Empire State Realty Trust (ESRT) 25 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Greg Faje	Director, Investor Relations
Anthony Malkin	Chairman and Chief Executive Officer
John Kessler	President and Chief Operating Officer
Drew Prentice	Chief Accounting Officer, Treasurer and Acting Chief Financial Officer
John Hogg	Head, Financial Planning and Analysis
Tom Durels	Executive Vice President, Real Estate
Craig Mailman	KeyBanc Capital Markets
Jason Green	Evercore ISI
Michael Bilerman	Citigroup
Jamie Feldman	Bank of America/Merrill Lynch
John Guinee	Stifel
Blaine Heck	Wells Fargo
Daniel Ismail	Green Street Advisors
John Kim	BMO Capital
Manny Korchman	Citigroup

Call transcript

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Operator

Greetings and welcome to the Empire State Realty Trust Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Investor Empire of Realty Director Faje, Relations State for Trust. Greg you. Thank

begin. You may

Greg Faje

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

quarterly release results empirestaterealtytrust.com. our our website Investors latest been last press section detail have and the presentation in to with further addition evening, In at a posted supplemental investor of package on company’s distributed the the

laws, management’s expense. defined expenditures, questions call today’s securities those may in prepared as forward-looking statements income answers market your On to remarks to contain capital applicable conditions, including related operations, and property and

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

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

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

John Kessler

transit. with we assets, call. focused a you, locations City Greg. fully Empire New and thank our REIT Trust, to easy quarter access central and earnings Good to are retail modernized office mass and At morning third XXXX State Realty Welcome conference York

cash embedded peer leading growth upside Our four leasing of deliver drivers and spreads.

B priced Class positioned market. well properties between Class trophy is outperform in portfolio any to and A Our

with industry line sheet and leverage we low and in un-drawn credit have leader efficiency. are an balance an of and fortress sustainability a We energy

market our including sheet. will XXX,XXX our quarter’s will demand leases, feet lease review with LinkedIn, then leading expansion spreads. about market balance square the Greg performance of XXX,XXX And Durels speak and square and third leasing Tom for our approximately financial foot Today, our properties Faje

As Prentice, Planning also CFO Analysis our Treasurer our Drew John Acting Head Officer, and questions. and and joined Financial assist Hogg, who always, we Chief of with are by Accounting can

During and and quarter, XX, which galleries, October we first opened our second accompanied interactive very feedback Observatory floor Visitor opening the the XX, museum. XXXnd floor and media observation its the the social extensive positive. press XXXnd on been the set was positive deck. opened has floor And of October

our Robbins Han digital with Finally, as we call, Energy Patricia and media since last welcomed to Schneider experience, social of and and President Dana Director of Vice board her Sustainability. Senior our commerce wealth

and have an consultant For work more ESRT’s Dana we energy efficiency her has than as full led us are time. outside fortunate join to decade, a

technology to We Justine our Officer and Attorney a Leasing and Suresh ESG, Rangarajan, lastly, our our President have appointed Urbaites, growth new to as Senior of Chief importance for the Director Senior and role President of Vice address Technology as us Senior Vice business. of

Durels. now will to I call turn Tom the over Tom?

Tom Durels

can growth estimate investor good and the our these we over million next on to quarter, XXXX top September growth. The be embedded of XX, In morning. years X John Thanks, Page found of $XX line be four breakdown our the made drivers more on top progress line revenue X presentation. of which we third of as drivers

portfolio. retail Empire metropolitan feet office square approximately of that new XXXX. our feet. feet XX,XXX greater quarter, leases First New Grand quarter Manhattan as square compares lease Building our will This this Significant XXX,XXX September in State leases cash at totaling retail $XXX the I in office include million XX third revenue square foot with XX,XXX square York the approximately in office and Central XX-month reference, feet included properties we square signed rental new renewal a In One and XX, new to our For properties, in Bank trailing square with and expansion during Republic lease discuss retail at office a in the and detail shortly XX,XXX LinkedIn XXX,XXX signed feet more Place. XXX,XXX

we XXXX and expire chart As tenants disclosure shows full leases a potential tenants leases for been X year introduced XXXX our XXXX. within and be whom with replaced have portfolio the be to signed. vacates out Page and of vacates on remainder new renewals by that our by reminder, our quarter on for supplemental, of This to relocated updated broken have

expansion with in square XXX,XXX each recapture out Coty’s early XX,XXX expansion the an totaling of the schedule X commenced square comments our State Empire at take X feet long-term will to floors the that floors two LinkedIn’s time signed commencement of LinkedIn tenants regard feet. our lease Faje is move for partnering another Our four in Building of Coty, and lease impact. of with dates constructive the This value. will from involved on place existing created over significant financial and additional supplemental. provide shareholder leases accommodates Greg Page not And detailed new

to recapture portfolio compared cash quarter, properties, signed our of XX.X%. at on leases the rental escalated were than new cash space at rents leases During basis we And XX.X% third higher spread positive market and a released across due projected. and than early The earlier rates higher the prior below entire anticipated a new leasing at this office spreads of rents. achieved renewal were Coty’s previously Manhattan our to on rent quarter

vary from and leasing rates, leases. will factor rental Our new escalated a fully quarter of are expired, they as to quarter spreads

the between presentation, estimate on spreads of cash leases any current we our future rents leasing without assumption will XX our release Page increase. expiring the On office on XX% future based Manhattan XX% of investor and market of vary

demand XX-month our locations asking average have points increased Manhattan for and and in a product, X% by basis weighted rents on price Our our buildings office remains good. over trailing

large our of termination XX rent presentation, effective leased the we investor quarter driven fourth by part by in Page in space for excess show rent effective to trailing subsequently experienced our net straight of new of is increased have net which month office on XX This the early we in growth Manhattan growth LinkedIn. year-over-year basis X%. a XX.X%, As on

