953,610 | |||||
Commitments and contingencies | |||||||
Capital: | |||||||
Private perpetual preferred units, $16.62 per unit liquidation preference, 1,560,360 issued and outstanding in 2018 and 2017, respectively | 8,004 | 8,004 | |||||
Series PR operating partnership units: | |||||||
ESRT partners' capital (3,033,261 and 3,004,095 general partner operating partnership units and 171,877,365 and 158,472,949 limited partner operating partnership units outstanding at December 31, 2018 and 2017, respectively) | 1,238,482 | 1,168,282 | |||||
Limited partners' interests (86,202,638 and 91,759,741 limited partner operating partnership units outstanding at December 31, 2018 and 2017, respectively) | 725,108 | 778,279 | |||||
Series ES operating partnership units (30,129,556 and 33,774,678 limited partner operating partnership units outstanding at December 31, 2018 and 2017, respectively) | 14,399 | 17,132 | |||||
Series 60 operating partnership units (8,019,509 and 8,987,931 limited partner operating partnership units outstanding at December 31, 2018 and 2017, respectively) | 3,385 | 3,992 | |||||
Series 250 operating partnership units (4,063,737 and 4,410,093 limited partner operating partnership units outstanding at December 31, 2018 and 2017, respectively) | 1,731 | 2,048 | |||||
Total capital | 1,991,109 | 1,977,737 | |||||
Total liabilities and capital | $ | 4,195,780 | $ | 3,931,347 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenues: | |||||||||||
Rental revenue | $ | 493,231 | $ | 483,944 | $ | 460,653 | |||||
Tenant expense reimbursement | 72,372 | 73,679 | 73,459 | ||||||||
Observatory revenue | 131,227 | 127,118 | 124,814 | ||||||||
Lease termination fees | 20,847 | 13,551 | 7,676 | ||||||||
Third-party management and other fees | 1,440 | 1,400 | 1,766 | ||||||||
Other revenue and fees | 12,394 | 9,834 | 8,985 | ||||||||
Total revenues | 731,511 | 709,526 | 677,353 | ||||||||
Operating expenses: | |||||||||||
Property operating expenses | 167,379 | 163,531 | 153,850 | ||||||||
Ground rent expenses | 9,326 | 9,326 | 9,326 | ||||||||
General and administrative expenses | 52,674 | 50,315 | 49,078 | ||||||||
Observatory expenses | 32,767 | 30,275 | 29,833 | ||||||||
Real estate taxes | 110,000 | 102,466 | 96,061 | ||||||||
Acquisition expenses | — | — | 98 | ||||||||
Depreciation and amortization | 168,508 | 160,710 | 155,211 | ||||||||
Total operating expenses | 540,654 | 516,623 | 493,457 | ||||||||
Total operating income | 190,857 | 192,903 | 183,896 | ||||||||
Other income (expense): | |||||||||||
Interest income | 10,661 | 2,942 | 647 | ||||||||
Interest expense | (79,623 | ) | (68,473 | ) | (70,595 | ) | |||||
Loss on early extinguishment of debt | — | (2,157 | ) | (552 | ) | ||||||
Loss from derivative financial instruments | — | (289 | ) | — | |||||||
Income before income taxes | 121,895 | 124,926 | 113,396 | ||||||||
Income tax expense | (4,642 | ) | (6,673 | ) | (6,146 | ) | |||||
Net income | 117,253 | 118,253 | 107,250 | ||||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | (936 | ) | |||||
Net income attributable to common unitholders | $ | 116,317 | $ | 117,317 | $ | 106,314 | |||||
Total weighted average units: | |||||||||||
Basic | 297,258 | 296,455 | 276,848 | ||||||||
Diluted | 297,259 | 298,049 | 277,568 | ||||||||
Net income per unit: | |||||||||||
Basic | $ | 0.39 | $ | 0.39 | $ | 0.38 | |||||
Diluted | $ | 0.39 | $ | 0.39 | $ | 0.38 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 117,253 | $ | 118,253 | $ | 107,250 | |||||
Other comprehensive loss: | |||||||||||
Unrealized loss on valuation of interest rate swap agreements | (2,721 | ) | (11,658 | ) | (3,054 | ) | |||||
Amount reclassified into interest expense | 1,845 | 1,142 | — | ||||||||
Other comprehensive loss | (876 | ) | (10,516 | ) | (3,054 | ) | |||||
Comprehensive income | $ | 116,377 | $ | 107,737 | $ | 104,196 |
Series PR Operating Partnership Units | Series ES Operating Partnership Units Limited Partners | Series 60 Operating Partnership Units Limited Partners | Series 250 Operating Partnership Units Limited Partners | ||||||||||||||||||||||||||||||||||||||||||
General Partner | Limited Partners | ||||||||||||||||||||||||||||||||||||||||||||
Private Perpetual Preferred Units | Private Perpetual Preferred Units | Operating Partnership Units | Operating Partnership Unitholders | Operating Partnership Units | Operating Partnership Unitholders | Operating Partnership Units | Operating Partnership Unitholders | Operating Partnership Units | Operating Partnership Unitholders | Operating Partnership Units | Operating Partnership Unitholders | Total Capital | |||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 1,560 | $ | 8,004 | 120,023 | $ | 524,729 | 93,863 | $ | 809,901 | 38,262 | $ | 22,074 | 10,318 | $ | 5,366 | 5,106 | $ | 2,612 | $ | 1,372,686 | |||||||||||||||||||||||||
Issuance of OP units, net of costs | — | — | 29,611 | 611,206 | — | — | — | — | — | — | — | — | 611,206 | ||||||||||||||||||||||||||||||||
Conversion of operating partnership units and Class B shares to ESRT Partner's Capital | — | — | 6,167 | 23,678 | (2,657 | ) | (22,264 | ) | (2,534 | ) | (1,075 | ) | (617 | ) | (218 | ) | (359 | ) | (121 | ) | — | ||||||||||||||||||||||||
Equity compensation | — | — | 40 | 357 | 1,869 | 9,372 | — | — | — | — | — | — | 9,729 | ||||||||||||||||||||||||||||||||
Distributions | — | (936 | ) | — | (55,812 | ) | — | (37,621 | ) | — | (14,642 | ) | — | (3,985 | ) | — | (1,958 | ) | (114,954 | ) | |||||||||||||||||||||||||
Net income | — | 936 | — | 51,456 | — | 34,977 | — | 14,140 | — | 3,827 | — | 1,914 | 107,250 | ||||||||||||||||||||||||||||||||
Unrealized loss on valuation of interest rate swap agreements | — | — | — | (1,478 | ) | — | (1,005 | ) | — | (406 | ) | — | (110 | ) | — | (55 | ) | (3,054 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2016 | 1,560 | 8,004 | 155,841 | 1,154,136 | 93,075 | 793,360 | 35,728 | 20,091 | 9,701 | 4,880 | 4,747 | 2,392 | 1,982,863 | ||||||||||||||||||||||||||||||||
Conversion of operating partnership units and Class B shares to ESRT Partner's Capital | — | — | 5,615 | 23,435 | (2,611 | ) | (21,997 | ) | (1,954 | ) | (978 | ) | (713 | ) | (310 | ) | (337 | ) | (150 | ) | — | ||||||||||||||||||||||||
Equity compensation | — | — | 21 | 468 | 1,296 | 13,632 | — | — | — | — | — | — | 14,100 | ||||||||||||||||||||||||||||||||
Distributions | — | (936 | ) | — | (66,789 | ) | — | (38,969 | ) | — | (14,477 | ) | — | (3,889 | ) | — | (1,903 | ) | (126,963 | ) | |||||||||||||||||||||||||
Net income | — | 936 | — | 62,647 | — | 35,430 | — | 13,726 | — | 3,637 | — | 1,877 | 118,253 | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (5,615 | ) | — | (3,177 | ) | — | (1,230 | ) | — | (326 | ) | — | (168 | ) | (10,516 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 1,560 | 8,004 | 161,477 | 1,168,282 | 91,760 | 778,279 | 33,774 | 17,132 | 8,988 | 3,992 | 4,410 | 2,048 | 1,977,737 | ||||||||||||||||||||||||||||||||
Issuance of OP units, net of costs | — | — | 284 | 4,749 | — | — | — | — | — | — | — | — | 4,749 | ||||||||||||||||||||||||||||||||
Conversion of operating partnership units and Class B shares to ESRT Partner's Capital | — | — | 13,127 | 70,779 | (8,168 | ) | (68,386 | ) | (3,645 | ) | (1,809 | ) | (968 | ) | (423 | ) | (346 | ) | (161 | ) | — | ||||||||||||||||||||||||
Equity compensation | — | — | 24 | 417 | 2,610 | 18,368 | — | — | — | — | — | — | 18,785 | ||||||||||||||||||||||||||||||||
Distributions | — | (936 | ) | — | (70,854 | ) | — | (36,284 | ) | — | (13,161 | ) | — | (3,532 | ) | — | (1,772 | ) | (126,539 | ) | |||||||||||||||||||||||||
Net income | — | 936 | — | 65,603 | — | 33,383 | — | 12,330 | — | 3,373 | — | 1,628 | 117,253 | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (494 | ) | — | (252 | ) | — | (93 | ) | — | (25 | ) | — | (12 | ) | (876 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2018 | 1,560 | $ | 8,004 | 174,912 | $ | 1,238,482 | 86,202 | $ | 725,108 | 30,129 | $ | 14,399 | 8,020 | $ | 3,385 | 4,064 | $ | 1,731 | $ | 1,991,109 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash Flows From Operating Activities | |||||||||||
Net income | $ | 117,253 | $ | 118,253 | $ | 107,250 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 168,508 | 160,710 | 155,211 | ||||||||
Amortization of non-cash items within interest expense | 7,215 | 1,039 | 739 | ||||||||
Amortization of acquired above and below-market leases, net | (6,120 | ) | (5,721 | ) | (8,795 | ) | |||||
Amortization of acquired below-market ground leases | 7,831 | 7,831 | 7,831 | ||||||||
Straight-lining of rental revenue | (22,107 | ) | (26,544 | ) | (30,147 | ) | |||||
Equity based compensation | 18,785 | 14,100 | 9,729 | ||||||||
Settlement of derivative contracts | — | (15,695 | ) | — | |||||||
Loss on early extinguishment of debt | — | 2,157 | 552 | ||||||||
Increase (decrease) in cash flows due to changes in operating assets and liabilities: | |||||||||||
Security deposits | 10,717 | (97 | ) | (1,707 | ) | ||||||
Tenant and other receivables | (1,275 | ) | (5,787 | ) | (3,760 | ) | |||||
Deferred leasing costs | (26,899 | ) | (31,743 | ) | (22,622 | ) | |||||
Prepaid expenses and other assets | (781 | ) | (7,893 | ) | (3,289 | ) | |||||
Accounts payable and accrued expenses | 1,993 | (25,103 | ) | 2,939 | |||||||
Deferred revenue and other liabilities | 3,902 | 8,695 | 824 | ||||||||
Net cash provided by operating activities | 279,022 | 194,202 | 214,755 | ||||||||
Cash Flows From Investing Activities | |||||||||||
Short-term investments | (400,000 | ) | — | — | |||||||
Additions to building and improvements | (243,022 | ) | (222,979 | ) | (181,923 | ) | |||||
Development costs | (1 | ) | (34 | ) | (453 | ) | |||||
Net cash used in investing activities | (643,023 | ) | (223,013 | ) | (182,376 | ) |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash Flows From Financing Activities | |||||||||||
Proceeds from unsecured revolving credit facility | — | — | 50,000 | ||||||||
Repayments of unsecured revolving credit facility | — | — | (90,000 | ) | |||||||
Proceeds from mortgage notes payable | 160,000 | 315,000 | 50,000 | ||||||||
Repayment of mortgage notes payable | (266,613 | ) | (346,615 | ) | (32,305 | ) | |||||
Proceeds from senior unsecured notes | 335,000 | 115,000 | — | ||||||||
Repayment of unsecured term loan | — | (265,000 | ) | — | |||||||
Proceeds from unsecured revolving credit and term loan facility | — | 265,000 | — | ||||||||
Deferred financing costs | (1,980 | ) | (13,299 | ) | (3,006 | ) | |||||
Net proceeds from the issuance of operating partnership units | 4,749 | — | 611,206 | ||||||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | (936 | ) | |||||
Distributions | (125,603 | ) | (126,027 | ) | (114,018 | ) | |||||
Net cash provided by (used in) financing activities | 104,617 | (56,877 | ) | 470,941 | |||||||
Net (decrease) in cash and cash equivalents and restricted cash | (259,384 | ) | (85,688 | ) | 503,320 | ||||||
Cash and cash equivalents and restricted cash—beginning of period | 530,197 | 615,885 | 112,565 | ||||||||
Cash and cash equivalents and restricted cash—end of period | $ | 270,813 | $ | 530,197 | $ | 615,885 | |||||
Reconciliation of Cash and Cash Equivalents and Restricted Cash: | |||||||||||
Cash and cash equivalents at beginning of period | $ | 464,344 | $ | 554,371 | $ | 46,685 | |||||
Restricted cash at beginning of period | 65,853 | 61,514 | 65,880 | ||||||||
Cash and cash equivalents and restricted cash at beginning of period | $ | 530,197 | $ | 615,885 | $ | 112,565 | |||||
Cash and cash equivalents at end of period | $ | 204,981 | $ | 464,344 | $ | 554,371 | |||||
Restricted cash at end of period | 65,832 | 65,853 | 61,514 | ||||||||
Cash and cash equivalents and restricted cash at end of period | $ | 270,813 | $ | 530,197 | $ | 615,885 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for interest | $ | 74,160 | $ | 66,911 | $ | 69,062 | |||||
Interest capitalized | $ | 1,596 | $ | 459 | $ | — | |||||
Cash paid for income taxes | $ | 4,847 | $ | 5,783 | $ | 6,238 | |||||
Non-cash investing and financing activities: | |||||||||||
Building and improvements included in accounts payable and accrued expenses | $ | 85,242 | $ | 71,769 | $ | 66,620 | |||||
Write-off of fully depreciated assets | 39,665 | 19,136 | 15,381 | ||||||||
Derivative instruments at fair values included in prepaid expenses and other assets | 2,536 | — | 614 | ||||||||
Derivative instruments at fair values included in accounts payable and accrued expenses | 5,243 | 436 | 5,591 | ||||||||
Conversion of operating partnership units and Class B shares to Class A shares | 70,779 | 23,435 | 23,678 |
• | Quoted prices in active markets for similar instruments; |
• | Quoted prices in less active or inactive markets for identical or similar instruments; |
• | Other observable inputs (such as risk free interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates); and |
• | Market corroborated inputs (derived principally from or corroborated by observable market data). |
• | Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable; and |
• | Valuations based on internal models with significant unobservable inputs. |
2018 | 2017 | ||||||
Leasing costs | $ | 178,120 | $ | 164,751 | |||
Acquired in-place lease value and deferred leasing costs | 214,550 | 237,364 | |||||
Acquired above-market leases | 52,136 | 67,415 | |||||
444,806 | 469,530 | ||||||
Less: accumulated amortization | (209,839 | ) | (215,102 | ) | |||
Total deferred costs, net, excluding net deferred financing costs | $ | 234,967 | $ | 254,428 |
2018 | 2017 | ||||||
Acquired below-market ground leases | $ | 396,916 | $ | 396,916 | |||
Less: accumulated amortization | (36,518 | ) | (28,687 | ) | |||
Acquired below-market ground leases, net | $ | 360,398 | $ | 368,229 |
2018 | 2017 | ||||||
Acquired below-market leases | $ | (118,462 | ) | $ | (132,026 | ) | |
Less: accumulated amortization | 66,012 | 65,979 | |||||
Acquired below-market leases, net | $ | (52,450 | ) | $ | (66,047 | ) |
For the year ending: | Future Ground Rent Amortization | Future Amortization Expense | Future Rental Revenue | ||||||||
2019 | $ | 7,831 | $ | 15,829 | $ | 6,875 | |||||
2020 | 7,831 | 12,967 | 3,651 | ||||||||
2021 | 7,831 | 11,250 | 2,868 | ||||||||
2022 | 7,831 | 10,433 | 3,185 | ||||||||
2023 | 7,831 | 9,756 | 3,181 | ||||||||
Thereafter | 321,243 | 31,690 | 9,532 | ||||||||
$ | 360,398 | $ | 91,925 | $ | 29,292 |
As of December 31, 2018 | |||||||||||||||||
Principal Balance as of December 31, 2018 | Principal Balance as of December 31, 2017 | Stated Rate | Effective Rate(1) | Maturity Date(2) | |||||||||||||
Fixed rate mortgage debt | |||||||||||||||||
Metro Center | $ | 91,838 | $ | 93,948 | 3.59 | % | 3.68 | % | 11/5/2024 | ||||||||
10 Union Square | 50,000 | 50,000 | 3.70 | % | 3.97 | % | 4/1/2026 | ||||||||||
1542 Third Avenue | 30,000 | 30,000 | 4.29 | % | 4.53 | % | 5/1/2027 | ||||||||||
First Stamford Place(3) | 180,000 | 180,000 | 4.28 | % | 4.45 | % | 7/1/2027 | ||||||||||
1010 Third Avenue and 77 West 55th Street | 38,995 | 39,710 | 4.01 | % | 4.22 | % | 1/5/2028 | ||||||||||
10 Bank Street | 33,779 | 34,602 | 4.23 | % | 4.35 | % | 6/1/2032 | ||||||||||
383 Main Avenue | 30,000 | 30,000 | 4.44 | % | 4.55 | % | 6/30/2032 | ||||||||||
1333 Broadway | 160,000 | 66,602 | 4.21 | % | 4.29 | % | 2/5/2033 | ||||||||||
1400 Broadway | |||||||||||||||||
(first lien mortgage loan) | — | 66,632 | — | — | — | ||||||||||||
(second lien mortgage loan) | — | 9,172 | — | — | — | ||||||||||||
111 West 33rd Street | |||||||||||||||||
(first lien mortgage loan) | — | 74,045 | — | — | — | ||||||||||||
(second lien mortgage loan) | — | 9,369 | — | — | — | ||||||||||||
1350 Broadway | — | 37,144 | — | — | — | ||||||||||||
Total mortgage debt | 614,612 | 721,224 | |||||||||||||||
Senior unsecured notes - exchangeable | 250,000 | 250,000 | 2.63 | % | 3.93 | % | 8/15/2019 | ||||||||||
Senior unsecured notes: (4) | |||||||||||||||||
Series A | 100,000 | 100,000 | 3.93 | % | 3.96 | % | 3/27/2025 | ||||||||||
Series B | 125,000 | 125,000 | 4.09 | % | 4.12 | % | 3/27/2027 | ||||||||||
Series C | 125,000 | 125,000 | 4.18 | % | 4.21 | % | 3/27/2030 | ||||||||||
Series D | 115,000 | 115,000 | 4.08 | % | 4.11 | % | 1/22/2028 | ||||||||||
Series E | 160,000 | — | 4.26 | % | 4.27 | % | 3/22/2030 | ||||||||||
Series F | 175,000 | — | 4.44 | % | 4.45 | % | 3/22/2033 | ||||||||||
Unsecured revolving credit facility (4) | — | — | (5) | (5) | 8/29/2021 | ||||||||||||
Unsecured term loan facility (4) | 265,000 | 265,000 | (6) | (6) | 8/29/2022 | ||||||||||||
Total principal | 1,929,612 | 1,701,224 | |||||||||||||||
Unamortized (discount) premiums, net of unamortized premiums (discount) | (1,647 | ) | (3,370 | ) | |||||||||||||
Deferred financing costs, net | (9,032 | ) | (9,133 | ) | |||||||||||||
Total | $ | 1,918,933 | $ | 1,688,721 |
(1) | The effective rate is the yield as of December 31, 2018, including the effects of debt issuance costs and the amortization of the fair value of debt adjustment. |
(2) | Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty. |
(3) | Represents a $164 million mortgage loan bearing interest of 4.09% and a $16 million loan bearing interest at 6.25%. |
(4) | At December 31, 2018, we were in compliance with all debt covenants. |
(5) | At December 31, 2018, the unsecured revolving credit facility bears a floating rate at 30 day LIBOR plus 1.10%. The rate at December 31, 2018 was 3.60%. |
(6) | The unsecured term loan facility bears a floating rate at 30 day LIBOR plus 1.20%. Pursuant to an interest rate swap agreement, the LIBOR rate is fixed at 2.1485% through maturity. The rate at December 31, 2018 was 3.35% . |
Year | Amortization | Maturities | Total | ||||||||
2019 | $ | 3,790 | $ | 250,000 | $ | 253,790 | |||||
2020 | 3,938 | — | 3,938 | ||||||||
2021 | 4,090 | — | 4,090 | ||||||||
2022 | 5,628 | 265,000 | 270,628 | ||||||||
2023 | 7,876 | — | 7,876 | ||||||||
Thereafter | 33,868 | 1,355,422 | 1,389,290 | ||||||||
Total principal maturities | $ | 59,190 | $ | 1,870,422 | $ | 1,929,612 |
2018 | 2017 | ||||||
Financing costs | $ | 25,315 | $ | 24,446 | |||
Less: accumulated amortization | (10,027 | ) | (7,039 | ) | |||
Total deferred financing costs, net | $ | 15,288 | $ | 17,407 |
2018 | 2017 | ||||||
Accrued capital expenditures | $ | 85,242 | $ | 71,769 | |||
Accounts payable and accrued expenses | 34,585 | 32,509 | |||||
Interest rate swap agreements liability | 5,243 | 436 | |||||
Accrued interest payable | 4,990 | 5,687 | |||||
Due to affiliated companies | 616 | 448 | |||||
Total accounts payable and accrued expenses | $ | 130,676 | $ | 110,849 |
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
Derivative | Notional Amount | Receive Rate | Pay Rate | Effective Date | Expiration Date | Asset | Liability | Asset | Liability | ||||||||||||||
Interest rate swap | $ | 265,000 | 1 Month LIBOR | 2.1485 | % | August 31, 2017 | August 24, 2022 | $ | 2,536 | $ | — | $ | — | $ | (436 | ) | |||||||
Interest rate swap | 125,000 | 3 Month LIBOR | 2.9580 | % | July 1, 2019 | July 1, 2026 | — | (2,623 | ) | — | — | ||||||||||||
Interest rate swap | 125,000 | 3 Month LIBOR | 2.9580 | % | July 1, 2019 | July 1, 2026 | — | (2,620 | ) | — | — | ||||||||||||
$ | 2,536 | $ | (5,243 | ) | $ | — | $ | (436 | ) |
Effects of Cash Flow Hedges | December 31, 2018 | December 31, 2017 | December 31, 2016 | |||||||||
Amount of gain (loss) recognized in other comprehensive income (loss) | $ | (2,721 | ) | $ | (11,658 | ) | $ | (3,054 | ) | |||
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense | (1,845 | ) | (1,142 | ) | — |
Effects of Cash Flow Hedges | December 31, 2018 | December 31, 2017 | December 31, 2016 | |||||||||
Total interest (expense) presented on the consolidated statements of income in which the effects of cash flow hedges are recorded | $ | (79,623 | ) | $ | (68,473 | ) | $ | (70,595 | ) | |||
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense | (1,845 | ) | (1,142 | ) | — |
December 31, 2018 | ||||||||||||||||||||
Carrying Value | Estimated Fair Value | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Interest rate swaps included in prepaid expenses and other assets | $ | 2,536 | $ | 2,536 | $ | — | $ | 2,536 | $ | — | ||||||||||
Interest rate swaps included in accounts payable and accrued expenses | 5,243 | 5,243 | — | 5,243 | — | |||||||||||||||
Mortgage notes payable | 608,567 | 597,424 | — | — | 597,424 | |||||||||||||||
Senior unsecured notes - Exchangeable | 247,930 | 250,625 | — | 250,625 | — | |||||||||||||||
Senior unsecured notes - Series A, B, C, D, E and F | 798,289 | 795,662 | — | — | 795,662 | |||||||||||||||
Unsecured term loan facility | 264,147 | 265,000 | — | — | 265,000 |
December 31, 2017 | ||||||||||||||||||||
Carrying Value | Estimated Fair Value | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Interest rate swaps included in prepaid expenses and other assets | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Interest rate swaps included in accounts payable and accrued expenses | 436 | 436 | — | 436 | — | |||||||||||||||
Mortgage notes payable | 717,164 | 707,300 | — | — | 707,300 | |||||||||||||||
Senior unsecured notes - Exchangeable | 244,739 | 275,723 | — | 275,723 | — | |||||||||||||||
Senior unsecured notes - Series A, B, C, D, E and F | 463,156 | 460,352 | — | — | 460,352 | |||||||||||||||
Unsecured term loan facility | 263,662 | 265,000 | — | — | 265,000 |
2019 | $ | 485,441 | |||
2020 | 460,127 | ||||
2021 | 423,365 | ||||
2022 | 391,395 | ||||
2023 | 362,738 | ||||
Thereafter | 1,536,461 | ||||
$ | 3,659,527 |
2019 | $ | 1,518 | |||
2020 | 1,518 | ||||
2021 | 1,518 | ||||
2022 | 1,518 | ||||
2023 | 1,518 | ||||
Thereafter | 68,298 | ||||
Total | $ | 75,888 |
Year Ended December 31, | |||||||||
2018 | 2017 | 2016 | |||||||
Empire State Building | 31.9 | % | 32.0 | % | 32.6 | % | |||
One Grand Central Place | 12.8 | % | 13.1 | % | 12.5 | % | |||
111 West 33rd Street | 9.3 | % | 8.6 | % | 6.8 | % | |||
1400 Broadway | 7.1 | % | 7.4 | % | 7.8 | % | |||
First Stamford Place | 5.9 | % | 5.4 | % | 6.4 | % | |||
250 West 57th Street | 5.2 | % | 5.2 | % | 5.3 | % |
• | Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. |
• | If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. |
• | If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. |
For the Year Ended December 31, | ||||||||||||
Benefit Plan | 2018 | 2017 | 2016 | |||||||||
Pension Plans (pension and annuity)* | $ | 3,327 | $ | 3,035 | $ | 3,155 | ||||||
Health Plans** | 9,373 | 8,551 | 8,280 | |||||||||
Other*** | 814 | 856 | 542 | |||||||||
Total plan contributions | $ | 13,514 | $ | 12,442 | $ | 11,977 |
* | Pension plans include $1.0 million, $0.9 million and $0.8 million for the years ended 2018, 2017 and 2016, respectively, to multiemployer plans not discussed above. |
Record Date | Payment Date | Amount per Operating Partnership Unit | ||
December 17, 2018 | December 31, 2018 | $0.105 | ||
September 14, 2018 | September 28, 2018 | $0.105 | ||
June 15, 2018 | June 29, 2018 | $0.105 | ||
March 15, 2018 | March 30, 2018 | $0.105 | ||
December 15, 2017 | December 29, 2017 | $0.105 | ||
September 15, 2017 | September 29, 2017 | $0.105 | ||
June 15, 2017 | June 30, 2017 | $0.105 | ||
