ESRT - Earnings call transcript Q2 2018 | Empire State Realty Trust, Inc.

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Operator

Greetings, and welcome to the Empire State Reality Trust Second Quarter 2018 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host, Mr. Thomas Keltner, General Counsel at Empire State Reality Trust, please proceed.

Thomas Keltner

Good morning. us earnings Empire conference joining second Realty for XXXX quarter call. you today State for Trust's Thank

answers income prepared conditions, including may those In addition our to your to market contain the a posted quarterly and the the applicable Company's forward-looking press release today's call, package to in On in further distributed website with at detail section on laws, management’s Investors statements results empirestaterealtytrust.com. been operations, securities expenditures, supplemental has capital of last property expense. remarks and questions as defined relating evening,

As update discussions estimates. Empire filings uncertainties, today. a to in related forward-looking future. the any detailed the differ reminder, listeners which forward-looking statements the are and Company's discussed to statements those State represent statement review in Realty to management's risks the encourage results more from They to We current Trust may assumes with to forward-looking actual cause these obligation subject no SEC.

we non-GAAP the meaningful reconciliations in release cash measures Company's during which most and these are NOI on believe will NOI, GAAP the Finally, The each are comparable definitions we measures performance. discuss package, directly and FFO, to such call, website. financial as evaluating in modified core available certain of today's EBITDA, and FFO, included and measures, supplemental the earnings the Company's

Kessler, Chief Operating and to Officer. President will I John call the Now over turn

John Kessler

At located Trust Empire Good morning. near Realty call. Welcome is to Transit. State conference quarter our fully earnings Mass modernized second our XXXX portfolio centrally

opportunity provides us A price and between upside Class which Class tenants and B valued a market both properties, downside protection. offers point position Our with Trophy,

market-leading embedded from de-risked, spreads office of growth We space. redevelopment leasing have and our strategy generate a

market office Tom XXX.XXX we second market-leading balance an position and properties, industry-leader leases, and sustainability We demand sheet speak feet our significant And borrowings Today, outstanding in about Durels square REITS, the leasing quarter's cash have energy are approximately against for our will line. our spreads. the levered a lowest of no efficiency. and among

expansion at leasing in then joined to Their performance Our our us questions. I'll over After team address here expansion sixth to XXXX. results since sheet. is tenant a included Building. balance will Karp our State turn Empire financial approximate our David the square-foot now and that the Tom XX,XXX answer they your Durels, Tom? And LinkedIn’s as call

Tom Durels

morning, Thanks everyone. good John and

quarter on our revenue second four of further Our six million, five over growth next June website. of of drivers, The full available presentation found XXXX, as of of years. to reflect Page investor progress derisked, we on estimate investor be be our line, which section top the drivers our XX, breakdown $XXX the numbers our embedded to X growth on can

For $XXX cash in compares revenue as tenant reference, XX-month in June reimbursements of to trailing and and trailing NOI this million cash XX $XXX XXXX. months million XX, rental

Just approximately feet. of XX in Empire a XXX,XXX as In with this feet all leases square-foot floor and full This new square renewal Metropolitan XX,XXX quarter during our square feet XX,XXX greater lease will properties; a totaling reminder, properties; signed York at and flow NOI. our new we of X,XXX include and Building. retail. the office Manhattan feet New LinkedIn expansion leases the signed office office Significant the $XXX not square to second quarter, XXX,XXX million is the approximately revenue in included square through growth State

whom tenants relocated leases to signed. our updated leases that which have be on been XXXX, by tenants renewals chart X and by vacates shows supplemental. have of and year-end on be found potential for to vacates within our This disclosure expired We new portfolio the be can Page replaced with

to strategy higher tenants. re-lease spaces, rents to them spaces at those with our and better redevelop continued consolidate proven have We vacate and

the between vary and GAAP can occupancy timing commencement timing further commencement delay these existing legal out reported of between move the impact revenue. revenue As resulting a These and new and reminder, delay replacement the There leases, of recognition. quarter-by-quarter. the tenants a lags is our

second across entire compared higher our cash And XX.X% to were rental new we leases of and escalated signed rent at at prior a our the on leases office a on renewal new portfolio quarter, During rents. spread basis rates properties positive Manhattan XX.X%.