We for on have we redevelop healthy to pre-builts that pipeline vacate across a and and full of negotiation strategy portfolio for lease-up. leases both focused in to bring space we will market future floors remain the and our

the Greg Greg? Now over I will turn Faje. call to

Greg Faje

Thanks, Tom.

prior per we NOI with cash same Total period. For quarter, reported the diluted core was of year third share. $XX million, store flat $X.XX the million or FFO $XX

and from Excluding up results cash on response disclosure as which Observatory summary well on addition X%. and on include the will I the of our momentarily, ground cash same helpful as comments leases. NOI same-store calculation, termination the to fees property page X to analysts investors in lease Changes store supplemental, comment NOI was our

continue our additional We enhancements. consider review supplemental to and

On with downtime for page vacates and commencement the new space each lease departure and expected seen help following floors The of that of and of XXXX net the its remaining in between amortized a million Coty’s the growth to XX we GAAP to termination of revenue $X.X refine the will LinkedIn, starting in dates increase in both of of as models. million, XXXX the we is over GAAP be Coty additional information detail on reduction revenue the basis XQ on you your supplemental. supplemental Coty the transaction effect cash a X years partially GAAP of in beginning revenue offset lease. The the recognition on LinkedIn’s in of X and GAAP XXXX have the income $X.X Page is by of lease an thereafter.

observation relating the of deck, due closure and improved of Net a the the Observatory redevelopment. of than decreased decline revenue operating aforementioned to to by $XX.X XXXX the relating XXXX the for of lower XX Page XXXnd X.X% quarter income million X.X% supplemental Turning for by third Revenue $XX.X the third pricing. highlights observatory Observatory from to $X higher period, the million was quarter to the Observatory, the or reduced our million, of prior-year drivers to offset driven expenses our revenue floor operations.

anticipate second final the phases the earlier, mentioned opened and floor, XXth we November. new John to of end at As the open the phase and third

exclude XXXnd and floor year-over-year XXXX was X.X% revenue period. quarter same third NOI you increased revenue, the the up If X.X% over

the XX hosted decrease of the supplemental, million approximately the third XXXX. to Observatory As of quarter of in Page XXXX, of reported X.XX the compared third visitors XXX,XXX on a quarter visitors

or Observatory X.X% decreased max prior revenue For ended million period $XX year lower from factors to the Net September year $XX operating the similar due the income the period. mentioned. X.X% I was just to of prior XX, the X million, than XXXX, months

flat XXXX, and X.X% roughly Observatory the the million hosted same over visitors floor revenue XXXX, was XXXnd X.XX the in period. down The to revenue period. X.X% in was nine Observatory first Excluding down months prior million of year $X.XX approximately NOI in compared the

has X.X cash variable next new years. and quarters $XXX to we with outstanding August balance, had debt billion repaid as on debt weighted to no the we The replenish a our under our X.XX% borrowing line XX, balance XXXX, outstanding million of of exchangeable to $X.X within bonds billion term the None approximately has rates. sheet, $X.X Moving average of plan of total We average credit. and debt and of September weighted of maturity XX two our our a interest unsecured rate financing.

consolidated net As and short-term of capitalization held our EBITDA consolidated XXXX, million. XX equivalents and net cash, X.X was debt we cash debt September total of $XXX and to our XX.X% investments times, market to was

open questions. to your like the call for Operator? I’d that, With

Operator

your Please will line Capital Mailman Instructions] Thank session. a question Our the of you. with question. Markets. we comes question-and-answer At KeyBanc first proceed with this Craig time, conducting [Operator be from

Craig Mailman

Tom, morning good start Hey, with you. guys. maybe I’d

healthy redeveloped a of more demand your depth of these kind of of could you been give us negotiations talked maybe some some spaces? where a little in availabilities are of of pipeline on color have that bigger or and for of about where floors bit deals, just sense you kind already give around, You are

Tom Durels

Craig. Sure,

I’d office activity we our entire First, good pipeline that our Manhattan about say portfolio. of feel really across

We on both Street, proposals or West partial XXth XXX XXXX leases Broadway, full floors XXXX negotiation and and in Seventh have Broadway Avenue. XXX at

the Grand a demand professional where the steady am Central Empire One products, variety demand State and pleased I about about services we our with have demand also from I we’re Place seeing TAMI, pre-built including of for really others. in am types. results. steady and So And seeing sectors tenant and various Building – industry that quarter have at pre-built at consumer we third financial, we’re pleased

a of Seventh Empire at XXXX fourth State Specifically, available strong Full XXX Building in and marketing quarter we so, feel Street, the XXX one quarter. overall about coming West Broadway, Avenue. one off available and the Broadway We are good XXXX floor into and have activity really at at Floors XXth actively floor quarter third the only going

