ESRT - Earnings call transcript Q4 2019 | Empire State Realty Trust, Inc.

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Operator

Greetings and welcome to the Empire State Realty Trust Fourth Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Tom Keltner, Executive Vice President, General Counsel and Secretary. begin. may you you, Thank

Tom Keltner

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

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

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

As update discussions a Empire filings uncertainties, today. estimates. to in related forward-looking future. the any detailed the differ reminder, listeners which forward-looking statements the are and Company’s discussed to current those State statements statement review in Realty to represent risks the encourage results more from They to We management’s 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

Greg will balance XXXX quarter, show demand Team for Earnings performance Good afternoon financial square XXX,XXX quarter’s then and market-leading Call. quarter market of Tom the review and speak with sheet. thank our is leasing run call. leases, Durels for Conference our fourth our Welcome fourth you, will about is of approximately the properties, Faje and spreads. our here and very feet Tom. here today’s to pleased our

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

completed quarter we State feedback later quarter, the fourth In our covered Visitor the multiyear results this in been in detail Building Observatory be Empire fourth Observatory. the of has will and call. redevelopment positive, more

exchange X.X perpetual addition, XXXX perpetual of without shareholders, of partnership completed for offer units million exchange preferred diluted $XX permanent In units private fully operating This locked count units. the is accretive any one-one share capital for we reduced series, effectively preferred in and using our cash. for our million our

publicly December also authorization We our A traded $XXX repurchase XXXX. renewed common and partnership XX, million through unit Class stock operating

the turn now I’ll call to Durels. Tom? Tom over

Tom Durels

over every solid another By fourth which growth. strong our we of and be these was Page better presentation. breakdown of top four during estimate investor top afternoon. which good our line measurement, and on next line quarter The five December $XX we XX, found the drivers, be John, as quarter our of revenue made million growth can Thanks, progress XXXX, of on drivers X to years,

For million trailing XX, reference, December rental of this cash compares $XXX revenue as in XX-month XXXX. to

office In in Target square to new Significant XXXX. square our XXX,XXX Concord East expected XX is properties, feet in Square lease square office and leases New include York in the XX,XXX retail XXX leases properties lease This Metropolitan feet. Music the we XX,XXX new renewal retail foot Manhattan quarter, expires with foot feet included with square XXth feet signed and West retail XX,XXX Greater approximately XXX,XXX our totaling fourth after at the quarter Street and during existing new portfolio. Union Group, XX our square square and office in at a new XX,XXX tenant’s lease commence signed a office that approximately

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

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

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

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

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

presentation, on rent which we show have our investor effective fifth This X%. new a excess we Manhattan XX-month increased the growth our by in year-over-year straight Page XX net basis XX.X%. net in of office trailing rent quarter is growth of for effective on As experienced

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

I’ll Greg? over now turn the And call to Faje. Greg

Greg Faje

Tom. Thanks,

Observatory quarter, For FFO period $X.XX drove million results X.X% of from per the cash reported $XX or exclude property lease fees, Same-store diluted core NOI termination fourth and a the onetime operations increase. share. we the respective

completed brand-new quarter The prior to quarter million of XXXX drove fourth a million. approximately $X.X a quarter primarily operating income highlights contribution by to observation million, year XX.X% increased total increase driven XXXnd in for in Revenue the of performance opened improved XXXX the supplemental million our of additional for the floor weeks $XX.X experience to quarter, of our to compared Observatory thanks the XX or for net XX $X and floor deck XXXnd X.X% fourth in period, pacing. for redevelopment. Page was $XX in roughly approximately the fourth

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

$XXX.X prior by year the XXXX, the lower from partially to or XX due floor visitation, observation pricing. of ended $X.X XXXnd more than improved the December and nine period the for million, was months offset million months decrease closure For X.X% Observatory deck of revenue XX, a

operating million, $XX $X.X decrease a compared period. prior Net of the was million to income

Excluding respective the XXXX, revenue the up X.X% was period. Observatory X.X% in compared X.X%, was period, the down million XXXnd million NOI over revenue hosted Observatory same floor in year. The up and $X.X prior the X.X visitors to in the approximately

January the the be new experience, pricing clicking has can Buy been place XXXX Our at Observatory in esbnyc.com found since just new on by strategy button. for Tickets which

to balance Moving sheet. our

years. billion under of total and weighted $X.X debt debt approximately maturity XX, line December average had outstanding billion our of credit. The None a unsecured interest of rate weighted variable a we has $X.X debt outstanding of of As of average has XXXX, to our rates. no and borrowing term X.X X.XX%

We of are the note XXXX. well with efforts provide replenish long-term million the in details time. to We at underway we’ll financing our August such repayment final $XXX balance and first in cash exchangeable finalize to after aim our quarter,

we expense X.X% on if interest rate to you prior calls, interest earnings tenure, in range. into spreads be initial stated have were GAAP a swap, the and would As take current account our

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

to following full impact that we As the expect year insight on we to items look listen ahead please carefully to results. XXXX,

in and the results is redevelopment closure in $X observation The XXXnd that floor won’t now back XXXX First, service. an XXXX. million approximate floor we the of have of in XXXnd completed nine-month Observatory repeat the the was headwind deck

we addition, found to expect In our be benefit pricing, new which from can esbnyc.com. on