disclosed spreads XX Page expiring rents, on Of the leasing escalated course, depend our on supplemental. always fully of which we’ve

offerings. product, for to healthy pipeline quarter, both the have third and and and across continue our the pre-builts. price for floors and leases demand our portfolio full feel confident of we locations a see points Heading very We in into negotiation

significantly timing will remain We we bring redevelop As a future for vary may volume leasing market given the deals. strategy on and our to that the space focused lease-up. by quarter reminder of particular vacate

the I'll over David? Karp. Now, turn David call to

David Karp

Thanks Tom everyone. and morning, good

on reported we FFO the For income this XX. core was our NOI interest million, XX second $XX.X of now statement $X.XX with line quarter, include $XX a Cash the million or item investments balance our on and on Page as share. we sheet supplemental per line reported Page separate prior-year of income period. on Starting flat diluted short-term quarter, essentially separate a as our item

within Easter visitors XXXX. shift second of of to our holiday are operations, from in the in the resulted second NOI quarter. despite fell This million whereas dynamic split for $XX.X period. which was and quarters, up XXXX. fewer million second types X.X% of in ticket Easter a improvement our Observatory the Revenue highlighted to million, the A year. in between Observatory this announced compared Easter second of the on the first the We approximately drove XXXX, as the XX,XXX a previously compared hosted mix prior of the lower the to entirely X.XX the second of implementation second quarter that and Turning year, quarter XXXX, visitor pricing, quarter X.X% year, XXXX estimate the second in combination second holiday of holiday quarter to prior-year The NOI. quarter of or count the from year-over-year the increases, was this decrease in XX a Page price supplemental. of $XX.X better approximately increased XXXX, of X.X% of visitors quarter

For visitors the in more than weather bad period. prior-year second fewer we in the days resulted estimate approximately quarter, XX,XXX

despite was the million, XXXX, fact replacement was first compared of months For higher-speed the up a X.X% prior-year performance a in of with Observatory months revenue period. deck the XXXX, period. XXXnd glass observation the six of strong elevator. the floor ended achieved for This $XX.X new the was the elevator first closed the increase quarter machinery original million, was that operating the $XX.X six for June prior-year to X.X% from XX, Net income XXXX

XXXX, X.X% the the first million compared was of same down would've for revenue observation revenue which firsts from ended XXXX. XXXnd Excluding increased months X.X% in deck, in period $X.X The million the the June visitors XXXX, Observatory hosted X.XX half XX, quarter period. in six in approximately compared Observatory million with as the year to X.XX XXXX. prior

balance environment. our free sheet, sheet, remains Moving balance on joint leverage flexible including any hand, us competitive cash to and venture a in market significant low advantage and our for differentiating

The our billion of weighted outstanding we average had unsecured June of rate and interest term debt and to XX, credit. has billion borrowing approximately $X.X of of $X.X weighted debt a X.X XXXX, X.XX% of maturity no under line average total years. As

None variable with maturing before laddered maturities a debt our million single rates. of only issue well XXXX. debt $XXX Our outstanding has are

I XXXX, that, of debt $XXX consolidated consolidated times. of As market net we cash net would investments XX, to the June for was debt-to-EBITDA capitalization questions. short-term X.X the Operator? With have million. XX.X%, open total company's call and cash, to your was and And equivalents like

Operator

Our Instructions] Craig question [Operator sir. first KeyBanc. Please comes from go Mailman of you, Thank today ahead.

Craig Mailman

morning guys. you. with good Tom start to Hey may be

since bit is just in, of levels you curious, some up you at rent redeveloped from curious, little buildings. or market guys rent moving Just if are the have your really markets guys been growth a are I'm overall become market tougher the perspective. a in kind you IPO successful

to how what curious in. push ability that's your of how market price kind of view given some average guys assets statistics? the stack up point your maybe higher, kind Just you’ve you think money continue the to you the put your And of in to

Tom Durels

Sure Craig.

growth year-to-date We some and year-over-year. modest have rent seen

the drive that healthy. I able would I think feels that to as far say as rents, market office being

and submarkets our – certainly submarket are Our healthy. offerings

to price point, and numbers the continue given growth activity modest and be our can employment forward, think, product, growth. we study see positive going locations to our I we rent As we see continue see some to for expect

We offering a offer As Class and we've modernize B. create great we great provide and always traditional locations. a value properties said, Class properties and A unique between

see rent long will growth I see to as employment continue offerings. for as good continue think, modest to we So be numbers, we