Craig Mailman

That’s guys redeveloped if the second the helpful. just I was And mark-to-market space. demonstrated have don’t call in generation think LinkedIn the, the still that one thing embedded know I lease you guess, them I you

portfolio, more bit As anomaly? mid program that the in of of XX% kind portfolio on the little ends? of you will that is extension the the embedded redevelopment after talking kind or that calculated an even that guys guys growth an you mark-to-market a look more something as of to I start about is

John Kessler

our for pointing redeveloped out. embedded portfolio. our mark-to-market space growth example within of ability great thanks previously was unlock rent on Well, a Yes. to This

growth average, in-place that than whom on fully with As we’ve eight a with take LinkedIn and with market. previously, back example particularly escalated and The below a worked rents of LinkedIn great we over pointed are to was both are out their partnership long-term Coty tenants lease more believe accommodate expansions. the we

from done We the tenants, to we accommodate in will we’ve successfully for always in for look opportunities certainly as past the will growth look and our opportunities existing future.

Craig Mailman

visitor just maybe it’s increases by visitation to the for a you across – and the price But little Observatory then kind in here. it being be is or you for there seeing your And can look, attainment primary clearly any kind challenging, by mean, bases anything bit Visa Tony, I of helpful. mix is of as offset in ticket That’s continues trends are countries? better different harder share? guys solely you China

Anthony Malkin

ourselves. longer My are move is we to is it and understanding Those are sector. attractions think. at compare better weakest the to higher most dollars the pay the weak we of of which stays, market, Cross-ocean sentiment we the off

we overall good look you our let market are, on U.S. specifically. news find will we any to the think well the what’s think the from challenging. in we I is, New competition, companies but to are and the going generally the hospitality there remains in York And to in But our perspective out headwinds. compare market, there market will

Craig Mailman

That’s helpful.

guys the perspective? backfill new the of $XXX look one is deal, quick and of, and rate that million paid you on last kind that so, to plan kind debt one what or, with could Just if like a still timing the off from debt

Greg Faje

Greg our examining It’s cash two here. Craig. options Yes, Hey, are to new balance within next financing. our through quarters to replenish we continuing the

length basis variety stated in call, to X.XX%. you as on all-in the which financing be We non-cash And look portion X.X% the equity costs time. spread we depending and X.XXX% X% approximately a at the upon basis have We was deferred a XXX the the term that of note points to the of a And of at and we’re that if of was prior would was incorporates current for the considering amortization X.XXX%. had cash on basis, and at points coupon coupon the swap repaid XXX a range. GAAP options option

Craig Mailman

Thank Great. you.

Operator

Thank you.

comes question question. with next the with line Our proceed of ISI. from your Please Jason Evercore Green

Jason Green

morning. Good

a the able means to quarter, lost visitation, XXXnd floor the XXXnd XQXX. we I the in whether by to visitors other being back on been contributed But and closed? say due floor you you Observatory quantify Just have survey $X can in question specifically million look or how many know

Tom Durels

other transaction, who The the survey the do the of only is we not answer come, which are able is additional is that to but the source we but not the opening since our at people changed view XXX, XXX the about a XXX know don’t time. opportunities historic premium an this same attraction has associated from nothing perspective. premium And to current of or

that a attracted argue that customer there who could of is is to opportunity. one type So, specifically

Jason Green

only of represent XX would only been quarterly seeing was the given quarter the do Okay. from obviously that absent, you but of Manhattan are XXX,XXX around versus tenant And deal of significant number average leases the perspective, then amount number any was on a feet and pipeline deals have leasing quarter a a Does then or a during one slowdown of the think XX. strong volume leasing, higher? in question a square you signed

John Kessler

We not are any slowdown. seeing

negotiation as that We are this of not delighted commented currently. activity really was we have of and pleased kind results seeing in with any execution general. the by It quarter am previously. of slowdown and am quarterly the a with deals I level past I pipeline team the in I great our

So, now with we that are activity the pleased the into quarter. going we right are fourth seeing

Jason Green

Okay, you. great. Thank

Operator

you. Thank

from Citigroup. comes question of line Korchman next with Mann Our proceed the Please with question. your

Michael Bilerman

it’s the Michael question a Tony, I you here with for had buyback. Bilerman Hey, on Manny.

you which buying quarter a on price absolutely was stock. there specific last at act So would a said you

a something price my $XX question up of lot were So we should used the capacity? then is, that or that not working your was that you’re on assume would – have that

Anthony Malkin

haven’t I made disclosed statement just to through I we today. that and think that the purchases you any that take from takeaway, is can Manny only since

Michael Bilerman

Bilerman. It’s

from and you a were in down the maybe went working to in there the Are $XX was price. trying of and [indiscernible] so that your just share or something was said to your have up to or you comments that not would we $XX the last that had quarter. you context referring tied the $XX price in to was to were on regards price $XX I’m understand capacity, was if a there the buyback. then quarter assume price So that

