Form 8-K Empire State Realty Trus For: Oct 29
�
�
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
�
�
FORM 8-K
�
�
CURRENT REPORT
Pursuant to Section�13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October�29, 2014
�
�
EMPIRE STATE REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
�
�
�
| Maryland | � | 001-36105 | � | 37-1645259 |
| (State or other Jurisdiction of Incorporation) |
� | (Commission File Number) |
� | (I.R.S. Employer Identification No.) |
�
�
EMPIRE STATE REALTY OP, L.P.
(Exact Name of Registrant as Specified in its Charter)
�
�
�
| Delaware | � | 001-36106 | � | 45-4685158 |
| (State or other Jurisdiction of Incorporation) |
� | (Commission File Number) |
� | (I.R.S. Employer Identification No.) |
�
| One Grand Central Place 60 East 42nd Street New York, New York |
� | 10165 |
| (Address of Principal Executive Offices) | � | (Zip Code) |
Registrant�s telephone number, including area code: (212) 687-8700
n/a
(Former name or former address, if changed from last report)
�
�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
�
| � | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
�
| � | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
�
| � | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
�
| � | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
�
�
�
| Item�2.02. | Results of Operations and Financial Condition. |
On October�29, 2014, Empire State Realty Trust, Inc. (the �Company�) issued a press release announcing its financial results for the third quarter of 2014. The press release referred to certain supplemental information that is available on the Company�s website. The press release and the supplemental information are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated by reference herein.
The information in Item�2.02 of this Current Report, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed �filed� for purposes of Section�18 of the Securities Exchange Act of 1934, as amended (the �Exchange Act�), or otherwise subject to the liabilities of that Section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the �Securities Act�), or the Exchange Act, unless it is specifically incorporated by reference therein.
�
| Item�7.01. | Regulation FD Disclosure |
As discussed in Item�2.02 above, the Company issued a press release regarding its financial results for the third quarter of 2014 and made available on its website certain supplemental information relating thereto.
The information in Item�7.01 of this Current Report is being furnished and shall not be deemed �filed� for purposes of Section�18 of the Exchange Act, or otherwise subject to the liabilities of that Section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or the Exchange Act, unless it is specifically incorporated by reference therein.
�
| Item�9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
�
| Exhibit�No. | �� | Description |
| 99.1 | �� | Press Release announcing financial results for the third quarter of 2014 |
| 99.2 | �� | Supplemental package |
Non-GAAP Supplemental Financial Measures
Funds From Operations (�FFO�)
The Company computes 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
�
2
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 the Company believes, 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. The Company presents FFO because it considers it an important supplemental measure of its operating performance and believes 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 the Company�s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and could materially impact the Company�s results of operations, the utility of FFO as a measure of its performance is limited. There can be no assurance that FFO presented by the Company 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.
Core Funds From Operations (�Core FFO�)
Core FFO adds back to traditionally defined FFO the following items associated with the Company�s initial public offering, or IPO, and formation transactions: gain on consolidation of non-controlling entities, acquisition expenses, severance expenses and retirement equity compensation expenses. It also adds back private perpetual preferred exchange offering expenses, acquisition expenses, and gain on settlement of lawsuit related to the Observatory, net of income taxes and ground lease amortization. The Company presents Core FFO because it considers it an important supplemental measure of its operating performance in that it excludes items associated with its IPO and formation transactions and other non-recurring items. There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.
�
3
Core Funds Available for Distribution (�Core FAD�)
In addition to Core FFO, the Company presents Core FAD by (i)�adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expense and (ii)�deducting straight line rent, recurring second generation leasing commissions, tenant improvements, prebuilts, capital expenditures, furniture, fixtures�& equipment purchases, amortization of debt premiums and above/below market rent revenue. Core FAD is presented solely as a supplemental disclosure that management believes provides useful information regarding the Company�s ability to fund its dividends. Core FAD does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FAD is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. There can be no assurance that Core FAD presented by the Company is comparable to similarly titled measures of other REITs.
Net Operating Income (�NOI�)
Net Operating Income, or NOI is a non-GAAP financial measure of performance. NOI is used by investors and the Company�s management to evaluate and compare the performance of the Company�s properties and to determine trends in earnings and to compute the fair value of its properties as it is not affected by: (i)�the cost of funds of the property owner, (ii)�the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii)�acquisition expenses and formation transaction expenses; or (iv)�general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from net operating income because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by the Company regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in the Company�s office or retail properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing the Company�s operating results to the operating results of other real estate companies that have not made similarly timed, purchases or sales. The Company also excludes private perpetual exchange offering expenses and gain on settlement of lawsuit related to the Observatory, net of income taxes. The Company believes that eliminating these costs from net income
�
4
is useful because the resulting measure captures the actual revenue, generated and actual expenses incurred in operating its properties as well as trends in occupancy rates, rental rates and operating costs. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company�s properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness. NOI is a measure of the operating performance of the Company�s properties but does not measure its performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Supplemental Package regarding the components of net income that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI than the Company does.
EBITDA
The Company computes EBITDA as net income plus perpetual preferred unit distributions, interest expense, income taxes, depreciation and amortization, acquisition expenses, and gain on consolidation of non-controlled entities. The Company presents EBITDA because it believes that EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of its ability to incur and service debt. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company�s financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of its liquidity.
�
5
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
�
| �� | EMPIRE STATE REALTY TRUST, INC. (Registrant) | |||||
| Date:�October�29,�2014 | �� | By: | � | /s/ David A. Karp | ||
| �� | � | Name: | � | David A. Karp | ||
| �� | � | Title: | � | Executive Vice President, Chief Financial Officer and Treasurer | ||
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
�
| �� | EMPIRE STATE REALTY OP, L.P. (Registrant) | |||||
| �� | By: | � | Empire State Realty Trust, Inc., as general partner | |||
| Date:�October�29,�2014 | �� | By: | � | /s/ David A. Karp | ||
| �� | � | Name: | � | David A. Karp | ||
| �� | � | Title: | � | Executive�Vice�President,�Chief�Financial Officer and Treasurer | ||
�
6
Exhibit 99.1
EMPIRE STATE REALTY TRUST ANNOUNCES THIRD QUARTER 2014 RESULTS
- Reports Core FFO of $0.25 Per Fully Diluted Share -
New York, New York, October�29, 2014 - Empire State Realty Trust, Inc. (NYSE: ESRT) (the �Company�), a real estate investment trust with office and retail properties in Manhattan and the greater New York metropolitan area, today reported operational and financial results for the third quarter 2014.
�We are very pleased with our performance in our first year as a public company. We have consistently stated and executed on the plans we set out prior to our IPO. In the third quarter we redeveloped and leased office and retail space to high quality tenants at very strong leasing spreads and continued towards the completion of our base building redevelopment at the Empire State Building. We added two quality assets with what we think is very good upside to our portfolio through the exercise of our options at 112 West 34th Street and 1400 Broadway, and meaningfully enhanced our balance sheet flexibility. Our third quarter leasing to high quality tenants at very strong positive spreads on new leases underscores the inherent opportunity in our ongoing redevelopment program. Looking ahead, Empire State Realty Trust is well positioned to continue delivering compelling built-in growth and drive value for all shareholders,� stated Anthony E. Malkin, Empire State Realty Trust�s Chairman, Chief Executive Officer, and President.
Third Quarter Highlights
�
| � | � | � | Achieved Core Funds From Operations (�Core FFO�) of $0.25 per fully diluted share and net income attributable to the Company of $0.09 per fully diluted share; |
�
| � | � | � | Total portfolio was 88.7% occupied; including signed leases not commenced (�SLNC�), the total portfolio was 89.7% leased at September�30, 2014; |
�
| � | � | � | Same store portfolio (defined as the total portfolio excluding 112 West 34th Street and 1400 Broadway) was 89.2% occupied, up 60 basis points from June�30, 2014; including SLNC, the same store portfolio was 90.3% leased at September�30, 2014; |
�
| � | � | � | Manhattan office portfolio (excluding the retail component of these properties) was 87.6% occupied; including SLNC, the Manhattan office portfolio was 88.7% leased at September�30, 2014. On a same store basis, the Manhattan office portfolio was 88.1% occupied, up 40 basis points from June�30, 2014; including SLNC, the Manhattan office portfolio same store was 89.4% leased at September�30, 2014; |
�
1
| � | � | � | Retail portfolio was 92.3% occupied; including SLNC, the Company�s retail portfolio was 92.8% leased at September�30, 2014. On a same store basis, the retail portfolio was 92.1% occupied, down 40 basis points from June�30, 2014; including SLNC, the Company�s retail portfolio was 92.7% leased at September�30, 2014; |
�
| � | � | � | Empire State Building was 86.0% occupied, up 40 basis points from June�30, 2014; including SLNC, the Empire State Building was 87.6% leased at September�30, 2014; |
�
| � | � | � | Executed 57 leases, representing 181,743 rentable square feet across the total portfolio, achieving a 19.8% increase in mark-to-market rent over previously fully escalated rents on new, renewal, and expansion leases; 42 of these leases, representing 133,117 rentable square feet, were within the Manhattan office portfolio capturing a 24.9% increase in mark-to-market rent over previously fully escalated rents on new, renewal and expansion leases; |
�
| � | � | � | Signed 22 new leases representing 97,424 rentable square feet of new leases in the third quarter 2014 for the Manhattan office portfolio (excluding the retail component of these properties), achieving an increase of 37.2% in mark-to-market rent over expired previously fully escalated rents; |
�
| � | � | � | The Empire State Building Observatory revenue for the third quarter 2014 grew 10.2% to $35.7 million, from $32.4 million in the third quarter 2013; |
�
| � | � | � | Purchased the ground and operating leases at 112 West 34th Street (and the fee title to 122 West 34th Street) and the ground lease at 1400 Broadway (the �option properties�) for a total of approximately $734 million in assumption of debt, cash, common stock and operating partnership units adding 1.6�million square feet of office and retail, including approximately 600,000 square feet of space for redevelopment, to the Manhattan portfolio; |
�
| � | � | � | Completed a private placement of $250 million aggregate principal amount of 2.625% Exchangeable Senior Notes and completed an exchange of private perpetual preferred units on a one-for-one basis for 1,609,813 common operating partnership units; and |
�
| � | � | � | Declared a dividend in the amount of $0.085 per share for the third quarter 2014, which was paid on September�30, 2014. |
�
2
Financial Results for the Third Quarter 2014
Core FFO was $65.1 million, or $0.25 per fully diluted share. Core FFO excludes the impact of acquisition costs, private perpetual preferred unit exchange offering costs, and the amortization of below-market ground leases. Funds from Operations (�FFO�), which includes these items, was $60.3 million, or $0.23 per fully diluted share.
Net income attributable to common stockholders was $8.3 million, or $0.09 per fully diluted share. The Company began operations upon the completion of its formation transactions and initial public offering in October 2013 and therefore had no comparative results to report for the third quarter 2013.
Financial Results for the Nine Months Ended September�30, 2014
Core FFO was $162.2 million, or $0.65 per fully diluted share. Core FFO excludes the impact of acquisition costs, private perpetual preferred unit exchange offering costs, the amortization of below-market ground leases, and gains, net of income taxes, on the settlement of a lawsuit related to the Observatory. FFO, which includes these items, was $155.4 million, or $0.62 per fully diluted share.
Net income attributable to common stockholders was $22.5 million, or $0.23 per fully diluted share. The Company began operations upon the completion of its formation transactions and initial public offering in October 2013 and therefore had no comparative results to report for the nine months ended September�30, 2013.
Portfolio Operations
The Company reported that its total portfolio as of September�30, 2014, containing 10.0�million rentable square feet of office and retail space, was 88.7% occupied at the end of the third quarter 2014. Including SLNC, the Company�s portfolio was 89.7% leased at September�30, 2014.
The Company�s same store portfolio, defined as the total portfolio excluding 112 West 34th Street and 1400 Broadway and containing 8.4�million rentable square feet of office and retail space, was 89.2%
�
3
occupied at the end of the third quarter 2014. Percentage occupied was up 60 basis points from 88.6% at the end of the second quarter 2014, and up 350 basis points from 85.7% at the end of the third quarter 2013. Including SLNC, the Company�s same store portfolio was 90.3% leased at September�30, 2014.
The Company�s office portfolio (excluding the retail component of these properties) as of September�30, 2014, containing 9.3�million rentable square feet, was 88.5% occupied at the end of the third quarter 2014. On a same store basis, the office portfolio was 89.0% occupied, up 70 basis points from the end of the second quarter 2014, and up 380 basis points from the end of the third quarter 2013. Including SLNC, the Company�s office portfolio (excluding the retail component of these properties) was 89.4% leased at September�30, 2014.
The Manhattan office portfolio (excluding the retail component of these properties) as of September�30, 2014, containing 7.5�million rentable square feet was 87.6% occupied at the end of the third quarter 2014. On a same store basis, the Manhattan office portfolio was 88.1% occupied, up 40 basis points from the end of the second quarter 2014, and up 440 basis points from the end of the third quarter 2013. Including SLNC, the Company�s Manhattan office portfolio (excluding the retail component of these properties), was 88.7% leased at September�30, 2014.
The Company�s retail portfolio as of September�30, 2014, containing approximately 731,000 rentable square feet, was 92.3% occupied at the end of the third quarter 2014. On a same store basis, the retail portfolio was 92.1% occupied, which compares to 92.5% at the end of the second quarter of 2014, and compares to 91.6% at the end of the third quarter 2013. Including SLNC, the Company�s retail portfolio was 92.8% leased at September�30, 2014.
Leasing
For the three months ended September�30, 2014, the Company executed 57 leases within the total portfolio, comprising 181,743 rentable square feet. Total leasing volume included 55 office leases, comprising 173,582 rentable square feet, and two retail leases, comprising 8,161 rentable square feet.
�
4
On a blended basis, the 57 new, renewal and expansion leases signed within the total portfolio during the quarter had an average starting rental rate of $51.11 per rentable square foot, representing an increase of 19.8% over the prior in-place rent on a fully escalated basis.
Leases signed in the Third Quarter 2014 for the Manhattan office portfolio included
�
| � | � | � | 22 new leases comprising 97,424 rentable square feet, with an average starting rental rate of $52.65 per rentable square foot, representing an increase of 37.2% over the prior in-place rent on a fully escalated basis, and |
�
| � | � | � | 20 renewal leases, comprising 35,693 rentable square feet, with an average starting rental rate of $49.35 per rentable square foot, representing a decrease of 0.9% over the prior in-place rent on a fully escalated basis. |
Significant Leases Executed During the Third Quarter included
�
| � | � | � | At the Empire State Building, the Company signed a 26,286 rentable square foot full floor new lease with BrightRoll, Inc., the leading independent video advertising technology platform, for a term of 10.4 years. |
Empire State Building
The Company continues to renovate and re-lease the 2.8�million rentable square foot Empire State Building, its flagship property. At September�30, 2014, the Empire State Building was 86.0% occupied; including SLNC, the Empire State Building was 87.6% leased.
During the third quarter 2014, the Company executed six office leases at the Empire State Building, representing 53,876 rentable square feet in the aggregate.
The Observatory revenue for the third quarter grew 10.2% to $35.7 million, from $32.4 million in the third quarter 2013. The increase in Observatory revenue was driven by a combination of more visitors, higher admission prices, and a better mix of tickets purchased. The Observatory hosted approximately 1.4�million visitors in the third quarter 2014, representing a 0.9% increase from the same period of 2013.
�
5
For the nine months ended September�30, 2014, the Observatory recovered from bad weather in the quarter ended March�31, 2014 and hosted 3.3�million visitors, equal to record numbers from the same period in 2013. Observatory revenue was $83.4 million, a 9.2% increase from $76.4 million for the nine months ended September�30, 2013.
Acquisitions
On July�15, 2014, the Company acquired the ground and operating lease at 112 West 34th Street (and the fee title to 122 West 34th Street) for $423.6 million, consisting of $87.7 million by assumption of existing mortgage debt, $106.9 million in cash and $229.0 million in shares of Class�A and Class B common stock and Series PR operating partnership units of Empire State Realty OP, L.P., the Company�s operating partnership (�ESRO�).
On July�15, 2014, the Company also acquired the ground lease at 1400 Broadway for $310.0 million, consisting of $80.0 million by assumption of existing mortgage debt, $79.7 million in cash and $150.3 million in shares of Class�A and Class B common stock and Series PR operating partnership units of ESRO.
Balance Sheet and Financial Transactions
As of September�30, 2014, the outstanding balance on the Company�s term loan and credit facility was $355.6 million. The secured revolving and term credit facility has an accordion feature, allowing for an increase in its maximum aggregate principal balance to $1.25 billion under certain circumstances.
At September�30, 2014, the Company had total debt outstanding of approximately $1.6 billion, with a weighted average interest rate of 4.29%�per annum, and a weighted average term to maturity of three years. At September�30, 2014, the Company had approximately $104.2 million of debt maturing during the remainder of 2014, and approximately $132.6 million maturing in 2015.
During the quarter, the Company�s operating partnership completed a private placement of $250 million aggregate principal amount of its 2.625% Exchangeable Senior Notes due 2019. The net proceeds, which totaled approximately $247.0 million, were used to finance the cash portion of the acquisition of the option properties and to repay mortgage debt outstanding.
�
6
During the quarter, the Company completed an exchange of private perpetual preferred units on a one-for-one basis for 1,609,813 common operating partnership units of ESRO. The private perpetual preferred units have a stated distribution entitlement of $0.60 per unit per annum. The exchange offer was made only to current holders of operating partnership units and was not made or offered to the public or holders of the Company�s common stock or any other security.