Craig Mailman

to maybe like move think, have I due kind up New just you the feet updated of that’s York out just were you Could helpful. about? thoughts that That’s that is in looks four square to, out then could about guys kind was just Or portfolio. And XXXX visibility greater XXX,XXX vacates talk expiring? or mostly given that what's guys whether you of talk

Tom Durels

of that to Craig, XX occupies I'd comment space square-foot the it for workplace than XX,XXX be [indiscernible] the non-renewable years today’s tenant for been rebuilt expected They've a tenant. to it's needs old. due that that is there environment. more

Craig Mailman

mean, and Okay, in rebound the came in. Then where had price, mix that's helpful. you kind it Observatory, guys I of just on good ticket a

Kind and additional for opened Just visitors? you what through of increases guys curious Observatory to guys as kind ability on offer volatility would million. of, your thoughts price some continue your fund entrants that or ticket to push $XXX of you kind the appetite that the in new view the

Tony Malkin

to opening, new to The areas is presentation We just this increases while do we State a for results improvements. mix us Malkin here. we us, that. been when just the report, more both think away. even offense Craig, We don't per in able impacted. then fact forward there look exciting. when views some providing believe weather go Tony the reason very help and to a Hey is are absolutely much forward cap Building which will few put and is which together to is have ticket Empire price we the the look to Observatory weeks We on that speculate We

the environment volume. by Street the it's not is line going visitors, more And improve it's just way for retail are to is opportunities bottom XXth us tenants. tourist behind make to don't office to help our and increase changes these drive going we to to think So our of a reduction Avenue desirability the rents the going the – help Observatory, forget as there the and Fifth to desirable ESB tenants raise ESB lobby not

that excited absolutely to is this get a us. plus out. this we for think We're So very

Craig Mailman

Great guys. thanks

Operator

Jamie America ahead. of The is of Feldman Merrill Bank next from question go Please Lynch.

Jamie Feldman

Great, thanks.

the what foot from earnings implications XX,XXX you the maybe next out move a on the it's low average square or the talk in portfolio suburbs can assume average. just I following-up pretty just be about move? might rent to Just that rent year, compared

Tom Durels

compared rents seeing average, City. tenant square-foot a rents by to is occupied are that New roughly portfolio space half As that XX,XXX the that that we're our is – average York entire in

a I equivalent go it's ahead. as relevant then that far our sense it that as good York, roles. tenant a rent So in question think in as yes, And New the that's impacts half size overall to –

Jamie Feldman

I’m No, ahead. go sorry,

Tom Durels

Yes, I good thanks. am

Jamie Feldman

do you it out just then full of a expect certain that And rehab? spaces? take is service to property Or for

Tony Malkin

occupied It's needs completely As space been than mentioned be tenant I XX by years. that to more for has redeveloped. and old before,

offline, would re-lease So, it and and it yes, redevelop take it. we

Jamie Feldman

Is full it a now? building

Tony Malkin

No.

Jamie Feldman

some the schedule, from your I the of here, pushed some moving with pieces it of looks vacates just sticking There's then your, your got maybe tenant I some wrong but third might vacates? even supplemental. the versus like XQ to us back XQ quarter. with And think, of then be versus tenant the the moving talk pieces in the last actual both now and you quarter vacates intentional third projected quarter, just your third quarter and through last Can Okay.

Tony Malkin

short-term as the the relates of leases due this increase tenant is and vacates, third to it rollover Jamie, extensions. in to some quarter of the most month-on-month some

with also accounts the We've on on X That that bulk short-term Page for added supplemental a change. a line see to footnote the hold for tenants. month-to-month regard of and our new of renewals added of tenants. was You'll

Jamie Feldman

much Okay, for leasing and lease. and your space? space has that's over how the think developed talk ready on year. pipeline about seeing to you how about then, the guys it you could you just always changed – Can as that Are be have you the you may give last statistics

tenants, larger more in XX frame seeing you of are might So kind or tenants? ahead months next Just the smaller so? what

Tony Malkin

about discussion. I deals our Jamie feel our portfolio pipelines good and of under

for both of pipeline opening our a office Manhattan solid As and floors I remarks suites. full mentioned we in activity have my space for pre-built

We pipeline we solid have and variety offerings currently. activity a sold a of have and

both our at product, demand and So ranges sizes. to and floors our our variety price of points, pre-builts see continue full of in locations and a we for our

Jamie Feldman

the on color on then New more And mean the of seeing just I seeing the specifically? I types York question global final can of you a kind guess, domestic? there, visitors all to us some out given to the seeing? noise Okay. Are from you me give just Observatory Any you're trends more Are international? visitors kind visitors of on and you Observatory.