Anthony Malkin

disclosed It we if now. that have answer the would just only we think I right any have And we stock. haven’t, Again, bought did. been that’s Michael,

Michael Bilerman

there want the buy to not I Well, you $XX price and was I in have didn’t August willing would hit you it which and you that to your act were ensure or was comment acted. a just that I’m to But referencing price that stock. any know which September $XX,

the have where capacity understand something context there been arguably it’s trying tied Tony better just were a blackout would to the So together there to have you something That’s That other that up I’m am had relative you specific else that or that would or piece on, working What’s you $XX. lower comment price the maybe were trying that better. was to would That’s was act. in your to things? wasn’t time-weighted. to I you pricing; it which

a was there said price. You

what to I so trying am that’s And understand.

Anthony Malkin

Hey, Michael, and really answered. I think that’s asked

We are happy to answer any other question.

four move want from people have want discussion got us from the on other last our did the We for to folks really We call. call. on call that this to comments on we – get folks the

talk any this point, might we have you or about could else another to our So spreads, move or but Feldman. to and we mind about question at further maybe Manny our to with you results Jamie you leasing don’t happy move other on mark-to-market on

Michael Bilerman

the we about being LinkedIn in So talk that showing spreads amortized, – there that? the Coty? the a can Is the GAAP numbers a are talk is why lease economics just that the that How don’t is – of fee of of mention through rents? you in how terms is you term

Greg Faje

Greg payment it’s that lease. XX The years lease is Michael, the remaining received termination amortized going we to of here. with And be Coty’s

XX rental that years. So the revenue rolled be over into will next

Michael Bilerman

there. specifically terms capturing the disclosure higher the show Are LinkedIn amortizing But leasing in quarter, amortizing on into is or the you in during term spread in in I you i.e., of – fee activity you’re lease the because the the old the which spread, No. the numbers? the new lease that Coty that higher lease believe for spread the deals lease isn’t

Anthony Malkin

The spread leasing spreads. disclosure No, in the captured of termination not captured for payment our spreads LinkedIn the the the The of any is leasing impact and leasing overall quarter. third no. amortization is in is answer transaction

Michael Bilerman

top fee the that. then apples So of on and an is apples of term lease to

Anthony Malkin

Correct.

Michael Bilerman

you. thank Okay,

Anthony Malkin

bet. You

Operator

Thank you.

from Feldman line comes with question Bank next of America/Merrill Lynch. of Please question. proceed the Our with your Jamie

Jamie Feldman

talk the change Thank have has since about Can market you. leasing WeWork – pulled you seen noticeable this any you in IPO?

Tom Durels

No, no. Jamie, Tom. is this

As – twice a now, entire we I types. from across the of of are variety commented seeing our portfolio have activity steady kind

third think quarter of this and that level results activity. So I great a is demand and example reflects that

is in broad seeing no the And of different from WeWork. no simply tenants. are a activity, no, to growth change answer is change employment momentum related in We base

Jamie Feldman

route otherwise tenants that would I in am going guess what seen to demand I about is, you wreck? improvement have gone thinking an who have more asking like maybe

Anthony Malkin

Jamie. Hi, here. Tony

anything remember, WeWork. to we do didn’t got with You

our always tenants them present. in been we being perspective, interested from attracting So were buildings have without who in

So, it really hasn’t changed our business.

Jamie Feldman

Okay, that’s helpful.

seen acceleration in you York So assets? that, office talk your about whether we have New City doing an on your your sales, asset or thoughts it’s suburban peers can Manhattan

John Hogg

Yes, here. morning. good Jamie, John it’s

focus not said that’s As York on our the business. but shrink wanting the we continue grow York focus the rather to grow and greater it on business New than assets we before, is or trying whether Metro selling to New to assets,

Jamie Feldman

alright. Okay,

I optimistic added mentioned going that supplemental same forward. NOI outlook your reflects that store to a You you this more assume quarter,

prior known there. of on trend based next at the you move move-ins give year your look how kind so? you Can negatives or that you just should some number If you quarters thoughts have any had in out, do on over

Greg Faje

it Greg help to easier guidance. that it’s us Yes, are the disclosure providing not we added this forward the here. we for point make to At compare Street set. Jamie, peer have to

the quarter. are third to I and themselves So, with showed you speak in results pleased for the leave number the just we we would

Jamie Feldman

any then organization CFO you the focusing of there to the you at the and an several new promotions. of timing is does search? the mentioned Can talk Okay. the and kind update you beginning also that what have change hires guys of what if in on, call and are about on And

Anthony Malkin

appointments, the here to we regard call are doing, you really happy With what are X.X. with just we new Jamie, I ESRT it, if will Sure. Tony will,