Subsequent to quarter end, the Company took advantage of a favorable prepayment option with its existing lender to refinance at a lower rate the mortgage loan on its Metro Center property, located in Stamford, Connecticut. The new $100 million mortgage loan�has a ten year term and bears interest at a fixed rate of 3.59% with amortization on a 30 year schedule.
Dividend
The Company paid a dividend of $0.085 per share for the third quarter 2014 to holders of the Company�s Class�A common stock and Class B common stock and to holders of ESRO�s Series ES, Series 250 and Series 60 operating partnership units (NYSE Arca: ESBA, FISK and OGCP, respectively) and Series PR operating partnership units on September�30, 2014. The Company paid a dividend of $0.15 per unit for the third quarter 2014 to holders of ESRO�s private perpetual preferred units.
Webcast and Conference Call Details
Empire State Realty Trust will host a webcast and conference call, open to the general public, on Thursday, October�30, 2014 at 8:30 am Eastern time.
The webcast will be available in the Investors section of the Company�s website at www.empirestaterealtytrust.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Shortly after the call, a replay of the webcast will be available for 90 days on the Company�s website.
The conference call can be accessed by dialing 1-877-407-3982 for domestic callers or 1-201-493-6780 for international callers. A replay will be available shortly after the call and can be accessed by dialing 1-877-870-5176 for domestic callers or 1-858-384-5517 for international callers. The passcode for the replay is 13591471. A replay of the conference call will be available until November�6, 2014.
�
7
The Supplemental Package will be available prior to the conference call in the Investors section of the Company�s website, www.empirestaterealtytrust.com.
About Empire State Realty Trust
Empire State Realty Trust, Inc. (NYSE: ESRT), a leading real estate investment trust (REIT), owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building, the world�s most famous office building. Headquartered in New York, New York, the Company�s office and retail portfolio covers 10.0�million rentable square feet, as of September�30, 2014, consisting of 9.3�million rentable square feet in 14 office properties, including nine in Manhattan, three in Fairfield County, Connecticut and two in Westchester County, New York; and approximately 731,000 rentable square feet in the retail portfolio. The Company also owns land at the Stamford, Connecticut Transportation Center that supports the development of an approximately 380,000 rentable square foot office building and garage.
Non-GAAP Financial Measures
The Company has used non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on pages 12 and 13 of this release and in the Company�s supplemental package.
Forward-Looking Statements
This press release includes �forward looking statements�. Forward-looking statements may be identified by the use of words such as �believes,� �expects,� �may,� �will,� �should,� �seeks,� �approximately,� �intends,� �plans,� �pro forma,� �estimates,� �contemplates,� �aims,� �continues,� �would� or �anticipates� or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: the factors included in (i)�the Company�s Annual Report
�
8
on Form 10-K for the year ended December�31, 2013, including those set forth under the headings �Risk Factors,� �Management�s Discussion and Analysis of Financial Condition and Results of Operations,� �Business,� and �Properties� and (ii)�in future periodic reports filed by the Company under the Securities and Exchange Act of 1934, as amended. While forward-looking statements reflect the Company�s good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. For a further discussion of these and other factors that could impact the Company�s future results, performance or transactions, see the section entitled �Risk Factors� in the Annual Report on Form 10-K for the year ended December�31, 2013, and in the Quarterly Report on Form 10-Q for the quarter ended June�30, 2014 and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).
Contact:
Investors
Empire State Realty Trust Investor Relations
(212) 850-2678
Media
Brandy Bergman/Hugh Burns
Sard Verbinnen�& Co.
(212) 687-8080
�
9
Empire State Realty Trust, Inc.
Condensed Consolidated Statement of Income
(unaudited and amounts in thousands, except per share data)
�
| � | �� | For the Three Months�Ended September�30, 2014 |
� | |
| Revenues |
�� | |||
| Rental revenue |
�� | $ | 106,152 | �� |
| Tenant expense reimbursement |
�� | � | 20,034 | �� |
| Observatory revenue |
�� | � | 35,684 | �� |
| Construction revenue |
�� | � | 5,804 | �� |
| Third-party management and other fees |
�� | � | 561 | �� |
| Other revenue and fees |
�� | � | 1,206 | �� |
| �� | � |
� |
� | |
| Total revenues |
�� | � | 169,441 | �� |
| Operating expenses |
�� | |||
| Property operating expenses |
�� | � | 38,291 | �� |
| Ground rent expenses |
�� | � | 2,066 | �� |
| Marketing, general and administrative expenses |
�� | � | 10,071 | �� |
| Observatory expenses |
�� | � | 7,109 | �� |
| Construction expenses |
�� | � | 6,095 | �� |
| Real estate taxes |
�� | � | 21,870 | �� |
| Acquisition expenses |
�� | � | 2,647 | �� |
| Depreciation and amortization |
�� | � | 37,880 | �� |
| �� | � |
� |
� | |
| Total operating expenses |
�� | � | 126,029 | �� |
| �� | � |
� |
� | |
| Total operating income |
�� | � | 43,412 | �� |
| Interest expense |
�� | � | (17,674 | )� |
| �� | � |
� |
� | |
| Income before income taxes |
�� | � | 25,738 | �� |
| Income tax expense |
�� | � | (3,004 | )� |
| �� | � |
� |
� | |
| Net income |
�� | � | 22,734 | �� |
| Preferred unit distributions |
�� | � | (241 | )� |
| Net income attributable to non-controlling interests |
�� | � | (14,171 | )� |
| �� | � |
� |
� | |
| Net income attributable to common stockholders |
�� | $ | 8,322 | �� |
| �� | � |
� |
� | |
| Total weighted average shares |
�� | |||
| Basic |
�� | � | 97,729 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | � | 263,041 | �� |
| �� | � |
� |
� | |
| Net income per share attributable to common stockholders |
�� | |||
| Basic |
�� | $ | 0.09 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.09 | �� |
| �� | � |
� |
� | |
Empire State Realty Trust, Inc.
Condensed Consolidated Statement of Income
(unaudited and amounts in thousands, except per share data)
�
| � | �� | For the Nine Months�Ended September�30, 2014 |
� | |
| Revenues |
�� | |||
| Rental revenue |
�� | $ | 288,566 | �� |
| Tenant expense reimbursement |
�� | � | 49,491 | �� |
| Observatory revenue |
�� | � | 83,374 | �� |
| Construction revenue |
�� | � | 33,730 | �� |
| Third-party management and other fees |
�� | � | 1,925 | �� |
| Other revenue and fees |
�� | � | 7,829 | �� |
| �� | � |
� |
� | |
| Total revenues |
�� | � | 464,915 | �� |
| Operating expenses |
�� | |||
| Property operating expenses |
�� | � | 109,300 | �� |
| Ground rent expenses |
�� | � | 2,964 | �� |
| Marketing, general and administrative expenses |
�� | � | 29,786 | �� |
| Observatory expenses |
�� | � | 21,210 | �� |
| Construction expenses |
�� | � | 33,173 | �� |
| Real estate taxes |
�� | � | 58,429 | �� |
| Acquisition expenses |
�� | � | 3,382 | �� |
| Depreciation and amortization |
�� | � | 96,632 | �� |
| �� | � |
� |
� | |
| Total operating expenses |
�� | � | 354,876 | �� |
| �� | � |
� |
� | |
| Total operating income |
�� | � | 110,039 | �� |
| Interest expense |
�� | � | (46,640 | )� |
| �� | � |
� |
� | |
| Income before income taxes |
�� | � | 63,399 | �� |
| Income tax expense |
�� | � | (4,153 | )� |
| �� | � |
� |
� | |
| Net income |
�� | � | 59,246 | �� |
| Preferred unit distributions |
�� | � | (241 | )� |
| Net income attributable to non-controlling interests |
�� | � | (36,480 | )� |
| �� | � |
� |
� | |
| Net income attributable to common stockholders |
�� | $ | 22,525 | �� |
| �� | � |
� |
� | |
| Total weighted average shares |
�� | |||
| Basic |
�� | � | 96,226 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | � | 250,696 | �� |
| �� | � |
� |
� | |
| Net income per share attributable to common stockholders |
�� | |||
| Basic |
�� | $ | 0.23 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.23 | �� |
| �� | � |
� |
� | |
Empire State Realty Trust, Inc.
Reconciliation of Net Income to Funds From Operations (�FFO�)
and Core Funds From Operations (�Core FFO�)
(unaudited and amounts in thousands, except per share data)
�
| � | �� | For the Three Months�Ended September�30, 2014 |
� | |
| Net income |
�� | $ | 22,734 | �� |
| Preferred unit distributions |
�� | � | (241 | )� |
| Real estate depreciation and amortization |
�� | � | 37,797 | �� |
| �� | � |
� |
� | |
| FFO |
�� | � | 60,290 | �� |
| Private perpetual preferred exchange offering expenses |
�� | � | 407 | �� |
| Acquisition expenses |
�� | � | 2,647 | �� |
| Amortization of below-market ground leases |
�� | � | 1,750 | �� |
| �� | � |
� |
� | |
| Core FFO |
�� | $ | 65,094 | �� |
| �� | � |
� |
� | |
| Total weighted average shares and Operating Partnership Units |
�� | |||
| Basic |
�� | � | 263,041 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | � | 263,041 | �� |
| �� | � |
� |
� | |
| FFO per share |
�� | |||
| Basic |
�� | $ | 0.23 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.23 | �� |
| �� | � |
� |
� | |
| Core FFO per share |
�� | |||
| Basic |
�� | $ | 0.25 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.25 | �� |
| �� | � |
� |
� | |
Empire State Realty Trust, Inc.
Reconciliation of Net Income to Funds From Operations (�FFO�)
and Core Funds From Operations (�Core FFO�)
(unaudited and amounts in thousands, except per share data)
�
| � | �� | For the Nine Months�Ended September�30, 2014 |
� | |
| Net income |
�� | $ | 59,246 | �� |
| Preferred unit distributions |
�� | � | (241 | )� |
| Real estate depreciation and amortization |
�� | � | 96,405 | �� |
| �� | � |
� |
� | |
| FFO |
�� | � | 155,410 | �� |
| Gain on settlement of lawsuit related to the Observatory, net of income taxes |
�� | � | (540 | )� |
| Private perpetual preferred exchange offering expenses |
�� | � | 1,357 | �� |
| Acquisition expenses |
�� | � | 3,382 | �� |
| Amortization of below-market ground leases |
�� | � | 2,602 | �� |
| �� | � |
� |
� | |
| Core FFO |
�� | $ | 162,211 | �� |
| �� | � |
� |
� | |
| Total weighted average shares and Operating Partnership Units |
�� | |||
| Basic |
�� | � | 250,696 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | � | 250,696 | �� |
| �� | � |
� |
� | |
| FFO per share |
�� | |||
| Basic |
�� | $ | 0.62 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.62 | �� |
| �� | � |
� |
� | |
| Core FFO per share |
�� | |||
| Basic |
�� | $ | 0.65 | �� |
| �� | � |
� |
� | |
| Diluted |
�� | $ | 0.65 | �� |
| �� | � |
� |
� | |
Empire State Realty Trust, Inc.
Condensed Consolidated Balance Sheets
(unaudited and amounts in thousands)
�
| � | �� | September�30, 2014 |
� | � | December�31, 2013 |
� | ||
| Assets |
�� | � | ||||||
| Commercial real estate properties, at cost |
�� | $ | 2,107,610 | �� | � | $ | 1,649,423 | �� |
| Less: accumulated depreciation |
�� | � | (354,730 | )� | � | � | (295,351 | )� |
| �� | � |
� |
� | � | � |
� |
� | |
| Commercial real estate properties, net |
�� | � | 1,752,880 | �� | � | � | 1,354,072 | �� |
| Cash and cash equivalents |
�� | � | 52,918 | �� | � | � | 60,743 | �� |
| Restricted cash |
�� | � | 63,821 | �� | � | � | 55,621 | �� |
| Tenant and other receivables |
�� | � | 29,837 | �� | � | � | 24,817 | �� |
| Deferred rent receivables |
�� | � | 94,837 | �� | � | � | 62,689 | �� |
| Prepaid expenses and other assets |
�� | � | 31,091 | �� | � | � | 35,407 | �� |
| Deferred costs, net |
�� | � | 80,396 | �� | � | � | 78,938 | �� |
| Acquired below market ground leases, net |
�� | � | 392,756 | �� | � | � | 62,312 | �� |
| Acquired lease intangibles, net |
�� | � | 312,001 | �� | � | � | 249,983 | �� |
| Goodwill |
�� | � | 491,479 | �� | � | � | 491,479 | �� |
| �� | � |
� |
� | � | � |
� |
� | |
| Total assets |
�� | $ | 3,302,016 | �� | � | $ | 2,476,061 | �� |
| �� | � |
� |
� | � | � |
� |
� | |
| Liabilities and equity |
�� | � | ||||||
| Mortgage notes |
�� | $ | 1,005,569 | �� | � | $ | 883,112 | �� |
| Term loan and credit facility |
�� | � | 355,600 | �� | � | � | 325,000 | �� |
| Exchangeable senior notes |
�� | � | 236,999 | �� | � | � | ��� | �� |
| Accounts payable and accrued expenses |
�� | � | 97,413 | �� | � | � | 81,908 | �� |
| Acquired below market leases, net |
�� | � | 148,493 | �� | � | � | 129,882 | �� |
| Deferred revenue and other liabilities |
�� | � | 24,728 | �� | � | � | 21,568 | �� |
| Tenants� security deposits |
�� | � | 40,111 | �� | � | � | 31,406 | �� |
| �� | � |
� |
� | � | � |
� |
� | |
| Total liabilities |
�� | � | 1,908,913 | �� | � | � | 1,472,876 | �� |
| Total equity |
�� | � | 1,393,103 | �� | � | � | 1,003,185 | �� |
| �� | � |
� |
� | � | � |
� |
� | |
| Total liabilities and equity |
�� | $ | 3,302,016 | �� | � | $ | 2,476,061 | �� |
| �� | � |
� |
� | � | � |
� |
� | |
Exhibit 99.2
�
�
EMPIRE STATE REALTY TRUST
Supplemental Operating and Financial Data
For the Quarter Ended September 30, 2014
�
Third Quarter 2014
�
| Table of Contents |
�� | Page | � | |
| Summary |
�� | |||
| Company Profile |
�� | � | 3 | �� |
| Financial Highlights |
�� | � | 4 | �� |
| Selected Property Data |
�� | |||
| Property Summary |
�� | � | 5 | �� |
| Property Same Store Summary |
�� | � | 7 | �� |
| Property Detail |
�� | � | 8 | �� |
| Tenant Lease Expirations |
�� | � | 9 | �� |
| Largest Tenants and Portfolio Tenant Diversification by Industry |
�� | � | 12 | �� |
| Capital Expenditures and Redevelopment Program |
�� | � | 13 | �� |
| Observatory Summary |
�� | � | 14 | �� |
| Financial information |
�� | |||
| Condensed Consolidated Balance Sheets |
�� | � | 15 | �� |
| Condensed Consolidated Statements of Income |
�� | � | 16 | �� |
| Core FFO, FFO, FAD and EBITDA |
�� | � | 17 | �� |
| Net Operating Income |
�� | � | 18 | �� |
| Consolidated Debt Analysis |
�� | |||
| Debt Summary |
�� | � | 19 | �� |
| Debt Detail |
�� | � | 20 | �� |
| Debt Maturities |
�� | � | 21 | �� |
| Ground Leases |
�� | � | 21 | �� |
| Supplemental Definitions |
�� | � | 22 | �� |
Forward-looking Statements
We make forward-looking statements in this supplemental package within the meaning of Section�27A of the Securities Act of 1933, as amended, and Section�21E of the Securities Exchange Act of 1934, as amended. You should not rely on them as predictions of future events. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections.
You can identify forward-looking statements by the use of forward-looking terminology such as �believes,� �expects,� �may,� �will,� �should,� �seeks,� �approximately,� �intends,� �plans,� �estimates,� �contemplates,� �aims,� �continues,� �would� or �anticipates� or similar words or phrases in the positive or negative. In particular, forward looking statements include those pertaining to our capital resources, portfolio performance, dividend policy, results of operations, anticipated growth in our portfolio from operations, acquisitions, and market conditions and demographics.
Forward-looking statements involve numerous risks and uncertainties, many of which are difficult to predict and generally beyond our control. They depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: changes in our industry and markets, either nationally or in Manhattan or the greater New York metropolitan area; resolution of the appeals related to the class actions filed against us; reduced demand for office or retail space; general volatility of the capital and credit markets and the market price of our Class�A common stock and listed operating partnership units; changes in our business strategy; defaults on, early terminations of, or non-renewal of leases by, tenants; insolvency of a major tenant or a significant number of smaller tenants; fluctuations in interest rates; increased operating costs; declining real estate valuations and impairment charges; our failure to obtain necessary financing; our expected leverage; decreased rental rates or increased vacancy rates; our failure to generate sufficient cash flows to service our outstanding indebtedness; our failure to redevelop, renovate and reposition properties successfully or on the anticipated timeline or at the anticipated costs; difficulties in identifying properties to acquire and completing acquisitions; risks of real estate acquisitions, dispositions and development (including our Metro Tower development site), including construction delays and cost overruns; our failure to operate acquired properties and operations successfully; our ability to manage our growth effectively; changes in governmental regulations, tax laws and rates and similar matters; our failure to qualify as a REIT; a future terrorist event in the U.S.; environmental uncertainties and risks related to adverse weather conditions and natural disasters; lack or insufficient amounts of insurance; financial market fluctuations; availability of, and our ability to attract and retain, qualified personnel; conflicts of interest affecting our senior management team; competition; changes in real estate and zoning laws and increases in real property tax rates; and our ability to comply with the laws, rules and regulations applicable to companies and, in particular, public companies.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes after the date of this presentation, except as required by applicable law.