March 15, 2017 | March 31, 2017 | $0.105 | ||
December 15, 2016 | December 29, 2016 | $0.105 | ||
September 19, 2016 | September 30, 2016 | $0.105 | ||
June 15, 2016 | June 30, 2016 | $0.105 | ||
March 16, 2016 | March 31, 2016 | $0.085 |
ESRT Restricted Stock | LTIP Units | Weighted Average Grant Fair Value | |||||||
Unvested balance at December 31, 2017 | 90,791 | 3,588,609 | $ | 11.20 | |||||
Vested | (30,693 | ) | (495,303 | ) | 14.59 | ||||
Granted | 39,608 | 2,719,801 | 8.54 | ||||||
Forfeited or unearned | (8,548 | ) | (110,286 | ) | 8.50 | ||||
Unvested balance at December 31, 2018 | 91,158 | 5,702,821 | $ | 9.68 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Numerator: | |||||||||||
Net income | $ | 117,253 | $ | 118,253 | $ | 107,250 | |||||
Private perpetual preferred unit distributions | (936 | ) | (936 | ) | (936 | ) | |||||
Earnings allocated to unvested shares | (851 | ) | (760 | ) | (747 | ) | |||||
Net income attributable to common unitholders - basic and diluted | $ | 115,466 | $ | 116,557 | $ | 105,567 | |||||
Denominator: | |||||||||||
Weighted average units outstanding - basic | 297,258 | 296,455 | 276,848 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock-based compensation plans | 1 | 775 | 454 | ||||||||
Exchangeable senior notes | — | 819 | 266 | ||||||||
Weighted average shares outstanding - diluted | 297,259 | 298,049 | 277,568 | ||||||||
Earnings per unit - basic and diluted | $ | 0.39 | $ | 0.39 | $ | 0.38 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Current: | |||||||||||
Federal | $ | (2,389 | ) | $ | (3,923 | ) | $ | (3,632 | ) | ||
State and local | (2,253 | ) | (2,304 | ) | (2,055 | ) | |||||
Total current | (4,642 | ) | (6,227 | ) | (5,687 | ) | |||||
Deferred: | |||||||||||
Federal | — | (446 | ) | (291 | ) | ||||||
State and local | — | — | (168 | ) | |||||||
Total deferred | — | (446 | ) | (459 | ) | ||||||
Income tax expense | $ | (4,642 | ) | $ | (6,673 | ) | $ | (6,146 | ) |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Federal tax expense at statutory rate | $ | (2,844 | ) | $ | (4,684 | ) | $ | (4,629 | ) | ||
State income taxes, net of federal benefit | (1,798 | ) | (1,543 | ) | (1,517 | ) | |||||
Corporate income tax rate adjustment | — | (446 | ) | — | |||||||
Income tax expense | $ | (4,642 | ) | $ | (6,673 | ) | $ | (6,146 | ) |
2018 | 2017 | 2016 | |||||||||
Deferred tax assets: | |||||||||||
Deferred revenue on unredeemed observatory admission ticket sales | $ | 1,396 | $ | 1,395 | $ | 198 |
2018 | ||||||||||||||||
Real Estate | Observatory | Intersegment Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenue | $ | 493,231 | $ | — | $ | — | $ | 493,231 | ||||||||
Intercompany rental revenue | 79,954 | — | (79,954 | ) | — | |||||||||||
Tenant expense reimbursement | 72,372 | — | — | 72,372 | ||||||||||||
Observatory revenue | — | 131,227 | — | 131,227 | ||||||||||||
Lease termination fees | 20,847 | — | — | 20,847 | ||||||||||||
Third-party management and other fees | 1,440 | — | — | 1,440 | ||||||||||||
Other revenue and fees | 12,394 | — | — | 12,394 | ||||||||||||
Total revenues | 680,238 | 131,227 | (79,954 | ) | 731,511 | |||||||||||
Operating expenses: | ||||||||||||||||
Property operating expenses | 167,379 | — | — | 167,379 | ||||||||||||
Intercompany rent expense | — | 79,954 | (79,954 | ) | — | |||||||||||
Ground rent expense | 9,326 | — | — | 9,326 | ||||||||||||
General and administrative expenses | 52,674 | — | — | 52,674 | ||||||||||||
Observatory expenses | — | 32,767 | — | 32,767 | ||||||||||||
Real estate taxes | 110,000 | — | — | 110,000 | ||||||||||||
Depreciation and amortization | 168,430 | 78 | — | 168,508 | ||||||||||||
Total operating expenses | 507,809 | 112,799 | (79,954 | ) | 540,654 | |||||||||||
Total operating income | 172,429 | 18,428 | — | 190,857 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 10,661 | — | — | 10,661 | ||||||||||||
Interest expense | (79,623 | ) | — | — | (79,623 | ) | ||||||||||
Income before income taxes | 103,467 | 18,428 | — | 121,895 | ||||||||||||
Income tax expense | (1,114 | ) | (3,528 | ) | — | (4,642 | ) | |||||||||
Net income | $ | 102,353 | $ | 14,900 | $ | — | $ | 117,253 | ||||||||
Segment assets | $ | 3,930,330 | $ | 265,450 | $ | — | $ | 4,195,780 | ||||||||
Expenditures for segment assets | $ | 201,685 | $ | 54,811 | $ | — | $ | 256,496 |
2017 | ||||||||||||||||
Real Estate | Observatory | Intersegment Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Rental revenue | $ | 483,944 | $ | — | $ | — | $ | 483,944 | ||||||||
Intercompany rental revenue | 77,646 | — | (77,646 | ) | — | |||||||||||
Tenant expense reimbursement | 73,679 | — | — | 73,679 | ||||||||||||
Observatory revenue | — | 127,118 | — | 127,118 | ||||||||||||
Lease termination fees | 13,551 | — | — | 13,551 | ||||||||||||
Third-party management and other fees | 1,400 | — | — | 1,400 | ||||||||||||
Other revenue and fees | 9,834 | — | — | 9,834 | ||||||||||||
Total revenues | 660,054 | 127,118 | (77,646 | ) | 709,526 | |||||||||||
Operating expenses: | ||||||||||||||||
Property operating expenses | 163,531 | — | — | 163,531 | ||||||||||||
Intercompany rent expense | — | 77,646 | (77,646 | ) | — | |||||||||||
Ground rent expense | 9,326 | — | — | 9,326 | ||||||||||||
General and administrative expenses | 50,315 | — | — | 50,315 | ||||||||||||
Observatory expenses | — | 30,275 | — | 30,275 | ||||||||||||
Real estate taxes | 102,466 | — | — | 102,466 | ||||||||||||
Depreciation and amortization | 160,630 | 80 | — | 160,710 | ||||||||||||
Total operating expenses | 486,268 | 108,001 | (77,646 | ) | 516,623 | |||||||||||
Total operating income (loss) | 173,786 | 19,117 | — | 192,903 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 2,942 | — | — | 2,942 | ||||||||||||
Interest expense | (68,473 | ) | — | — | (68,473 | ) | ||||||||||
Loss on early extinguishment of debt | (2,157 | ) | — | — | (2,157 | ) | ||||||||||
Loss from derivative financial instrument | (289 | ) | — | — | (289 | ) | ||||||||||
Income before income taxes | 105,809 | 19,117 | — | 124,926 | ||||||||||||
Income tax expense | (1,306 | ) | (5,367 | ) | — | (6,673 | ) | |||||||||
Net income | $ | 104,503 | $ | 13,750 | $ | — | $ | 118,253 | ||||||||
Segment assets | $ | 3,670,907 | $ | 260,440 | $ | — | $ | 3,931,347 | ||||||||
Expenditures for segment assets | $ | 191,541 | $ | 36,621 | $ | — | $ | 228,162 |
2016 | |||||||||||||||||
Real Estate | Observatory | Intersegment Elimination | Total | ||||||||||||||
Revenues: | |||||||||||||||||
Rental revenue | $ | 460,653 | $ | — | $ | — | $ | 460,653 | |||||||||
Intercompany rental revenue | 75,658 | — | (75,658 | ) | — | ||||||||||||
Tenant expense reimbursement | 73,459 | — | — | 73,459 | |||||||||||||
Observatory revenue | — | 124,814 | — | 124,814 | |||||||||||||
Lease termination fees | 7,676 | — | — | 7,676 | |||||||||||||
Third-party management and other fees | 1,766 | — | — | 1,766 | |||||||||||||
Other revenue and fees | 8,970 | 15 | — | 8,985 | |||||||||||||
Total revenues | 628,182 | 124,829 | (75,658 | ) | 677,353 | ||||||||||||
Operating expenses: | |||||||||||||||||
Property operating expenses | 153,850 | — | — | 153,850 | |||||||||||||
Intercompany rent expense | — | 75,658 | (75,658 | ) | — | ||||||||||||
Ground rent expense | 9,326 | — | — | 9,326 | |||||||||||||
General and administrative expenses | 49,078 | — | — | 49,078 | |||||||||||||
Observatory expenses | — | 29,833 | — | 29,833 | |||||||||||||
Real estate taxes | 96,061 | — | — | 96,061 | |||||||||||||
Acquisition expenses | 98 | — | — | 98 | |||||||||||||
Depreciation and amortization | 154,817 | 394 | — | 155,211 | |||||||||||||
Total operating expenses | 463,230 | 105,885 | (75,658 | ) | 493,457 | ||||||||||||
Total operating income (loss) | 164,952 | 18,944 | — | 183,896 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest income | 647 | — | — | 647 | |||||||||||||
Interest expense | (70,595 | ) | — | — | (70,595 | ) | |||||||||||
Loss on early extinguishment of debt | (552 | ) | — | — | (552 | ) | |||||||||||
Income (loss) before income taxes | 94,452 | 18,944 | — | 113,396 | |||||||||||||
Income tax expense | (1,361 | ) | (4,785 | ) | — | (6,146 | ) | ||||||||||
Net income | $ | 93,091 | $ | 14,159 | $ | — | $ | 107,250 | |||||||||
Segment assets | $ | 3,641,844 | $ | 249,109 | $ | — | $ | 3,890,953 | |||||||||
Expenditures for segment assets | $ | 197,680 | $ | — | $ | — | $ | 197,680 |
March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | ||||||||||||
Revenues | $ | 167,271 | $ | 178,529 | $ | 186,402 | $ | 199,309 | |||||||
Operating income | $ | 34,164 | $ | 49,665 | $ | 48,538 | $ | 58,490 | |||||||
Net income | $ | 18,058 | $ | 30,184 | $ | 29,230 | $ | 39,781 | |||||||
Net income attributable to common unitholders | $ | 17,824 | $ | 29,950 | $ | 28,996 | $ | 39,547 | |||||||
Net income per share attributable to common unitholders: | |||||||||||||||
Basic and diluted | $ | 0.06 | $ | 0.10 | $ | 0.10 | $ | 0.13 | |||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | ||||||||||||
Revenues | $ | 164,333 | $ | 176,349 | $ | 186,547 | $ | 182,297 | |||||||
Operating income | $ | 36,045 | $ | 50,659 | $ | 56,008 | $ | 50,191 | |||||||
Net income | $ | 19,145 | $ | 31,359 | $ | 35,489 | $ | 32,260 | |||||||
Net income attributable to common unitholders | $ | 18,911 | $ | 31,125 | $ | 35,255 | $ | 32,026 | |||||||
Net income per share attributable to common unitholders: | |||||||||||||||
Basic and diluted | $ | 0.06 | $ | 0.10 | $ | 0.12 | $ | 0.11 | |||||||
March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | ||||||||||||
Revenues | $ | 157,057 | $ | 165,785 | $ | 175,704 | $ | 178,807 | |||||||
Operating income | $ | 34,097 | $ | 44,162 | $ | 53,442 | $ | 52,195 | |||||||
Net income | $ | 16,705 | $ | 24,640 | $ | 32,897 | $ | 33,008 | |||||||
Net income attributable to common unitholders | $ | 16,471 | $ | 24,406 | $ | 32,663 | $ | 32,774 | |||||||
Net income per share attributable to common unitholders: | |||||||||||||||
Basic and diluted | $ | 0.06 | $ | 0.09 | $ | 0.12 | $ | 0.11 |
Description | Balance At Beginning of Year | Additions Charged Against Operations | Uncollectible Accounts Written-Off | Balance at End of Year | ||||||||||||
Year ended December 31, 2018 | ||||||||||||||||
Allowance for doubtful accounts | $ | 1,607 | $ | (811 | ) | $ | (289 | ) | $ | 507 | ||||||
Year ended December 31, 2017 | ||||||||||||||||
Allowance for doubtful accounts | $ | 3,723 | $ | (1,650 | ) | $ | (466 | ) | $ | 1,607 | ||||||
Year ended December 31, 2016 | ||||||||||||||||
Allowance for doubtful accounts | $ | 3,037 | $ | 908 | $ | (222 | ) | $ | 3,723 |
Initial Cost to the Company | Cost Capitalized Subsequent to Acquisition | Gross Amount at which Carried at 12/31/18 | ||||||||||||||||||||||||||||||||||||||||||
Development | Type | Encumbrances | Land | Building & Improvements | Improvements | Carrying Costs | Land | Buildings & Improvements | Total | Accumulated Depreciation | Date of Construction | Date Acquired | Life on which depreciation in latest income statement is computed | |||||||||||||||||||||||||||||||
111 West 33rd Street, New York, NY | office / retail | $ | — | $ | 13,630 | $ | 244,461 | $ | 106,780 | n/a | $ | 13,630 | $ | 351,241 | $ | 364,871 | $ | (41,629 | ) | 1954 | 2014 | various | ||||||||||||||||||||||
1400 Broadway, New York, NY | office / retail | — | — | 96,338 | 40,261 | — | — | 136,599 | 136,599 | (31,601 | ) | 1930 | 2014 | various | ||||||||||||||||||||||||||||||
1333 Broadway, New York, NY | office / retail | 158,484 | 91,435 | 120,190 | 7,491 | n/a | 91,435 | 127,681 | 219,116 | (22,331 | ) | 1915 | 2013 | various | ||||||||||||||||||||||||||||||
1350 Broadway, New York, NY | office / retail | — | — | 102,518 | 27,161 | — | — | 129,679 | 129,679 | (25,312 | ) | 1929 | 2013 | various | ||||||||||||||||||||||||||||||
250 West 57th Street, New York, NY | office/ retail | — | 2,117 | 5,041 | 141,581 | n/a | 2,117 | 146,622 | 148,739 | (36,058 | ) | 1921 | 1953 | various | ||||||||||||||||||||||||||||||
501 Seventh Avenue, New York, NY | office/ retail | — | 1,100 | 2,600 | 94,778 | n/a | 1,100 | 97,378 | 98,478 | (43,164 | ) | 1923 | 1950 | various | ||||||||||||||||||||||||||||||
1359 Broadway, New York, NY | office/ retail | — | 1,233 | 1,809 | 57,938 | n/a | 1,233 | 59,747 | 60,980 | (26,549 | ) | 1924 | 1953 | various | ||||||||||||||||||||||||||||||
350 Fifth Avenue (Empire State Building), New York, NY | office/ retail | — | 21,551 | 38,934 | 895,989 | n/a | 21,551 | 934,923 | 956,474 | (211,068 | ) | 1930 | 2013 | various | ||||||||||||||||||||||||||||||
One Grand Central Place, New York, NY | office/ retail | — | 7,240 | 17,490 | 241,218 | n/a | 7,222 | 258,726 | 265,948 | (109,502 | ) | 1930 | 1954 | various | ||||||||||||||||||||||||||||||
First Stamford Place, Stamford, CT | office | 178,616 | 22,952 | 122,739 | 63,292 | n/a | 24,862 | 184,121 | 208,983 | (78,570 | ) | 1986 | 2001 | various | ||||||||||||||||||||||||||||||
One Station Place, Stamford, CT (Metro Center) | office | 91,592 | 5,313 | 28,602 | 15,301 | n/a | 5,313 | 43,903 | 49,216 | (30,763 | ) | 1987 | 1984 | various | ||||||||||||||||||||||||||||||
383 Main Avenue, Norwalk, CT | office | 29,614 | 2,262 | 12,820 | 22,253 | n/a | 2,262 | 35,073 | 37,335 | (12,876 | ) | 1985 | 1994 | various | ||||||||||||||||||||||||||||||
500 Mamaroneck Avenue, Harrison, NY | office | — | 4,571 | 25,915 | 22,198 | n/a | 4,571 | 48,113 | 52,684 | (23,147 | ) | 1987 | 1999 | various | ||||||||||||||||||||||||||||||
10 Bank Street, White Plains, NY | office | 33,316 | 5,612 | 31,803 | 18,412 | n/a | 5,612 | 50,215 | 55,827 | (21,134 | ) | 1989 | 1999 | various | ||||||||||||||||||||||||||||||
10 Union Square, New York, NY | retail | 49,116 | 5,003 | 12,866 | 1,966 | n/a | 5,003 | 14,832 | 19,835 | (7,801 | ) | 1987 | 1996 | various | ||||||||||||||||||||||||||||||
1542 Third Avenue, New York, NY | retail | 29,459 | 2,239 | 15,266 | 425 | n/a | 2,239 | 15,691 | 17,930 | (7,774 | ) | 1991 | 1999 | various | ||||||||||||||||||||||||||||||
1010 Third Avenue, New York, NY and 77 West 55th Street, New York, NY | retail | 38,370 | 4,462 | 15,817 | 783 | n/a | 4,462 | 16,600 | 21,062 | (8,590 | ) | 1962 | 1998 | various | ||||||||||||||||||||||||||||||
69-97 Main Street, Westport, CT | retail | — | 2,782 | 15,766 | 1,046 | n/a | 2,782 | 16,812 | 19,594 | (7,113 | ) | 1922 | 2003 | various | ||||||||||||||||||||||||||||||
103-107 Main Street, Westport, CT | retail | — | 1,243 | 7,043 | 321 | n/a | 1,260 | 7,347 | 8,607 | (2,322 | ) | 1900 | 2006 | various | ||||||||||||||||||||||||||||||
Property for development at the Transportation Hub in Stamford, CT | land | — | 4,542 | — | 7,987 | — | 12,529 | — | 12,529 | — | n/a | n/a | n/a | |||||||||||||||||||||||||||||||
Totals | $ | 608,567 | $ | 199,287 | $ | 918,018 | $ | 1,767,181 | $ | — | $ | 209,183 | $ | 2,675,303 | $ | 2,884,486 | $ | (747,304 | ) |
2018 | 2017 | 2016 | |||||||||
Balance, beginning of year | $ | 2,667,655 | $ | 2,458,629 | $ | 2,276,330 | |||||
Acquisition of new properties | — | — | — | ||||||||
Improvements | 256,496 | 228,162 | 197,680 | ||||||||
Disposals | (39,665 | ) | (19,136 | ) | (15,381 | ) | |||||
Balance, end of year | $ | 2,884,486 | $ | 2,667,655 | $ | 2,458,629 |
2018 | 2017 | 2016 | ||||||||||
Balance, beginning of year | $ | 656,900 | $ | 556,546 | $ | 465,584 | ||||||
Depreciation expense | 130,069 | 119,490 | 106,343 | |||||||||
Disposals | (39,665 | ) | (19,136 | ) | (15,381 | ) | ||||||
Balance, end of year | $ | 747,304 | $ | 656,900 | $ | 556,546 |
Buildings | 39 years | |
Building improvements | 39 years or useful life | |
Tenant improvements | Term of related lease |
Dated: February 28, 2019 | By: /s/ Anthony E. Malkin |
Anthony E. Malkin | |
Chairman and Chief Executive Officer |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: February 28, 2019 | By: /s/ David A. Karp |
David A. Karp | |
Executive Vice President and Chief Financial Officer |
Date: February 28, 2019 | By: /s/ Anthony E. Malkin |
Anthony E. Malkin | |
Chairman and Chief Executive Officer |
Date: February 28, 2019 | By: /s/ David A. Karp |
David A. Karp | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 22, 2019 |
Jun. 30, 2018 |
|
Entity Registrant Name | Empire State Realty OP, L.P. | ||
Entity Central Index Key | 0001553079 | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Series ES Operating Partnership Units Limited Partners | |||
Entity Common Stock, Shares Outstanding | 29,238,349 | ||
Series 60 Operating Partnership Units Limited Partners | |||
Entity Common Stock, Shares Outstanding | 7,944,584 | ||
Series 250 Operating Partnership Units Limited Partners | |||
Entity Common Stock, Shares Outstanding | 3,993,052 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 117,253 | $ 118,253 | $ 107,250 |
Other comprehensive loss: | |||
Unrealized loss on valuation of interest rate swap agreements | (2,721) | (11,658) | |
Unrealized loss on valuation of interest rate swap agreements | (3,054) | ||
Amount reclassified into interest expense | 1,845 | 1,142 | |
Amount reclassified into interest expense | 0 | ||
Other comprehensive loss | (876) | (10,516) | (3,054) |
Comprehensive income | $ 116,377 | $ 107,737 | $ 104,196 |
Description of Business and Organization |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | Description of Business and Organization As used in these consolidated financial statements, unless the context otherwise requires, “we,” “us,” "our," and the "company,” mean Empire State Realty OP, L.P. and its consolidated subsidiaries. Empire State Realty OP, L.P. is the entity through which Empire State Realty Trust, Inc. ("ESRT"), a self-administered and self-managed real estate investment trust, or REIT, conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We own, manage, operate, acquire and reposition office and retail properties in Manhattan and the greater New York metropolitan area. Empire State Realty Trust, Inc.'s Class A common stock, par value $0.01 per share, is listed on the New York Stock Exchange under the symbol "ESRT." We were organized as a Delaware limited partnership on November 28, 2011. ESRT as the sole general partner in our company, has responsibility and discretion in the management and control in our company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities of our company. As of December 31, 2018, ESRT owned approximately 57.7% of our operating partnership units. As of December 31, 2018, our total portfolio contained 10.1 million rentable square feet of office and retail space. We owned 14 office properties (including three long-term ground leasehold interest) encompassing approximately 9.4 million rentable square feet of office space. Nine of these properties are located in the midtown Manhattan market and encompass in the aggregate approximately 7.6 million rentable square feet of office space, including the Empire State Building. Our Manhattan office properties also contain an aggregate of 513,606 rentable square feet of premier retail space on their ground floor and/or lower levels. Our remaining five office properties are located in Fairfield County, Connecticut and Westchester County, New York, encompassing in the aggregate approximately 1.8 million rentable square feet. The majority of square footage for these five properties is located in densely populated metropolitan communities with immediate access to mass transportation. Additionally, we have entitled land at the Stamford Transportation Center in Stamford, Connecticut, adjacent to one of our office properties, that will support the development of an approximately 380,000 rentable square foot office building and garage, which we refer to herein as Metro Tower. As of December 31, 2018, our portfolio also included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 205,748 rentable square feet in the aggregate. We have two entities that elected, together with ESRT, to be treated as taxable REIT subsidiaries, or TRSs, of ESRT. The TRSs, through several wholly owned limited liability companies, conduct third-party services businesses, which include the Empire State Building Observatory, cleaning services, cafeteria, restaurant and health clubs, and asset and property management services. |
Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the "SEC") represent our assets and liabilities and operating results. The consolidated financial statements include our accounts and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. We had no VIEs as of December 31, 2018 and 2017. We will assess the accounting treatment for each investment we may have in the future. This assessment will include a review of each entity’s organizational agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit. In situations where we or our partner could approve, among other things, the annual budget, or leases that cover more than a nominal amount of space relative to the total rentable space at each property, we would not consolidate the investment as we consider these to be substantive participation rights that result in shared power of the activities that would most significantly impact the performance and benefit of such joint venture investment. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheets and in the consolidated statements of income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. Accounting Estimates The preparation of the consolidated financial statements in accordance with GAAP requires management to use estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Significant items subject to such estimates and assumptions include allocation of the purchase price of acquired real estate properties among tangible and intangible assets, determination of the useful life of real estate properties and other long-lived assets, valuation and impairment analysis of commercial real estate properties and other long-lived assets, estimate of tenant expense reimbursements, estimate of percentage of completion on construction contracts, valuation of the allowance for doubtful accounts, and valuation of derivative instruments, senior unsecured notes, mortgage notes payable, unsecured notes, unsecured revolving credit and term loan facilities, and equity based compensation. These estimates are prepared using management’s best judgment, after considering past, current, and expected events and economic conditions. Actual results could differ from those estimates. Revenue Recognition Rental Revenue Rental revenue includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease which includes the effects of rent steps and rent abatements under the leases. In general, we commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. We account for all of our leases as operating leases. Deferred rent receivables, including free rental periods and leasing arrangements allowing for increased base rent payments, are accounted for in a manner that provides an even amount of fixed lease revenues over the respective non-cancellable lease terms. Differences between rental income recognized and amounts due under the respective lease agreements are recognized as an increase or decrease to deferred rent receivables. In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in an index such as the Consumer Price Index over the index value in effect during a base year, or contain fixed percentage increases over the base rent to cover escalations. We will recognize rental revenue of acquired in-place above- and below-market leases at their fair values over the terms of the respective leases, including, for below-market leases, fixed option renewal periods, if any. Lease termination fees are recognized when the fees are determinable, tenant vacancy has occurred, collectability is reasonably assured, we have no continuing obligation to provide services to such former tenants and the payment is not subject to any conditions that must be met or waived. Observatory Revenue Revenues from the sale of Observatory tickets are recognized upon admission or ticket expirations. Deferred revenue related to unused and unexpired tickets as of December 31, 2018 and 2017 was $4.1 million and $4.1 million, respectively, and is included in deferred revenue and other liabilities on the consolidated balance sheets. Gains on Sale of Real Estate We record a gain on sale of real estate when title is conveyed to the buyer and we have no substantial economic involvement with the property. If the sales criteria for the full accrual method are not met, we defer some or all of the gain recognition and account for the continued operations of the property by applying the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria are met. Third-Party Management and Other Fees We earn revenue arising from contractual agreements with related party entities for asset and property management services. This revenue is recognized as the related services are performed under the respective agreements in place. Other Revenues and Fees Other revenues and fees includes parking income, percentage rent, legal, tax and insurance settlements, demand response energy use earnings and sales from our restaurant at the Empire State Building. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred. The expense for the years ended December 31, 2018, 2017, and 2016 was $8.9 million, $7.6 million and $9.4 million, respectively, and is included within operating expenses in our consolidated statements of income. Real Estate Properties and Related Intangible Assets Land and buildings and improvements are recorded at cost less accumulated depreciation and amortization. The recorded cost includes cost of acquisitions, development and construction and tenant allowances and improvements. Expenditures for ordinary repairs and maintenance are charged to property operating expense as incurred. Significant replacements and betterments which improve or extend the life of the asset are capitalized. Tenant improvements which improve or extend the life of the asset are capitalized. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any tenant improvements are written off if they are replaced or have no future value. For developed properties, direct and indirect costs that clearly relate to projects under development are capitalized. Costs include construction costs, professional services such as architectural and legal costs, capitalized interest and direct payroll costs. We begin capitalization when the project is probable. The assets relating to the project are stated at cost and are not depreciated. Once construction is completed and the assets are placed in service, the assets are reclassified to the appropriate asset class and depreciated in accordance with the useful lives as indicated below. Capitalization of interest ceases when the asset is ready for its intended use, which is generally near the date that a certificate of occupancy is obtained. Total capitalized interest for the years ended December 31, 2018 and 2017 was $1.6 million and $0.5 million, respectively. There was no capitalized interest for the year ended December 31, 2016. Depreciation and amortization are computed using the straight-line method for financial reporting purposes. Buildings and improvements are depreciated over the shorter of 39 years, the useful life, or the remaining term of any leasehold interest. Tenant improvement costs, which are included in building and improvements in the consolidated balance sheets, are depreciated over the shorter of (i) the related remaining lease term or (ii) the life of the improvement. Corporate equipment, which is included in “Other assets,” is depreciated over three to seven years. Acquisitions of properties are accounted for utilizing the acquisition method and accordingly the purchase cost is allocated to tangible and intangible assets and liabilities based on their fair values. The fair value of tangible assets acquired is determined by valuing the property as if it were vacant, applying methods similar to those used by independent appraisers of income-producing property. The resulting value is then allocated to land, buildings and improvements, and tenant improvements based on our determination of the fair value of these assets. The assumptions used in the allocation of fair values to assets acquired are based on our best estimates at the time of evaluation. Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the tenant based on the existing lease and (b) our estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts are amortized as a decrease to rental revenue over the remaining terms of the respective leases. Capitalized below-market lease amounts are amortized as an increase to rental revenue over the remaining terms of the respective leases. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The aggregate value of other acquired intangible assets consists of acquired ground leases and acquired in-place leases and tenant relationships. The fair value allocated to acquired in-place leases consists of a variety of components including, but not necessarily limited to: (a) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute a lease, including leasing commissions and legal fees, if any); (b) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period (i.e. real estate taxes, insurance and other operating expenses); (c) the value associated with lost rental revenue from existing leases during the assumed lease-up period; and (d) the value associated with any other inducements to secure a tenant lease. We assess the potential for impairment of our long-lived assets, including real estate properties, annually or whenever events occur or a change in circumstances indicate that the recorded value might not be fully recoverable. We determine whether impairment in value has occurred by comparing the estimated future undiscounted cash flows expected from the use and eventual disposition of the asset to its carrying value. If the undiscounted cash flows do not exceed the carrying value, the real estate is adjusted to fair value and an impairment loss is recognized. Assets held for sale are recorded at the lower of cost or fair value less costs to sell. We do not believe that the value of any of our properties and intangible assets were impaired during the years ended December 31, 2018, 2017 and 2016. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, government money markets, demand deposits with financial institutions and short-term liquid investments with original maturities of three months or less when purchased. Cash and cash equivalents held at major commercial banks may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash. Restricted Cash Restricted cash consists of amounts held for tenants in accordance with lease agreements such as security deposits and amounts held by lenders and/or escrow agents to provide for future real estate tax expenditures and insurance expenditures, tenant vacancy related costs and debt service obligations. Short-term Investments Short-term investments include time deposits with original maturities of greater than three months and remaining maturities of less than one year. Tenant and Other Receivables Tenant and other receivables, other than deferred rent receivable, are generally expected to be collected within one year. Allowance for Doubtful Accounts We maintain an allowance against tenant and other receivables and deferred rents receivables for future potential tenant credit losses. The credit assessment is based on the estimated accrued rental revenue that is recoverable over the term of the respective lease. The computation of this allowance is based on the tenants’ payment history and current credit status. If our estimate of collectability differs from the cash received, then the timing and amount of our reported revenue could be impacted. Bad debt expense is included in operating expenses on our consolidated statements of income and includes the impact of changes in the allowance for doubtful accounts on our consolidated balance sheets. Deferred Leasing Costs Deferred leasing costs consist of fees and direct costs incurred to initiate and renew leases, are amortized on a straight-line basis over the related lease term and the expense is included in depreciation and amortization in our consolidated statements of income. Upon the early termination of a lease, unamortized deferred leasing costs are charged to expense. Deferred Financing Costs Fees and costs incurred to obtain long-term financing have been deferred and are amortized as a component of interest expense in our consolidated statements of income over the life of the respective long-term financing on the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking debt, which do not close, are expensed in the period in which it is determined that the financing will not close. Equity Method Investments We account for investments under the equity method of accounting where we do not have control but have the ability to exercise significant influence. Under this method, investments are recorded at cost, and the investment accounts are adjusted for our share of the entities’ income or loss and for distributions and contributions. Equity income (loss) is allocated based on the portion of the ownership interest that is controlled by us. The agreements may designate different percentage allocations among investors for profits and losses; however, our recognition of the entity’s income or loss generally follows the entity’s distribution priorities, which may change upon the achievement of certain investment return thresholds. To the extent that we contributed assets to an entity, our investment in the entity is recorded at cost basis in the assets that were contributed to the entity. Upon contributing assets to an entity, we make a judgment as to whether the economic substance of the transaction is a sale. If so, gain or loss is recognized on the portion of the asset to which the other partners in the entity obtain an interest. To the extent that the carrying amount of these investments on our combined balance sheets is different than the basis reflected at the entity level, the basis difference would be amortized over the life of the related asset and included in our share of equity in net income of the entity. On a periodic basis, we assess whether there are any indicators that the carrying value of our investments in entities may be impaired on an other than temporary basis. An investment is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment on an other than temporary basis. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the fair value of the investment. As of December 31, 2018 and 2017, we had no equity method investments. Goodwill Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. Non-amortizing intangible assets, such as trade names and trademarks, are subject to an annual impairment test based on fair value and amortizing intangible assets are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Fair Value Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Financial Accounting Standards Board ("FASB") guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The methodologies used for valuing financial instruments have been categorized into three broad levels as follows: Level 1 - Quoted prices in active markets for identical instruments. Level 2 - Valuations based principally on other observable market parameters, including:
Level 3 - Valuations based significantly on unobservable inputs, including:
These levels form a hierarchy. We follow this hierarchy for our financial instruments measured or disclosed at fair value on a recurring and nonrecurring basis and other required fair value disclosures. The classifications are based on the lowest level of input that is significant to the fair value measurement. We use the following methods and assumptions in estimating fair value disclosures for financial instruments. Cash and cash equivalents, restricted cash, short term investments, tenant and other receivables, prepaid expenses and other assets, deferred revenue, tenant security deposits, accounts payable and accrued expenses carrying values approximate their fair values due to the short term maturity of these instruments. The fair value of our senior unsecured notes - exchangeable was derived from quoted prices in active markets and is classified as Level 2 since trading volumes are low. The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy. The fair value of our mortgage notes payable, unsecured revolving credit and term loan facility, and senior unsecured notes - Series A, B, C, D, E and F which are determined using Level 3 inputs, are estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made to us. Derivative Instruments We are exposed to the effect of interest rate changes and manage these risks by following policies and procedures including the use of derivatives. To manage exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices. We also hedge exposure to the variability in future cash flows for forecast transactions over a maximum period of 11 months (excluding forecast transactions related to the payment of variable interest on existing financial instruments). We record all derivatives on the balance sheet at fair value. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. We measure the credit risk of our derivative instruments that are subject to master netting agreements on a net basis by counterparty portfolio. For derivatives that qualify as cash flow hedges, we report the gain or loss on the derivative designated as a hedge as part of other comprehensive income (loss) and subsequently reclassify the gain or loss into income in the period that the hedged transaction affects income. Income Taxes We are generally not subject to federal and state income taxes as our taxable income or loss is reportable by our partners. Accordingly, no provision has been made for federal and state income taxes. ESRT has elected, together with ESRT Observatory TRS, L.L.C., our subsidiary which holds our observatory operations, to treat ESRT Observatory TRS, L.L.C. as a TRS. ESRT has elected, together with ESRT Holdings TRS, L.L.C., our subsidiary that holds our third party management, restaurant, cafeteria, health clubs and certain cleaning operations, to treat ESRT Holdings TRS, L.L.C. as a TRS. TRSs may participate in non-real estate activities and/or perform non-customary services for tenants and their operations are generally subject to regular corporate income taxes. Our TRSs account for their income taxes in accordance with GAAP, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. The calculation of the TRSs' tax provisions may require interpreting tax laws and regulations and could result in the use of judgments or estimates which could cause its recorded tax liability to differ from the actual amount due. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The TRSs periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, or federal statutory tax audits or estimates and judgments used. We apply provisions for measuring and recognizing tax benefits associated with uncertain income tax positions. Penalties and interest, if incurred, would be recorded as a component of income tax expense. As of December 31, 2018 and 2017, we do not have a liability for uncertain tax positions. As of December 31, 2018, the tax years ended December 31, 2015 through December 31, 2018 remain open for an audit by the Internal Revenue Service, state or local authorities. Share-Based Compensation Share-based compensation is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the vesting period. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of ESRT stock, expected dividend yield, expected term, and assumptions of whether these awards will achieve parity with other operating partnership units or achieve performance thresholds. We believe that the assumptions and estimates utilized are appropriate based on the information available to management at the time of grant. Per Unit Data Basic and diluted earnings per unit are computed based upon the weighted average number of shares outstanding during the respective period. Segment Reporting We have identified two reportable segments: (1) Real Estate and (2) Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rent as if the sales or rent were to third parties, that is, at current market prices. Reclassification Certain prior year balances have been reclassified to conform to our current year presentation. The 2017 and 2016 balance of other revenues and fees has been reclassified to separately present lease termination fees and interest income and conform to our current year presentation. Recently Issued or Adopted Accounting Standards During August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which contain amendments that align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). Accordingly, for entities in a hosting arrangement that is a service contract, costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. The amendments in ASU No. 2018-15 also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in any interim period. The amendments in ASU No. 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which contain amendments that modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. ASU No. 2017-04 should be applied on a prospective basis and the amendments adopted for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which contain amendments to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in ASU No. 2017-01 provide a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. Additionally, these amendments narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606, Revenue from Contracts with Customers. ASU No. 2017-01 will be effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective date. No disclosures are required at transition. We believe that future acquisitions of real estate properties will be considered asset acquisitions. During November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which contain amendments that require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. We adopted this standard on January 1, 2018 using a retrospective transition method. The adoption did not have a material impact on our consolidated financial statements. During August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted including adoption in an interim period. We adopted this standard on January 1, 2018 using a retrospective transition method. The adoption did not have a material impact on our consolidated financial statements. During June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which contains amendments that replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses which contain amendments relating to the transition and effective date requirements for nonpublic business entities and also clarified that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. ASU No. 2016-13 and ASU No. 2018-19 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier adoption as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, is permitted. The amendments must be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified retrospective approach). We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. ASU No. 2016-02 leaves the accounting for leases by lessors largely unchanged from previous GAAP. ASU No. 2016-02 will be effective for fiscal years beginning after December 15, 2018 and subsequent interim periods. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. This ASU is expected to result in the recognition of a right-to-use asset and related liability to account for our future obligations under our ground lease agreements for which we are the lessee. As of December 31, 2018, the remaining contractual payments under our ground lease agreements aggregated $75.9 million. In addition, under ASU 2016-02, lessors may only capitalize incremental direct leasing costs. As a result, we expect that we will no longer capitalize our non-contingent leasing costs and instead will expense these costs as incurred. These costs totaled $4.6 million for the year ended December 31, 2018. During July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which contains amendments which are intended to clarify or to correct unintended application of ASU No. 2016-02. Also during July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to Topic 842, Leases, which provides another transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments in ASU No. 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component provided that (1) the timing and pattern of transfer are the same for the nonlease components and associated lease component and (2) the lease component, if accounted separately, would be classified as an operating lease. During December 2018, the FASB issued ASU No. 2018-20, Narrow-Scope Improvements for Lessors that contain amendments to further help lessors apply ASU No. 2016-02, including amendments that require lessors to (1) exclude lessor costs paid directly by lessees to third parties on the lessor's behalf from variable payments and therefore variable lease revenue and (2) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense. For entities that have not yet adopted ASU No. 2016-02, the effective dates and transition requirements for ASU No. 2018-10, ASU No. 2018-11 and ASU No. 2018-20 will be the same as the effective date and transition requirements in ASU No. 2016-02. We adopted this standard on January 1, 2019 and elected the available practical expedients. ASU 2016-02 and its related amendments resulted in the recognition of right-of-use assets and lease liabilities for our operating leases on our balance sheet of approximately $30.0 million, but did not have an impact on our consolidated statements of income. During May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces all current GAAP guidance related to revenue recognition and eliminates all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted this standard on January 1, 2018 and it did not have a material impact on our consolidated financial statements. |
Deferred Costs, Acquired Lease Intangibles and Goodwill |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Acquired Lease Intangibles and Goodwill | Deferred Costs, Acquired Lease Intangibles and Goodwill Deferred costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