Local of to which We She estate the us energy simple observatory her just ongoing are her we important, than Building with is for offers the was State challenges Empire having then City development area, portfolio. original efficiency we undivided not very, the on on She thrilled real Council Patricia. tremendous worked focus, which more XX very for And rolled amendment lead the exposure the really out with closely and XXXX-A. Dana very has a business. decade. of work, to it’s as toward activities, Law to gets in-house us particularly through an the move our but very

for of to work efficiency us going retrofit ESP make needs and at terrific culturally. be to it taken different being a we’re that sort the X.X just call a as So to look talent energy wanted absolutely which real

a fact to to to community and technology presence we day well prior we our be construction within referred efficient. which not the just we of being leasing quantum think ESG her how a this whole to logically we activities calls, but the which is focus work do a on to but is the And become to day just again we on perspective, regard – it’s and So plus. works communication and companies. really for proxy, challenges. from to as going And online efficiency intelligent investors taking of handle it’s company, everything has how building really It’s also our leap change, not systems forward. how who energy with are From I more before of Suresh in handle just our a that as our

that our true So as at forward. the phase version of redevelopment the questioned come X.X our It in general, that the on, things as internal we I the we earlier to about have that think perspective, really goes was you through done were from surprised looking the first ESRT portfolio. about wouldn’t of be more what can second growth. additional appropriately development mark-ups phase as from of But see that’s talk go-forward

interviews side, led transition by things CFO has hand. in The way. John we team well the Kessler under On have

rest to, have off team the communicate John hats years to person, are quarter. job, the happy very going to done have and In one. by capabilities this and done going the others to not on when a happy right the look several to really we behalf of we’re like are in on would who guidance see demonstrate outcome really Greg the work We this, to meantime after and though position with Hogg And very of they’re to a find the of the rush David. I how Drew, terrific we’re their John

and no So in panic rush. we’re no now comfortable right quite we’re where we are

to someone for is who looking business. going be meaningful the very We’re to

Jamie Feldman

Okay thank helpful. you. That’s

As you you you of about X.X platform, you more know think the kind think me, acquirer how for of some makes excuse these you? other platforms you about of – or families if an advantage attractive you’ve feel strategic been talking a about they or as assets for were this do to you so that to many these years? Is companies there help would sell

Anthony Malkin

cutter. since and and portfolio tenant sold commissions, we’ve that investors. been a since for be through. look the out of the created helpful the raised forward our results. for billion work to shares the put our to And raised spent we friends that able that’s we first money of money, will and And we’ve the I show is everybody our improvements redevelopment than phase we to lot sharing Look that business, the more will a our in be from we installations by of all results lot the helpful understand we $X think to – And our to we in value debt coming gone additional

Jamie Feldman

one just finally then And thanks. question. housekeeping Okay,

numbers for Building. quarter be year quarter in third a that the work million million $X back the Empire uptick of So, you State the the some or Is at is talked of the in guys of up hit? expenses fourth a more about – that to going half in $X

Greg Faje

approximately Jamie. we maximize is the Hi, Greg. in spent quarter half that weather. sought to seasonally of as favorable the This We number third

Jamie Feldman

Okay, alright. Thank you.

Operator

you. Thank

Stifel. your the from Please Guinee comes question line question. of with next with Our proceed John

John Guinee

you. that transcript not Tony that’s question, you Comment publish all for us, thank when guys have Mr. when of Bilerman, just one. Great, please and conversation the

foot X.XX and go then from at to for thought square feet the vacant that I’m York. move And I versus to XX, you both from leasing XXX,XXX down least a And quarter on XX quarter, see it from feet. with moves looking inventory a guys increase. of part I when see opportunity decrease how supposed looking for page XX any at New page got big page I I’m you’ve XXX,XXX I space. quarter square opportunity this that have look page out that kind hey, was Second, Do XX in went sense square XXXX? this at greater last the

TomDurels

Tom. communicating vacates we this have increase approximately in out one, as New of in portfolio John, the York property in A metropolitan several of few move greater is derived feet tenant things. New XX,XXX from Number is York the quarters That square anticipated. our largely for our one office been now. was

have of of square whole commenced. not XXX,XXX floors. form vacancy rental are leases marketing accelerated pre-built, And of the total moves revenue greater XXX,XXX feet we an Manhattan partial opportunity have to actively really is About tenant showing in of about where opportunity that signed for growth, space. won’t that the redeveloped course prepare that yet the but against we have We XX% space our create feet office we we very square out space, portfolio XX% this at until completely office to end is of year. of have Manhattan portfolio

redeveloped We space. marketing are actively the

proven ability up of prior, a of have to lot A We redeveloped that are vacated rents. off lease our below coming market the space. we spaces have

redeveloped In a Manhattan growth shareholder escalated on opportunity was and $XX fact space and the vacant create represents rents revenue our value. us rental to great foot fully for higher square

John Guinee

it. Got

the $X.X or be This again. number decrease? ask still will, year, $X time this will next it to million Let million it range me in

Anthony Malkin

leasing got page years square that a on proven consecutive. we’ve of in been And supplemental We’ve over John, the in is had we’re working of vacates great every X space. starting success We for slow. of in to ability, detail in day feet detail. vacant to the our all our lease great the past. provided up $X million pace We’ve X

whole so, point have would of portfolio within of about only square out million square our space that redeveloped the XXX,XXX I also X.X feet portfolio. office in feet undeveloped And Manhattan and out that we have remaining

we As second leasing in it lowering those reported that basis, growth we’ll will easier been reflected costs gen the us release also average have back previously make as this those our past redeveloped get for spaces. impact our of quarter. net spaces And rent strong effective on to space have really

our effective on for growth year-over-year page rent presentation, office in net a we Manhattan investor a of portfolio. shown basis XX.X% reported As on XX

we’ve up lease that our So lot confident space. to in good I our would just we say are we’re work, a vacant of of hard really position, done ability