For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled �Risk Factors� beginning on page 11 of our Annual Report on Form 10-K for the year ended December�31, 2013 and on page 59 of our Quarterly Report on Form 10-Q for the quarter ended June�30, 2014 and other risks described in documents we subsequently file from time to time with the Securities and Exchange Commission.
�
Page 2
Third Quarter 2014
COMPANY PROFILE
Empire State Realty Trust, Inc., or the Company, is a leading real estate investment trust (REIT) that owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building, the world�s most famous office building.
�
| BOARD OF DIRECTORS | �� | �� | ||
| Anthony E. Malkin |
�� | William H. Berkman | �� | Alice M. Connell |
| Chairman, Chief Executive |
�� | Director, Chair of | �� | Director |
| Officer and President |
�� | Compensation Committee | �� | |
| Thomas J. DeRosa |
�� | Steven J. Gilbert | �� | S. Michael Giliberto |
| Director, Chair of |
�� | Director, Lead Director | �� | Director |
| Audit Committee |
�� | �� | ||
| Lawrence E. Golub |
�� | �� | ||
| Director, Chair of Nominating/Corporate |
�� | �� | ||
| Governance Committee |
�� | �� | ||
| EXECUTIVE MANAGEMENT | �� | �� | ||
| Anthony E. Malkin |
�� | Thomas P. Durels | �� | David A. Karp |
| Chairman, Chief Executive |
�� | Executive Vice President and | �� | Executive Vice President, Chief |
| Officer and President |
�� | Director of Leasing and Operations | �� | Financial Officer and Treasurer |
| Thomas N. Keltner, Jr. |
�� | �� | ||
| Executive Vice President, |
�� | �� | ||
| General Counsel and Secretary |
�� | �� | ||
| COMPANY INFORMATION | �� | �� | ||
| Corporate Headquarters |
�� | Investor Relations | �� | New York Stock Exchange |
| One Grand Central Place |
�� | David A. Karp | �� | Trading Symbol: ESRT |
| 60 East 42nd Street |
�� | [email protected] | �� | |
| New York, NY 10165 www.empirestaterealtytrust.com |
�� | �� | ||
| (212) 687-8700 |
�� | �� | ||
�
Page 3
Third Quarter 2014
Financial Highlights
(unaudited and dollars in thousands, except per share amounts)
�
| � | �� | Three Months Ended | � | � | Period from October 7,�2013 through December�31, 2013 |
� | ||||||||||
| � | �� | September 30, 2014 |
� | � | June 30, 2014 |
� | � | March 31, 2014 |
� | � | ||||||
| Selected Items: |
�� | � | � | � | ||||||||||||
| Revenue |
�� | $ | 169,441 | �� | � | $ | 155,168 | � | � | $ | 140,306 | �� | � | $ | 127,583 | � |
| EBITDA (1) |
�� | $ | 83,698 | �� | � | $ | 71,911 | � | � | $ | 54,203 | �� | � | $ | 48,405 | � |
| Cash net operating income (1) |
�� | $ | 82,379 | �� | � | $ | 66,994 | � | � | $ | 49,029 | �� | � | $ | 54,000 | � |
| Net income |
�� | $ | 22,734 | �� | � | $ | 25,281 | � | � | $ | 11,231 | �� | � | $ | 193,431 | � |
| Core funds from operations (�Core FFO�) (1) |
�� | $ | 65,094 | �� | � | $ | 55,408 | � | � | $ | 41,709 | �� | � | $ | 41,793 | � |
| Core funds available for distribution (�Core FAD�) (1) |
�� | $ | 49,008 | �� | � | $ | 39,236 | � | � | $ | 25,839 | �� | � | $ | 21,819 | � |
| Core FFO per share - diluted |
�� | $ | 0.25 | �� | � | $ | 0.23 | � | � | $ | 0.17 | �� | � | $ | 0.17 | � |
| Core FAD per share - diluted |
�� | $ | 0.19 | �� | � | $ | 0.16 | � | � | $ | 0.11 | �� | � | $ | 0.09 | � |
| Dividends declared and paid per share |
�� | $ | 0.085 | �� | � | $ | 0.085 | � | � | $ | 0.085 | �� | � | $ | 0.0795 | � |
| Portfolio Statistics: |
�� | � | � | � | ||||||||||||
| Number of properties |
�� | � | 20 | �� | � | � | 18 | � | � | � | 18 | �� | � | � | 18 | � |
| Total rentable square footage |
�� | � | 10,024,329 | �� | � | � | 8,371,044 | � | � | � | 8,362,786 | �� | � | � | 8,350,871 | � |
| Percent occupied (2) |
�� | � | 88.7 | %� | � | � | 88.6 | % | � | � | 87.2 | %� | � | � | 86.1 | % |
| Observatory Metrics: |
�� | � | � | � | ||||||||||||
| Number of visitors |
�� | � | 1,405,000 | �� | � | � | 1,222,000 | � | � | � | 664,000 | �� | � | � | 980,000 | � |
| Change in visitors year over year |
�� | � | 0.9 | %� | � | � | 3.8 | % | � | � | -6.3 | %� | � | � | 8.5 | % |
| Observatory revenues |
�� | $ | 35,684 | �� | � | $ | 30,389 | � | � | $ | 17,301 | �� | � | $ | 25,389 | � |
| Change in revenues year over year |
�� | � | 10.2 | %� | � | � | 11.4 | % | � | � | 3.6 | %� | � | � | 10.4 | % |
| Ratios: |
�� | � | � | � | ||||||||||||
| Consolidated Debt to Total Market Capitalization (3) |
�� | � | 28 | %� | � | � | 23 | % | � | � | 24 | %� | � | � | 24 | % |
| Consolidated Debt and Perpetual Preferred Units to Total Market Capitalization (3) |
�� | � | 29 | %� | � | � | 23 | % | � | � | 24 | %� | � | � | 24 | % |
| Consolidated Debt to EBITDA (annualized) |
�� | � | 4.8x | �� | � | � | 4.3x | �� | � | � | 5.6x | �� | � | � | 5.9x | �� |
| Interest Coverage Ratio |
�� | � | 5.5x | �� | � | � | 4.9x | �� | � | � | 3.9x | �� | � | � | 3.9x | �� |
| Core FFO Payout Ratio (4) |
�� | � | 35 | %� | � | � | 38 | % | � | � | 51 | %� | � | � | 47 | % |
| Core FAD Payout Ratio (5) |
�� | � | 46 | %� | � | � | 53 | % | � | � | 78 | %� | � | � | 89 | % |
| Class�A common stock price at quarter end |
�� | $ | 15.02 | �� | � | $ | 16.50 | � | � | $ | 15.11 | �� | � | $ | 15.30 | � |
| Average closing price |
�� | $ | 16.20 | �� | � | $ | 16.07 | � | � | $ | 14.88 | �� | � | $ | 14.64 | � |
| Dividends per share - annualized |
�� | $ | 0.34 | �� | � | $ | 0.34 | � | � | $ | 0.34 | �� | � | $ | 0.34 | � |
| Dividend yield (6) |
�� | � | 2.3 | %� | � | � | 2.1 | % | � | � | 2.3 | %� | � | � | 2.2 | % |
| Private Perpetual Preferred Units outstanding |
�� | � | 1,609,813 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Common stock and operating partnership units outstanding |
�� | � | 267,129,680 | �� | � | � | 245,964,043 | � | � | � | 245,894,321 | �� | � | � | 245,477,006 | � |
Notes:
�
| (1) | Represents non-GAAP financial measures. For a discussion on what these metrics represent and why the Company presents them, see page 23 and for a reconciliation of these metrics to net income, see pages 18 and 19. |
| (2) | Based on leases signed and commenced as of end of period. |
| (3) | Market capitalization represents the sum of (i)�Company�s common stock per share price as of September�30, 2014 multiplied by the total outstanding number of shares of common stock and operating partnership units as of September�30, 2014; (ii)�the number of perpetual preferred units at September�30, 2014 multiplied by $16.62 and (iii)�our outstanding indebtedness as of September�30, 2014. |
| (4) | Represents the amount of Core FFO paid out in distributions. |
| (5) | Represents the amount of Core FAD paid out in distributions. |
| (6) | Based on the closing price per share of Class�A common stock on September�30, 2014. |
�
�
Page 4
Third Quarter 2014
Property Summary
(unaudited and dollars in thousands, except per square foot amounts)
�
| � | �� | Three Months Ended September 30, 2014 | � | |||||||||||||||||
| � | �� | � | � | � | Manhattan | � | � | Greater�New�York | � | � | Standalone |
� | � | � | � | |||||
| � | �� | Total Portfolio |
� | � | Office Portfolio (1) |
� | � | Office Portfolio |
� | � | Retail Portfolio |
� | � | Observatory | � | |||||
| Number of properties |
�� | � | 20 | �� | � | � | 9 | �� | � | � | 5 | �� | � | � | 6 | �� | � | |||
| Square feet |
�� | � | 10,024,329 | �� | � | � | 7,976,822 | �� | � | � | 1,843,332 | �� | � | � | 204,175 | �� | � | |||
| Occupancy (2) |
�� | � | 88.7 | %� | � | � | 87.7 | %� | � | � | 91.8 | %� | � | � | 100.0 | %� | � | |||
| Revenue |
�� | $ | 163,076 | �� | � | $ | 103,528 | �� | � | $ | 19,053 | �� | � | $ | 4,811 | �� | � | $ | 35,684 | �� |
| Operating expenses |
�� | � | (69,336 | )� | � | � | (52,916 | )� | � | � | (7,773 | )� | � | � | (1,538 | )� | � | � | (7,109 | )� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 93,740 | �� | � | � | 50,612 | �� | � | � | 11,280 | �� | � | � | 3,273 | �� | � | � | 28,575 | �� |
| Straight-line rent |
�� | � | (8,543 | )� | � | � | (8,858 | )� | � | � | 433 | �� | � | � | (118 | )� | � | � | ��� | �� |
| Above/below-market lease amortization |
�� | � | (4,568 | )� | � | � | (4,568 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Below-market ground lease amortization |
�� | � | 1,750 | �� | � | � | 1,750 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 82,379 | �� | � | $ | 38,936 | �� | � | $ | 11,713 | �� | � | $ | 3,155 | �� | � | $ | 28,575 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Leasing activity |
�� | � | � | � | � | |||||||||||||||
| Total leases executed |
�� | � | 57 | �� | � | � | 48 | �� | � | � | 9 | �� | � | � | ��� | �� | � | |||
| Total square footage executed |
�� | � | 181,743 | �� | � | � | 143,290 | �� | � | � | 38,453 | �� | � | � | ��� | �� | � | |||
| Average rent psf - leases executed |
�� | $ | 51.11 | �� | � | $ | 55.80 | �� | � | $ | 33.65 | �� | � | $ | ��� | �� | � | |||
| Previously escalated rents psf |
�� | $ | 42.67 | �� | � | $ | 44.99 | �� | � | $ | 34.02 | �� | � | $ | ��� | �� | � | |||
| Percentage of new rent over previously escalated rents |
�� | � | 19.8 | %� | � | � | 24.0 | %� | � | � | -1.1 | %� | � | � | ��� | �� | � | |||
| Leasing commission costs per square foot |
�� | $ | 14.30 | �� | � | $ | 16.97 | �� | � | $ | 4.34 | �� | � | $ | ��� | �� | � | |||
| Tenant improvement costs per square foot |
�� | � | 43.54 | �� | � | � | 53.14 | �� | � | � | 7.79 | �� | � | � | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| Total LC and TI per square foot (3) |
�� | $ | 57.84 | �� | � | $ | 70.11 | �� | � | $ | 12.13 | �� | � | $ | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| � | �� | Three Months Ended June 30, 2014 | � | |||||||||||||||||
| � | �� | � | � | � | Manhattan | � | � | Greater New York | � | � | Standalone | � | � | � | � | |||||
| � | �� | Total Portfolio |
� | � | Office Portfolio (1) |
� | � | Office Portfolio |
� | � | Retail Portfolio |
� | � | Observatory | � | |||||
| Number of properties |
�� | � | 18 | �� | � | � | 7 | � | � | � | 5 | �� | � | � | 6 | � | � | |||
| Square feet |
�� | � | 8,371,044 | �� | � | � | 6,323,271 | � | � | � | 1,843,598 | �� | � | � | 204,175 | � | � | |||
| Occupancy (2) |
�� | � | 88.6 | %� | � | � | 87.8 | % | � | � | 90.2 | %� | � | � | 100.0 | % | � | |||
| Revenue |
�� | $ | 140,477 | �� | � | $ | 86,693 | �� | � | $ | 18,991 | �� | � | $ | 4,404 | �� | � | $ | 30,389 | � |
| Operating expenses |
�� | � | (60,902 | )� | � | � | (44,527 | )� | � | � | (7,902 | )� | � | � | (1,353 | )� | � | � | (7,120 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 79,575 | �� | � | � | 42,166 | �� | � | � | 11,089 | �� | � | � | 3,051 | �� | � | � | 23,269 | � |
| Straight-line rent |
�� | � | (10,979 | )� | � | � | (10,540 | )� | � | � | (192 | )� | � | � | (247 | )� | � | � | ��� | �� |
| Above/below-market lease amortization |
�� | � | (2,028 | )� | � | � | (2,028 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Below-market ground lease amortization |
�� | � | 426 | �� | � | � | 426 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 66,994 | �� | � | $ | 30,024 | �� | � | $ | 10,897 | �� | � | $ | 2,804 | �� | � | $ | 23,269 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Leasing activity |
�� | � | � | � | � | |||||||||||||||
| Total leases executed |
�� | � | 69 | �� | � | � | 58 | �� | � | � | 11 | �� | � | � | ��� | �� | � | |||
| Total square footage executed |
�� | � | 211,259 | �� | � | � | 172,212 | �� | � | � | 39,047 | �� | � | � | ��� | �� | � | |||
| Average rent psf - leases executed |
�� | $ | 49.05 | �� | � | $ | 51.54 | �� | � | $ | 37.53 | �� | � | $ | ��� | �� | � | |||
| Previously escalated rents psf |
�� | $ | 41.15 | �� | � | $ | 41.03 | �� | � | $ | 41.30 | �� | � | $ | ��� | �� | � | |||
| Percentage of new rent over previously escalated rents |
�� | � | 19.2 | %� | � | � | 25.6 | %� | � | � | -9.1 | %� | � | � | ��� | �� | � | |||
| Leasing commission costs per square foot |
�� | $ | 15.20 | �� | � | $ | 16.52 | �� | � | $ | 9.41 | �� | � | $ | ��� | �� | � | |||
| Tenant improvement costs per square foot |
�� | � | 45.65 | �� | � | � | 51.29 | �� | � | � | 20.78 | �� | � | � | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| Total LC and TI per square foot (3) |
�� | $ | 60.85 | �� | � | $ | 67.81 | �� | � | $ | 30.19 | �� | � | $ | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
�
Page 5
Third Quarter 2014
Property Summary
(unaudited and dollars in thousands, except per square foot amounts)
�
| � | �� | Three Months Ended March 31, 2014 | � | |||||||||||||||||
| � | �� | Total Portfolio |
� | � | Manhattan Office Portfolio (1) |
� | � | Greater�New�York Office Portfolio |
� | � | Standalone Retail Portfolio |
� | � | Observatory | � | |||||
| Number of properties |
�� | � | 18 | �� | � | � | 7 | � | � | � | 5 | �� | � | � | 6 | � | � | |||
| Square feet |
�� | � | 8,362,786 | �� | � | � | 6,318,516 | � | � | � | 1,840,095 | �� | � | � | 204,175 | � | � | |||
| Occupancy (2) |
�� | � | 87.2 | %� | � | � | 86.2 | % | � | � | 89.5 | %� | � | � | 98.9 | % | � | |||
| Revenue |
�� | $ | 124,732 | �� | � | $ | 84,946 | �� | � | $ | 17,985 | �� | � | $ | 4,500 | �� | � | $ | 17,301 | � |
| Operating expenses |
�� | � | (61,665 | )� | � | � | (44,438 | )� | � | � | (8,854 | )� | � | � | (1,392 | )� | � | � | (6,981 | )� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 63,067 | �� | � | � | 40,508 | �� | � | � | 9,131 | �� | � | � | 3,108 | �� | � | � | 10,320 | � |
| Straight-line rent |
�� | � | (12,580 | )� | � | � | (12,748 | )� | � | � | 250 | �� | � | � | (82 | )� | � | � | ��� | �� |
| Above/below-market lease amortization |
�� | � | (1,884 | )� | � | � | (1,884 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Below-market ground lease amortization |
�� | � | 426 | �� | � | � | 426 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 49,029 | �� | � | $ | 26,302 | �� | � | $ | 9,381 | �� | � | $ | 3,026 | �� | � | $ | 10,320 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Leasing activity |
�� | � | � | � | � | |||||||||||||||
| Total leases executed |
�� | � | 50 | �� | � | � | 46 | �� | � | � | 4 | �� | � | � | ��� | �� | � | |||