At December 31, 2018 and 2017, $6.3 million and $8.3 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the consolidated balance sheets. Amortization expense related to deferred leasing and acquired deferred leasing costs was $26.3 million, $24.1 million, and $24.2 million, for the years ended December 31, 2018, 2017, and 2016, respectively. Amortization expense related to acquired lease intangibles was $12.1 million, $17.1 million and $24.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. Amortizing acquired intangible assets and liabilities consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
Rental revenue related to the amortization of below market leases, net of above market leases was $6.1 million, $5.7 million and $8.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. The remaining weighted-average amortization period as of December 31, 2018 is 24.5 years, 4.5 years, 3.8 years and 4.0 years for below-market ground leases, in-place leases and deferred leasing costs, above-market leases and below-market leases, respectively. We expect to recognize amortization expense and rental revenue from the acquired intangible assets and liabilities as follows (amounts in thousands):
As of December 31, 2018, we had goodwill of $491.5 million. In 2013, we acquired the interests in Empire State Building Company, L.L.C. and 501 Seventh Avenue Associates, L.L.C. for an amount in excess of their net tangible and identified intangible assets and liabilities and as a result we recorded goodwill related to the transaction. Goodwill was allocated $227.5 million to the observatory operations of the Empire State Building, $250.8 million to Empire State Building, and $13.2 million to 501 Seventh Avenue. We performed an annual review of goodwill for impairment and concluded there was no impairment of goodwill. Our methodology to review goodwill impairment, which includes a significant amount of judgment and estimates, provides a reasonable basis to determine whether impairment has occurred. However, many of the factors employed in determining whether or not goodwill is impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods. |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consisted of the following as of December 31, 2018 and 2017 (amounts in thousands):
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Mortgage Debt During January 2018, we refinanced and increased our mortgage debt on 1333 Broadway from $66.6 million to $160.0 million. A portion of this increase was applied to release the $75.8 million mortgage lien on 1400 Broadway. During March 2018, we repaid our mortgage indebtedness on 111 West 33rd Street and 1350 Broadway. Principal Payments Aggregate required principal payments at December 31, 2018 are as follows (amounts in thousands):
Deferred Financing Costs Deferred financing costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
At December 31, 2018 and 2017, $6.3 million and $8.3 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility were included in deferred costs, net on the consolidated balance sheet. Amortization expense related to deferred financing costs was $4.1 million, $4.7 million, and $5.0 million, for the years ended December 31, 2018, 2017 and 2016, respectively, and was included in interest expense. Unsecured Revolving Credit and Term Loan Facility During August 2017, we entered into an amended and restated senior unsecured revolving credit and term loan facility (the “Facility”) with Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo, National Association and Capital One, National Association, as co-syndication agents, and the lenders party thereto. The Facility amended and restated the credit facility dated as of January 23, 2015, with Bank of America, N.A., Merrill Lynch, Goldman Sachs and the other lenders party thereto. In connection with the modification of the credit facility and term loan, we incurred a loss on early extinguishment of debt of $2.2 million which is reflected in our consolidated statement of income for the year ended December 31, 2017. This transaction extended the unsecured revolving credit and term loan facility maturity, lowered borrowing costs and added flexibility to the financial covenants. The Facility is in the original principal amount of up to $1.365 billion which consists of a $1.1 billion revolving credit facility and a $265.0 million term loan facility. The new revolving credit facility replaced a credit facility which was due to mature in January 2019 and was undrawn when amended. The term loan facility was borrowed in full at closing and used to repay a $265.0 million term loan that had been due in 2022. We may request the Facility be increased through one or more increases in the revolving credit facility or one or more increases in the term loan facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $1.75 billion. The initial maturity of the unsecured revolving credit facility is August 2021. We have the option to extend the initial term for up to two additional 6-month periods, subject to certain conditions, including the payment of an extension fee equal to 0.0625% and 0.075% of the then outstanding commitments under the unsecured revolving credit facility on the first and the second extensions, respectively. The term loan facility matures on August 2022. We may prepay the loans under the Facility at any time, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar Rate borrowings. The Facility includes the following financial covenants: (i) maximum leverage ratio of total indebtedness to total asset value (as defined in the agreement) of the loan parties and their consolidated subsidiaries will not exceed 60%, (ii) consolidated secured indebtedness will not exceed 40% of total asset value, (iii) tangible net worth will not be less than $1.2 billion plus 75% of net equity proceeds received by us (other than proceeds received within ninety (90) days after the redemption, retirement or repurchase of ownership or equity interests in us up to the amount paid by us in connection with such redemption, retirement or repurchase, where, the net effect is that we shall not have increased our net worth as a result of any such proceeds), (iv) adjusted EBITDA (as defined in the Facility) to consolidated fixed charges will not be less than 1.50x, (v) the aggregate net operating income with respect to all unencumbered eligible properties to the portion of interest expense attributable to unsecured indebtedness will not be less than 1.75x, and (vi) the ratio of total unsecured indebtedness to unencumbered asset value will not exceed 60%. The Facility contains customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates, and requires certain customary financial reports. The Facility contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control (defined in the agreement for the Facility). As of December 31, 2018, we were in compliance with the covenants under the Facility. Senior Unsecured Notes Exchangeable During August 2014, we issued $250.0 million principal amount of 2.625% Exchangeable Senior Notes (“2.625% Exchangeable Senior Notes”) due August 15, 2019. Interest on the 2.625% Exchangeable Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year. The 2.625% Exchangeable Senior Notes are senior unsecured obligations and rank equally in right of payment with all of our other senior unsecured indebtedness and effectively subordinated in right of payment to all of our secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and structurally subordinated to all liabilities and preferred equity of our subsidiaries. The 2.625% Exchangeable Senior Notes will mature on August 15, 2019, unless earlier exchanged, redeemed or repurchased. Holders may exchange their 2.625% Exchangeable Senior Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2019 only under the following circumstances: (i) during any calendar quarter beginning after September 30, 2014 (and only during such quarter) if the closing sale price of our Class A common stock is more than 130% of the then current exchange price for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the previous calendar quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per 1,000 principal amount of the 2.625% Exchangeable Senior Notes for each trading day during such five consecutive trading-day period in which the trading price per 1,000 principal amount of the 2.625% Exchangeable Senior Notes for each trading day during such five trading-day period was less than 98% of the closing sale price of our Class A common stock, for each trading day during such five trading-day period multiplied by the then current exchange rate; (iii) if we call any or all of the 2.625% Exchangeable Senior Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate transactions (significant consolidation, sale, merger, share exchange, fundamental change, etc.). On or after May 15, 2019, and on or prior to the second scheduled trading day immediately preceding the maturity date, holders may exchange their notes without regard to the foregoing conditions. The 2.625% Exchangeable Senior Notes will be exchangeable into cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at our election. We have asserted it is our intent and ability to settle the principal amount of the 2.625% Exchangeable Senior Notes in cash. The initial exchange rate of 2.625% Exchangeable Senior Notes is 51.4059 shares per $1,000 principal amount of notes (equivalent to an initial exchange price of approximately $19.45 per share of Class A common stock), subject to adjustment, as described in the related indenture governing the 2.625% Exchangeable Senior Notes. As of December 31, 2018, the exchange rate of the 2.625% Exchangeable Senior Notes was 52.0116 shares per $1,000 principal amount of notes (equivalent to an initial exchange price of approximately $19.23 per share of Class A common stock), subject to adjustment, as described in the related indenture governing the 2.625% Exchangeable Senior Notes. Following certain corporate transactions which constitute a make-whole fundamental change (defined in the indenture), we will increase the exchange rate for holders who elect to exchange their 2.625% Exchangeable Senior Notes in connection with such make whole fundamental change in certain circumstances. Following certain corporate transactions which constitute a fundamental change, holders may require us to repurchase the 2.625% Exchangeable Senior Notes for cash at a price equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. We have separately accounted for the liability and equity components of the 2.625% Exchangeable Senior Notes by bifurcating gross proceeds between the indebtedness, or liability component, and the embedded conversion option, or the equity component. The bifurcation was done by estimating an effective interest rate as of the date of the issuance for similar notes which do not contain an embedded conversion option. This effective interest rate was estimated to be 3.8% and was used to compute the fair value at the time of issuance for the indebtedness of $236.6 million. The gross proceeds from the issuance of the 2.625% Exchangeable Senior Notes less the initial amount allocated to the indebtedness resulted in a $13.4 million allocation to the embedded conversion option which is included in Equity, net of financing costs, in the consolidated balance sheets as of December 31, 2018 and 2017. The resulting debt discount is being amortized over the five year period in which the 2.625% Exchangeable Senior Notes are expected to be outstanding (that is, through maturity date) as additional non-cash interest expense. As of December 31, 2018 and 2017, the unamortized discount was $1.6 million and $4.3 million, respectively. Underwriting discounts and commissions and issuance costs totaled $3.1 million and were allocated to the indebtedness and the embedded conversion option on a pro-rata basis and accounted for as debt issuance costs and equity issuance costs, respectively. In this connection, $2.9 million attributable to the indebtedness was recorded as part of deferred costs, to be subsequently amortized using the effective interest method as interest expense over the expected term of the 2.625% Exchangeable Senior Notes, and $0.2 million attributable to the embedded conversion option was recorded as a reduction to Equity in the consolidated balance sheets as of December 31, 2018 and 2017. For the years ended December 31, 2018, 2017 and 2016, total interest expense related to the 2.625% Exchangeable Senior Notes was $9.9 million, $9.9 million and $9.9 million, respectively, consisting of (i) contractual interest expense of $6.6 million, $6.6 million and $6.6 million, respectively, (ii) additional non-cash interest expense of $2.7 million, $2.7 million and $2.7 million, respectively, related to the accretion of the debt discount, and (iii) amortization of deferred financing costs of $0.6 million, $0.6 million and $0.6 million, respectively. Senior Unsecured Notes During December 2017, we entered into an agreement to issue and sell an aggregate principal amount of $450.0 million of senior unsecured notes consisting of $115.0 million of 4.08% Series D Senior Notes due 2028, $160.0 million of 4.26% Series E Senior Notes due 2030, and $175.0 million of 4.44% Series F Senior Notes due 2033. We issued and sold the Series D Senior Notes in December 2017 and the Series E and F Senior Notes in March 2018. In connection with the March 2018 issuance of the notes, we repaid our mortgage indebtedness on 111 West 33rd Street and 1350 Broadway. The terms of the Series A, B, C, D, E, and F senior notes agreements include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum amount of tangible net worth, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. As of December 31, 2018, we were in compliance with the covenants under the outstanding Senior Unsecured Notes. |
Accounts Payable and Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following as of December 31, 2018 and 2017 (amounts in thousands):
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Financial Instruments and Fair Values |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Fair Values | Financial Instruments and Fair Values Derivative Financial Instruments We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations. We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of December 31, 2018, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $5.3 million. If we had breached any of these provisions at December 31, 2018, we could have been required to settle our obligations under the agreements at their termination value of $5.3 million. As of December 31, 2018 and 2017, we had interest rate LIBOR swaps with an aggregate notional value of $515.0 million and $265.0 million, respectively, which were designated as cash flow hedges of interest rate risk. We are hedging variability in future cash flows associated with our existing variable-rate term loan facility and with a forecasted refinancing of our exchangeable senior notes. The notional value does not represent exposure to credit, interest rate or market risks. As of December 31, 2018, the fair value of these derivative instruments amounted to $2.5 million which is included in prepaid expenses and other assets and ($5.2 million) which is included in accounts payable and accrued expenses on the consolidated balance sheet. As of December 31, 2017, the fair value of the derivative instrument amounted to ($0.4 million) which is included in accounts payable and accrued expenses on the consolidated balance sheet. As of December 31, 2018 and 2017, a net unrealized loss of $0.9 million and $10.5 million, respectively, is reflected in the consolidated statements of comprehensive income (loss) relating to both active and terminated cash flow hedges of interest rate risk. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $0.9 million net loss of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months. For the year ended December 31, 2017, we recognized a loss of $0.3 million from derivative financial instruments, incurred in connection with the partial termination and re-designation of related cash flow hedges. The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of December 31, 2018 and 2017 (dollar amounts in thousands):
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of income for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
Fair Valuation The estimated fair values at December 31, 2018 and 2017 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following tables summarize the carrying and estimated fair values of our financial instruments as of December 31, 2018 and 2017 (amounts in thousands):
Disclosure about the fair value of financial instruments is based on pertinent information available to us as of December 31, 2018 and 2017. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. |
Rental Income |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental Income | Rental Income We lease various spaces to tenants over various terms. Certain leases have renewal options for additional terms. The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation. Operating expense reimbursements are reflected in our consolidated statements of income as tenant expense reimbursement. As of December 31, 2018, we were entitled to the following future contractual minimum lease payments on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):
The above future minimum lease payments exclude tenant recoveries, amortization of deferred rent receivables and the net accretion of above-below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings Litigation Except as described below, as of December 31, 2018, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants. We believe that the costs and related liabilities, if any, which may result from such actions will not materially affect our condensed consolidated financial position, operating results or liquidity. As previously disclosed, in October 2014, 12 former investors in Empire State Building Associates L.L.C. (“ESBA”), which prior to the initial public offering of our company (the "Offering"), owned the fee title to the Empire State Building, filed an arbitration with the American Arbitration Association against Peter L. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our subsidiary ESRT MH Holdings LLC, the former supervisor of ESBA, as respondents. The statement of claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleges breach of fiduciary duty and related claims in connection with the Offering and formation transactions and seeks monetary damages and declaratory relief. These investors had opted out of a prior class action bringing similar claims that was settled with court approval. The respondents filed an answer and counterclaims. In March 2015, the federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings for a select number of sessions started in May 2016 and concluded in August 2018. Post-hearing briefing is currently scheduled to be completed by June 25, 2019. The respondents believe the allegations in the arbitration are entirely without merit, and they intend to continue to defend them vigorously. Pursuant to indemnification agreements which were made with our directors, executive officers and chairman emeritus as part of our formation transactions, Anthony E. Malkin, Peter L. Malkin and Thomas N. Keltner, Jr. have defense and indemnity rights from us with respect to this arbitration. Ground Lease Commitments We make payments under ground leases related to three of our properties. Minimum rent is expensed on a straight-line basis over the non-cancellable term of the leases. The ground leases are due to expire between the years 2050 and 2077. Future minimum lease payments to be paid over the terms of the leases are as follows (amounts in thousands):
Unfunded Capital Expenditures At December 31, 2018, we estimate that we will incur approximately $88.4 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements. We expect to fund these capital expenditures with operating cash flow, additional property level mortgage financings, our unsecured credit facility, cash on hand and other borrowings. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion. Concentration of Credit Risk Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, tenant and other receivables and deferred rent receivables. At December 31, 2018, we held on deposit at various major financial institutions cash and cash equivalents, restricted cash balances and short-term investments in excess of amounts insured by the Federal Deposit Insurance Corporation. Real Estate Investments Our properties are located in Manhattan, New York; Fairfield County, Connecticut; and Westchester County, New York. The latter locations are suburbs of the city of New York. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory and social factors affecting the markets in which the tenants operate. We perform ongoing credit evaluations of our tenants for potential credit losses. Tenant Credit Evaluations Our investments in real estate properties are subject to risks incidental to the ownership and operation of commercial real estate. These risks include, among others, the risks normally associated with changes in general economic conditions, trends in the real estate industry, creditworthiness of tenants, competition of tenants and customers, changes in tax laws, interest rate levels, the availability and cost of financing, and potential liability under environmental and other laws. We may require tenants to provide some form of credit support such as corporate guarantees and/or other financial guarantees and we perform ongoing credit evaluations of tenants. Although the tenants operate in a variety of industries, to the extent we have a significant concentration of rental revenue from any single tenant, the inability of that tenant to make its lease payments could have an adverse effect on our company. Major Customers and Other Concentrations For the year ended December 31, 2018, other than five tenants who accounted for 6.0%, 3.1%, 2.9%, 2.0% and 2.0% of rental revenues, no other tenant in our portfolio accounted for more than 2.0% of rental revenues. For the year ended December 31, 2017, other than five tenants who accounted for 6.3%, 3.2%, 2.9%, 2.1% and 2.0% of rental revenues, no other tenant in our portfolio accounted for more than 2.0% of rental revenues. For the year ended December 31, 2016, other than five tenants who accounted for 6.4%, 3.3%,2.9%, 2.3% and 2.0% of rental revenues, no other tenant in our portfolio accounted for more than 2.0% of rental revenues. For the years ended December 31, 2018, 2017 and 2016, the six properties listed below accounted for the indicated percentage of total rental revenues. No other property accounted for more than 5.0% of total rental revenues.