John Guinee

you. thank Great,

Operator

you. Thank

Fargo. next question. question with the Please Our your comes with proceed from Blaine Wells line Heck of

Blaine Heck

Good morning, have with leasing Tom environment you’re in the about seeing increase just change portfolio. there Thanks. in tenants and whether the room still Can demand you out out or there some any to you conversations recently? talk guys occupancy suburban

TomDurels

Sure, of XX% we would XX,XXX feet leases. out, signed leased, first are square point of I all we Blaine.

significant During feet two place of of of first and the XXX,XXX Center. third ever Metro feet square XXXX, at tenants, one quarter, the feet total we about in We other renewed about XX,XXX leasing. of XX,XXX did square square

at leased XX% are Bank We Street. XX

and The to upgrade been areas previously conference way, very favorable. under as with announced, are and centers. amenities, have our gyms, coffee feedback dining, from common lounges, early brokers like improvements tenants and of an We including lobbies

very yet not pleased I’m feedback are but done the work, we’ve We far. that gotten with thus with that

positioned. well So really we’re

our But our year. that of response good we’ve commented opportunity vacated White making have don’t in are I quarter end Plains this feet that in but at to of first Stafford begun early, improvements space white-boxed it’s just our year, be rent some generally square in we at on we the Overall, show seen next it’s the the As of to in marketing North previously, it’s property a and properties. that end the the flat. property early growth to we’ve XX,XXX toward really expected is

our I there. So, competitive feel good about position

We mass in are space lease next that up downtown right located feel forward. to we transit we that able be Stamford to our vacant will and move confident as

Blaine Heck

rent tenant CapEx both a standpoint side are And free you out seeing on any improvement the from trends there, standpoint? and

Anthony Malkin

on and think rental I packages been been concessions. rent downtown the in say concession terms we’re TI flat I both on the it’s seeing. free of it’s No, Stamford in rates would stable and that relatively that relatively

Blaine Heck

picture, are to maybe you for Okay, any guys give size any John, acquisitions able that’s whether investment you to on can table are And on there or specific the still helpful. right would assets Last of for write opportunities me. guys the expand the or now, challenged situations color check us pursuing just whether unique you Tony be willing on today? and are what opportunity? for that one right

John Kessler

it’s Blaine, Hey, John.

continuing closely. definitely very to market follow We’re the

opportunities. I a and lot that’s it’s and the there is equity for low out investment that debt returns is think available of in resulting headline there capital

we I I distress, check As attractive. think it as by And I think I what it you the strong in But refinance. – would pretty really significant seen guess in say on I particular owners for there is I to situations. liquidity for should again, meaningful and boxed have and debt we part size. sheet, we a just, of low markets balance know, meaningful haven’t it’s we as a size have something we driven think see levered we think easy ourselves have relates investments to are, distressed Today, how to relates any capacity

Blaine Heck

Got it. Thanks guys.

Operator

Thank you.

next of with Our Ismail question proceed from the line Please question. Street Daniel with your Advisors. comes Green

Daniel Ismail

thank Great, you.

any update in for in of York one passed the those just laws and Tony, State to any maybe tracking earlier gas greenhouse year regulations? this New terms to update Just Empire

Anthony Malkin

Sure. Thanks.

are of XXXX XXXX on can have written. be no with still calculations. to this the more go the We as the thresholds them various associated that have, significant we’ll are coefficients impact thresholds exposure difficult presently in XXXX energy legislation will how can rules have assigned The have to sources achievable defined. material Don’t thresholds, some impact have And continue the from are example a on and are for thresholds all An get there. and they to forget XXXX landlords. the is there rules

and first investment looks effort We the put like here. our and have see crossover solutions the these return are. work simple, we Robbins, combinations very might from with good at And curve Schneider’s Senior at appointment address points all signs President it to are comparing cost and experience proactively be our Dana on with what look position together a the Vice sustainability all challenges really a what very of energy. to against of we It’s levied the what

of the think it that folks going I what��s feet majority square Manhattan necessarily of they starting not owners on say no all, point. completely own on I not the at focused So vast by have in people, will of number numb are by to and and

to So, Council Department mayor’s and of the making. of even Advisory appointed council the the I’d April do was not Buildings eight that also members this been The yet. in by office Council requires an Advisory and rule by add has that the bill XXXX formed City Council passed and bill of

Daniel Ismail

guys guys? when how you into this Does a universe are underwriting that And for this a underwriting? factor, you limit opportunities, of potential acquisition new there does out much investable play