Tony Malkin

we At our that than I Tony two to at between it have, City States. NYC the on tell market decrease all when connection less historically we’re is it that occurring: cross-border was. of same will revenue, cross no we is – we here view image will & Observatory that and attractions York border is Look, I U.S. traveling and Well, tell United movements look have New how Company question relationship things a international in we in perspective the think, visitors. you is One no slight from foreign time, the increased that see currency the world, I across we the there Jamie. seeing positive today’s no internationally seen impact you will strong reporting

take under efforts begun effect. sales have to our sales Our leader new

efforts However, beginning ticket benefits I historically. haul in of is more cross-border think And than and the we of our we we’re to think our higher they the already And those pricing. our get see visitors, pay ticket mix the long prices. to particularly goal have

forward. we Empire candidly, we that where of the have regardless the – that, Observatory overseas, that strategy see still to at Beyond succeed But of trends. Building a the moment, is going State have would and visitors we going majority are overall continuing I our from say

Jamie Feldman

Okay, alright, thank you.

Operator

of The is Evercore from Simone Rob ahead. ISI. next go question Please

Rob Simone

thanks. guys, Hey

of question correct? question which to occur the correct, going earnings – follow-up means, primarily obviously, That in XXXX. to next a a that Just XX,XXX into square-foot Jamie’s XQ quick that’s out, Is earlier. move flows impact year

David Karp

lease That in expires correct. XXXX. – That’s at November of

Rob Simone

said on Got average half the you the side? it. And roughly York it’s rent New

David Karp

That’s correct.

Rob Simone

follow-ups the then on vacates XXX. just your up was down there’s and and bucket looks by time. was And if Okay. then stated XXX,XXX two feet – and bucket It unknown leasing about by about like intentional square quick about down between

assume just there. like So of in feet forward? call leased net it quarter space that that square kind Is elsewhere to moves. was a that that it full this I was XX,XXX Or out that’s that understand how was in safe that trying to is moving around break?

Tony Malkin

I’m Well not periods comparing. sure, you’re which

Rob Simone

[Indiscernible], sorry.

Tony Malkin

Okay. New we a the square-foot in from an others updated tenant change change vacate. tenant portfolio as Metropolitan moving the are forecast tenant was big XX,XXX just was there it. Connecticut. big a greater then And to office change York currently The one in see that Again the unknown

Rob Simone

reported it I seems for look about Yes, if about you guys by just Like plus there XX,XXX I vacate it or feet quarter like unknown, this XXXX those the last looks the XXXX like I what a square get XX,XXX to square was reduction compare feet. so that. at number buckets if quarter,

question. So does thinking the that portion did that’s what or I or leased, this mean, XXX,XXX wrong that am already really as the quarter, foot square that of I leasing was mean way? you a about in of

David Karp

it to a of to should changes. number the a single referring square change small point you’re be If I thing. about of total of can’t and XX,XXX portfolio one feet, comprised

our it’s XXXX simply So again forecast. our XXXX – this period updated instead of

Rob Simone

was opportunity as of talked on restated that in guys lastly just you guess, you Okay, as your the kind that did to you investment, in in about just b), it yield trying David for invest re-leased out, enhance an to more? to short-term or bit portfolio, tick Did And it in a) that little to the What up looks started What QX? on Was the the – a me, start excuse income like intention the Was technically kind QX. that it? just interest of there? you a) it broke c) understand I extent understood. me was And then – – that

John Kessler

Rob. Yes,

placed $XXX and leading in months regional banks. series believe to to we time of tenants balances, the we this did rates. access And our cash national and deposits is nine million we taking did to some of this this So ratted in with rising with We a way prudent mid-June. retain advantage while

It QX little it QX. have in that see you’ll bit. a So impact impact larger a had as an go we will into

Rob Simone

I thanks. guys. it Great appreciate

Operator

Please from Stifel. is of question Guinee next The go ahead. John

John Guinee

of here Great couple John questions. Guinee a thanks,

cash, now like the end million looks of plus your restricted David, cash, notes $XXX first plus quarter. million $XXX First with around