Asset Retirement Obligations We are required to accrue costs that we are legally obligated to incur on retirement of our properties which result from acquisition, construction, development and/or normal operation of such properties. Retirement includes sale, abandonment or disposal of a property. Under that standard, a conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control and a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties. As of December 31, 2018, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates. As such, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation. However ongoing asbestos abatement, maintenance programs and other required documentation are carried out as required and related costs are expensed as incurred. Other Environmental Matters Certain of our properties have been inspected for soil contamination due to pollutants, which may have occurred prior to our ownership of these properties or subsequently in connection with its development and/or its use. Required remediation to such properties has been completed and, as of December 31, 2018, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents. All such maintenance costs are expensed as incurred. We expect that resolution of the environmental matters relating to the above will not have a material impact on our business, assets, consolidated and combined financial condition, results of operations or liquidity. However, we cannot be certain that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that such environmental liabilities arise. Insurance Coverage We carry insurance coverage on our properties of types and in amounts with deductibles that we believe are in line with coverage customarily obtained by owners of similar properties. Multiemployer Pension and Defined Contribution Plans We contribute to a number of multiemployer defined benefit pension plans under the terms of collective bargaining agreements that cover our union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following respects:
We participate in various unions. The union in which we have significant employees and costs is 32BJ. 32BJ We participate in the Building Service 32BJ, ("Union"), Pension Plan and Health Plan. The Pension Plan is a multi-employer, non-contributory defined benefit pension plan that was established under the terms of collective bargaining agreements between the Service Employees International Union, Local 32BJ, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. This Pension Plan is administered by a joint board of trustees consisting of union trustees and employer trustees and operates under employer identification number 13-1879376. The Pension Plan year runs from July 1 to June 30. Employers contribute to the Pension Plan at a fixed rate on behalf of each covered employee. Separate actuarial information regarding such pension plans is not made available to the contributing employers by the union administrators or trustees, since the plans do not maintain separate records for each reporting unit. However, on September 28, 2016, September 28, 2017 and September 28, 2018, the actuary certified that for the plan years beginning July 1, 2016, July 1, 2017 and July 1, 2018, respectively, the Pension Plan was in critical status under the Pension Protection Act of 2006. The Pension Plan trustees adopted a rehabilitation plan consistent with this requirement. For each of the years ended June 30, 2018, 2017 and 2016, the Pension Plan received contributions from employers totaling $272.3 million, $257.8 million and $249.5 million, respectively. The Health Plan was established under the terms of collective bargaining agreements between the Union, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. The Health Plan provides health and other benefits to eligible participants employed in the building service industry who are covered under collective bargaining agreements, or other written agreements, with the Union. The Health Plan is administered by a Board of Trustees with equal representation by the employers and the Union and operates under employer identification number 13-2928869. The Health Plan receives contributions in accordance with collective bargaining agreements or participation agreements. Generally, these agreements provide that the employers contribute to the Health Plan at a fixed rate on behalf of each covered employee. For the years ended June 30, 2018, 2017 and 2016, the Health Plan received contributions from employers totaling $1.4 billion, $1.3 billion and $1.2 billion, respectively. Term of Collective Bargaining Agreement The most recent collective bargaining agreement for Local 32BJ commenced from January 1, 2016 and runs through December 31, 2019. Contributions Contributions we made to the multi-employer plans for the years ended December 31, 2018, 2017 and 2016 are included in the table below (amounts in thousands):
** Health plans include $1.6 million, $1.6 million and $1.6 million for the years ended 2018, 2017 and 2016, respectively, to multiemployer plans not discussed above. *** Other consists of union costs which were not itemized between pension and health plans. Other includes $0.2 million, $0.2 million and $0.2 million for the years ended 2018, 2017 and 2016, respectively, in connection with other multiemployer plans not discussed above. Benefit plan contributions are included in operating expenses in our consolidated statements of income. |
Capital |
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Stockholders' Equity Note Disclosure, Disclosure of Compensation Related Costs, Share-based Payments and Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital | Capital During 2016, Q REIT Holding LLC, a Qatar Financial Centre limited liability company and a wholly owned subsidiary of the Qatar Investment Authority, a governmental authority of the State of Qatar ("QREIT", and together with any eligible transferee, "QIA"), purchased 29,610,854 newly issued ESRT Class A common shares at $21.00 per share, resulting in gross proceeds of $621.8 million. The proceeds were contributed to us and we issued 29,610,854 Series PR units to ESRT. At August 23, 2016, the 29,610,854 units were equivalent to a 9.9% economic interest in us. QIA has a top-up right to maintain their ownership stake at 9.9% over time. During the second quarter of 2018, pursuant to an August 2016 stockholders agreement between ESRT and QIA, ESRT sold 284,015 shares of ESRT Class A common stock (the “Top Up Shares”) to QIA pursuant to its top-up right to acquire its 9.9% pro rata share of new equity securities issued during the first quarter of 2018 (in this case, equity compensation). The aggregate purchase price which QIA paid to ESRT for the Top Up Shares was $4.7 million, or $16.72 per share of ESRT Class A common stock, in accordance with a formula in the stockholders agreement equal to the average closing price per share during the five (5) consecutive trading days immediately preceding the issuance of the applicable new equity securities. As of December 31, 2018, there were approximately 303.3 million operating partnership units outstanding, of which approximately 174.9 million, or 57.7%, were owned by ESRT and approximately 128.4 million, or 42.3%, were owned by other partners, including ESRT directors, members of senior management and other employees. Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Empire State Realty Trust Inc. Empire State Realty OP, L.P. 2013 Equity Incentive Plan ("2013 Plan"), reducing the availability for other equity awards on a one-for-one basis. The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified events, and any increase in valuation from the time of grant until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into operating partnership units on a one-for-one basis. LTIP units subject to time based vesting, whether vested or not, receive the same per unit distributions as OP Units, which equal per share dividends (both regular and special) on our common stock. Market based LTIP units receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter. Private Perpetual Preferred Units As of December 31, 2018, there were 1,560,360 Private Perpetual Preferred Units ("Preferred Units") which have a liquidation preference of $16.62 per unit and which are entitled to receive cumulative preferential annual cash distributions of $0.60 per unit payable in arrears on a quarterly basis. The Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. Distributions The following table summarizes the distributions paid on our operating partnership units for the years ended December 31, 2018, 2017 and 2016:
Total distributions paid to OP unitholders and Preferred unitholders during 2018, 2017 and 2016 totaled $126.5 million, $127.0 million and $115.0 million, respectively. Incentive and Share-Based Compensation The 2013 Plan provides for grants to our directors, employees and consultants of our company and ESRT consisting of stock options, restricted stock, dividend equivalents, stock payments, performance shares, LTIP units, stock appreciation rights and other incentive awards. An aggregate of approximately 12.2 million shares of ESRT common stock are authorized for issuance under awards granted pursuant to the 2013 Plan, and as of December 31, 2018, approximately 4.3 million shares of ESRT common stock remain available for future issuance. In May 2018, we made grants of LTIP units to our non-employee directors under the 2013 Plan. At such time, we granted a total of 65,000 LTIP units that are subject to time-based vesting with fair market values of $1.0 million. The awards vest ratably over three years from the date of the grant, subject generally to the director's continued service on our Board of Directors. In March 2018, we made grants of LTIP units to executive officers under the 2013 Plan. At such time, we granted to executive officers a total of 386,876 LTIP units that are subject to time-based vesting and 1,737,917 LTIP units that are subject to market-based vesting awards. In March 2018, we made grants of LTIP units and restricted stock to certain other employees under the 2013 Plan. At such time, we granted to certain other employees a total of 67,449 LTIP units and 39,608 shares of restricted stock that are subject to time-based vesting and 223,950 LTIP units that are subject to market-based vesting, with fair market values of $1.7 million for the time-based vesting awards and $1.1 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2018, subject generally to the grantee's continued employment. The first installment vests on January 1, 2019 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to performance-based vesting is based on the achievement of absolute and relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2018. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2021 and the second installment vesting on January 1, 2022, subject generally to the grantee's continued employment on those dates. In 2017, our board of directors determined to reinforce the alignment of our executive officers’ interests with that of stockholders by designing a new bonus election program, under which named executive officers could elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIP's at the face amount of such bonus or (ii) time-vesting LTIP's which would vest over three years, subject to continued employment, at 125% of such face amount. In February 2018, we made grants of LTIP units to executive officers under the 2013 Plan in connection with the 2017 bonus election program. We granted to executive officers a total of 238,609 LTIP units that are subject to time based vesting with a fair market value $4.0 million. Of these LTIP units, 25,158 LTIP units vested immediately on the grant date and 213,451 LTIP units vest ratably over three years from January 1, 2018, subject generally to the grantee's continued employment. The first installment vests on January 1, 2019 and the remainder will vest thereafter in two equal annual installments. In May 2017, we made grants of LTIP units to our non-employee directors under the 2013 Plan. At such time, we granted a total of 50,408 LTIP units that are subject to time-based vesting with fair market values of $1.0 million. The awards vest ratably over three years from the date of the grant, subject generally to the director's continued service on our Board of Directors. In March 2017, we made grants of LTIP units to executive officers under the 2013 Plan. At such time, we granted to executive officers a total of 313,275 LTIP units that are subject to time-based vesting and 865,742 LTIP units that are subject to market-based vesting, with fair market values of $6.1 million for the time-based vesting awards and $9.6 million for the market-based vesting awards. In March 2017, we made grants of LTIP units and restricted stock to certain other employees under the 2013 Plan. At such time, we granted to certain other employees a total of 47,993 LTIP units and 34,407 shares of restricted stock that are subject to time-based vesting and 95,156 LTIP units that are subject to market-based vesting, with fair market values of $1.6 million for the time-based vesting awards and $1.0 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2017, subject generally to the grantee's continued employment. The first installment vests on January 1, 2018 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to performance-based vesting is based on the achievement of absolute and relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2017. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2020 and the second installment vesting on January 1, 2021, subject generally to the grantee's continued employment on those dates. Share-based compensation is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the vesting period. For the market-based LTIP units and restricted stock awards, the fair value of the awards was estimated using a Monte Carlo Simulation model. Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process. Geometric Brownian motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using a six-year look-back period. The expected growth rate of the stock prices over the performance period is determined with consideration of the risk free rate as of the grant date. For LTIP unit awards that are time-based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. For restricted stock awards that are time-based, we estimate the stock compensation expense based on the fair value of the stock at the grant date. LTIP units and ESRT restricted stock issued during the year ended December 31, 2018, 2017 and 2016 were valued at $23.6 million, $19.4 million and $18.4 million, respectively. The weighted-average per unit or share fair value was $8.54, $13.77 and $9.60 for grants issued in 2018, 2017 and 2016, respectively. The per unit or share granted in 2018 was estimated on the respective dates of grant using the following assumptions: an expected life of 2.8 years, a dividend rate of 2.30%, a risk-free interest rate of 2.50%, and an expected price volatility of 20.0%. The per unit or share granted in 2017 was estimated on the respective dates of grant using the following assumptions: an expected life of 2.8 years, a dividend rate of 2.05%, a risk-free interest rate of 1.55% and an expected price volatility of 20.0%. The per unit or share granted in 2016 was estimated on the respective dates of grant using the following assumptions: an expected life of 2.8 years, a dividend rate of 2.10%, a risk-free interest rate of 0.84%, and an expected price volatility of 24.0%. No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding in 2018, 2017 and 2016. The following is a summary of ESRT restricted stock and LTIP unit activity for the year ended December 31, 2018:
The total fair value of LTIP units and restricted stock that vested during 2018, 2017 and 2016 was $7.7 million, $7.6 million and $5.1 million, respectively. The LTIP unit and ESRT restricted stock award agreements will immediately vest when a grantee attains the (i) age of 60 and (ii) the date on which grantee has first completed ten years of continuous service with our company or its affiliates. For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based awards, and accordingly, we recognized $1.8 million, $1.0 million and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Unrecognized compensation expense was $1.0 million at December 31, 2018, which will be recognized over a weighted average period of 2.1 years. For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $17.0 million, $13.1 million and $9.0 million in noncash compensation expense for the years ended December 31, 2018, 2017 and 2016, respectively. Unrecognized compensation expense was $27.4 million at December 31, 2018, which will be recognized over a weighted average period of 2.2 years. Earnings Per Unit Earnings per unit for the years ended December 31, 2018, 2017 and 2016 is computed as follows (amounts in thousands, except per share amounts):
There were 485,865, 834,267 and 800,746 antidilutive shares and LTIP units for the years ended December 31, 2018, 2017 and 2016, respectively. |
Related Party Transactions |
12 Months Ended |
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Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions QIA In connection with any new issuance by us of common equity securities, for so long as QIA maintains at least a 5.0% fully diluted economic interest in ESRT and remains in material compliance with the terms of the stockholders agreement, QIA will have the right (but not the obligation) to purchase its pro rata share of such new equity securities in the form of newly issued shares of ESRT Class A common stock. These “top up” rights are generally exercisable on a quarterly basis, or sooner if we or ESRT issues new equity securities in an issuance in excess of $1.0 million. Through August 2021, QIA will have the right of first offer to co-invest with ESRT as a joint venture partner in real estate investment opportunities initiated by ESRT where ESRT has elected, at its discretion, to seek a joint venture partner. The right of first offer period will be extended for a 30-month term if at least one joint venture transaction is consummated among ESRT and QIA during the initial five year term, and will be extended for a further 30-month term if at least one joint venture transaction is consummated during such initial 30-month extension term. Subject to certain minimum thresholds and conditions, ESRT will indemnify QIA for certain applicable U.S. federal and state taxes payable by QIA in connection with dividends paid by ESRT on the QIA shares that are attributable to capital gains from the sale or exchange of any U.S. real property interests. ESRT's obligation to indemnify QIA will terminate one year following the date on which the sum of the QIA shares then owned by QIA falls below 10% of ESRT outstanding common shares. Tax Protection Agreement In 2013, we and ESRT entered into a tax protection agreement with Anthony E. Malkin and Peter L. Malkin that is intended to protect to a limited extent the Malkin Group and an additional third party investor in Metro Center (who was one of the original landowners and was involved in the development of the property) against certain tax consequences arising from a transaction involving one of four properties, which we refer to in this section as the protected assets. First, this agreement provides that our operating partnership will not sell, exchange, transfer or otherwise dispose of such protected assets, or any interest in a protected asset, until (i) October 7, 2025, with respect to one protected asset, First Stamford Place, and (ii) the later of (x) October 7, 2021 and (y) the death of both Peter L. Malkin and Isabel W. Malkin, who are 85 and 82 years old, respectively, for the three other protected assets, Metro Center, 10 Bank Street and 1542 Third Avenue, unless: (1)Anthony E. Malkin consents to the sale, exchange, transfer or other disposition; or (2)we deliver to each protected party thereunder a cash payment intended to approximate the tax liability arising from the recognition of the pre-contribution built-in gain resulting from the sale, exchange, transfer or other disposition of such protected asset (with the pre-contribution “built-in gain” being not more than the taxable gain that would have been recognized by such protected party if the protected asset been sold for fair market value in a taxable transaction at the time of the consolidation) plus an additional amount so that, after the payment of all taxes on amounts received pursuant to the agreement (including any tax liability incurred as a result of receiving such payment), the protected party retains an amount equal to such protected party’s total tax liability incurred as a result of the recognition of the pre-contribution built-in gain pursuant to such sale, exchange, transfer or other disposition; or (3)the disposition does not result in a recognition of any built-in gain by the protected party. Second, with respect to the Malkin Group, including Anthony E. Malkin and Peter L. Malkin, and one additional third party investor in Metro Center (who was one of the original landowners and was involved in the development of the property), to protect against gain recognition resulting from a reduction in such continuing investor’s share of the operating partnership liabilities, the agreement provides that during the period from October 7, 2013 until such continuing investor owns less than the aggregate number of operating partnership units and shares of ESRT common stock equal to 50% of the aggregate number of such units and shares such investor received in the formation transactions, which we refer to in this section as the tax protection period, we will (i) refrain from prepaying any amounts outstanding under any indebtedness secured by the protected assets and (ii) use our commercially reasonable efforts to refinance such indebtedness at or prior to maturity at its current principal amount, or, if we are unable to refinance such indebtedness at its current principal amount, at the highest principal amount possible. The agreement also provides that, during the tax protection period, we will make available to such continuing investors the opportunity (i) to enter into a “bottom dollar” guarantee of their allocable share of $160.0 million of our aggregate indebtedness meeting certain requirements or (ii) in the event we have recourse debt outstanding and such a continuing investor agrees, in lieu of guaranteeing debt pursuant to clause (i) above, to enter into a deficit restoration obligation, in each case, in a manner intended to provide an allocation of our liabilities to the continuing investor. In the event that a continuing investor guarantees our debt, such continuing investor will be responsible, under certain circumstances, for the repayment of the guaranteed amount to the lender in the event that the lender would otherwise recognize a loss on the loan, such as, for example, if property securing the loan was foreclosed and the value was not sufficient to repay a certain amount of the debt. A deficit restoration obligation is a continuing investor’s obligation, under certain circumstances, to contribute a designated amount of capital to us upon our liquidation in the event that our assets are insufficient to repay our liabilities. Because we expect that we will at all times have sufficient liabilities to allow us to meet our