Anthony Malkin

it’s of think underwrite we an continue now, I and important look for the assets it at order the underwritings we in that following acquisition, view do to in off way. that Right new make to acquisition. to our

to Our order to view is have in to suspend that disbelief you put work. money your

assume have to the no you And in when that you importantly, demand to no the IRR bill and rate, of at the have that continues together, look you most to and to today. coefficient all an interest X.X% same have to the project to it you and project unlevered continue as to growth and you And put at unabated, gas when have which be range. prepared look up, an costs finally, fines. remains have that you you greenhouse for downturn go You to have rents to all X.X% is imagine that, market continue perhaps

we’re paying look and do the a of doing people are when is – this they in at which transactions. market we conclude when just how what think the we’re here underwriting I prices component

Daniel Ismail

helpful. Greg, work, just how question pass tenants? XX maybe local a That’s And law cleaner is the that, Thanks. for one any, if through to of much

Greg Faje

does Part tenants, there on to the but lag pass is through timing. a of get it

Daniel Ismail

guys. Okay, great. Thanks

Operator

you. Thank

line question your the with question. of Markets. John comes with Capital proceed next BMO Please Kim Our from

John Kim

Thank you.

LinkedIn, and [indiscernible]? can where transitioning downsize you as to downsizing Difficulty] Coty, discussed to far discuss they to as longer are also and going [Technical Coty go why You term which But is a decided favorable outcome.

TomDurels

this Sure, Tom. is

the of the LinkedIn transaction. approximately square in further connection vacate First occupancy with new they’ll feet And space place will supplemental. with XXX,XXX of make square square expiration prepared their they our XXX,XXX of Coty in lease of foot, Coty XXXX, got part average a in shown beyond of feet comments. rent all vacate XXXX remain any $XX and in as that not really will in to

John Kim

reduced forward? XXX,XXX – be feet But, there going the is square can

TomDurels

the XXX,XXX remain square expiration they $XX which of with and XXXX is market. foot, currently on occupancy fully an that lease square in well feet place of Well, escalated rent in a below

John Kim

Okay.

space Difficulty]? weren’t So [Technical they are utilizing they before completely using the

TomDurels

was I’ll this Look, LinkedIn, great that It really previously, both bit with comment we am alright needs and And a great our result pleased in for execution great and of outcome, I accommodated transaction. it’s the deal. the Coty a a shareholders.

John Kim

Okay.

XXXX? On same-store up of not was I year-over-year, you the discussed year second X% that to that wanted occurring expense recurring to an was in R&M the the call half clarify looking last I think was growth on one-time that the expense. just that

TomDurels

of relating XX Correct. work. That’s law work to the on tower top local

John Kim

forward? guidance Okay. the store same you’re going metric, Is providing something

TomDurels

guidance if basis will But going Yes, provide on I we Board guidance we the to at and to going review date. to continues a forward. use regular for the metric elect this we’re consumption provide analysts management, so a do future think and

John Kim

it additional going to of a the G&A positions that be? the made, within hires on like then follow-up sounds a What new impact And lot company. the Okay. is you’ve

Anthony Malkin

I was doing note Schneider else. a that think for us for lot to working somebody of it’s already just Dana work important

us. So add that is new on Board. obviously actually Patricia the out Han, for works well a

other that Justine talent he way changes for to company. definitely, be but in he’s additional already perhaps cost a cost is real Urbaites is is department, is and the under he here a at different an Suresh offset us. by

John Kim

you. Great, thank

Operator

Thank you.

question from of question. final Lynch. with Bank this the morning Our Feldman proceed Jamie comes your America/Merrill of line with Please

Jamie Feldman

Great, thank you.

just Just the there larger can as for the unknowns are any pieces ones? tenant year and of we think you chunky the next vacates, about kind about of talk those,

TomDurels

full XXXX what about tenants comprise floor square at we $XX of rent X.X, Sure. a have is square of Jamie, foot. XXX,XXX the larger we In this unknowns. Manhattan, in an a call [indiscernible] escalator of tenant Tom. full in-place was feet But

that Many we great ranging $XX for XX,XXX floor foot, whether paying tower XXXX well anywhere opportunity tenant Grand well vacate. I’m feet per So And happy have similarly of great easily Broadway, opportunity full about they One we to or XX,XXX already market. whether $XX market XXXX, to also Central XX,XXX feet mark-to-market a we a a square to foot, paying have there, And we are they marketed. rents from of renew square all $XX floors us. below floor tenants a Place see get have those at and that a back square Then be these below similarly, of again, and In would are from consolidated. mark-to-market square back. space getting at

the past On about are known that vacates, tenant in XXXX. number of we’ve below talked the spaces also these in a paying market well

a Building generally State square tower foot. above square paying get the $XX Empire over floor $XX a we per example, foot, well everything is tenant from back For that’s at a

Place floor Central then represents tower Grand again, us. great well a for mark-to-market And at market. another One So opportunity below

as tenant of really position So the has and of unknowns spaces. out release vacates, create all to those rental good we growth got revenue

Jamie Feldman

And tenants there helpful. other you are have but and to looking that’s number at Coty decent have are X. come was guess a retailers contemplating I that Okay, shrink, any of there top your downsizing? other that then on you that list, will there, XX any tenants amount are

TomDurels

LinkedIn for rental to by team, shareholders. value say shareholder for create simply opportunity The great transaction and execution growth. that enhance terrific this would our it’s we’re deal a always result I a Coty it’s our was looking revenue and an great

to going look always We’re for opportunities.

ahead. answer into investment look, Jamie. reaping years of hard work the look our there, in do work And portfolio. direct we embedded of hard think rewards within and we’ve And to question The vast the roll much our from growth redeveloped our to out forward space have rent space. of come nicely, existing your I the as a to our of been has we majority pointed years and

has to retailer, no downsize. asked have We who

Jamie Feldman

Alright, helpful. you. that’s thank Okay,

Operator

Thank you.