| Total square footage executed |
�� | � | 191,319 | �� | � | � | 172,716 | �� | � | � | 18,603 | �� | � | � | ��� | �� | � | |||
| Average rent psf - leases executed |
�� | $ | 48.03 | �� | � | $ | 49.42 | �� | � | $ | 35.11 | �� | � | $ | ��� | �� | � | |||
| Previously escalated rents psf |
�� | $ | 41.47 | �� | � | $ | 40.43 | �� | � | $ | 51.14 | �� | � | $ | ��� | �� | � | |||
| Percentage of new rent over previously escalated rents |
�� | � | 15.8 | %� | � | � | 22.3 | %� | � | � | -31.3 | %� | � | � | ��� | �� | � | |||
| Leasing commission costs per square foot |
�� | $ | 14.75 | �� | � | $ | 15.07 | �� | � | $ | 11.71 | �� | � | $ | ��� | �� | � | |||
| Tenant improvement costs per square foot |
�� | � | 53.36 | �� | � | � | 54.25 | �� | � | � | 46.11 | �� | � | � | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| Total LC and TI per square foot (3) |
�� | $ | 68.11 | �� | � | $ | 69.32 | �� | � | $ | 57.82 | �� | � | $ | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| � | �� | Period from October 7, 2013 through December 31, 2013 | � | |||||||||||||||||
| � | �� | Total Portfolio |
� | � | Manhattan Office Portfolio (1) |
� | � | Greater New York Office Portfolio |
� | � | Standalone Retail Portfolio |
� | � | Observatory | � | |||||
| Number of properties |
�� | � | 18 | �� | � | � | 7 | � | � | � | 5 | �� | � | � | 6 | � | � | |||
| Square feet |
�� | � | 8,350,871 | �� | � | � | 6,306,601 | � | � | � | 1,840,095 | �� | � | � | 204,175 | � | � | |||
| Occupancy (2) |
�� | � | 86.1 | %� | � | � | 84.7 | % | � | � | 89.7 | %� | � | � | 97.7 | % | � | |||
| Revenue |
�� | $ | 121,768 | �� | � | $ | 77,584 | �� | � | $ | 16,731 | �� | � | $ | 3,718 | �� | � | $ | 23,735 | � |
| Operating expenses |
�� | � | (57,331 | )� | � | � | (42,628 | )� | � | � | (7,838 | )� | � | � | (1,178 | )� | � | � | (5,687 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 64,437 | �� | � | � | 34,956 | �� | � | � | 8,893 | �� | � | � | 2,540 | �� | � | � | 18,048 | � |
| Straight-line rent |
�� | � | (8,932 | )� | � | � | (8,807 | )� | � | � | (94 | )� | � | � | (31 | )� | � | � | ��� | �� |
| Above/below-market lease amortization |
�� | � | (1,903 | )� | � | � | (1,903 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Below-market ground lease amortization |
�� | � | 398 | �� | � | � | 398 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 54,000 | �� | � | $ | 24,644 | � | � | $ | 8,799 | �� | � | $ | 2,509 | � | � | $ | 18,048 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Leasing activity |
�� | � | � | � | � | |||||||||||||||
| Total leases executed |
�� | � | 55 | �� | � | � | 47 | � | � | � | 6 | �� | � | � | 2 | � | � | |||
| Total square footage executed |
�� | � | 414,806 | �� | � | � | 362,844 | � | � | � | 45,705 | �� | � | � | 6,257 | � | � | |||
| Average rent psf - leases executed |
�� | $ | 43.82 | �� | � | $ | 42.92 | � | � | $ | 35.57 | �� | � | $ | 156.15 | � | � | |||
| Previously escalated rents psf |
�� | $ | 41.29 | �� | � | $ | 39.70 | � | � | $ | 41.06 | �� | � | $ | 135.18 | � | � | |||
| Percentage of new rent over previously escalated rents |
�� | � | 6.1 | %� | � | � | 8.1 | % | � | � | -13.4 | %� | � | � | 15.5 | % | � | |||
| Leasing commission costs per square foot |
�� | $ | 19.29 | �� | � | $ | 19.64 | �� | � | $ | 9.26 | �� | � | $ | 72.15 | � | � | |||
| Tenant improvement costs per square foot |
�� | � | 38.26 | �� | � | � | 39.12 | �� | � | � | 36.68 | �� | � | � | ��� | �� | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
| Total LC and TI per square foot (3) |
�� | $ | 57.55 | �� | � | $ | 58.76 | �� | � | $ | 45.94 | �� | � | $ | 72.15 | � | � | |||
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | ||||
Notes:
�
| (1)� | Includes 526,539 rentable square feet of retail space in the Company�s nine Manhattan office properties. |
| (2)� | Based on leases signed and commenced as of period end. |
| (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. |
�
Page 6
Third Quarter 2014
Same Store Summary
(unaudited and dollars in thousands, except per square foot amounts)
�
| � | �� | Total Portfolio - Same Store (1) | � | |||||||||||||
| � | �� | Three Months Ended | � | � | Period from October�7,�2013 through December�31, 2013 |
� | ||||||||||
| � | �� | September�30, 2014 |
� | � | June�30, 2014 |
� | � | March�31, 2014 |
� | � | ||||||
| Number of properties |
�� | � | 18 | �� | � | � | 18 | �� | � | � | 18 | �� | � | � | 18 | �� |
| Square feet |
�� | � | 8,372,784 | �� | � | � | 8,371,044 | �� | � | � | 8,362,786 | �� | � | � | 8,350,871 | �� |
| Occupancy (2) |
�� | � | 89.2 | %� | � | � | 88.6 | %� | � | � | 87.2 | %� | � | � | 86.1 | %� |
| Revenue |
�� | $ | 146,098 | �� | � | $ | 140,477 | �� | � | $ | 124,732 | �� | � | $ | 121,768 | �� |
| Operating expenses |
�� | � | (62,502 | )� | � | � | (60,902 | )� | � | � | (61,665 | )� | � | � | (57,331 | )� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 83,596 | �� | � | � | 79,575 | �� | � | � | 63,067 | �� | � | � | 64,437 | �� |
| Straight-line rent |
�� | � | (7,132 | )� | � | � | (10,979 | )� | � | � | (12,580 | )� | � | � | (8,932 | )� |
| Above/below-market lease amortization |
�� | � | (1,892 | )� | � | � | (2,028 | )� | � | � | (1,884 | )� | � | � | (1,903 | )� |
| Below-market ground lease amortization |
�� | � | 426 | �� | � | � | 426 | �� | � | � | 426 | �� | � | � | 398 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 74,998 | �� | � | $ | 66,994 | �� | � | $ | 49,029 | �� | � | $ | 54,000 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| �� | � | � | � | |||||||||||||
| Leasing activity |
�� | � | � | � | ||||||||||||
| Total leases executed |
�� | � | 55 | �� | � | � | 69 | �� | � | � | 50 | �� | � | � | 55 | � |
| Total square footage executed |
�� | � | 179,366 | �� | � | � | 212,259 | �� | � | � | 191,319 | �� | � | � | 414,806 | � |
| Average rent psf - leases executed |
�� | $ | 51.20 | �� | � | $ | 49.05 | �� | � | $ | 48.03 | �� | � | $ | 43.82 | � |
| Previously escalated rents psf |
�� | $ | 42.64 | �� | � | $ | 41.15 | �� | � | $ | 41.47 | �� | � | $ | 41.29 | � |
| Percentage of new rent over previously escalated rents |
�� | � | 20.1 | %� | � | � | 19.2 | %� | � | � | 15.8 | %� | � | � | 6.1 | % |
| Leasing commission costs per square foot |
�� | $ | 14.45 | �� | � | $ | 15.20 | �� | � | $ | 14.75 | �� | � | $ | 19.29 | � |
| Tenant improvement costs per square foot |
�� | � | 44.08 | �� | � | � | 45.65 | �� | � | � | 53.36 | �� | � | � | 38.26 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total LC and TI per square foot (3) |
�� | $ | 58.53 | �� | � | $ | 60.85 | �� | � | $ | 68.11 | �� | � | $ | 57.55 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| � | �� | Manhattan Office Portfolio - Same Store (1) | � | |||||||||||||
| � | �� | Three Months Ended | � | � | Period from October 7, 2013 through December 31, 2013 |
� | ||||||||||
| � | �� | September�30, 2014 |
� | � | June�30, 2014 |
� | � | March�31, 2014 |
� | � | ||||||
| Number of properties |
�� | � | 7 | �� | � | � | 7 | �� | � | � | 7 | �� | � | � | 7 | � |
| Square feet |
�� | � | 6,325,276 | �� | � | � | 6,323,271 | �� | � | � | 6,318,516 | �� | � | � | 6,306,601 | � |
| Occupancy (2) |
�� | � | 88.1 | %� | � | � | 87.8 | %� | � | � | 86.2 | %� | � | � | 84.7 | % |
| Revenue |
�� | $ | 86,550 | �� | � | $ | 86,693 | �� | � | $ | 84,946 | �� | � | $ | 77,584 | �� |
| Operating expenses |
�� | � | (46,082 | )� | � | � | (44,527 | )� | � | � | (44,438 | )� | � | � | (42,628 | )� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 40,468 | �� | � | � | 42,166 | �� | � | � | 40,508 | �� | � | � | 34,956 | �� |
| Straight-line rent |
�� | � | (7,447 | )� | � | � | (10,540 | )� | � | � | (12,748 | )� | � | � | (8,807 | )� |
| Above/below-market lease amortization |
�� | � | (1,892 | )� | � | � | (2,028 | )� | � | � | (1,884 | )� | � | � | (1,903 | )� |
| Below-market ground lease amortization |
�� | � | 426 | �� | � | � | 426 | �� | � | � | 426 | �� | � | � | 398 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | $ | 31,555 | �� | � | $ | 30,024 | �� | � | $ | 26,302 | �� | � | $ | 24,644 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| �� | � | � | � | |||||||||||||
| Leasing activity |
�� | � | � | � | ||||||||||||
| Total leases executed |
�� | � | 46 | �� | � | � | 58 | �� | � | � | 46 | �� | � | � | 47 | � |
| Total square footage executed |
�� | � | 140,913 | �� | � | � | 172,212 | �� | � | � | 172,716 | �� | � | � | 362,844 | � |
| Average rent psf - leases executed |
�� | $ | 56.00 | �� | � | $ | 51.54 | �� | � | $ | 49.42 | �� | � | $ | 42.92 | � |
| Previously escalated rents psf |
�� | $ | 44.99 | �� | � | $ | 41.03 | �� | � | $ | 40.43 | �� | � | $ | 39.70 | � |
| Percentage of new rent over previously escalated rents |
�� | � | 24.5 | %� | � | � | 25.6 | %� | � | � | 22.3 | %� | � | � | 8.1 | % |
| Leasing commission costs per square foot |
�� | $ | 17.21 | �� | � | $ | 16.52 | �� | � | $ | 15.07 | �� | � | $ | 19.64 | � |
| Tenant improvement costs per square foot |
�� | � | 53.98 | �� | � | � | 51.29 | �� | � | � | 54.25 | �� | � | � | 39.12 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total LC and TI per square foot (3) |
�� | $ | 71.19 | �� | � | $ | 67.81 | �� | � | $ | 69.32 | �� | � | $ | 58.76 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
Notes:
�
| (1)� | Defined as the total portfolio excluding 112 West 34th Street and 1400 Broadway which the Company acquired on July�15, 2014. |
| (2)� | Based on leases signed and commenced as of period end. |
| (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. |
�
Page 7
Third Quarter 2014
Property Detail
(unaudited)
�
| Property Name |
�� | Location or Sub-Market |
�� | Rentable Square Feet(1) |
� | �� | Percent Occupied�(2) |
� | � | Annualized Rent (3) |
� | �� | Annualized Rent per�Occupied Square�Foot�(4) |
� | �� | Number�of Leases�(5) |
� | |||||
| Manhattan Office Properties - Office |
�� | �� | � | �� | �� | |||||||||||||||||
| The Empire State Building�(6) |
�� | Penn Station -Times Sq. South | �� | � | 2,692,099 | �� | �� | � | 85.6 | %� | � | $ | 106,594,751 | �� | �� | $ | 46.26 | �� | �� | � | 190 | � |
| One Grand Central Place |
�� | Grand Central | �� | � | 1,182,005 | �� | �� | � | 86.6 | %� | � | � | 50,117,703 | �� | �� | � | 48.98 | �� | �� | � | 281 | � |
| 1400 Broadway (10) (11) |
�� | Penn Station -Times Sq. South | �� | � | 890,673 | �� | �� | � | 89.8 | %� | � | � | 32,210,850 | �� | �� | � | 40.29 | �� | �� | � | 62 | � |
| 112 West 34th Street (10) (12) |
�� | Penn Station -Times Sq. South | �� | � | 650,831 | �� | �� | � | 80.6 | %� | � | � | 23,736,877 | �� | �� | � | 45.23 | �� | �� | � | 36 | � |
| 250 West 57th Street |
�� | Columbus Circle - West Side | �� | � | 476,885 | �� | �� | � | 84.0 | %� | � | � | 18,806,529 | �� | �� | � | 46.95 | �� | �� | � | 152 | � |
| 501 Seventh Avenue |
�� | Penn Station -Times Sq. South | �� | � | 455,978 | �� | �� | � | 95.3 | %� | � | � | 18,126,911 | �� | �� | � | 41.70 | �� | �� | � | 35 | � |
| 1359 Broadway |
�� | Penn Station -Times Sq. South | �� | � | 446,000 | �� | �� | � | 94.4 | %� | � | � | 18,538,460 | �� | �� | � | 44.04 | �� | �� | � | 34 | � |
| 1350 Broadway (8) |
�� | Penn Station -Times Sq. South | �� | � | 363,658 | �� | �� | � | 91.1 | %� | � | � | 14,952,171 | �� | �� | � | 45.13 | �� | �� | � | 69 | � |
| 1333 Broadway |
�� | Penn Station -Times Sq. South | �� | � | 292,154 | � | �� | � | 98.7 | %� | � | � | 12,563,318 | � | �� | � | 43.57 | �� | �� | � | 9 | � |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Manhattan Office Properties - Office |
�� | � | 7,450,283 | �� | �� | � | 87.6 | %� | � | � | 295,647,570 | �� | �� | � | 45.29 | �� | �� | � | 868 | � | ||
| Manhattan Office Properties - Retail |
�� | �� | �� | � | �� | �� | ||||||||||||||||
| The Empire State Building�(7) |
�� | Penn Station -Times Sq. South | �� | � | 142,586 | �� | �� | � | 93.1 | %� | � | � | 15,650,072 | �� | �� | � | 117.87 | �� | �� | � | 17 | � |
| One Grand Central Place |
�� | Grand Central | �� | � | 69,631 | �� | �� | � | 83.8 | %� | � | � | 6,467,557 | �� | �� | � | 110.78 | �� | �� | � | 16 | � |
| 1400 Broadway (10) (11) |
�� | Penn Station -Times Sq. South | �� | � | 17,587 | �� | �� | � | 71.6 | %� | � | � | 1,343,716 | �� | �� | � | 106.64 | �� | �� | � | 8 | � |
| 112 West 34th Street (10) (12) |
�� | Penn Station -Times Sq. South | �� | � | 92,455 | �� | �� | � | 97.5 | %� | � | � | 3,592,268 | �� | �� | � | 39.87 | �� | �� | � | 2 | � |
| 250 West 57th Street |
�� | Columbus Circle - West Side | �� | � | 49,534 | �� | �� | � | 84.7 | %� | � | � | 5,131,374 | �� | �� | � | 122.34 | �� | �� | � | 7 | � |
| 501 Seventh Avenue |
�� | Penn Station -Times Sq. South | �� | � | 35,502 | �� | �� | � | 96.4 | %� | � | � | 1,843,415 | �� | �� | � | 53.87 | �� | �� | � | 9 | � |
| 1359 Broadway |
�� | Penn Station -Times Sq. South | �� | � | 25,123 | �� | �� | � | 36.0 | %� | � | � | 1,248,319 | �� | �� | � | 138.09 | �� | �� | � | 5 | � |
| 1350 Broadway (8) |
�� | Penn Station -Times Sq. South | �� | � | 31,455 | �� | �� | � | 100.0 | %� | � | � | 6,287,169 | �� | �� | � | 199.88 | �� | �� | � | 6 | � |
| 1333 Broadway |
�� | Penn Station -Times Sq. South | �� | � | 62,666 | �� | �� | � | 95.6 | %� | � | � | 6,688,642 | �� | �� | � | 111.61 | �� | �� | � | 4 | � |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Manhattan Office Properties - Retail |
�� | � | 526,539 | � | �� | � | 89.3 | %� | � | � | 48,252,532 | � | �� | � | 102.57 | �� | �� | � | 74 | � | ||
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Sub-Total/Weighted Average |
�� | �� | � | �� | �� | |||||||||||||||||
| Manhattan Office Properties - Office and Retail |
�� | � | 7,976,822 | � | �� | � | 87.7 | %� | � | � | 343,900,102 | � | �� | � | 49.14 | �� | �� | � | 942 | � | ||
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Greater New York Metropolitan Area Office Properties |
�� | �� | �� | � | �� | �� | ||||||||||||||||
| First Stamford Place (9) |
�� | Stamford, CT | �� | � | 784,405 | �� | �� | � | 92.1 | %� | � | � | 30,425,585 | �� | �� | � | 42.09 | �� | �� | � | 53 | � |