obligations to allocate liabilities to our partners that are protected parties under the tax protection agreement, our indemnification obligation with respect to “certain tax liabilities” would generally arise only in the event that we dispose in a taxable transaction of a protected asset within the period specified above in a taxable transaction. In the event of such a disposition, the amount of our indemnification obligation would depend on several factors, including the amount of “built-in gain,” if any, recognized and allocated to the indemnified partners with respect to such disposition and the effective tax rate to be applied to such gain at the time of such disposition. Our partnership agreement requires that allocations with respect to such acquired property be made in a manner consistent with Section 704(c) of the Code. Treasury Regulations issued under Section 704(c) of the Code provide partnerships with a choice of several methods of allocating book-tax differences. Under the tax protection agreement, we have agreed to use the “traditional method” for accounting for book-tax differences for the properties acquired by us in the consolidation. Under the traditional method, which is the least favorable method from our perspective, the carryover basis of the acquired properties in our hands (i) may cause us to be allocated lower amounts of depreciation and other deductions for tax purposes than would be allocated to us if all of the acquired properties were to have a tax basis equal to their fair market value at the time of acquisition and (ii) in the event of a sale of such properties, could cause us to be allocated gain in excess of its corresponding economic or book gain (or taxable loss that is less than its economic or book loss), with a corresponding benefit to the partners transferring such properties to us for interests in us. Registration Rights We entered into a registration rights agreement with certain persons receiving shares of ESRT common stock or operating partnership units in the formation transactions, including certain members of ESRT's senior management team and our other continuing investors. In connection therewith, we have filed, and are obligated to maintain the effectiveness of, an automatically effective shelf registration statement, along with a prospectus supplement, with respect to, among other things, shares of ESRT Class A common stock that may be issued upon redemption of operating partnership units or issued upon conversion of shares of ESRT Class B common stock to continuing investors in the public existing entities. Pursuant to the registration rights agreement, under certain circumstances, ESRT will also be required to undertake an underwritten offering upon the written request of the Malkin Group, which we refer to as the holder, provided (i) the registrable shares to be registered in such offering will have a market value of at least $150.0 million, (ii) ESRT will not be obligated to effect more than two underwritten offerings during any 12-month period; and (iii) the holder will not have the ability to effect more than four underwritten offerings. In addition, if ESRT files a registration statement with respect to an underwritten offering for its own account or on behalf of the holder, the holder will have the right, subject to certain limitations, to register such number of registrable shares held by him, her or it as each such holder requests. With respect to underwritten offerings on behalf of the holder, ESRT will have the right to register such number of primary shares as it requests; provided, however, that if cut backs are required by the managing underwriters of such an offering, ESRT's primary shares shall be cutback first (but in no event will our shares be cut back to less than $25.0 million). ESRT has also agreed to indemnify the persons receiving rights against specified liabilities, including certain potential liabilities arising under the Securities Act, or to contribute to the payments such persons may be required to make in respect thereof. ESRT has agreed to pay all of the expenses relating to the registration and any underwritten offerings of such securities, including, without limitation, all registration, listing, filing and stock exchange or FINRA fees, all fees and expenses of complying with securities or “blue sky” laws, all printing expenses and all fees and disbursements of counsel and independent public accountants retained by ESRT, but excluding underwriting discounts and commissions, any out-of-pocket expenses (except ESRT will pay any holder’s out-of-pocket fees (including disbursements of such holder’s counsel, accountants and other advisors) up to $25,000 in the aggregate for each underwritten offering and each filing of a resale shelf registration statement or demand registration statement), and any transfer taxes. Employment Agreement and Change in Control Severance Agreements ESRT entered into an employment agreement with Anthony E. Malkin, which provides for salary, bonuses and other benefits, including among other things, severance benefits upon a termination of employment under certain circumstances and the issuance of equity awards. In addition, ESRT entered into change in control severance agreements with Thomas P. Durels, David A. Karp, Thomas N. Keltner, Jr. and John B. Kessler. Indemnification of Our Directors and Officers We entered into indemnification agreements with each of ESRT's directors, executive officers, chairman emeritus and certain other parties, providing for the indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against (i) ESRT's directors, executive officers and chairman emeritus and (ii) ESRT's executive officers, chairman emeritus and certain other parties who are former members, managers, securityholders, directors, limited partners, general partners, officers or controlling persons of our predecessor in such capacities. Excluded Properties and Businesses The Malkin Group, including Anthony E. Malkin, our Chairman and Chief Executive Officer, owns non-controlling interests in, and Anthony E. Malkin and Peter L. Malkin control the general partners or managers of, the entities that own interests in eight multi-family properties, five net leased retail properties, (including one single tenant retail property in Greenwich, Connecticut), and a parcel that is being developed for residential use. The Malkin Group also owns non-controlling interests in one Manhattan office property, two Manhattan retail properties and several retail properties outside of Manhattan, none of which were contributed to us in the formation transactions. We refer to the non-controlling interests described above collectively as the excluded properties. In addition, the Malkin Group owns interests in two mezzanine and senior equity funds, an industrial fund, and five residential properties, and which we refer to collectively as the excluded businesses. Other than the Greenwich retail property, we do not believe that the excluded properties or the excluded businesses are consistent with our portfolio geographic or property type composition, management or strategic direction. Pursuant to management and/or service agreements with the owners of interests in those excluded properties and services agreements with five residential property managers and the managers of certain other excluded businesses which historically were managed by affiliates of our predecessor, we are designated as the asset manager (supervisor) and/or property manager of the excluded properties and will provide services to the owners of certain of the excluded properties and the five residential property managers and provide services and access to office space to the existing managers of the other excluded businesses. As the manager or service provider, we are paid a management or other fee with respect to those excluded properties and excluded businesses where our predecessor had previously received a management fee on the same terms as the fee paid to our predecessor, and reimbursed for our costs in providing the management and other services to those excluded properties and businesses where our predecessor had not previously received a management fee. ESRT's management of the excluded properties and provision of services to the five residential property managers and the existing managers of the other excluded businesses represent a minimal portion of our overall business. There is no established time period in which we will manage such properties or provide services to the owners of certain of the excluded properties and the five residential property managers and provide services and access to office space to the existing managers of the other excluded businesses; and Peter L. Malkin and Anthony E. Malkin expect to sell certain properties or unwind these businesses over time. We are not precluded from acquiring all or certain interests in the excluded properties or businesses. If we were to attempt any such acquisition, we anticipate that Anthony E. Malkin, ESRT's Chairman and Chief Executive Officer, will not participate in the negotiation process on our behalf with respect to our potential acquisition of any of these excluded properties or businesses, and the approval of a majority of ESRT's independent directors will be required to approve any such acquisition. Services are and were provided by us to excluded properties and businesses. These transactions are reflected in our consolidated statements of income as third-party management and other fees. We earned asset management (supervisory) and service fees from excluded properties and businesses of $1.1 million, $1.1 million and $1.4 million during the years ended December 31, 2018, 2017 and 2016, respectively. We earned property management fees from excluded properties of $0.3 million, $0.3 million and $0.4 million during the years ended December 31, 2018, 2017 and 2016, respectively. Other We were reimbursed at allocable cost for 647 square feet of shared office space, equipment, and administrative support shared with us in our corporate offices, as was done prior to our formation, and we received rent generally at market rental rate for 3,074 square feet of leased space, from entities affiliated with Anthony E. Malkin at one of our properties. Total revenue aggregated $0.2 million for the year ended December 31, 2016. During August 2016, such entities moved from the previously shared office and leased spaces to relocate to a new 5,351 square foot leased space at one of our properties, paying rent generally at a market rental rate. Under such new lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We now have a shared use agreement with such tenant, to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus and employee, utilizing approximately 15% of the space, for which we pay an allocable pro rata share of the cost to such tenant. We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support. Total revenue aggregated $0.3 million, $0.4 million and $0.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. During 2016 and in connection with our office move, Peter L. Malkin purchased miscellaneous furniture and artwork from us at their appraised value of $23,300. Remaining office furniture was disposed. One of our directors, James D. Robinson IV, is a general partner in an investment fund, which owns more than a 10% economic and voting interest in one of our tenants, OnDeck Capital, with an annualized rent of $4.5 million and $5.8 million as of December 31, 2018 and 2017, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes TRS Holdings and Observatory TRS are taxable entities and their consolidated provision for income taxes consisted of the following for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
In December 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted. The TCJA includes a number of changes to existing U.S. tax laws, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. We measure deferred tax assets using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, our deferred tax assets were remeasured to reflect the reduction in the U.S. corporate income tax rate, resulting in a $0.4 million increase in income tax expense for the year ended December 31, 2017 and a corresponding decrease of the same amount in our deferred assets as of December 31, 2017. The effective income tax rate is 34.0%, 48.5% and 44.8% for the years ended December 31, 2018, 2017 and 2016, respectively. The actual tax provision differed from that computed at the federal statutory corporate rate as follows (amounts in thousands):
The income tax effects of temporary differences that give rise to deferred tax assets are presented below as of December 31, 2018, 2017 and 2016 (amounts in thousands):
Deferred tax assets at December 31, 2018, 2017 and 2016, respectively, are attributable to the inclusion of deferred revenue on Observatory admission ticket sales not redeemed at year-end in determining income for tax reporting purposes and are included in prepaid expenses and other assets on the consolidated balance sheets. No valuation allowance has been recorded against the deferred tax asset because the Company believes that the deferred tax asset will, more likely than not, be realized. This determination is based on the Observatory TRS’s anticipated future taxable income and the reversal of the deferred tax asset. At December 31, 2018, 2017 and 2016, the TRS entities have no amount of unrecognized tax benefits. For tax years 2018, 2017, 2016 and 2015, the United States federal and state tax returns are open for examination. |
Segment Reporting |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We have identified two reportable segments: (1) Real Estate and (2) Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rents as if the sales or rents were to third parties, that is, at current market prices. The following tables provide components of segment profit for each segment for the years ended December 31, 2018, 2017 and 2016, as reviewed by management (amounts in thousands):
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Summary of Quarterly Financial Information (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Quarterly Financial Information (unaudited) | Summary of Quarterly Financial Information (unaudited) The quarterly results of operations of our company for the years ended December 31, 2018, 2017 and 2016 are as follows (amounts in thousands):
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events None. |
Schedule II - Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts (amounts in thousands)
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Schedule III - Real Estate and Accumulated Depreciation |
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SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule III - Real Estate and Accumulated Depreciation | Schedule III—Real Estate and Accumulated Depreciation (amounts in thousands)
Empire State Realty OP, L.P. Notes to Schedule III—Real Estate and Accumulated Depreciation (amounts in thousands) 1. Reconciliation of Investment Properties The changes in our investment properties for the years ended December 31, 2018, 2017 and 2016 are as follows:
The unaudited aggregate cost of investment properties for federal income tax purposes as of December 31, 2018 was $2.5 billion. 2. Reconciliation of Accumulated Depreciation The changes in our accumulated depreciation for the years ended December 31, 2018, 2017 and 2016 are as follows:
Depreciation of investment properties reflected in the combined statements of income is calculated over the estimated original lives of the assets as follows:
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Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2018 | |||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the "SEC") represent our assets and liabilities and operating results. The consolidated financial statements include our accounts and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
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Consolidation, Variable Interest Entity | We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. We had no VIEs as of December 31, 2018 and 2017. We will assess the accounting treatment for each investment we may have in the future. This assessment will include a review of each entity’s organizational agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit. In situations where we or our partner could approve, among other things, the annual budget, or leases that cover more than a nominal amount of space relative to the total rentable space at each property, we would not consolidate the investment as we consider these to be substantive participation rights that result in shared power of the activities that would most significantly impact the performance and benefit of such joint venture investment. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheets and in the consolidated statements of income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. |
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Accounting Estimates | Accounting Estimates The preparation of the consolidated financial statements in accordance with GAAP requires management to use estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Significant items subject to such estimates and assumptions include allocation of the purchase price of acquired real estate properties among tangible and intangible assets, determination of the useful life of real estate properties and other long-lived assets, valuation and impairment analysis of commercial real estate properties and other long-lived assets, estimate of tenant expense reimbursements, estimate of percentage of completion on construction contracts, valuation of the allowance for doubtful accounts, and valuation of derivative instruments, senior unsecured notes, mortgage notes payable, unsecured notes, unsecured revolving credit and term loan facilities, and equity based compensation. These estimates are prepared using management’s best judgment, after considering past, current, and expected events and economic conditions. Actual results could differ from those estimates. |
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Revenue Recognition | Revenue Recognition Rental Revenue Rental revenue includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease which includes the effects of rent steps and rent abatements under the leases. In general, we commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. We account for all of our leases as operating leases. Deferred rent receivables, including free rental periods and leasing arrangements allowing for increased base rent payments, are accounted for in a manner that provides an even amount of fixed lease revenues over the respective non-cancellable lease terms. Differences between rental income recognized and amounts due under the respective lease agreements are recognized as an increase or decrease to deferred rent receivables. In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in an index such as the Consumer Price Index over the index value in effect during a base year, or contain fixed percentage increases over the base rent to cover escalations. We will recognize rental revenue of acquired in-place above- and below-market leases at their fair values over the terms of the respective leases, including, for below-market leases, fixed option renewal periods, if any. Lease termination fees are recognized when the fees are determinable, tenant vacancy has occurred, collectability is reasonably assured, we have no continuing obligation to provide services to such former tenants and the payment is not subject to any conditions that must be met or waived. Observatory Revenue Revenues from the sale of Observatory tickets are recognized upon admission or ticket expirations. Deferred revenue related to unused and unexpired tickets as of December 31, 2018 and 2017 was $4.1 million and $4.1 million, respectively, and is included in deferred revenue and other liabilities on the consolidated balance sheets. Gains on Sale of Real Estate We record a gain on sale of real estate when title is conveyed to the buyer and we have no substantial economic involvement with the property. If the sales criteria for the full accrual method are not met, we defer some or all of the gain recognition and account for the continued operations of the property by applying the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria are met. Third-Party Management and Other Fees We earn revenue arising from contractual agreements with related party entities for asset and property management services. This revenue is recognized as the related services are performed under the respective agreements in place. |
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Other Revenue and Fees | Other Revenues and Fees Other revenues and fees includes parking income, percentage rent, legal, tax and insurance settlements, demand response energy use earnings and sales from our restaurant at the Empire State Building. |
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Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred. |