Please proceed Now, our will Guinee final of the with come John line your question question. from Stifel. with

John Guinee

underwrite to guys then, your mind. suspending Great. had would Hey, to aggressive to the increase lever your Greg, you or believe you bid up have how you’re discussed work, think But probably cash little and in – disbelief Tony, to and that which make leads a XX% a me ask Greg balance. a is XX% there numbers a you gap deal going one articulately Tony very bit mentioned to that I

is So from underwriting lever distant why would for you so up still acquisition your market opportunities? the guys if

Anthony Malkin

all to we’ve We this here. of a of in cycles stuck it assets box not in number and things just flexibility. turned in folks seen to having got opportunity. a execute prior stuck in to see unable Tony, when recycle about leverage, for people being and and advantage think happen John, We that not that take to It’s to but And a juggle not we’ve in cash its commitments liquidity. under or order box, pay it’s order generate way.

– that’s where So that’s we stay we’re that’s where focused. coming. from And

John Guinee

thank you. Great,

Operator

ladies and you, gentlemen. Thank

with from are Korchman with your come final Manny question question. proceed our Citigroup. will – As Please

Manny Korchman

if final question, there rent back any just going thing, Coty I period lease the you’re providing the third new finals, and on sort guess and free that is LinkedIn, of LinkedIn of then that what to sort Quick to the you those what X, been, terms TIs spreads of this are would the were long, how associate XX% thirdly, deal? page And in capital on so providing? of are have spreads excluding the

Anthony Malkin

those at a I take me could. let So if one time,

go LinkedIn. Regarding And deal. of range is each foot. of market of our page $XXX staggered captured spoken rate That but in won’t a X on won’t LinkedIn the to have exact range per generally, square said, be full do I of for With free we’ve concession floors in generally in year the supplemental that the a lease. floor on concessions, it four for into confidentiality LinkedIn can being commencement of reasons, a received the dates for package. we I new specifics, concessions the TI a $XX TI rent, market –

of haven’t for would out X look on I specifically, mark-to-market, leasing spreads conclude, you leasing like the mark-to-market rents disclosure one this what page our balance in spread quarter. was LinkedIn So impact we regarding and the leasing the broken And leasing overall the third carefully. we at transaction while very suggest for And for spread LinkedIn is the of the mark-to-market can the Coty prior upon mark-to-market based quarter. escalator healthy on achieved capturing

Manny Korchman

in just of to lease So LinkedIn? fee giving helped in TI term aggregate, how that the the much fee to package you’re offset

Anthony Malkin

It helps.

the for has the Greg impact and total given LinkedIn, think transaction. I in financial Coty

Beyond that, I give. to think we prepared that the provided all detail already we’re

Manny Korchman

to on a to trying have is understand right, both you’re the business XX-year great, desire net to cash, relationship to as you’re how have tenants, basis, increase think deal in management. XX-year trying basis, space and over decided economics I was know it good about I’m if are Coty’s it. are flow doing Coty an now they solving wouldn’t LinkedIn and this the to building. other could downsize just spaces doing didn’t But decide their desire in which stated and net just I’m their grown Coty IRR, downsize, has in LinkedIn’s much you by incremental cash place, generating doing

a understand another. for complete the stack effectively one, it together trying capital in where all it lease really incremental trying a little NOI that’s just to how TIs the cash dynamics from generating I’m putting We these So you pieces I’m you’re the just XX-year put package. understand spreads all financial rare in? much basis in and get on to

Anthony Malkin

see you the extremely one, a If XX-year that it at is number you it positive. in look and disclosure, horizon, beyond well will goes it our take

Manny Korchman

Okay.

Anthony Malkin

you just thanks to our a good the of already to transition members have with Kessler in all investors. if quarter I we spreads, much all observatory, for on team our and into everybody we and the opening that to Thank all we done property going of you the of our about team. hard And right tours I look you thank much. And rent your phase just results as have on effective your and said, to work. to everybody on best. to results net the some the ones forward third the X.X. may, want then very great month very questions. by move leasing the positive appreciated the Again, what very Super to really remainder Thank of Until I’ve the year, one at remarks. we we additions John of reporting Thrilled I’m for fourth NDRs, meet our dialog. It’s who and really biggest to Look So, to growth CFO led for scheduled with And time welcome, work, the as look the version responsibilities closing chances work for great February. lot all toward have truly. of leasing ESRT, re-imagine helpful. forward opportunity ESRT always move ahead strong the the

Operator

Thank you this concludes today’s teleconference.

at for this may lines time. You your your you disconnect Thank participation.

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