| Metro Center |
�� | Stamford, CT | �� | � | 279,384 | �� | �� | � | 96.9 | %� | � | � | 15,047,932 | �� | �� | � | 55.61 | �� | �� | � | 29 | � |
| 383 Main Street |
�� | Norwalk, CT | �� | � | 260,474 | �� | �� | � | 86.2 | %� | � | � | 7,232,029 | �� | �� | � | 32.23 | �� | �� | � | 20 | � |
| 500 Mamaroneck Avenue |
�� | Harrison, NY | �� | � | 289,772 | �� | �� | � | 94.8 | %� | � | � | 8,087,462 | �� | �� | � | 29.43 | �� | �� | � | 34 | � |
| 10 Bank Street |
�� | White Plains, NY | �� | � | 229,297 | � | �� | � | 87.0 | %� | � | � | 7,029,468 | � | �� | � | 35.22 | �� | �� | � | 28 | � |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Sub-Total/Weighted Average Greater New York Metropolitan Area Office Properties |
�� | � | 1,843,332 | � | �� | � | 91.8 | %� | � | � | 67,822,476 | � | �� | � | 40.08 | �� | �� | � | 164 | � | ||
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Standalone Retail Properties |
�� | �� | �� | � | �� | �� | ||||||||||||||||
| 10 Union Square |
�� | Union Square | �� | � | 58,005 | �� | �� | � | 100.0 | %� | � | � | 6,053,688 | �� | �� | � | 104.36 | �� | �� | � | 14 | � |
| 1542 Third Avenue |
�� | Upper East Side | �� | � | 56,250 | �� | �� | � | 100.0 | %� | � | � | 3,274,958 | �� | �� | � | 58.22 | �� | �� | � | 4 | � |
| 1010 Third Avenue |
�� | Upper East Side | �� | � | 44,662 | �� | �� | � | 100.0 | %� | � | � | 3,315,591 | �� | �� | � | 74.24 | �� | �� | � | 2 | � |
| 77 West 55th Street |
�� | Midtown | �� | � | 24,102 | �� | �� | � | 100.0 | %� | � | � | 2,508,408 | �� | �� | � | 104.07 | �� | �� | � | 3 | � |
| 69-97 Main Street |
�� | Westport, CT | �� | � | 16,826 | �� | �� | � | 100.0 | %� | � | � | 2,068,956 | �� | �� | � | 122.96 | �� | �� | � | 5 | � |
| 103-107 Main Street |
�� | Westport, CT | �� | � | 4,330 | � | �� | � | 100.0 | %� | � | � | 581,040 | � | �� | � | 134.19 | �� | �� | � | 1 | � |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Sub-Total/Weighted Average Standalone Retail Properties |
�� | � | 204,175 | � | �� | � | 100.0 | %� | � | � | 17,802,641 | � | �� | � | 87.19 | �� | �� | � | 29 | � | ||
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| �� | �� | �� | � | �� | �� | |||||||||||||||||
| Portfolio Total |
�� | �� | � | 10,024,329 | � | �� | � | 88.7 | %� | � | $ | 429,525,219 | � | �� | $ | 48.29 | �� | �� | � | 1,135 | � | |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| �� | �� | �� | � | �� | �� | |||||||||||||||||
| Total/Weighted Average Office Properties |
�� | � | 9,293,615 | �� | �� | � | 88.5 | %� | � | $ | 363,470,046 | �� | �� | $ | 44.23 | �� | �� | � | 1,032 | � | ||
| Total/Weighted Average Retail Properties |
�� | � | 730,714 | � | �� | � | 92.3 | %� | � | � | 66,055,173 | � | �� | � | 97.91 | �� | �� | � | 103 | � | ||
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
| Portfolio Total |
�� | �� | � | 10,024,329 | � | �� | � | 88.7 | %� | � | $ | 429,525,219 | � | �� | $ | 48.29 | �� | �� | � | 1,135 | � | |
| �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | ||
Notes:
�
| (1) | Excludes (i)�164,630 square feet of space across the Company�s portfolio attributable to building management use and tenant amenities and (ii)�69,757 square feet of space attributable to the Company�s observatory. |
| (2) | Based on leases signed and commenced as of September�30, 2014. |
| (3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
| (4) | Represents annualized rent under leases commenced as of September�30, 2014 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 86,902 rentable square feet of space leased by the Company�s broadcasting tenants. |
| (7) | Includes 5,300 rentable square feet of space leased by Host Services of New York, a licensee of the Company�s observatory. |
| (8) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 36 years (expiring July�31, 2050). |
| (9) | First Stamford Place consists of three buildings. |
| (10) | Property was acquired by the Company on July�15, 2014. |
| (11) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 49 years (expiring December�31, 2063). |
| (12) | Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 63 years (expiring May�31, 2077). |
�
Page 8
Third Quarter 2014
Tenant Lease Expirations
(unaudited)
�
| Total Lease Expirations |
�� | Number of�Leases Expiring�(1) |
� | �� | Rentable Square Feet Expiring (2) |
� | �� | Percent�of Portfolio Rentable Square�Feet Expiring |
� | � | Annualized Rent (3) |
� | �� | Percent of Portfolio Annualized Rent (4) |
� | � | Annualized Rent Per Rentable Square�Foot |
� | ||||||
| Available |
�� | � | ��� | �� | �� | � | 1,036,752 | �� | �� | � | 10.4 | % | � | $ | ��� | �� | �� | � | 0.0 | % | � | $ | ��� | �� |
| Signed leases not commenced |
�� | � | 20 | � | �� | � | 92,631 | �� | �� | � | 0.9 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2014 |
�� | � | 98 | � | �� | � | 253,617 | �� | �� | � | 2.5 | % | � | � | 11,006,692 | �� | �� | � | 2.6 | % | � | � | 43.40 | � |
| 2015 |
�� | � | 265 | � | �� | � | 859,583 | �� | �� | � | 8.6 | % | � | � | 40,045,106 | �� | �� | � | 9.3 | % | � | � | 46.59 | � |
| 2016 |
�� | � | 145 | � | �� | � | 719,625 | �� | �� | � | 7.2 | % | � | � | 30,419,151 | �� | �� | � | 7.1 | % | � | � | 42.27 | � |
| 2017 |
�� | � | 146 | � | �� | � | 692,973 | �� | �� | � | 6.9 | % | � | � | 33,303,629 | �� | �� | � | 7.8 | % | � | � | 48.06 | � |
| 2018 |
�� | � | 131 | � | �� | � | 751,474 | �� | �� | � | 7.5 | % | � | � | 35,073,313 | �� | �� | � | 8.2 | % | � | � | 46.67 | � |
| 2019 |
�� | � | 89 | � | �� | � | 668,237 | �� | �� | � | 6.7 | % | � | � | 30,177,283 | �� | �� | � | 7.0 | % | � | � | 45.16 | � |
| 2020 |
�� | � | 73 | � | �� | � | 788,056 | �� | �� | � | 7.9 | % | � | � | 41,709,637 | �� | �� | � | 9.7 | % | � | � | 52.93 | � |
| 2021 |
�� | � | 47 | � | �� | � | 500,857 | �� | �� | � | 5.0 | % | � | � | 25,595,319 | �� | �� | � | 6.0 | % | � | � | 51.10 | � |
| 2022 |
�� | � | 38 | � | �� | � | 408,275 | �� | �� | � | 4.1 | % | � | � | 22,149,079 | �� | �� | � | 5.2 | % | � | � | 54.25 | � |
| 2023 |
�� | � | 34 | � | �� | � | 524,679 | �� | �� | � | 5.2 | % | � | � | 26,820,241 | �� | �� | � | 6.2 | % | � | � | 51.12 | � |
| 2024 |
�� | � | 28 | � | �� | � | 539,444 | �� | �� | � | 5.4 | % | � | � | 28,202,011 | �� | �� | � | 6.6 | % | � | � | 52.28 | � |
| Thereafter |
�� | � | 41 | � | �� | � | 2,188,126 | �� | �� | � | 21.7 | % | � | � | 105,023,758 | �� | �� | � | 24.5 | % | � | � | 48.00 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total |
�� | � | 1,155 | � | �� | � | 10,024,329 | �� | �� | � | 100.0 | % | � | $ | 429,525,219 | �� | �� | � | 100.0 | % | � | $ | 48.29 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
Notes:
�
| (1) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
| (2) | Excludes (i)�164,630 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii)�69,757 square feet of space attributable to the Company�s observatory. |
| (3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
| (4) | Represents the percentage of annualized rent of the Company�s office and retail portfolio in the aggregate. |
�
Page 9
Third Quarter 2014
Tenant Lease Expirations
(unaudited)
�
| � | �� | Number of�Leases Expiring�(2) |
� | �� | Rentable Square Feet Expiring (3) |
� | �� | Percent of Portfolio Rentable Square�Feet Expiring |
� | � | Annualized Rent (4) |
� | �� | Percent of Portfolio Annualized Rent (5) |
� | � | Annualized Rent Per Rentable Square�Foot |
� | ||||||
| Manhattan Office Properties (1) |
�� | �� | �� | � | �� | � | ||||||||||||||||||
| Available |
�� | � | ��� | �� | �� | � | 840,634 | �� | �� | � | 11.3 | %� | � | $ | ��� | �� | �� | � | 0.0 | % | � | $ | ��� | �� |
| Signed leases not commenced |
�� | � | 15 | � | �� | � | 81,821 | �� | �� | � | 1.1 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2014 |
�� | � | 86 | � | �� | � | 223,620 | �� | �� | � | 3.0 | % | � | � | 9,601,279 | �� | �� | � | 3.2 | % | � | � | 42.94 | � |
| 2015 |
�� | � | 231 | � | �� | � | 743,068 | �� | �� | � | 10.0 | % | � | � | 33,010,658 | �� | �� | � | 11.2 | % | � | � | 44.42 | � |
| 2016 |
�� | � | 113 | � | �� | � | 456,915 | �� | �� | � | 6.1 | % | � | � | 20,236,180 | �� | �� | � | 6.8 | % | � | � | 44.29 | � |
| 2017 |
�� | � | 116 | � | �� | � | 500,845 | �� | �� | � | 6.7 | % | � | � | 23,342,681 | �� | �� | � | 7.9 | % | � | � | 46.61 | � |
| 2018 |
�� | � | 95 | � | �� | � | 480,301 | �� | �� | � | 6.4 | % | � | � | 23,051,119 | �� | �� | � | 7.8 | % | � | � | 47.99 | � |
| 2019 |
�� | � | 65 | � | �� | � | 376,877 | �� | �� | � | 5.1 | % | � | � | 17,144,924 | �� | �� | � | 5.8 | % | � | � | 45.49 | � |
| 2020 |
�� | � | 44 | � | �� | � | 516,182 | �� | �� | � | 6.9 | % | � | � | 23,203,626 | �� | �� | � | 7.8 | % | � | � | 44.95 | � |
| 2021 |
�� | � | 34 | � | �� | � | 353,425 | �� | �� | � | 4.7 | % | � | � | 16,021,747 | �� | �� | � | 5.4 | % | � | � | 45.33 | � |
| 2022 |
�� | � | 23 | � | �� | � | 177,561 | �� | �� | � | 2.4 | % | � | � | 8,811,932 | �� | �� | � | 3.0 | % | � | � | 49.63 | � |
| 2023 |
�� | � | 22 | � | �� | � | 359,157 | �� | �� | � | 4.8 | % | � | � | 16,409,272 | �� | �� | � | 5.6 | % | � | � | 45.69 | � |
| 2024 |
�� | � | 13 | � | �� | � | 334,234 | �� | �� | � | 4.5 | % | � | � | 15,242,075 | �� | �� | � | 5.2 | % | � | � | 45.60 | � |
| Thereafter |
�� | � | 26 | � | �� | � | 2,005,643 | �� | �� | � | 26.9 | % | � | � | 89,572,077 | �� | �� | � | 30.3 | % | � | � | 44.66 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total Manhattan office properties |
�� | � | 883 | � | �� | � | 7,450,283 | �� | �� | � | 100.0 | % | � | � | 295,647,570 | �� | �� | � | 100.0 | % | � | � | 45.29 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Greater New York Metropolitan Area Office Properties |
�� | �� | �� | � | �� | � | ||||||||||||||||||
| Available |
�� | � | ��� | �� | �� | � | 143,353 | �� | �� | � | 7.8 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| Signed leases not commenced |
�� | � | 4 | � | �� | � | 7,482 | �� | �� | � | 0.4 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2014 |
�� | � | 12 | � | �� | � | 29,997 | �� | �� | � | 1.6 | % | � | � | 1,405,413 | �� | �� | � | 2.1 | % | � | � | 46.85 | � |
| 2015 |
�� | � | 19 | � | �� | � | 82,525 | �� | �� | � | 4.5 | % | � | � | 3,328,736 | �� | �� | � | 4.9 | % | � | � | 40.34 | � |
| 2016 |
�� | � | 17 | � | �� | � | 85,258 | �� | �� | � | 4.6 | % | � | � | 3,331,838 | �� | �� | � | 4.9 | % | � | � | 39.08 | � |
| 2017 |
�� | � | 23 | � | �� | � | 145,308 | �� | �� | � | 7.9 | % | � | � | 5,836,632 | �� | �� | � | 8.6 | % | � | � | 40.17 | � |
| 2018 |
�� | � | 29 | � | �� | � | 243,770 | �� | �� | � | 13.2 | % | � | � | 9,687,719 | �� | �� | � | 14.3 | % | � | � | 39.74 | � |
| 2019 |
�� | � | 18 | � | �� | � | 264,413 | �� | �� | � | 14.3 | % | � | � | 10,100,814 | �� | �� | � | 14.9 | % | � | � | 38.20 | � |
| 2020 |
�� | � | 18 | � | �� | � | 209,602 | �� | �� | � | 11.4 | % | � | � | 8,308,659 | �� | �� | � | 12.3 | % | � | � | 39.64 | � |
| 2021 |
�� | � | 7 | � | �� | � | 118,495 | �� | �� | � | 6.4 | % | � | � | 5,105,306 | �� | �� | � | 7.5 | % | � | � | 43.08 | � |
| 2022 |
�� | � | 6 | � | �� | � | 168,044 | �� | �� | � | 9.1 | % | � | � | 6,562,285 | �� | �� | � | 9.7 | % | � | � | 39.05 | � |
| 2023 |
�� | � | 5 | � | �� | � | 114,106 | �� | �� | � | 6.2 | % | � | � | 4,922,030 | �� | �� | � | 7.3 | % | � | � | 43.14 | � |
| 2024 |
�� | � | 2 | � | �� | � | 174,448 | �� | �� | � | 9.5 | % | � | � | 7,063,701 | �� | �� | � | 10.4 | % | � | � | 40.49 | � |
| Thereafter |
�� | � | 8 | � | �� | � | 56,531 | �� | �� | � | 3.1 | % | � | � | 2,169,343 | �� | �� | � | 3.2 | % | � | � | 38.37 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total greater New York metropolitan area office properties |
�� | � | 168 | � | �� | � | 1,843,332 | �� | �� | � | 100.0 | % | � | � | 67,822,476 | �� | �� | � | 100.0 | % | � | � | 40.07 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Retail�Properties |
�� | �� | �� | � | �� | � | ||||||||||||||||||
| Available |
�� | � | ��� | �� | �� | � | 52,765 | �� | �� | � | 7.2 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| Signed leases not commenced |
�� | � | 1 | � | �� | � | 3,328 | �� | �� | � | 0.5 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2014 |
�� | � | ��� | �� | �� | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2015 |
�� | � | 15 | � | �� | � | 33,990 | �� | �� | � | 4.7 | % | � | � | 3,705,712 | �� | �� | � | 5.6 | % | � | � | 109.02 | � |
| 2016 |
�� | � | 15 | � | �� | � | 177,452 | �� | �� | � | 24.3 | % | � | � | 6,851,133 | �� | �� | � | 10.4 | % | � | � | 38.61 | � |
| 2017 |
�� | � | 7 | � | �� | � | 46,820 | �� | �� | � | 6.4 | % | � | � | 4,124,316 | �� | �� | � | 6.2 | % | � | � | 88.09 | � |
| 2018 |
�� | � | 7 | � | �� | � | 27,403 | �� | �� | � | 3.8 | % | � | � | 2,334,475 | �� | �� | � | 3.5 | % | � | � | 85.19 | � |
| 2019 |
�� | � | 6 | � | �� | � | 26,947 | �� | �� | � | 3.7 | % | � | � | 2,931,545 | �� | �� | � | 4.4 | % | � | � | 108.79 | � |
| 2020 |
�� | � | 11 | � | �� | � | 62,272 | �� | �� | � | 8.5 | % | � | � | 10,197,352 | �� | �� | � | 15.4 | % | � | � | 163.76 | � |
| 2021 |
�� | � | 6 | � | �� | � | 28,937 | �� | �� | � | 4.0 | % | � | � | 4,468,266 | �� | �� | � | 6.8 | % | � | � | 154.41 | � |
| 2022 |
�� | � | 9 | � | �� | � | 62,670 | �� | �� | � | 8.6 | % | � | � | 6,774,862 | �� | �� | � | 10.3 | % | � | � | 108.10 | � |
| 2023 |
�� | � | 7 | � | �� | � | 51,416 | �� | �� | � | 7.0 | % | � | � | 5,488,939 | �� | �� | � | 8.3 | % | � | � | 106.76 | � |
| 2024 |
�� | � | 13 | � | �� | � | 30,762 | �� | �� | � | 4.2 | % | � | � | 5,896,235 | �� | �� | � | 8.9 | % | � | � | 191.67 | � |
| Thereafter |
�� | � | 7 | � | �� | � | 125,952 | �� | �� | � | 17.2 | % | � | � | 13,282,338 | �� | �� | � | 20.1 | % | � | � | 105.46 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total retail properties |
�� | � | 104 | � | �� | � | 730,714 | �� | �� | � | 100.0 | % | � | � | 66,055,173 | �� | �� | � | 100.0 | % | � | � | 97.91 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total portfolio lease expirations |