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Real Estate Properties and Related Intangible Assets | Real Estate Properties and Related Intangible Assets Land and buildings and improvements are recorded at cost less accumulated depreciation and amortization. The recorded cost includes cost of acquisitions, development and construction and tenant allowances and improvements. Expenditures for ordinary repairs and maintenance are charged to property operating expense as incurred. Significant replacements and betterments which improve or extend the life of the asset are capitalized. Tenant improvements which improve or extend the life of the asset are capitalized. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any tenant improvements are written off if they are replaced or have no future value. For developed properties, direct and indirect costs that clearly relate to projects under development are capitalized. Costs include construction costs, professional services such as architectural and legal costs, capitalized interest and direct payroll costs. We begin capitalization when the project is probable. The assets relating to the project are stated at cost and are not depreciated. Once construction is completed and the assets are placed in service, the assets are reclassified to the appropriate asset class and depreciated in accordance with the useful lives as indicated below. Capitalization of interest ceases when the asset is ready for its intended use, which is generally near the date that a certificate of occupancy is obtained. Total capitalized interest for the years ended December 31, 2018 and 2017 was $1.6 million and $0.5 million, respectively. There was no capitalized interest for the year ended December 31, 2016. Depreciation and amortization are computed using the straight-line method for financial reporting purposes. Buildings and improvements are depreciated over the shorter of 39 years, the useful life, or the remaining term of any leasehold interest. Tenant improvement costs, which are included in building and improvements in the consolidated balance sheets, are depreciated over the shorter of (i) the related remaining lease term or (ii) the life of the improvement. Corporate equipment, which is included in “Other assets,” is depreciated over three to seven years. Acquisitions of properties are accounted for utilizing the acquisition method and accordingly the purchase cost is allocated to tangible and intangible assets and liabilities based on their fair values. The fair value of tangible assets acquired is determined by valuing the property as if it were vacant, applying methods similar to those used by independent appraisers of income-producing property. The resulting value is then allocated to land, buildings and improvements, and tenant improvements based on our determination of the fair value of these assets. The assumptions used in the allocation of fair values to assets acquired are based on our best estimates at the time of evaluation. Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the tenant based on the existing lease and (b) our estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts are amortized as a decrease to rental revenue over the remaining terms of the respective leases. Capitalized below-market lease amounts are amortized as an increase to rental revenue over the remaining terms of the respective leases. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The aggregate value of other acquired intangible assets consists of acquired ground leases and acquired in-place leases and tenant relationships. The fair value allocated to acquired in-place leases consists of a variety of components including, but not necessarily limited to: (a) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute a lease, including leasing commissions and legal fees, if any); (b) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period (i.e. real estate taxes, insurance and other operating expenses); (c) the value associated with lost rental revenue from existing leases during the assumed lease-up period; and (d) the value associated with any other inducements to secure a tenant lease. We assess the potential for impairment of our long-lived assets, including real estate properties, annually or whenever events occur or a change in circumstances indicate that the recorded value might not be fully recoverable. We determine whether impairment in value has occurred by comparing the estimated future undiscounted cash flows expected from the use and eventual disposition of the asset to its carrying value. If the undiscounted cash flows do not exceed the carrying value, the real estate is adjusted to fair value and an impairment loss is recognized. Assets held for sale are recorded at the lower of cost or fair value less costs to sell. We do not believe that the value of any of our properties and intangible assets were impaired during the years ended December 31, 2018, 2017 and 2016. |
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Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, government money markets, demand deposits with financial institutions and short-term liquid investments with original maturities of three months or less when purchased. Cash and cash equivalents held at major commercial banks may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash. Restricted Cash Restricted cash consists of amounts held for tenants in accordance with lease agreements such as security deposits and amounts held by lenders and/or escrow agents to provide for future real estate tax expenditures and insurance expenditures, tenant vacancy related costs and debt service obligations. |
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Short-term Investments | Short-term Investments Short-term investments include time deposits with original maturities of greater than three months and remaining maturities of less than one year. |
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Tenant and Other Receivables | Tenant and Other Receivables Tenant and other receivables, other than deferred rent receivable, are generally expected to be collected within one year. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We maintain an allowance against tenant and other receivables and deferred rents receivables for future potential tenant credit losses. The credit assessment is based on the estimated accrued rental revenue that is recoverable over the term of the respective lease. The computation of this allowance is based on the tenants’ payment history and current credit status. If our estimate of collectability differs from the cash received, then the timing and amount of our reported revenue could be impacted. Bad debt expense is included in operating expenses on our consolidated statements of income and includes the impact of changes in the allowance for doubtful accounts on our consolidated balance sheets. |
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Deferred Leasing Costs and Deferred Financing Costs | Deferred Leasing Costs Deferred leasing costs consist of fees and direct costs incurred to initiate and renew leases, are amortized on a straight-line basis over the related lease term and the expense is included in depreciation and amortization in our consolidated statements of income. Upon the early termination of a lease, unamortized deferred leasing costs are charged to expense. Deferred Financing Costs Fees and costs incurred to obtain long-term financing have been deferred and are amortized as a component of interest expense in our consolidated statements of income over the life of the respective long-term financing on the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking debt, which do not close, are expensed in the period in which it is determined that the financing will not close. |
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Equity Method Investments | Equity Method Investments We account for investments under the equity method of accounting where we do not have control but have the ability to exercise significant influence. Under this method, investments are recorded at cost, and the investment accounts are adjusted for our share of the entities’ income or loss and for distributions and contributions. Equity income (loss) is allocated based on the portion of the ownership interest that is controlled by us. The agreements may designate different percentage allocations among investors for profits and losses; however, our recognition of the entity’s income or loss generally follows the entity’s distribution priorities, which may change upon the achievement of certain investment return thresholds. To the extent that we contributed assets to an entity, our investment in the entity is recorded at cost basis in the assets that were contributed to the entity. Upon contributing assets to an entity, we make a judgment as to whether the economic substance of the transaction is a sale. If so, gain or loss is recognized on the portion of the asset to which the other partners in the entity obtain an interest. To the extent that the carrying amount of these investments on our combined balance sheets is different than the basis reflected at the entity level, the basis difference would be amortized over the life of the related asset and included in our share of equity in net income of the entity. On a periodic basis, we assess whether there are any indicators that the carrying value of our investments in entities may be impaired on an other than temporary basis. An investment is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment on an other than temporary basis. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the fair value of the investment. As of December 31, 2018 and 2017, we had no equity method investments. |
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Goodwill | Goodwill Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. Non-amortizing intangible assets, such as trade names and trademarks, are subject to an annual impairment test based on fair value and amortizing intangible assets are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. |
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Fair Value | Fair Value Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Financial Accounting Standards Board ("FASB") guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The methodologies used for valuing financial instruments have been categorized into three broad levels as follows: Level 1 - Quoted prices in active markets for identical instruments. Level 2 - Valuations based principally on other observable market parameters, including:
Level 3 - Valuations based significantly on unobservable inputs, including:
These levels form a hierarchy. We follow this hierarchy for our financial instruments measured or disclosed at fair value on a recurring and nonrecurring basis and other required fair value disclosures. The classifications are based on the lowest level of input that is significant to the fair value measurement. We use the following methods and assumptions in estimating fair value disclosures for financial instruments. Cash and cash equivalents, restricted cash, short term investments, tenant and other receivables, prepaid expenses and other assets, deferred revenue, tenant security deposits, accounts payable and accrued expenses carrying values approximate their fair values due to the short term maturity of these instruments. The fair value of our senior unsecured notes - exchangeable was derived from quoted prices in active markets and is classified as Level 2 since trading volumes are low. The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy. The fair value of our mortgage notes payable, unsecured revolving credit and term loan facility, and senior unsecured notes - Series A, B, C, D, E and F which are determined using Level 3 inputs, are estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made to us. |
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Derivative Instruments | Derivative Instruments We are exposed to the effect of interest rate changes and manage these risks by following policies and procedures including the use of derivatives. To manage exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices. We also hedge exposure to the variability in future cash flows for forecast transactions over a maximum period of 11 months (excluding forecast transactions related to the payment of variable interest on existing financial instruments). We record all derivatives on the balance sheet at fair value. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. We measure the credit risk of our derivative instruments that are subject to master netting agreements on a net basis by counterparty portfolio. For derivatives that qualify as cash flow hedges, we report the gain or loss on the derivative designated as a hedge as part of other comprehensive income (loss) and subsequently reclassify the gain or loss into income in the period that the hedged transaction affects income. |
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Income Taxes | Income Taxes We are generally not subject to federal and state income taxes as our taxable income or loss is reportable by our partners. Accordingly, no provision has been made for federal and state income taxes. ESRT has elected, together with ESRT Observatory TRS, L.L.C., our subsidiary which holds our observatory operations, to treat ESRT Observatory TRS, L.L.C. as a TRS. ESRT has elected, together with ESRT Holdings TRS, L.L.C., our subsidiary that holds our third party management, restaurant, cafeteria, health clubs and certain cleaning operations, to treat ESRT Holdings TRS, L.L.C. as a TRS. TRSs may participate in non-real estate activities and/or perform non-customary services for tenants and their operations are generally subject to regular corporate income taxes. Our TRSs account for their income taxes in accordance with GAAP, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. The calculation of the TRSs' tax provisions may require interpreting tax laws and regulations and could result in the use of judgments or estimates which could cause its recorded tax liability to differ from the actual amount due. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The TRSs periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, or federal statutory tax audits or estimates and judgments used. We apply provisions for measuring and recognizing tax benefits associated with uncertain income tax positions. Penalties and interest, if incurred, would be recorded as a component of income tax expense. As of December 31, 2018 and 2017, we do not have a liability for uncertain tax positions. As of December 31, 2018, the tax years ended December 31, 2015 through December 31, 2018 remain open for an audit by the Internal Revenue Service, state or local authorities. |
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Share-Based Compensation | Share-Based Compensation Share-based compensation is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the vesting period. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of ESRT stock, expected dividend yield, expected term, and assumptions of whether these awards will achieve parity with other operating partnership units or achieve performance thresholds. We believe that the assumptions and estimates utilized are appropriate based on the information available to management at the time of grant. |
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Per Unit Data | Per Unit Data Basic and diluted earnings per unit are computed based upon the weighted average number of shares outstanding during the respective period. |
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Segment Reporting | Segment Reporting We have identified two reportable segments: (1) Real Estate and (2) Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rent as if the sales or rent were to third parties, that is, at current market prices. |
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Reclassification | Reclassification Certain prior year balances have been reclassified to conform to our current year presentation. |
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Recently Issued or Adopted Accounting Standards | Recently Issued or Adopted Accounting Standards During August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which contain amendments that align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). Accordingly, for entities in a hosting arrangement that is a service contract, costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. The amendments in ASU No. 2018-15 also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in any interim period. The amendments in ASU No. 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which contain amendments that modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. ASU No. 2017-04 should be applied on a prospective basis and the amendments adopted for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which contain amendments to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in ASU No. 2017-01 provide a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. Additionally, these amendments narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606, Revenue from Contracts with Customers. ASU No. 2017-01 will be effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective date. No disclosures are required at transition. We believe that future acquisitions of real estate properties will be considered asset acquisitions. During November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which contain amendments that require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. We adopted this standard on January 1, 2018 using a retrospective transition method. The adoption did not have a material impact on our consolidated financial statements. During August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted including adoption in an interim period. We adopted this standard on January 1, 2018 using a retrospective transition method. The adoption did not have a material impact on our consolidated financial statements. During June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which contains amendments that replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses which contain amendments relating to the transition and effective date requirements for nonpublic business entities and also clarified that receivables arising from operating leases are not within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. ASU No. 2016-13 and ASU No. 2018-19 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier adoption as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, is permitted. The amendments must be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified retrospective approach). We are evaluating the impact of adopting this new accounting standard on our consolidated financial statements. During February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. ASU No. 2016-02 leaves the accounting for leases by lessors largely unchanged from previous GAAP. ASU No. 2016-02 will be effective for fiscal years beginning after December 15, 2018 and subsequent interim periods. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. This ASU is expected to result in the recognition of a right-to-use asset and related liability to account for our future obligations under our ground lease agreements for which we are the lessee. As of December 31, 2018, the remaining contractual payments under our ground lease agreements aggregated $75.9 million. In addition, under ASU 2016-02, lessors may only capitalize incremental direct leasing costs. As a result, we expect that we will no longer capitalize our non-contingent leasing costs and instead will expense these costs as incurred. These costs totaled $4.6 million for the year ended December 31, 2018. During July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which contains amendments which are intended to clarify or to correct unintended application of ASU No. 2016-02. Also during July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to Topic 842, Leases, which provides another transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments in ASU No. 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component provided that (1) the timing and pattern of transfer are the same for the nonlease components and associated lease component and (2) the lease component, if accounted separately, would be classified as an operating lease. During December 2018, the FASB issued ASU No. 2018-20, Narrow-Scope Improvements for Lessors that contain amendments to further help lessors apply ASU No. 2016-02, including amendments that require lessors to (1) exclude lessor costs paid directly by lessees to third parties on the lessor's behalf from variable payments and therefore variable lease revenue and (2) include lessor costs that are paid by the lessor and reimbursed by the lessee in the measurement of variable lease revenue and the associated expense. For entities that have not yet adopted ASU No. 2016-02, the effective dates and transition requirements for ASU No. 2018-10, ASU No. 2018-11 and ASU No. 2018-20 will be the same as the effective date and transition requirements in ASU No. 2016-02. We adopted this standard on January 1, 2019 and elected the available practical expedients. ASU 2016-02 and its related amendments resulted in the recognition of right-of-use assets and lease liabilities for our operating leases on our balance sheet of approximately $30.0 million, but did not have an impact on our consolidated statements of income. During May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces all current GAAP guidance related to revenue recognition and eliminates all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted this standard on January 1, 2018 and it did not have a material impact on our consolidated financial statements. |
Deferred Costs, Acquired Lease Intangibles and Goodwill (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Costs, Net | Deferred costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
Deferred financing costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
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Schedule of Amortizing Acquired Intangible Assets and Liabilities | Amortizing acquired intangible assets and liabilities consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
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Schedule of Future Amortization Expense and Rental Revenue from Acquired Intangible Assets | We expect to recognize amortization expense and rental revenue from the acquired intangible assets and liabilities as follows (amounts in thousands):
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt consisted of the following as of December 31, 2018 and 2017 (amounts in thousands):
______________
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Schedule of Maturities of Long-term Debt | Aggregate required principal payments at December 31, 2018 are as follows (amounts in thousands):
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Schedule of Deferred Costs, Net | Deferred costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
Deferred financing costs, net, consisted of the following at December 31, 2018 and 2017 (amounts in thousands):
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Accounts Payable and Accrued Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following as of December 31, 2018 and 2017 (amounts in thousands):
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Financial Instruments and Fair Values (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Terms of Agreements and Fair Values of Derivative Financial Instruments | The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of December 31, 2018 and 2017 (dollar amounts in thousands):
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Summary of Effect of Derivative Financial Instruments Designated as Cash Flow Hedges | The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of income for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
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Schedule of the Aggregate Carrying Value of Debt and Estimates of Fair Value | The following tables summarize the carrying and estimated fair values of our financial instruments as of December 31, 2018 and 2017 (amounts in thousands):
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Rental Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments Receivable for Operating Leases | As of December 31, 2018, we were entitled to the following future contractual minimum lease payments on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments | Future minimum lease payments to be paid over the terms of the leases are as follows (amounts in thousands):
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Summary of Percent of Total Rental Revenue | For the years ended December 31, 2018, 2017 and 2016, the six properties listed below accounted for the indicated percentage of total rental revenues. No other property accounted for more than 5.0% of total rental revenues.