You your expect When CBD the quarter? phase – turn assuming bend do suburbs, and you renovations and acquisitions cost. cash flow cash you when turn re-leasing total what you in And for building positive? your cash positive, you look to cost balance the Observatory And the dispositions? be what at do no what both or flow your for do in

David Karp

positive in summary, move difference cost, decline which cash remaining this quarter-over-quarter balance was of due principally John, $XXX $XX quarterly in million offset to was the then term in Yes, dividend, that by million $XX the million. all the the was $XX cash the the and biggest investments. the the and which was the million; was And of about flow, CapEx of leasing which short operating change was

net specific into – guidance, can’t that we look a don’t you we longer I As we no feel give provide a cash use we quarter. XXXX. forward, while become we of

John Guinee

you million $XX of And plus think have is time? at restricted investments – million cash. $XXX now you balance your you’re you right what do What and think that short-term do cash of

David Karp

on the for go – reason investment was cash you that’s specifically put a to And position purpose. sheet we for if was balance the ourselves well back, that that opportunity. again, Well,

cash Our is liquidity that and balance goal to the retain on that sheet.

for as will future it to we expenditures, much of how and such funding use other want be capital to investment to allocate continue considering as So cash will capital we how for cash items retain we we of that expenditures. much our

can’t I answer So now. give specific a right you

John Guinee

of economic is you percent – lease Page then a it’s percent you awfully commenced your could and Do X Page occupancy off, free basically, occupancy guess, try to of then rent And number number burn job, you Do the a flat give upside scheduled from guys not great ins on outs, Page economic through occupied. difficult have you lease X provide? number Because the economic have X. you, would a pretty But on an go your much occupancy all I have the flat Okay. do handy? and initial a to than quarter-over-quarter here. people sense a of you signed a

David Karp

some We can companies of don’t have more see something apartment mean, like it take certainly right it of office We the you the look now. with or that a handy at we haven’t typically REITs many I typically it’s often seen it. companies. and with

the in about off-line, appropriate And you not was be at the have context if on talk it happy thoughts happy I’d really looked necessary have to we We past that But it to that. and felt you in of it. to report. revisit some what

John Guinee

question XXXX different healthy get I last that’s you this expiration over mark-to-markets that Tom. couple and And Okay. in you been getting, expiring quarter? the $XX guess, the very is you’ve the then Manhattan I the still for property office about think year question, you than leases on XX%, XXXX, can or other Page very of average think XX, quick last sub-$XX two. looks then And like last Do

in there strike exchangeable on [ph]? due is question other the price ’XX The a notes

Thomas Keltner

John, this Tom. is

as was rent And depend the the per our rent space always square fact will First prior out. vacant rents escalated on office spreads, on escalated expiring would on developed I you’ve fully the foot. that the highlight pointed they fully Manhattan $XX.XX

superior low rents opportunity that spaces expect to ranged XXs we for near to the rent square represents are Given per our asking and leasing for in high achieve some that that the spreads. foot the of XXs future, significant

John Guinee

Okay.

David Karp

the And is with and current XXXX question on it’s to strike the $XX.XX, August and in bond, exchangeable your believe, matures the I respect change. price of roughly right exchangeable $XX

John Guinee

Okay.

the So right out money now. of

David Karp

Correct.

John Guinee

Thank Okay. you.

Operator

of is question Please go Heck from The Blaine Wells Fargo. next ahead.

Blaine Heck

pursuing just to the Thanks, morning. there which to significant and few all are or on table to on few the you’ve Can today? market kind touch this back the whether of or a that anything good have are spill whether opportunities investment John has got on treated. for, specific as go of, you give and now properties assets said, but any challenged get will cash, recently redevelopment, Tony, of Tony are on there picture, color you right some guys

John Kessler

We can our of sheet think at balance morning, But our it’s we lot we a make that think to terms Look, of situation. in Good sheet. to do are opportunities is continue deployment good decision-making our of in discipline balance tool cash. use continue that the the Blaine, and that us a and we use flexibility to right look would John. of in be and a that deploy pursue we gives markets

And be in continues certainly we’re the seen best what’s portfolio, And that’s that the to investment market opportunity hard opportunity so there looking positioned to continue believe we’re us you’ve the well happening do. our which far, as certain things. we attractive. for we’re certainly be following us at should an that But we think and