�� | � | 1,155 | � | �� | � | 10,024,329 | �� | �� | � | 100.0 | % | � | $ | 429,525,219 | �� | �� | � | 100.0 | % | � | $ | 48.29 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
Notes:
�
| (1) | Excludes (i)�retail space in the Company�s Manhattan office properties and (ii)�the Empire State Building broadcasting licenses and observatory operations. |
| (2) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
| (3) | Excludes (i)�164,630 rentable square feet of space across the Company portfolio attributable to building management use and tenant amenities and (ii)�69,757 square feet of space attributable to the Company�s observatory. |
| (4) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
| (5) | Represents the percentage of annualized rent of the Company�s office and retail portfolio in the aggregate. |
�
Page 10
Third Quarter 2014
Tenant Lease Expirations
(unaudited)
�
| � | �� | Number of�Leases Expiring�(2) |
� | �� | Rentable Square Feet Expiring |
� | �� | Percent�of Portfolio Rentable Square�Feet Expiring |
� | � | Annualized Rent�(3) |
� | �� | Percent of Portfolio Annualized Rent (4) |
� | � | Annualized Rent Per Rentable Square�Foot |
� | ||||||
| Empire State Building Office (1) |
�� | �� | �� | � | �� | � | ||||||||||||||||||
| Available |
�� | � | ��� | �� | �� | � | 342,195 | �� | �� | � | 12.7 | % | � | $ | ��� | �� | �� | � | 0.0 | % | � | $ | ��� | �� |
| Signed leases not commenced |
�� | � | 4 | � | �� | � | 45,504 | �� | �� | � | 1.7 | % | � | � | ��� | �� | �� | � | 0.0 | % | � | � | ��� | �� |
| 2014 |
�� | � | 14 | � | �� | � | 48,570 | �� | �� | � | 1.8 | % | � | � | 1,782,937 | �� | �� | � | 1.7 | % | � | � | 36.71 | � |
| 2015 |
�� | � | 38 | � | �� | � | 190,767 | �� | �� | � | 7.1 | % | � | � | 8,668,344 | �� | �� | � | 8.1 | % | � | � | 45.44 | � |
| 2016 |
�� | � | 14 | � | �� | � | 70,383 | �� | �� | � | 2.6 | % | � | � | 3,355,050 | �� | �� | � | 3.1 | % | � | � | 47.67 | � |
| 2017 |
�� | � | 24 | � | �� | � | 75,253 | �� | �� | � | 2.8 | % | � | � | 3,733,502 | �� | �� | � | 3.5 | % | � | � | 49.61 | � |
| 2018 |
�� | � | 24 | � | �� | � | 90,548 | �� | �� | � | 3.4 | % | � | � | 4,152,496 | �� | �� | � | 3.9 | % | � | � | 45.86 | � |
| 2019 |
�� | � | 14 | � | �� | � | 58,495 | �� | �� | � | 2.2 | % | � | � | 2,745,260 | �� | �� | � | 2.6 | % | � | � | 46.93 | � |
| 2020 |
�� | � | 18 | � | �� | � | 232,871 | �� | �� | � | 8.7 | % | � | � | 11,046,444 | �� | �� | � | 10.4 | % | � | � | 47.44 | � |
| 2021 |
�� | � | 11 | � | �� | � | 83,522 | �� | �� | � | 3.1 | % | � | � | 3,918,793 | �� | �� | � | 3.7 | % | � | � | 46.92 | � |
| 2022 |
�� | � | 10 | � | �� | � | 45,252 | �� | �� | � | 1.7 | % | � | � | 2,161,597 | �� | �� | � | 2.0 | % | � | � | 47.77 | � |
| 2023 |
�� | � | 6 | � | �� | � | 34,549 | �� | �� | � | 1.3 | % | � | � | 1,852,052 | �� | �� | � | 1.7 | % | � | � | 53.61 | � |
| 2024 |
�� | � | 7 | � | �� | � | 140,386 | �� | �� | � | 5.2 | % | � | � | 6,818,209 | �� | �� | � | 6.4 | % | � | � | 48.57 | � |
| Thereafter |
�� | � | 10 | � | �� | � | 1,233,804 | �� | �� | � | 45.8 | % | � | � | 56,360,068 | �� | �� | � | 52.9 | % | � | � | 45.68 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total Empire State Building office |
�� | � | 194 | � | �� | � | 2,692,099 | �� | �� | � | 100.0 | % | � | $ | 106,594,751 | �� | �� | � | 100.0 | % | � | $ | 46.26 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
Notes:
�
| (1) | Excludes retail space, broadcasting licenses and observatory operations |
| (2) | If a lease has two different expiration dates, it is considered to be two leases (for the purpose of lease count and square footage). |
| (3) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
| (4) | Represents the percentage of annualized rent of the Company�s office and retail portfolio in the aggregate. |
�
Page 11
Third Quarter 2014
20 Largest Tenants and Portfolio Tenant Diversification by Industry
(unaudited)
�
| 20 Largest Tenants |
�� | Number of�Leases |
� | �� | Number�of Properties |
� | �� | Lease Expiration�(1) |
�� | Weighted Average Remaining Lease Term(2) |
� | �� | Total Occupied Square Feet (3) |
� | �� | Percent�of Portfolio Rentable Square Feet (4) |
� | � | Annualized Rent (5) |
� | �� | Percent of Portfolio Annualized Rent (6) |
� | |||||||
| 1. Li�& Fung |
�� | � | 6 | �� | �� | � | 3 | �� | �� | Oct.�2021-Oct.�2028 | �� | � | 12.8�years | �� | �� | � | 886,995 | �� | �� | � | 8.8 | %� | � | $ | 36,051,514 | �� | �� | � | 8.4 | % |
| 2. Coty |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Jan. 2030 | �� | � | 15.3 years | �� | �� | � | 311,242 | �� | �� | � | 3.1 | %� | � | � | 15,489,038 | �� | �� | � | 3.6 | % |
| 3. PVH Corp. |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Oct. 2028 | �� | � | 14.1 years | �� | �� | � | 217,842 | �� | �� | � | 2.2 | %� | � | � | 9,241,478 | �� | �� | � | 2.2 | % |
| 4. Thomson Reuters |
�� | � | 4 | �� | �� | � | 2 | �� | �� | Apr.�2018-Apr.�2020 | �� | � | 4.8 years | �� | �� | � | 147,208 | �� | �� | � | 1.5 | %� | � | � | 7,581,081 | �� | �� | � | 1.8 | % |
| 5. LinkedIn |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Feb. 2026 | �� | � | 11.4 years | �� | �� | � | 158,261 | �� | �� | � | 1.6 | %� | � | � | 7,425,142 | �� | �� | � | 1.7 | % |
| 6. Federal Deposit Insurance Corporation |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Feb. 2020 | �� | � | 5.3 years | �� | �� | � | 121,879 | �� | �� | � | 1.2 | %� | � | � | 6,269,020 | �� | �� | � | 1.5 | % |
| 7. Urban Outfitters |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Sept. 2029 | �� | � | 15.0 years | �� | �� | � | 56,730 | �� | �� | � | 0.6 | %� | � | � | 6,200,000 | �� | �� | � | 1.4 | % |
| 8. Legg Mason |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Sept. 2024 | �� | � | 10.0 years | �� | �� | � | 138,868 | �� | �� | � | 1.4 | %� | � | � | 6,129,370 | �� | �� | � | 1.4 | % |
| 9. Duane Reade |
�� | � | 3 | �� | �� | � | 3 | �� | �� | Feb.�2021-Sept.�2027 | �� | � | 10.2 years | �� | �� | � | 46,976 | �� | �� | � | 0.5 | %� | � | � | 5,881,602 | �� | �� | � | 1.4 | % |
| 10. Footlocker |
�� | � | 2 | �� | �� | � | 1 | �� | �� | Apr. 2016 | �� | � | 1.5 years | �� | �� | � | 170,187 | �� | �� | � | 1.7 | %� | � | � | 5,324,340 | �� | �� | � | 1.2 | % |
| 11. Host Services of New York |
�� | � | 1 | �� | �� | � | 1 | �� | �� | May 2020 | �� | � | 5.6 years | �� | �� | � | 5,300 | �� | �� | � | 0.1 | %� | � | � | 5,216,733 | �� | �� | � | 1.2 | % |
| 12. Kohl�s |
�� | � | 1 | �� | �� | � | 1 | � | �� | May 2029 | �� | � | 14.6 years | �� | �� | � | 111,834 | � | �� | � | 1.1 | %� | � | � | 4,404,896 | �� | �� | � | 1.0 | % |
| 13. Aeropostale |
�� | � | 2 | �� | �� | � | 1 | � | �� | Nov.�2015-Nov.�2016 | �� | � | 1.8 years | �� | �� | � | 88,760 | � | �� | � | 0.8 | %� | � | � | 4,118,948 | �� | �� | � | 1.0 | % |
| 14. Odyssey Reinsurance |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Sept. 2022 | �� | � | 8.0 years | �� | �� | � | 101,619 | �� | �� | � | 1.0 | %� | � | � | 3,835,022 | �� | �� | � | 0.9 | % |
| 15. The Interpublic Group of Companies |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Aug. 2024 | �� | � | 9.8 years | �� | �� | � | 86,561 | �� | �� | � | 0.9 | %� | � | � | 3,767,237 | �� | �� | � | 0.9 | % |
| 16. Shutterstock |
�� | � | 1 | �� | �� | � | 1 | �� | �� | Sept. 2024 | �� | � | 10.0 years | �� | �� | � | 82,331 | �� | �� | � | 0.7 | %� | � | � | 3,658,715 | �� | �� | � | 0.9 | % |
| 17. Bank of America |
�� | � | 3 | �� | �� | � | 3 | �� | �� | Apr. 2015-Feb. 2018 | �� | � | 1.8 years | �� | �� | � | 29,671 | �� | �� | � | 0.3 | %� | � | � | 3,495,103 | �� | �� | � | 0.8 | % |
| 18. Human Rights Watch |
�� | � | 1 | �� | �� | � | 1 | � | �� | Oct. 2026 | �� | � | 12.0 years | �� | �� | � | 65,660 | � | �� | � | 0.7 | %� | � | � | 3,468,156 | � | �� | � | 0.8 | % |
| 19. Reed Elsevier |
�� | � | 1 | �� | �� | � | 1 | � | �� | Nov. 2019 | �� | � | 5.2 years | �� | �� | � | 96,727 | � | �� | � | 1.0 | %� | � | � | 3,204,769 | � | �� | � | 0.7 | % |
| 20. Jordache |
�� | � | 2 | �� | �� | � | 1 | � | �� | Oct. 2014-May 2024 | �� | � | 9.6 years | �� | �� | � | 75,150 | � | �� | � | 0.7 | %� | � | � | 3,148,340 | � | �� | � | 0.7 | % |
| �� | � |
� |
� | �� | �� | �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | ||||||||
| Total |
�� | � | 35 | �� | �� | �� | �� | �� | � | 2,999,801 | � | �� | � | 29.9 | %� | � | $ | 143,910,504 | � | �� | � | 33.5 | % | |||||||
| �� | � |
� |
� | �� | �� | �� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | �� | � |
� |
� | ||||||||
Notes:
�
| (1) | Expiration dates are per lease and do not assume exercise of renewal or extension options. Except for the Federal Deposit Insurance Corporation lease (February 1, 2015), none of these leases contain early termination options. For tenants with more than two leases, the lease expiration is shown as a range. |
| (2) | Represents the weighted average lease term, based on annualized rent. |
| (3) | Based on leases signed and commenced as of September�30, 2014. |
| (4) | Represents the percentage of rentable square feet of the Company�s office and retail portfolios in the aggregate. |
| (5) | Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. |
| (6) | Represents the percentage of annualized rent of the Company�s office and retail portfolios in the aggregate. |
Portfolio Tenant Diversification by Industry (based on annualized rent)
�
�
Page 12
Third Quarter 2014
Capital Expenditures and Redevelopment Program
(unaudited)
�
| Capital expenditures | �� | September�30, 2014 |
� | �� | June�30, 2014 |
� | �� | March�31, 2014 |
� | |||
| Tenant improvements - first generation |
�� | $ | 28,462 | �� | �� | $ | 16,827 | � | �� | $ | 5,095 | � |
| Tenant improvements - second generation |
�� | � | 3,090 | �� | �� | � | 3,250 | � | �� | � | 1,038 | � |
| Leasing commissions - first generation |
�� | � | 2,945 | �� | �� | � | 1,207 | � | �� | � | 1,045 | � |
| Leasing commissions - second generation |
�� | � | 1,401 | �� | �� | � | 1,229 | � | �� | � | 880 | � |
| Building improvements - first generation |
�� | � | 24,328 | �� | �� | � | 11,721 | � | �� | � | 11,241 | � |
| Building improvements - second generation |
�� | � | 893 | �� | �� | � | 344 | � | �� | � | 195 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
| Total |
�� | $ | 61,119 | �� | �� | $ | 34,578 | � | �� | $ | 19,494 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
Redevelopment program components
�
| � | � | Upgrading common areas: lobbies, elevators, corridors and bathrooms |
�
| � | � | Installing energy efficient building systems |
�
| � | � | Improving roofs, windows and facades |
�
| � | � | Optimizing base floors for retail |
Current redevelopment program (1)�(2)
�
| � | � | Spent to date: $580 million |
�
| � | � | To be invested: $85 to $125 million between 2014 and 2016 |
Redevelopment program by square feet (1)�(2)
�
| � | � | Future redevelopment (Empire State Building) - 600,000 square feet |
�
| � | � | Future redevelopment (other Manhattan properties) - 1,600,000 square feet |
�
| � | � | Redevelopment completed - 5,800,000 square feet |
Inventory of vacant space (2)
�
| � | � | Developed - 63% |
�
| � | � | Undeveloped - 37% |
Inventory of undeveloped space (2)
�
| � | � | Vacant - 16% |
�
| � | � | Expires in 2014 through 2016 - 42% |
�
| � | � | Expires in 2017 and thereafter - 42% |
Notes:
�
| (1)� | These estimates are based on the Company�s current budgets (which do not include tenant improvements and leasing commission costs) and are subject to change. |
| (2)� | Redevelopment program is for the Manhattan office assets only. Square footage based on market measurement. Developed space includes space that has been demolished and completed asbestos abatement and available for lease up or ready to be prebuilt. Permanent building use spaces, amenity spaces and broadcasting spaces are excluded. |
�
Page 13
Third Quarter 2014
Observatory Summary
(unaudited and in thousands)
�
| � | �� | Three Months Ended | � | |||||||||||||||||
| Observatory NOI |
�� | September�30, 2014 |
� | �� | June�30, 2014 |
� | �� | March�31, 2014 |
� | � | December�31, 2013 |
� | � | September�30, 2013 |
� | |||||
| Observatory revenue |
�� | $ | 35,684 | �� | �� | $ | 30,389 | �� | �� | $ | 17,301 | �� | � | $ | 25,389 | �� | � | $ | 32,356 | � |
| Observatory expenses |
�� | � | 7,109 | �� | �� | � | 7,120 | �� | �� | � | 6,981 | �� | � | � | 6,193 | �� | � | � | 6,482 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| NOI |
�� | � | 28,575 | �� | �� | � | 23,269 | �� | �� | � | 10,320 | �� | � | � | 19,196 | �� | � | � | 25,874 | � |
| Intercompany rent expense (1) |
�� | � | 19,936 | �� | �� | � | 16,283 | �� | �� | � | 15,200 | �� | � | � | 20,276 | �� | � | � | 24,260 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| NOI after intercompany rent |
�� | $ | 8,639 | �� | �� | $ | 6,986 | �� | �� | $ | (4,880 | )� | � | $ | (1,080 | )� | � | $ | 1,614 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
Note:
�
| (1) | The observatory pays a market-based rent payment comprised of fixed and percentage rent to the Empire State Building. We recognize intercompany percentage rent expense in the interim periods as it is probable that percentage rent will be incurred based upon management�s estimates. Prior to the consolidation and formation transactions, Empire State Building Company, LLC recorded percentage rent when incurred, which resulted in rent expense being recognized primarily in the third and fourth quarters. Intercompany rent is eliminated upon consolidation. |
Annual Observatory Revenues 2009 to 2013
�
�
�
Page 14
Third Quarter 2014
Condensed Consolidated Balance Sheets
(unaudited and dollars in thousands)
�
| � | �� | September�30, 2014 |
� | � | June 30, 2014 |
� | � | March 31, 2014 |
� | � | December�31, 2013 |
� | ||||
| Assets |
�� | � | � | � | ||||||||||||
| Commercial real estate properties, at cost: |
�� | � | � | � | ||||||||||||
| Land |
�� | $ | 201,172 | � | � | $ | 187,566 | � | � | $ | 187,566 | � | � | $ | 187,566 | � |
| Development costs |
�� | � | 6,971 | � | � | � | 6,861 | � | � | � | 6,459 | � | � | � | 6,459 | � |