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Schedule of Contributions to Multiemployer Plans | Contributions we made to the multi-employer plans for the years ended December 31, 2018, 2017 and 2016 are included in the table below (amounts in thousands):
** Health plans include $1.6 million, $1.6 million and $1.6 million for the years ended 2018, 2017 and 2016, respectively, to multiemployer plans not discussed above. *** Other consists of union costs which were not itemized between pension and health plans. Other includes $0.2 million, $0.2 million and $0.2 million for the years ended 2018, 2017 and 2016, respectively, in connection with other multiemployer plans not discussed above. |
Capital (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure, Disclosure of Compensation Related Costs, Share-based Payments and Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared | The following table summarizes the distributions paid on our operating partnership units for the years ended December 31, 2018, 2017 and 2016:
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Summary of Restricted Stock and Long-Term Incentive Plan Activity | The following is a summary of ESRT restricted stock and LTIP unit activity for the year ended December 31, 2018:
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Schedule of Earnings Per Unit, Basic and Diluted | Earnings per unit for the years ended December 31, 2018, 2017 and 2016 is computed as follows (amounts in thousands, except per share amounts): |
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | TRS Holdings and Observatory TRS are taxable entities and their consolidated provision for income taxes consisted of the following for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands):
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Schedule of Actual Tax Provision Differed From Federal Statutory Corporate Rate | The actual tax provision differed from that computed at the federal statutory corporate rate as follows (amounts in thousands):
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Schedule of Deferred Tax Assets and Liabilities | The income tax effects of temporary differences that give rise to deferred tax assets are presented below as of December 31, 2018, 2017 and 2016 (amounts in thousands):
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Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables provide components of segment profit for each segment for the years ended December 31, 2018, 2017 and 2016, as reviewed by management (amounts in thousands):
|
Summary of Quarterly Financial Information (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The quarterly results of operations of our company for the years ended December 31, 2018, 2017 and 2016 are as follows (amounts in thousands):
|
Summary of Significant Accounting Policies Narrative (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018
USD ($)
segment
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Jan. 01, 2019
USD ($)
|
|
Accounting Policies [Line Items] | ||||
Deferred revenue | $ 4,100,000 | $ 4,100,000 | ||
Advertising and marketing expense | 8,900,000 | 7,600,000 | $ 9,400,000 | |
Capitalized interest | $ 1,600,000 | $ 500,000 | $ 0 | |
Number of reportable segments (segment) | segment | 2 | |||
Remaining contractual payments under ground lease agreements | $ 75,888,000 | |||
Capitalized internal leasing costs | $ 4,600,000 | |||
Building and Building Improvements | ||||
Accounting Policies [Line Items] | ||||
Useful life (in years) | 39 years | |||
Corporate Equipment | Minimum | ||||
Accounting Policies [Line Items] | ||||
Useful life (in years) | 3 years | |||
Corporate Equipment | Maximum | ||||
Accounting Policies [Line Items] | ||||
Useful life (in years) | 7 years | |||
Subsequent event | ASU 2016-02 | ||||
Accounting Policies [Line Items] | ||||
Operating lease, right-of-use assets | $ 30,000,000 | |||
Operating lease, liabilities | $ 30,000,000 |
Deferred Costs, Acquired Lease Intangibles and Goodwill - Schedule of Deferred Costs, Net (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs [Line Items] | ||
Leasing costs | $ 178,120 | $ 164,751 |
Total deferred costs, gross | 444,806 | 469,530 |
Less: accumulated amortization | (209,839) | (215,102) |
Total deferred costs, net, excluding net deferred financing costs | 234,967 | 254,428 |
Acquired in-place lease value and deferred leasing costs | ||
Deferred Costs [Line Items] | ||
Acquired intangible assets, gross | 214,550 | 237,364 |
Acquired above-market leases | ||
Deferred Costs [Line Items] | ||
Acquired intangible assets, gross | $ 52,136 | $ 67,415 |
Deferred Costs, Acquired Lease Intangibles and Goodwill - Acquired Leases (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Acquired below-market ground leases | $ 396,916 | $ 396,916 |
Less: accumulated amortization | (36,518) | (28,687) |
Acquired below-market ground leases, net | 360,398 | 368,229 |
Acquired below-market leases | (118,462) | (132,026) |
Less: accumulated amortization | 66,012 | 65,979 |
Acquired below-market leases, net | $ (52,450) | $ (66,047) |
Deferred Costs, Acquired Lease Intangibles and Goodwill - Future Amortization Expense and Rental Revenue (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Future Rental Revenue [Abstract] | |
2019 | $ 6,875 |
2020 | 3,651 |
2021 | 2,868 |
2022 | 3,185 |
2023 | 3,181 |
Thereafter | 9,532 |
Future Rental Revenue | 29,292 |
Ground lease | |
Future Amortization Expense [Abstract] | |
2019 | 7,831 |
2020 | 7,831 |
2021 | 7,831 |
2022 | 7,831 |
2023 | 7,831 |
Thereafter | 321,243 |
Future Amortization Expense | 360,398 |
Lease agreements | |
Future Amortization Expense [Abstract] | |
2019 | 15,829 |
2020 | 12,967 |
2021 | 11,250 |
2022 | 10,433 |
2023 | 9,756 |
Thereafter | 31,690 |
Future Amortization Expense | $ 91,925 |
Debt - Mortgage Debt (Details) - USD ($) |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | ||||
Repayment of mortgage notes payable | $ 266,613,000 | $ 346,615,000 | $ 32,305,000 | |
Fixed rate mortgage debt | ||||
Debt Instrument [Line Items] | ||||
Fixed rate debt | 614,612,000 | 721,224,000 | ||
Fixed rate mortgage debt | 1333 Broadway | ||||
Debt Instrument [Line Items] | ||||
Fixed rate debt | $ 160,000,000 | $ 66,602,000 | ||
Face amount | $ 160,000,000.0 | |||
Fixed rate mortgage debt | 1400 Broadway | ||||
Debt Instrument [Line Items] | ||||
Repayment of mortgage notes payable | $ 75,800,000 |
Debt - Schedule of Maturities of Long-term Debt (Details) - Fixed rate mortgage debt - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
2019 amortization | $ 3,790 | |
2020 amortization | 3,938 | |
2021 amortization | 4,090 | |
2022 amortization | 5,628 | |
2023 amortization | 7,876 | |
Thereafter | 33,868 | |
Total amortization | 59,190 | |
2019 maturities | 250,000 | |
2020 maturities | 0 | |
2021 maturities | 0 | |
2022 maturities | 265,000 | |
2023 maturities | 0 | |
Thereafter | 1,355,422 | |
Total maturities | 1,870,422 | |
2019 | 253,790 | |
2020 | 3,938 | |
2021 | 4,090 | |
2022 | 270,628 | |
2023 | 7,876 | |
Thereafter | 1,389,290 | |
Total | $ 1,929,612 | $ 1,701,224 |
Debt - Schedule of Deferred Financing Costs, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | |||
Financing costs | $ 25,315 | $ 24,446 | |
Less: accumulated amortization | (10,027) | (7,039) | |
Total deferred financing costs, net | 15,288 | 17,407 | |
Amortization expense related to deferred financing costs | 4,100 | 4,700 | $ 5,000 |
Revolving Credit Facility | Unsecured revolving credit facility | |||
Debt Instrument [Line Items] | |||
Net deferred financing costs | $ 6,300 | $ 8,300 |
Debt - Senior Unsecured Notes (Details) - Senior Notes - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Series D, Series E, and Series F Senior Unsecured Notes [Member] | ||
Line of Credit Facility [Line Items] | ||
Face amount | $ 450,000,000.0 | |
Series D Senior Notes due 2028 | ||
Line of Credit Facility [Line Items] | ||
Face amount | $ 115,000,000.0 | |
Stated interest rate | 4.08% | 4.08% |
Series E Senior Notes due 2030 | ||
Line of Credit Facility [Line Items] | ||
Face amount | $ 160,000,000.0 | |
Stated interest rate | 4.26% | 4.26% |
Series F Senior Notes due 2033 | ||
Line of Credit Facility [Line Items] | ||
Face amount | $ 175,000,000.0 | |
Stated interest rate | 4.44% | 4.44% |
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued capital expenditures | $ 85,242 | $ 71,769 |
Accounts payable and accrued expenses | 34,585 | 32,509 |
Interest rate swap agreements liability | 5,243 | 436 |
Accrued interest payable | 4,990 | 5,687 |
Due to affiliated companies | 616 | 448 |
Total accounts payable and accrued expenses | $ 130,676 | $ 110,849 |
Financial Instruments and Fair Values - Terms of Agreements and Fair Value (Details) - Cash Flow Hedging - Designated as Hedging Instrument - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Asset | $ 2,536,000 | $ 0 |
Liability | (5,243,000) | (436,000) |
LIBOR | Interest Rate Swap, One Month LIBOR, 2.1485% | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 265,000,000 | |
Pay Rate | 2.1485% | |
Asset | $ 2,536,000 | 0 |
Liability | 0 | (436,000) |
LIBOR | Interest Rate Swap, Three Month LIBOR, 2.9580%, Swap Number One | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 125,000,000 | |
Pay Rate | 2.958% | |
Asset | $ 0 | 0 |
Liability | (2,623,000) | 0 |
LIBOR | Interest Rate Swap, Three Month LIBOR, 2.9580%, Swap Number Two | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 125,000,000 | |
Pay Rate | 2.958% | |
Asset | $ 0 | 0 |
Liability | $ (2,620,000) | $ 0 |
Rental Income - Schedule of Future Minimum Payments Receivable for Operating Leases (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
2019 | $ 485,441 |
2020 | 460,127 |
2021 | 423,365 |
2022 | 391,395 |
2023 | 362,738 |
Thereafter | 1,536,461 |
Total Future Minimum Payments Receivable for Operating Leases | $ 3,659,527 |
Commitments and Contingencies - Litigation (Details) |
1 Months Ended |
---|---|
Oct. 31, 2014
participant
| |
Predecessor | New York State Supreme Court, New York County | |
Loss Contingencies [Line Items] | |
Number of plaintiffs opting out of settlement (participant) | 12 |
Commitments and Contingencies - Ground Lease Commitments (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
property
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Number of properties subject to ground leases (property) | property | 3 |
2019 | $ 1,518 |
2020 | 1,518 |
2021 | 1,518 |
2022 | 1,518 |
2023 | 1,518 |
Thereafter | 68,298 |
Total | $ 75,888 |
Commitments and Contingencies - Unfunded Capital Expenditures (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Unfunded capital expenditures | $ 88.4 |
Commitments and Contingencies - Multiemployer Pension and Defined Contribution Plans Narrative (Details) - Building Service 32BJ - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Pension Plans | |||
Multiemployer Plans [Line Items] | |||
Plan contributions | $ 272.3 | $ 257.8 | $ 249.5 |
Health Plans | |||
Multiemployer Plans [Line Items] | |||
Plan contributions | $ 1,400.0 | $ 1,300.0 | $ 1,200.0 |
Commitments and Contingencies - Schedule of Contributions made to Multiemployer Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Multiemployer Plans [Line Items] | |||
Contributions | $ 13,514 | $ 12,442 | $ 11,977 |
Pension Plans | |||
Multiemployer Plans [Line Items] | |||
Contributions | 3,327 | 3,035 | 3,155 |
Pension Plans | Multiemployer Plan, Individually Insignificant Multiemployer Plans [Member] | |||
Multiemployer Plans [Line Items] | |||
Contributions | 1,000 | 900 | 800 |
Health Plans | |||
Multiemployer Plans [Line Items] | |||
Contributions | 9,373 | 8,551 | 8,280 |
Health Plans | Multiemployer Plan, Individually Insignificant Multiemployer Plans [Member] | |||
Multiemployer Plans [Line Items] | |||
Contributions | 1,600 | 1,600 | 1,600 |
Other | |||
Multiemployer Plans [Line Items] | |||
Contributions | 814 | 856 | 542 |
Other | Multiemployer Plan, Individually Insignificant Multiemployer Plans [Member] | |||
Multiemployer Plans [Line Items] | |||
Contributions | $ 200 | $ 200 | $ 200 |
Capital - Distributions (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 29, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stockholders' Equity Note Disclosure, Disclosure of Compensation Related Costs, Share-based Payments and Earnings Per Share [Abstract] | |||||||||||||||
Dividends declared and paid on operating partnership units (in dollars per share) | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.105 | $ 0.085 | |||
Distributions paid to OP unit holders | $ 126.5 | $ 127.0 | $ 115.0 |
Capital - Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Numerator: | |||||||||||||||
Net income | $ 39,781 | $ 29,230 | $ 30,184 | $ 18,058 | $ 32,260 | $ 35,489 | $ 31,359 | $ 19,145 | $ 33,008 | $ 32,897 | $ 24,640 | $ 16,705 | $ 117,253 | $ 118,253 | $ 107,250 |
Private perpetual preferred unit distributions | (936) | (936) | (936) | ||||||||||||
Earnings allocated to unvested shares | (851) | (760) | (747) | ||||||||||||
Net income attributable to common unitholders - basic and diluted | $ 115,466 | $ 116,557 | $ 105,567 | ||||||||||||
Denominator: | |||||||||||||||
Weighted average units outstanding - basic and diluted (in shares) | 297,258,000 | 296,455,000 | 276,848,000 | ||||||||||||
Effect of dilutive securities, stock-based compensation plans (in shares) | 1,000 | 775,000 | 454,000 | ||||||||||||
Effect of dilutive securities, exchangeable senior notes (in shares) | 0 | 819,000 | 266,000 | ||||||||||||
Weighted average shares outstanding - diluted (in shares) | 297,259,000 | 298,049,000 | 277,568,000 | ||||||||||||
Earnings per unit - basic and diluted (in dollars per share) | $ 0.13 | $ 0.10 | $ 0.10 | $ 0.06 | $ 0.11 | $ 0.12 | $ 0.10 | $ 0.06 | $ 0.11 | $ 0.12 | $ 0.09 | $ 0.06 | $ 0.39 | $ 0.39 | $ 0.38 |
Antidilutive shares and LTIP units (in shares) | 485,865 | 834,267 | 800,746 |
Related Party Transactions - QIA (Details) - Q REIT Holding LLC - USD ($) |
12 Months Ended | |
---|---|---|
Aug. 23, 2016 |
Dec. 31, 2018 |
|
Noncontrolling Interest [Line Items] | ||
Minimum interest required to be held by affiliate of QIA in order to purchase new equity securities | 5.00% | |
Threshold of equity securities issuance where top up rights are exercisable | $ 1,000,000.0 | |
Right to first offer to co-Invest, period (in months) | 30 months | |
JV partnership, term (in years) | 5 years | |
Extended term, if one joint venture transaction consummates (in days) | 30 months | |
Threshold to indemnify | 10.00% |
Related Party Transactions - Tax Protection Agreement (Details) - Malkin Group $ in Millions |
Oct. 07, 2013
USD ($)
property
|
---|---|
Related Party Transaction [Line Items] | |
Number of properties protected | property | 4 |
Aggregate number of operating partnership units and common stock threshold during tax protection period | 50.00% |
Bottom dollar guarantee of aggregate indebtedness during tax protection period | $ | $ 160.0 |
Related Party Transactions - Registration Rights (Details) - Registration rights agreement |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
$ / underwritten_offering
underwritten_offering
| |
Related Party Transaction [Line Items] | |
Number of underwritten offerings, maximum, during 12-month period following shelf effective date | underwritten_offering | 2 |
Primary shares cutback value, minimum | $ | $ 25,000,000 |
Payments for fees and registration per underwritten offering, maximum (in dollars per offering) | $ / underwritten_offering | 25,000 |
Certain persons receiving common stock or operating partnership units in formation transactions | |
Related Party Transaction [Line Items] | |
Registrable shares market value, minimum | $ | $ 150,000,000.0 |
Number of underwritten offerings, maximum | underwritten_offering | 4 |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Current federal tax | $ (2,389) | $ (3,923) | $ (3,632) |
Current state and local tax | (2,253) | (2,304) | (2,055) |
Total current tax | (4,642) | (6,227) | (5,687) |
Deferred federal tax | 0 | (446) | (291) |
Deferred state and local tax | 0 | 0 | (168) |
Total deferred tax | 0 | (446) | (459) |
Income tax expense | $ (4,642) | $ (6,673) | $ (6,146) |
Effective income tax rate, percent | 34.00% | 48.50% | 44.80% |
Federal tax expense at statutory rate | $ (2,844) | $ (4,684) | $ (4,629) |
State income taxes, net of federal benefit | (1,798) | (1,543) | (1,517) |
Corporate income tax rate adjustment | $ 0 | (446) | $ 0 |
Increase in income tax expense | 400 | ||
Deferred assets decrease | $ 400 |
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Deferred tax assets: | |||
Deferred revenue on unredeemed observatory admission ticket sales | $ 1,396 | $ 1,395 | $ 198 |
Segment Reporting - Reportable Segments (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments (segment) | 2 |
Summary of Quarterly Financial Information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||
Revenues | $ 199,309 | $ 186,402 | $ 178,529 | $ 167,271 | $ 182,297 | $ 186,547 | $ 176,349 | $ 164,333 | $ 178,807 | $ 175,704 | $ 165,785 | $ 157,057 | $ 731,511 | $ 709,526 | $ 677,353 |
Operating income | 58,490 | 48,538 | 49,665 | 34,164 | 50,191 | 56,008 | 50,659 | 36,045 | 52,195 | 53,442 | 44,162 | 34,097 | 190,857 | 192,903 | 183,896 |
Net income | 39,781 | 29,230 | 30,184 | 18,058 | 32,260 | 35,489 | 31,359 | 19,145 | 33,008 | 32,897 | 24,640 | 16,705 | 117,253 | 118,253 | 107,250 |
Net income attributable to common unitholders | $ 39,547 | $ 28,996 | $ 29,950 | $ 17,824 | $ 32,026 | $ 35,255 | $ 31,125 | $ 18,911 | $ 32,774 | $ 32,663 | $ 24,406 | $ 16,471 | $ 116,317 | $ 117,317 | $ 106,314 |
Basic and diluted net income per share (in dollars per share) | $ 0.13 | $ 0.10 | $ 0.10 | $ 0.06 | $ 0.11 | $ 0.12 | $ 0.10 | $ 0.06 | $ 0.11 | $ 0.12 | $ 0.09 | $ 0.06 | $ 0.39 | $ 0.39 | $ 0.38 |
Schedule II - Valuation and Qualifying Accounts (Details) - SEC Schedule, 12-09, Allowance, Credit Loss [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance At Beginning of Year | $ 1,607 | $ 3,723 | $ 3,037 |
Additions Charged Against Operations | (811) | (1,650) | 908 |
Uncollectible Accounts Written-Off | (289) | (466) | (222) |
Balance at End of Year | $ 507 | $ 1,607 | $ 3,723 |
Schedule III - Real Estate and Accumulated Depreciation Reconciliation of Investment Properties (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate [Roll Forward] | |||
Balance, beginning of year | $ 2,667,655 | $ 2,458,629 | $ 2,276,330 |
Acquisition of new properties | 0 | 0 | 0 |
Improvements | 256,496 | 228,162 | 197,680 |
Disposals | (39,665) | (19,136) | (15,381) |
Balance, end of year | 2,884,486 | $ 2,667,655 | $ 2,458,629 |
Aggregate cost of investment properties for federal income tax purpose | $ 2,500,000 |
Schedule III - Real Estate and Accumulated Depreciation Reconciliation of Accumulated Depreciation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate, Accumulated Depreciation [Roll Forward] | |||
Balance, beginning of year | $ 656,900 | $ 556,546 | $ 465,584 |
Depreciation expense | 130,069 | 119,490 | 106,343 |
Disposals | (39,665) | (19,136) | (15,381) |
Balance, end of year | $ 747,304 | $ 656,900 | $ 556,546 |
Schedule III - Real Estate and Accumulated Depreciation Schedule of Estimated Useful Lives of Investment Properties (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Building [Member] | |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation [Line Items] | |
Estimated original useful lives (in years) | 39 years |
Building Improvements [Member] | |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation [Line Items] | |
Estimated original useful lives (in years) | 39 years |
Label | Element | Value |
---|---|---|
Derivative Financial Instruments Included in Prepaid Expenses and Other Assets | esrt_DerivativeFinancialInstrumentsIncludedinPrepaidExpensesandOtherAssets | $ 614,000 |
Derivative Financial Instruments Included in Prepaid Expenses and Other Assets | esrt_DerivativeFinancialInstrumentsIncludedinPrepaidExpensesandOtherAssets | 0 |
Derivative Financial Instruments Included in Prepaid Expenses and Other Assets | esrt_DerivativeFinancialInstrumentsIncludedinPrepaidExpensesandOtherAssets | 2,536,000 |
Derivative Financial Instruments Included in Accounts Payable and Accrued Expense | esrt_DerivativeFinancialInstrumentsIncludedinAccountsPayableandAccruedExpense | 5,591,000 |
Derivative Financial Instruments Included in Accounts Payable and Accrued Expense | esrt_DerivativeFinancialInstrumentsIncludedinAccountsPayableandAccruedExpense | 436,000 |
Derivative Financial Instruments Included in Accounts Payable and Accrued Expense | esrt_DerivativeFinancialInstrumentsIncludedinAccountsPayableandAccruedExpense | $ 5,243,000 |
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