Tony Malkin

We might very point. able the of working just do. and New declining that way got office not the indicate the City add to looking Pricing writers will be ideas are hard, comment to done I fruition do. see there checks remains aren’t [indiscernible] articles of at But or good reducing who value opportunities value the writers Pricing work. New lot New we’ve high, City York or John’s this to anything the to on York things a City we’ve things York office. of We’ve the sensible. bring of of would that do are to we’re

disciplined. want we’re a So position stay to we in where

Blaine Heck

there any leases Okay, are ones – feet be forward? a within chunky XXX,XXX quick of square future? will XXXX changes that in of likely we that Are for around as Or Tom, leases there leases chunky move number in fair. could the smaller you. unknown that’s any look couple

Tom Durels

the the square foot rest One at in we a expiring have a chunky. are we mixed largest got range. nothing tenants, Central a XX,XXX Grand And Really lot lease is XX,XXX feet. then – small in floor Place The so that square to we of XXXX got tower it’s significantly midsize so bag,

Blaine Heck

And helpful. be that’s any quite in up be the mix was seem to leases that then executed and we quarter issue, or Okay, there CapEx about? down. there the just think underline lease on should a term that Was trends may

Tony Malkin

to Well the white-box, type, on the and ratio including new they cost and first-gen, second-gen reported upon past of and the leases. have the for pre-built, commissions going come renewal space TI length of depending or is or leasing term, quarter in space, vary

pre-built leasing During renewals. cost of the which we of this then was a percentage more quarter. quarter, our leasing And about leasing our new overall three did higher and this then typically have first-gen, leases quarters for leasing office Manhattan a of

cost So pointed first as in from Manhattan, prior the leasing decreased out, quarter. you actually, quarter our

to So upon just that vary I those it's going based mentioned. things

Blaine Heck

thanks Okay, guys.

Tony Malkin

XXs tenant it’s is XX,XXX tenant, I that. is actually square clarify a to our like smaller the next the the that in sorry in Manhattan expires rest next year than want I'm largest is and Blaine, foot

Blaine Heck

is XX,XXX in that bucket? So still unknown the

Tony Malkin

Yes.

Blaine Heck

Thanks.

Operator

go BMO. Please at Our John question Kim final ahead. come from will

John Kim

the vacates, ready and long aggregate good have how intentional specifically redevelop space on morning. to your some it you, takes color can it provide On lease? and you for Thank then

Tony Malkin

floors range tenants vacating. successful depends range of typically, anywhere or X XX duration, So downtime X space upon going into a lease from can overturn some to We've our pre-build at marketing It to full XX to and whether construction given But from overall floor. months. really months. can advance convert been we're leasing the in they that time

John Kim

And or that tenant vacates, some the then lease will take available that is for time off? when immediately

Tony Malkin

many We leased begin marketing of advance spaces in expiring. our tenants of

full when particularly they're similarly it's ready though and said, marketing better for a showing show, condition much get better built while we expirations. lease of I from existing for start to in And a construction. market like our been full have truly they're then for for advance to However, pre-builds, pre-builds But floors floors box successful in a a leasing we white tenants, under process as we standpoint showing.

John Kim

you is you you're then tell of space, that your on redeveloped available And Manhattan on you're space. inventory today what holding XXX,XXX much us moving that for what today of available lease lease aggregates is of have Can on versus current in space? how versus vacant office for for

Tony Malkin

of of square feet square Manhattan vacant XXX,XXX about of inventory space. feet X,XXX,XXX approximately total Out redeveloped office our current space is

All of available that currently marketing is what we're at.

inventory office Page As a of available presentation, the breakdown There I on and floors. our we approximately Manhattan our on said activity of our vacant partial Of remarks space consolidated is investor and our in have of our that's space both have floors. good redeveloped my for XX pipeline opening pre-builds are full in pre-build our half for website.