| Building and improvements |
�� | � | 1,899,467 | � | � | � | 1,508,309 | � | � | � | 1,473,665 | � | � | � | 1,455,398 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| �� | � | 2,107,610 | � | � | � | 1,702,736 | � | � | � | 1,667,690 | � | � | � | 1,649,423 | � | |
| Less: accumulated depreciation |
�� | � | (354,730 | ) | � | � | (332,766 | ) | � | � | (315,256 | ) | � | � | (295,351 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Commercial real estate properties, net |
�� | � | 1,752,880 | � | � | � | 1,369,970 | � | � | � | 1,352,434 | � | � | � | 1,354,072 | � |
| Cash and cash equivalents |
�� | � | 52,918 | � | � | � | 41,791 | � | � | � | 44,703 | � | � | � | 60,743 | � |
| Restricted cash |
�� | � | 63,821 | � | � | � | 55,482 | � | � | � | 54,832 | � | � | � | 55,621 | � |
| Tenant and other receivables, net |
�� | � | 29,837 | � | � | � | 26,185 | � | � | � | 29,644 | � | � | � | 24,817 | � |
| Deferred rent receivables, net |
�� | � | 94,837 | � | � | � | 85,948 | � | � | � | 74,971 | � | � | � | 62,689 | � |
| Prepaid expenses and other assets |
�� | � | 31,091 | � | � | � | 39,658 | � | � | � | 23,535 | � | � | � | 35,407 | � |
| Deferred costs, net |
�� | � | 80,396 | � | � | � | 77,035 | � | � | � | 79,032 | � | � | � | 78,938 | � |
| Acquired below-market ground leases, net |
�� | � | 392,756 | � | � | � | 61,460 | � | � | � | 61,886 | � | � | � | 62,312 | � |
| Acquired lease intangibles, net |
�� | � | 312,001 | � | � | � | 227,617 | � | � | � | 237,900 | � | � | � | 249,983 | � |
| Goodwill |
�� | � | 491,479 | � | � | � | 491,479 | � | � | � | 491,479 | � | � | � | 491,479 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total assets |
�� | $ | 3,302,016 | � | � | $ | 2,476,625 | � | � | $ | 2,450,416 | � | � | $ | 2,476,061 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Liabilities and Equity |
�� | � | � | � | ||||||||||||
| Mortgage notes |
�� | $ | 1,005,569 | � | � | $ | 873,863 | � | � | $ | 878,545 | � | � | $ | 883,112 | � |
| Term loan and credit facility |
�� | � | 355,600 | � | � | � | 355,000 | � | � | � | 325,000 | � | � | � | 325,000 | �� |
| Exchangeable senior notes |
�� | � | 236,999 | � | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Accounts payable and accrued expenses |
�� | � | 97,413 | � | � | � | 74,807 | � | � | � | 71,712 | � | � | � | 81,908 | �� |
| Acquired below-market leases, net |
�� | � | 148,493 | � | � | � | 120,219 | � | � | � | 125,106 | � | � | � | 129,882 | �� |
| Deferred revenue and other liabilities |
�� | � | 24,728 | � | � | � | 18,722 | � | � | � | 22,574 | � | � | � | 21,568 | �� |
| Tenants� security deposits |
�� | � | 40,111 | � | � | � | 34,170 | � | � | � | 32,939 | � | � | � | 31,406 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total liabilities |
�� | � | 1,908,913 | � | � | � | 1,476,781 | � | � | � | 1,455,876 | � | � | � | 1,472,876 | � |
| Total equity |
�� | � | 1,393,103 | � | � | � | 999,844 | � | � | � | 994,540 | � | � | � | 1,003,185 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total liabilities and equity |
�� | $ | 3,302,016 | � | � | $ | 2,476,625 | � | � | $ | 2,450,416 | � | � | $ | 2,476,061 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
�
Page 15
Third Quarter 2014
Condensed Consolidated Statements of Income
(unaudited and in thousands, except per share amounts)
�
| � | �� | Three Months Ended | � | � | Period from October�7,�2013 through December 31, 2013 |
� | ||||||||||
| � | �� | September�30, 2014 |
� | � | June�30, 2014 |
� | � | March�31, 2014 |
� | � | ||||||
| Revenues |
�� | � | � | � | ||||||||||||
| Rental revenue |
�� | $ | 106,152 | �� | � | $ | 92,210 | � | � | $ | 90,204 | �� | � | $ | 79,987 | � |
| Tenant expense reimbursement |
�� | � | 20,034 | �� | � | � | 14,304 | � | � | � | 15,153 | �� | � | � | 15,836 | � |
| Observatory revenue |
�� | � | 35,684 | �� | � | � | 30,389 | � | � | � | 17,301 | �� | � | � | 23,735 | � |
| Construction revenue |
�� | � | 5,804 | �� | � | � | 12,963 | � | � | � | 14,963 | �� | � | � | 5,265 | � |
| Third party management and other fees |
�� | � | 561 | �� | � | � | 753 | � | � | � | 611 | �� | � | � | 550 | � |
| Other revenue and fees |
�� | � | 1,206 | �� | � | � | 4,549 | � | � | � | 2,074 | �� | � | � | 2,210 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total revenues |
�� | � | 169,441 | �� | � | � | 155,168 | � | � | � | 140,306 | �� | � | � | 127,583 | � |
| Operating expenses |
�� | � | � | � | ||||||||||||
| Property operating expenses |
�� | � | 38,291 | �� | � | � | 35,149 | � | � | � | 35,860 | �� | � | � | 34,055 | � |
| Ground rent expenses |
�� | � | 2,066 | �� | � | � | 447 | � | � | � | 451 | �� | � | � | 398 | � |
| Marketing, general, and administrative expenses |
�� | � | 10,071 | �� | � | � | 9,560 | � | � | � | 10,155 | �� | � | � | 16,379 | � |
| Observatory expenses |
�� | � | 7,109 | �� | � | � | 7,120 | � | � | � | 6,981 | �� | � | � | 5,687 | � |
| Construction expenses |
�� | � | 6,095 | �� | � | � | 12,795 | � | � | � | 14,283 | �� | � | � | 5,468 | � |
| Real estate taxes |
�� | � | 21,870 | �� | � | � | 18,186 | � | � | � | 18,373 | �� | � | � | 17,191 | � |
| Acquisition expenses |
�� | � | 2,647 | �� | � | � | 735 | � | � | � | ��� | �� | � | � | 138,140 | � |
| Depreciation and amortization |
�� | � | 37,880 | �� | � | � | 28,637 | � | � | � | 30,115 | �� | � | � | 27,375 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total operating expenses |
�� | � | 126,029 | �� | � | � | 112,629 | � | � | � | 116,218 | �� | � | � | 244,693 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total operating income (loss) |
�� | � | 43,412 | �� | � | � | 42,539 | � | � | � | 24,088 | �� | � | � | (117,110 | ) |
| Other income (expense) |
�� | � | � | � | ||||||||||||
| Interest expense |
�� | � | (17,674 | )� | � | � | (14,629 | ) | � | � | (14,337 | )� | � | � | (13,147 | )� |
| Gain on consolidation of non-controlled entities |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | 322,563 | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Income before income taxes |
�� | � | 25,738 | �� | � | � | 27,910 | � | � | � | 9,751 | �� | � | � | 192,306 | � |
| Income tax (expense) benefit |
�� | � | (3,004 | )� | � | � | (2,629 | ) | � | � | 1,480 | �� | � | � | 1,125 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net income |
�� | � | 22,734 | �� | � | � | 25,281 | �� | � | � | 11,231 | �� | � | � | 193,431 | � |
| Perpetual preferred unit distributions |
�� | � | (241 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Net income attributable to non-controlling interests |
�� | � | (14,171 | )� | � | � | (15,447 | )� | � | � | (6,862 | )� | � | � | (118,186 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net income attributable to Empire State Realty Trust, Inc. |
�� | $ | 8,322 | �� | � | $ | 9,834 | � | � | $ | 4,369 | �� | � | $ | 75,245 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Weighted average common shares outstanding |
�� | � | � | � | ||||||||||||
| Basic |
�� | � | 97,729 | �� | � | � | 95,573 | � | � | � | 95,575 | �� | � | � | 95,574 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | � | 263,041 | �� | � | � | 245,941 | � | � | � | 245,821 | �� | � | � | 245,482 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net income per share attributable to Empire State Realty Trust, Inc. |
�� | � | � | � | ||||||||||||
| Basic |
�� | $ | 0.09 | �� | � | $ | 0.10 | � | � | $ | 0.05 | �� | � | $ | 0.79 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | $ | 0.09 | �� | � | $ | 0.10 | � | � | $ | 0.05 | �� | � | $ | 0.79 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Dividends per share |
�� | $ | 0.085 | �� | � | $ | 0.085 | �� | � | $ | 0.085 | �� | � | $ | 0.0795 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
�
Page 16
Third Quarter 2014
Core Funds from Operations (�Core FFO�), Funds from Operations (�FFO�), Core Funds Available for
Distribution (�Core FAD�) and EBITDA
(unaudited and in thousands, except per share amounts)
�
| � | �� | Three Months Ended | � | � | Period from October�7,�2013 through December 31, 2013 |
� | ||||||||||
| � | �� | September�30, 2014 |
� | � | June�30, 2014 |
� | � | March�31, 2014 |
� | � | ||||||
| Reconciliation of Net Income to FFO and Core FFO |
�� | � | � | � | ||||||||||||
| Net Income |
�� | $ | 22,734 | �� | � | $ | 25,281 | � | � | $ | 11,231 | �� | � | $ | 193,431 | � |
| Preferred unit distributions |
�� | � | (241 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Real estate depreciation and amortization |
�� | � | 37,797 | �� | � | � | 28,556 | � | � | � | 30,052 | �� | � | � | 27,352 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| FFO |
�� | � | 60,290 | �� | � | � | 53,837 | � | � | � | 41,283 | �� | � | � | 220,783 | � |
| Gain on settlement of lawsuit related to the Observatory, net of income taxes |
�� | � | ��� | �� | � | � | (540 | ) | � | � | ��� | �� | � | � | ��� | �� |
| Private perpetual preferred exchange offering expenses |
�� | � | 407 | �� | � | � | 950 | � | � | � | ��� | �� | � | � | ��� | �� |
| Acquisition expenses |
�� | � | 2,647 | �� | � | � | 735 | � | � | � | ��� | �� | � | � | 138,140 | � |
| Amortization of below-market ground lease |
�� | � | 1,750 | �� | � | � | 426 | � | � | � | 426 | �� | � | � | 398 | � |
| Gain on consolidation of non-controlled entities |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | (322,563 | ) |
| Severance expenses |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | 2,738 | � |
| Retirement equity compensation expenses |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | 2,297 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Core FFO |
�� | $ | 65,094 | �� | � | $ | 55,408 | � | � | $ | 41,709 | �� | � | $ | 41,793 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Total weighted average shares and Operating Partnership Units |
�� | � | � | � | ||||||||||||
| Basic |
�� | � | 263,041 | �� | � | � | 245,899 | � | � | � | 245,779 | �� | � | � | 245,445 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | � | 263,041 | �� | � | � | 245,941 | � | � | � | 245,821 | �� | � | � | 245,482 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| FFO per share |
�� | � | � | � | ||||||||||||
| Basic |
�� | $ | 0.23 | �� | � | $ | 0.22 | � | � | $ | 0.17 | �� | � | $ | 0.90 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | $ | 0.23 | �� | � | $ | 0.22 | � | � | $ | 0.17 | �� | � | $ | 0.90 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Core FFO per share |
�� | � | � | � | ||||||||||||
| Basic |
�� | $ | 0.25 | �� | � | $ | 0.23 | � | � | $ | 0.17 | �� | � | $ | 0.17 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | $ | 0.25 | �� | � | $ | 0.23 | � | � | $ | 0.17 | �� | � | $ | 0.17 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Reconciliation of Core FFO to Core FAD |
�� | � | � | � | ||||||||||||
| Core FFO |
�� | $ | 65,094 | �� | � | $ | 55,408 | � | � | $ | 41,709 | �� | � | $ | 41,793 | � |
| Add: |
�� | � | � | � | ||||||||||||
| Amortization of deferred financing costs |
�� | � | 2,653 | �� | � | � | 1,375 | �� | � | � | 1,090 | �� | � | � | 1,074 | � |
| Non-real estate depreciation and amortization |
�� | � | 83 | �� | � | � | 80 | �� | � | � | 65 | �� | � | � | 23 | � |
| Amortization of non-cash compensation expense |
�� | � | 939 | �� | � | � | 944 | �� | � | � | 1,025 | �� | � | � | 697 | � |
| Amortization of debt discount |
�� | � | 356 | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Deduct: |
�� | � | � | � | ||||||||||||
| Straight-line rental revenues |
�� | � | (8,543 | )� | � | � | (10,979 | )� | � | � | (12,580 | )� | � | � | (8,932 | ) |
| Amortization of debt premiums |
�� | � | (1,622 | )� | � | � | (738 | )� | � | � | (556 | )� | � | � | (922 | ) |
| Above/below-market rent revenue |
�� | � | (4,568 | )� | � | � | (2,028 | )� | � | � | (1,884 | )� | � | � | (1,903 | ) |
| FF&E purchases |
�� | � | ��� | �� | � | � | (3 | )� | � | � | (6 | )� | � | � | (853 | ) |
| Tenant improvements - second generation |
�� | � | (3,090 | )� | � | � | (3,250 | )� | � | � | (1,038 | )� | � | � | (1,219 | ) |
| Building improvements - second generation |
�� | � | (893 | )� | � | � | (344 | )� | � | � | (1,106 | )� | � | � | (1,030 | ) |
| Leasing commissions - second generation |
�� | � | (1,401 | )� | � | � | (1,229 | )� | � | � | (880 | )� | � | � | (6,909 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Core FAD |
�� | $ | 49,008 | �� | � | $ | 39,236 | �� | � | $ | 25,839 | �� | � | $ | 21,819 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Core FAD per share |
�� | � | � | � | ||||||||||||
| Basic |
�� | $ | 0.19 | �� | � | $ | 0.16 | �� | � | $ | 0.11 | �� | � | $ | 0.09 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Diluted |
�� | $ | 0.19 | �� | � | $ | 0.16 | �� | � | $ | 0.11 | �� | � | $ | 0.09 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Reconciliation of Net Income to EBITDA |
�� | � | � | � | ||||||||||||
| Net income |
�� | $ | 22,734 | �� | � | $ | 25,281 | � | � | $ | 11,231 | �� | � | $ | 193,431 | � |
| Perpetual preferred unit distributions |
�� | � | (241 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| Interest expense |
�� | � | 17,674 | �� | � | � | 14,629 | � | � | � | 14,337 | �� | � | � | 13,147 | � |
| Income tax expense (benefit) |
�� | � | 3,004 | �� | � | � | 2,629 | �� | � | � | (1,480 | )� | � | � | (1,125 | ) |
| Depreciation and amortization |
�� | � | 37,880 | �� | � | � | 28,637 | � | � | � | 30,115 | �� | � | � | 27,375 | � |
| Acquisition expenses |
�� | � | 2,647 | �� | � | � | 735 | � | � | � | ��� | �� | � | � | 138,140 | � |
| Gain on consolidation of non-controlled entities |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | (322,563 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| EBITDA |
�� | $ | 83,698 | �� | � | $ | 71,911 | � | � | $ | 54,203 | �� | � | $ | 48,405 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
Note:
For purposes of comparison, certain items shown in prior periods have been reclassified to conform to the presentation used for September�30, 2014.