John Kim

Okay.

recently, makes leased quarters up? under West challenging for to but that just about a it's is meaning but less there deal I leased. Street, several the know signed XXrd Turning asset get it that pointed think, something leased there, one been I XXX Nespresso out or XX% you to past

Tony Malkin

redeveloped It reflects some successful relatively leasing renovated comes that show our to new the good pipeline of of heels great. that And size building that Nespresso have we've very currently. vacate, they're they’ve show deal we the lobby. We've mentioned. space. inventory, have floors and ranged activity almost full elevator marketing program on including The currently we that and done, in that and you The of We're consolidate is caps. six fantastic. redevelop the floors done We're all just

John Kim

mentioned the number And of that Tony visitors that to observatory, visitors that I to about itself? the additional the ask the clarify think, Observatory, increase. or is the to I ability Turning to the investments – magnitude of increase and building wanted the to to will

Tony Malkin

going we everything and gosh, a question we people two, that Oh asked our that job be we're now. I of to right the reflects the increase do use well talk And emphasize able little through think, That's to I capacity have want observatory. capacity to one. just that about have the the differently, absolute I in the Number to we think work? Kim, think visitors more Observatory we of change

So in a in visitors more more as two, enjoyable, come to want when number even work for to provide people I've but pleasant, good. mentioned, more make Observatory is to we number one. not do entertaining, And we're the the not capacity, time weather spend this reason increasing

out plans we that's as in past, first for our So the to set and weeks few a come to that's able we see, be what our like our things And see will time to what people really themselves. job, that's fruition do. we

John Kim

I you additional but some plan or like point have in announce year this your at this, future? investment missed may to do later on the details

Tony Malkin

plan the the to open weeks. next few Observatory we entrance within new Well,

doing the pleasant around be to no a and on absolutely relationships there with profitable. new more electronics have So onto of period the people needs we it's of it, time to – more that see sense works. sure right everything But which make through go see the matter iconic going and revolutionary and itself the builds you'll have. now the we're tower here when it the the and burning need and and you more in of that builds in approach which to in what unique fact kind we're that technology, can is building, visit, efficient, it making and a it's is But

John Kim

Sorry, just part able to on visitors attract of Are as this a more. more days weather bad investment? even going one be to you

Tony Malkin

so. plan. That's hope We the certainly

John Kim

Looking Thank forward to. you.

Operator

question final Stifel, Guinee follow-up of from John please go is The a ahead.

John Guinee

Great.

lease is. roll Is in a rent it question building. the that up you're in place I that lot despite XXs is, about it like talking we’re low been the all to You've this Norwalk, guess, in looks rents a space? CapEx in are square-foot put in XX,XXX Guys, this down, or the going

Tom Durels

captured our that York expiring. to John, We've for Page point you that And integrated would within space not market presentation Tom. that shows New I our that portfolio. building square-foot is the identified New Well, this office or portfolio of mark-to- of is Page metropolitan XX,XXX XX York metropolitan which office really and greater presentation. investor It's is space the XX

John Guinee

got so looking Harrison about I at I've just and XX. rent. in about has open, Norwalk don't got have building rent And Page $XX $XX your has that I'm

of the NOI. portion at those just a So up it's not deal there's potential roll rents of curious one deal. It's be mean I’m if our I big could LinkedIn. any assuming minimus it’s I'm a that. like on

a If sort you hand-to-wheel have of asset. it's at the So who same look Green, at friends mix,

Tony Malkin

if presentation, look It's on investor XX going represents be – a to XXXX rent. markdown Page modest in at it you at

out there. we're As far throughout doing CapEx as our that portfolio the spends,

John Guinee

Got you.

lot. thanks Okay, a

Tony Malkin

bet. You

Operator

now turn I back Mr. Malkin over call to for would closing to remarks. like the

Tony Malkin

thank And for much. all team. like our you call. very you Thank complement attending today's I'd to

nine. to direct of these prepared Our with remarks enhanced say more our a General Counsel, disclaimers and presentation. goal supplemental than has broad shorter delighted down to Tom to fewer XX if been today that and mine totaled and our sites here, calls Keltner's minutes comments we're I'm investor we get whopping and dropout

very, spread lots earning lease calls with we're I'm our All on to in efficiency. team’s busy And happy addition metrics very of and in very value our portfolio's peers we seriousness, proposition fronts. lead execution. So our

the late Something looks very It that September. to quarter, on I. investors but fantastic look every of Phase we're in really about I open we an and is only forward opening The and for show event look the third in we we're Phase it you quarter, as hosting forward to to Observatory, upgraded up experience busy. there

to results look third forward your then, We in much three thank best. So very we the months. And quarter you for and until questions. all reporting time just

Operator

conference. today's This concludes

You you for may disconnect your lines. participation. now your Thank

Empire State Realty Trust (ESRT) 26 Jul 182018 Q2 Earnings call transcript