�
Page 17
Third Quarter 2014
Net Operating Income (�NOI�)
(unaudited and dollars in thousands)
�
| � | �� | Three Months Ended | � | � | Period from October�7,�2013 through December�31, 2013 |
� | ||||||||||
| � | �� | September�30, 2014 |
� | � | June�30, 2014 |
� | � | March�31, 2014 |
� | � | ||||||
| Reconciliation of Net Income to NOI, Cash NOI and Same Store Cash NOI |
�� | � | � | � | ||||||||||||
| Net income |
�� | $ | 22,734 | �� | � | $ | 25,281 | �� | � | $ | 11,231 | � | � | $ | 193,431 | � |
| Add: |
�� | � | � | � | ||||||||||||
| Marketing, general and administrative expenses |
�� | � | 10,071 | �� | � | � | 9,560 | �� | � | � | 10,155 | � | � | � | 16,379 | � |
| Depreciation and amortization |
�� | � | 37,880 | �� | � | � | 28,637 | �� | � | � | 30,115 | � | � | � | 27,375 | � |
| Interest expense |
�� | � | 17,674 | �� | � | � | 14,629 | �� | � | � | 14,337 | � | � | � | 13,147 | � |
| Construction expenses |
�� | � | 6,095 | �� | � | � | 12,795 | �� | � | � | 14,283 | � | � | � | 5,468 | � |
| Acquisition expenses |
�� | � | 2,647 | �� | � | � | 735 | �� | � | � | ��� | �� | � | � | 138,140 | � |
| Income tax expense (benefit) |
�� | � | 3,004 | �� | � | � | 2,629 | �� | � | � | (1,480 | ) | � | � | (1,125 | ) |
| Less: |
�� | � | � | � | ||||||||||||
| Construction revenue |
�� | � | (5,804 | )� | � | � | (12,963 | )� | � | � | (14,963 | ) | � | � | (5,265 | ) |
| Third-party management and other fees |
�� | � | (561 | )� | � | � | (753 | )� | � | � | (611 | ) | � | � | (550 | ) |
| Gain on settlement of lawsuit related to the Observatory |
�� | � | ��� | �� | � | � | (975 | )� | � | � | ��� | �� | � | � | ��� | �� |
| Gain on consolidation of non-controlled entities |
�� | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� | � | � | (322,563 | ) |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Net operating income |
�� | � | 93,740 | � | � | � | 79,575 | �� | � | � | 63,067 | � | � | � | 64,437 | � |
| Straight-line rent |
�� | � | (8,543 | )� | � | � | (10,979 | )� | � | � | (12,580 | ) | � | � | (8,932 | ) |
| Above/below-market lease amortization |
�� | � | (4,568 | )� | � | � | (2,028 | )� | � | � | (1,884 | ) | � | � | (1,903 | ) |
| Below-market ground lease amortization |
�� | � | 1,750 | �� | � | � | 426 | �� | � | � | 426 | � | � | � | 398 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Cash net operating income |
�� | � | 82,379 | � | � | � | 66,994 | �� | � | � | 49,029 | � | � | � | 54,000 | � |
| Less: 112 West 34th St. and 1400 Broadway cash NOI |
�� | � | (7,381 | )� | � | � | ��� | �� | � | � | ��� | �� | � | � | ��� | �� |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
| Same store cash net operating income |
�� | $ | 74,998 | �� | � | $ | 66,994 | �� | � | $ | 49,029 | �� | � | $ | 54,000 | � |
| �� | � |
� |
� | � | � |
� |
� | � | � |
� |
� | � | � |
� |
� | |
�
Page 18
Third Quarter 2014
Debt Summary
(unaudited and dollars in thousands)
�
| � | �� | � | � | �� | Weighted Average | � | ||||||
| Debt Summary |
�� | Balance | � | �� | Interest Rate |
� | � | Maturity (Years) |
� | |||
| Fixed rate mortgage debt |
�� | $ | 940,835 | �� | �� | � | 5.80 | %� | � | � | 2.3 | �� |
| Exchangeable senior notes |
�� | � | 250,000 | �� | �� | � | 2.63 | %� | � | � | 4.9 | �� |
| Variable rate mortgage debt |
�� | � | 41,059 | �� | �� | � | 4.17 | %� | � | � | 0.2 | �� |
| Term loan and credit facility |
�� | � | 355,600 | �� | �� | � | 1.48 | %� | � | � | 3.9 | �� |
| �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total |
�� | � | 1,587,494 | �� | �� | � | 4.29 | %� | � | � | 3.0 | �� |
| �� | �� | � |
� |
� | � | � |
� |
� | ||||
| Premium/discount |
�� | � | 10,674 | �� | �� | � | ||||||
| �� | � |
� |
� | �� | � | |||||||
| Total |
�� | $ | 1,598,168 | �� | �� | � | ||||||
| �� | � |
� |
� | �� | � | |||||||
�
| Available Borrowing |
�� | Facility | � | �� | Outstanding�at September 30, 2014 |
� | �� | Letters of�Credit |
� | �� | Empire Reserve�(2) |
� | �� | Remaining Capacity at September�30, 2014 |
� | |||||
| Mortgages |
�� | $ | ��� | �� | �� | $ | 981,894 | � | �� | $ | ��� | �� | �� | $ | ��� | �� | �� | $ | 10,615 | � |
| Exchangeable senior notes |
�� | � | ��� | �� | �� | � | 250,000 | � | �� | � | ��� | �� | �� | � | ��� | �� | �� | � | ��� | �� |
| Term loan and credit facility (1) |
�� | � | 800,000 | �� | �� | � | 355,600 | � | �� | � | ��� | �� | �� | � | 21,604 | � | �� | � | 422,796 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
| Total |
�� | $ | 800,000 | �� | �� | $ | 1,587,494 | � | �� | $ | ��� | �� | �� | $ | 21,604 | � | �� | $ | 433,411 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
�
| Covenant Summary |
�� | Required | � | � | Current Quarter |
� | � | In Compliance | ||
| Secured Credit Facility |
�� | � | � | |||||||
| Maximum Total Leverage |
�� | � | < 60 | %� | � | � | 31.3 | %� | � | Yes |
| Maximum Secured Debt |
�� | � | < 40 | %� | � | � | 19.7 | %� | � | Yes |
| Minimum Fixed Charge Coverage |
�� | � | > 1.5 | x� | � | � | 3.1 | x� | � | Yes |
| Maximum Variable Rate Indebtedness |
�� | � | < 25 | %� | � | � | 7.8 | %� | � | Yes |
| Maximum Secured Recourse Indebtedness |
�� | � | < 10 | %� | � | � | 0 | %� | � | Yes |
| Minimum Tangible Net Worth |
�� | $ | 689,800 | �� | � | $ | 931,695 | � | � | Yes |
Notes:
�
| (1) | The term loan and credit facility has an accordion feature allowing for an increase in maximum aggregate principal balance to $1,250,000 under certain circumstances. |
| (2) | Reflects a reserve for Empire State Building capital expenditures. |
�
Page 19
Third Quarter 2014
Debt Detail
(unaudited and dollars in thousands)
�
| � | �� | Stated Interest Rate�(%) |
� | � | Current Interest Rate�(%) |
� | � | Principal Balance |
� | �� | Maturity Date |
� | � | Amortization | � | |||||
| Fixed rate debt: |
�� | � | � | �� | � | |||||||||||||||
| One Grand Central Place (first lien mortgage loan) |
�� | � | 5.34 | %� | � | � | 5.34 | %� | � | � | 69,994 | �� | �� | � | 11/5/2014 | � | � | � | 25�years | �� |
| One Grand Central Place (second lien mortgage loan) |
�� | � | 7.00 | %� | � | � | 7.00 | %� | � | � | 14,642 | �� | �� | � | 11/5/2014 | � | � | � | 25 years | �� |
| 500 Mamaroneck Avenue, Harrison, NY |
�� | � | 5.41 | %� | � | � | 5.41 | %� | � | � | 32,076 | �� | �� | � | 1/1/2015 | � | � | � | 30 years | �� |
| 250 West 57th Street (first lien mortgage loan) |
�� | � | 5.33 | %� | � | � | 5.33 | %� | � | � | 24,976 | �� | �� | � | 1/5/2015 | � | � | � | 25 years | �� |
| 250 West 57th Street (second lien mortgage loan) |
�� | � | 6.13 | %� | � | � | 6.13 | %� | � | � | 11,036 | �� | �� | � | 1/5/2015 | � | � | � | 25 years | �� |
| 1359 Broadway |
�� | � | 6.04 | %� | � | � | 6.04 | %� | � | � | 44,146 | �� | �� | � | 2/3/2015 | � | � | � | 25 years | �� |
| Metro Center |
�� | � | 5.89 | %� | � | � | 5.89 | %� | � | � | 94,501 | �� | �� | � | 1/1/2016 | �(3)� | � | � | 30 years | �� |
| 10 Union Square |
�� | � | 6.00 | %� | � | � | 6.00 | %� | � | � | 20,726 | �� | �� | � | 5/1/2017 | � | � | � | 30 years | �� |
| 10 Bank Street |
�� | � | 5.72 | %� | � | � | 5.72 | %� | � | � | 32,999 | �� | �� | � | 6/1/2017 | � | � | � | 30 years | �� |
| 1542 Third Avenue |
�� | � | 5.90 | %� | � | � | 5.90 | %� | � | � | 18,727 | �� | �� | � | 6/1/2017 | � | � | � | 30 years | �� |
| First Stamford Place |
�� | � | 5.65 | %� | � | � | 5.65 | %� | � | � | 243,156 | �� | �� | � | 7/5/2017 | � | � | � | 30 years | �� |
| 383 Main Avenue, Norwalk, CT |
�� | � | 5.59 | %� | � | � | 5.59 | %� | � | � | 29,993 | �� | �� | � | 7/5/2017 | � | � | � | 30 years | �� |
| 1010 Third Avenue and 77 West 55th Street |
�� | � | 5.69 | %� | � | � | 5.69 | %� | � | � | 27,723 | �� | �� | � | 7/5/2017 | � | � | � | 30 years | �� |
| 1333 Broadway |
�� | � | 6.32 | %� | � | � | 6.32 | %� | � | � | 69,798 | �� | �� | � | 1/5/2018 | � | � | � | 30 years | �� |
| 1400 Broadway (first lien mortgage loan) |
�� | � | 6.12 | %� | � | � | 6.12 | %� | � | � | 69,920 | �� | �� | � | 2/5/2018 | �� | � | � | 30 years | �� |
| 1400 Broadway (second lien mortgage loan) |
�� | � | 3.35 | %� | � | � | 3.35 | %� | � | � | 9,853 | �� | �� | � | 2/5/2018 | �� | � | � | 30 years | �� |
| 112 West 34th Street (first lien mortgage loan) |
�� | � | 6.01 | %� | � | � | 6.01 | %� | � | � | 77,744 | �� | �� | � | 4/5/2018 | �� | � | � | 30 years | �� |
| 112 West 34th Street (second lien mortgage loan) |
�� | � | 6.56 | %� | � | � | 6.56 | %� | � | � | 9,792 | �� | �� | � | 4/5/2018 | �� | � | � | 30 years | �� |
| 1350 Broadway (first lien mortgage loan) |
�� | � | 5.87 | %� | � | � | 5.87 | %� | � | � | 39,033 | �� | �� | � | 4/5/2018 | � | � | � | Interest�only | �� |
| Exchangeable senior notes |
�� | � | 2.63 | %� | � | � | 2.63 | %� | � | � | 250,000 | �� | �� | � | 8/15/2019 | � | � | � | Interest only | �� |
| �� | � | � | � |
� |
� | �� | � | |||||||||||||
| Total fixed rate debt |
�� | � | � | � | 1,190,835 | �� | �� | � | ||||||||||||
| Variable rate debt: |
�� | � | � | �� | � | |||||||||||||||
| 1350 Broadway (second lien mortgage loan) |
�� | � | (1 | )� | � | � | 4.25 | %� | � | � | 13,677 | �� | �� | � | 10/10/2014 | �(4)� | � | � | Interest only | �� |
| One Grand Central Place (third lien mortgage loan) |
�� | � | (2 | )� | � | � | 3.75 | %� | � | � | 6,382 | �� | �� | � | 11/5/2014 | � | � | � | Interest only | �� |
| 250 West 57th Street (third lien mortgage loan) |
�� | � | (1 | )� | � | � | 4.25 | %� | � | � | 21,000 | �� | �� | � | 1/5/2015 | � | � | � | Interest only | �� |
| Secured Revolving Credit Facility |
�� | � | LIBOR�plus�1.20 | %� | � | � | 1.35 | %� | � | � | 55,600 | �� | �� | � | 10/5/2017 | � | � | � | Interest only | �� |
| Secured Term Credit Facility |
�� | � | LIBOR�plus�1.35 | %� | � | � | 1.50 | %� | � | � | 300,000 | �� | �� | � | 10/5/2018 | � | � | � | Interest only | �� |
| �� | � | � | � |
� |
� | �� | � | |||||||||||||
| Total variable rate debt |
�� | � | � | � | 396,659 | �� | �� | � | ||||||||||||
| �� | � | � |
� |
� | � | � |
� |
� | �� | � | ||||||||||
| Total / weighted average debt |
�� | � | � | 4.29 | %� | � | � | 1,587,494 | �� | �� | � | |||||||||
| �� | � | � |
� |
� | � | �� | � | |||||||||||||
| Premium/discounts |
�� | � | � | � | 10,674 | �� | �� | � | ||||||||||||
| �� | � | � | � |
� |
� | �� | � | |||||||||||||
| Total |
�� | � | � | $ | 1,598,168 | �� | �� | � | ||||||||||||
| �� | � | � | � |
� |
� | �� | � | |||||||||||||
Notes:
�
| (1) | Greater of 4.25% and Prime plus 1.00%. |
| (2) | Greater of 3.75% and Prime plus 0.50%. |
| (3) | Refinanced with a new $100.0 million mortgage loan due 2024 which bears interest at a fixed rate of 3.59% and a 30 year amortization. |
| (4) | Loan was repaid on October�10, 2014, using available cash. |
�
Page 20
Third Quarter 2014
Debt Maturities and Ground Lease Commitments
(unaudited and dollars in thousands)
�
| Year |
�� | Amortization | � | �� | Maturities (1) | � | �� | Total | � | �� | Percentage�of Total Debt |
� | � | Weighted Average Interest Rate of Maturing�Debt |
� | |||||
| 2014 |
�� | $ | 3,891 | �� | �� | $ | 104,246 | �� | �� | $ | 108,137 | �� | �� | � | 6.8 | %� | � | � | 5.33 | % |
| 2015 |
�� | � | 12,398 | �� | �� | � | 132,591 | �� | �� | � | 144,989 | �� | �� | � | 9.1 | %� | � | � | 5.48 | % |
| 2016 |
�� | � | 10,422 | �� | �� | � | 91,572 | �� | �� | � | 101,994 | �� | �� | � | 6.4 | %� | � | � | 5.89 | % |
| 2017 |
�� | � | 8,034 | �� | �� | � | 411,361 | �� | �� | � | 419,395 | �� | �� | � | 26.4 | %� | � | � | 5.12 | % |
| 2018 |
�� | � | 769 | �� | �� | � | 562,210 | �� | �� | � | 562,979 | �� | �� | � | 35.5 | %� | � | � | 3.67 | % |
| 2019 |
�� | � | ��� | �� | �� | � | 250,000 | � | �� | � | 250,000 | �� | �� | � | 15.7 | % | � | � | 2.63 | % |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | � | � |
� |
� | |
| Total debt |
�� | $ | 35,514 | �� | �� | $ | 1,551,980 | � | �� | � | 1,587,494 | �� | �� | � | 100.0 | % | � | � | 4.29 | % |
| �� | � |
� |
� | �� | � |
� |
� | �� | �� | � |
� |
� | � | � |
� |
� | ||||
| Premium/discount |
�� | �� | �� | � | 10,674 | �� | �� | � | ||||||||||||
| �� | �� | �� | � |
� |
� | �� | � | |||||||||||||
| Total |
�� | �� | �� | $ | 1,598,168 | �� | �� | � | ||||||||||||
| �� | �� | �� | � |
� |
� | �� | � | |||||||||||||
Note:
�
| (1) | Assumes no extension options are exercised. |
Debt Maturity Profile
�
�
Ground Lease Commitments
�
| Year |
�� | 1350 Broadway |
� | �� | 1400 Broadway |
� | �� | 112 West 34th�Street |
� | �� | Total | � | ||||
| 2014 |
�� | $ | 27 | �� | �� | $ | 169 | � | �� | $ | 184 | �� | �� | $ | 380 | � |
| 2015 |
�� | � | 108 | �� | �� | � | 675 | � | �� | � | 735 | �� | �� | � | 1,518 | � |
| 2016 |
�� | � | 108 | �� | �� | � | 675 | � | �� | � | 735 | �� | �� | � | 1,518 | � |
| 2017 |
�� | � | 108 | �� | �� | � | 675 | � | �� | � | 735 | �� | �� | � | 1,518 | � |
| 2018 |
�� | � | 108 | �� | �� | � | 675 | � | �� | � | 735 | �� | �� | � | 1,518 | � |
| Thereafter |
�� | � | 2,655 | �� | �� | � | 14,175 | � | �� | � | 42,936 | �� | �� | � | 59,766 | � |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
| �� | $ | 3,114 | �� | �� | $ | 17,044 | � | �� | $ | 46,060 | �� | �� | $ | 66,218 | � | |
| �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | �� | � |
� |
� | |
�
Page 21
Third Quarter 2014
Supplemental Definitions
Funds From Operations (�FFO�)
The Company computes 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 the Company believes, 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. The Company presents FFO because it considers it an important supplemental measure of its operating performance and believes 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 the Company�s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and could materially impact the Company�s results of operations, the utility of FFO as a measure of its performance is limited. There can be no assurance that FFO presented by the Company 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.
Core Funds From Operations (�Core FFO�)
Core FFO adds back to traditionally defined FFO the following items associated with the Company�s initial public offering, or IPO, and formation transactions: gain on consolidation of non-controlling entities, acquisition expenses, severance expenses and retirement equity compensation expenses. It also adds back private perpetual preferred exchange offering expenses, acquisition expenses, gain on settlement of lawsuit related to the Observatory, net of income taxes and ground lease amortization. The Company presents Core FFO because it considers it an important supplemental measure of its operating performance in that it excludes items associated with its IPO and formation transactions and other non-recurring assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and items. There can be no 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.
Core Funds Available for Distribution (�Core FAD�)
In addition to Core FFO, the Company presents Core FAD by (i)�adding to Core FFO non-real estate depreciation and amortization, the amortization of deferred financing costs, amortization of debt discounts and non-cash compensation expense and (ii)�deducting straight line rent, recurring second generation leasing commissions, tenant improvements, prebuilts, capital expenditures, furniture, fixtures�& equipment purchases, amortization of debt premiums and above/below market rent revenue. Core FAD is presented solely as a supplemental disclosure that management believes provides useful information regarding the Company�s ability to fund its dividends. Core FAD does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FAD is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. There can be no assurance that Core FAD presented by the Company is comparable to similarly titled measures of other REITs.
Net Operating Income
Net Operating Income, or NOI is a non-GAAP financial measure of performance. NOI is used by investors and the Company�s management to evaluate and compare the performance of the Company�s properties and to determine trends in earnings and to compute the fair value of its properties as it is not affected by; (i)�the cost of funds of the property owner, (ii)�the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii)�acquisition expenses and formation transaction expenses; or (iv)�general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from net operating income because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by the Company regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in the Company�s office or retail properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing the Company�s operating results to the operating results of other real estate companies that have not made similarly timed, purchases or sales. The Company also excludes private perpetual exchange offering expenses and gain on settlement of lawsuit related to the Observatory, net of income taxes. The Company believes that eliminating these costs from net income is useful because the resulting measure captures the actual revenue, generated and actual expenses incurred in operating its properties as well as trends in occupancy rates, rental rates and operating costs. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company�s properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness. NOI is a measure of the operating performance of the Company�s properties but does not measure its performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Supplemental Package regarding the components of net income that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI than the Company does.
EBITDA
The Company computes EBITDA as net income plus perpetual preferred unit distributions, interest expense, income taxes, depreciation and amortization, acquisition expenses, and gain on consolidation of non-controlled entities. The Company presents EBITDA because it believes that EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of its ability to incur and service debt. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company�s financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of its liquidity.
�
Page 22