XXXX in than Second, G&A in we anticipate XXXX. expense higher

As service expense and accelerated tests accounting time-based a an we would period employees annualize XX and equity meet treatment certain When starting million Page for age, of run in XXXX on as XXXX. officers the compensation. more fourth rate million, in quarter result seen supplemental. our of $XX.X the length accounting of than for point, there vesting G&A the will $X.X This is XXXX

leases And will we annualized in be for million which you off, that XXXX be million the incremental expect we an in and not million supplemental, have additional additional with revenue $X realized million $XX burn $XX XXXX, commenced, of $X see XXXX, rent of $X of in of an cash which in to in million the can on And Page last, XXXX. please with million $XX balance $XX an see signed of million free XXXX X have XXXX. realized revenue which we in

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

Operator

Evercore your with Instructions] question of Green Thank with question. proceed from Our ISI. Jason you. [Operator Please the comes line first

Jason Green

to getting Just one that visitation, are on and that revenue number seeing confidence start question gives know might I NOI near that increased. on year-over-year? a bottom that, you you But increase we’re anything visitation. Observatory

Tony Malkin

said, performance we’re to line very here. has received of as Malkin I have well happy I’m Observatory. look Tony redeveloped going to over that Jason, say ahead. think a how to at bottom our That year we the result the improved perform Hi,

have in edge opens new which in We March. Yards, a in competitor Hudson the

and We expect when competition, based we and full to Top noise Rock unfold. That a new One is yet have Vanderbilt, opens. and it year tough The compete see how of of it’s will product World, directly the the previewed most One with upon to said, believe it going lot the

Jason Green

just And to general? but quantifiable Got less visitation due then, any difficult you it’s guess, I and downtick it. in or I coronavirus have seen know track, to tourism

Tony Malkin

disclosed for percentage that of similar revenue and accounted While the approximately revenue We previously, market it accounts an Chinese of a XXXX. in on QX annual basis. for X%

reduction. zero not go have to seen have we it but here We seen a

us away mind While group highly in that we headwind the U.S. shift keep a is Do to XXXX, it from headlines early while as the in here, our perhaps canceled have been has suggest. severe would this for source Chinese visitors. discounted began we total, in not of travel modest as

that look, question. think there’s I So no

All these China. to weekly put around world, We just and flights are together all study from down these two a from that have City that to and from making to the They’re flights was New of Chinese are carriers carriers flights. China. York presently and six

no a is there. there big there’s impact question – that’s So

a broad broad impact. material we really At a if it’s not I the have think that have we us. of this, more to spread more moment, could

Jason Green

Got you it. Thank much. very

Operator

Our comes Mailman line with Craig question. from from proceed Markets. the of Capital question your next KeyBanc Please

Craig Mailman

give CFO search? us an guys. the you on Hey update Could

Tony Malkin

on again Malkin Tony Sure. subject. that

level a David of to and team maintained team-driven position. one interest transition we we I’d Our have excellent has did departure That execution a have the job. success any in ESRT’s since said, as that high to demonstrates of not Karp’s point continues person. lot that do out done belong an this

person. We’re members right that who to get fit step not as seen up And the a helps right David’s as be. that we’ve would retirement, post sit to we going us candidly, have our definition until team better

making done been really the So a Drew going. Very, person eye by that’s way definition the are happy as in short, job sure Kessler. towards we’ve for under it’s things a John David the very pleased John the look go-forward future. with And basis watchful with of in And right different on the held. the got Prentice that than one we and growth it’s very work us Hogg

of So report interest, something a to we’ll report, When lot we no it. rush. have

Craig Mailman

have Greg, still then, guys next $X in debt, have sense versus to replace cash capital And the for just the mean, sourcing you process mentioned kind swap of of you the kind know and guys as the just are you I you’re the of make XX Great. I million you it balance are doing debt the here months? curious, needs had plus kind that to not of on going calculus, exchangeable. XX replacement guys to the I’m in the given does the

Tony Malkin

– could Tony Malkin we If here.

his question to question. we’ll rotate ask to ask and then you around remember every and in. one ask kind in everybody and but We’ll answer just her we one, to one way chance get we Let’s question, the get this future, for that just ourselves be or

John Kessler

here. Craig, Hey, John

Just there. to respond

you from I place think, that And our as consistent think plan. been know, the why and think in did. be plan that’s that I the have to continues to the we we swap capital exchangeable, our has replenish we

keep that it we’ll to So in makes we’re place until going it. unwind given swap that, – to sense

Craig Mailman

Thanks. Great.

Operator

the question Citi. question. Manny of comes from line from Our proceed with next Please your Korchman

Michael Bilerman

I Bilerman, will It’s but Tony, question, it’s you. really Yes. Michael hard only here. to for ask one

a the think made – on cash we I My in preferred. took the did, and exchange perpetual Number about yield cash that security? from of it the in in leakage to X% in fact what unit X%. preferred perpetual of common north use and how does how bought of higher where that is was the carry sense the is, two, you will liquidation that some of comments, carry stock stock understanding at, it that know while back preference dividend, the a of common right? talked work As you about the dividend relative one. there that a the about is didn’t effectively just John opening will your and incentive it Number buyout So

those securities, securities dividend preferred points you two a introducing what the or higher distribution? up a and wind happens of about in with the can address if So of these out dealing more take in

John Kessler

– – Manny excuse John. me it’s Michael,

on first of Just the dividend. topic the

which liquidation of there return. common event the the private So the dividend such it’s obviously, liquidation had transaction preferred that the a if and annual of instances, a capital that call $X.XX preferred ability as And of – at our a a would And the it’s In pays is, to there dividend, the have preference. then triggers premium fixed count. a where preferred, what $XX.XX option. our but certain just company, know. in but transaction, above M&A common that it And key case, is a a reducing be as value, other share that a perpetual share. those is you And it’s which has benefit we we is is our in got – are and in,

Michael Bilerman

they And tomorrow… is upside? not if that would be so someone they going in not participate will – to here So

John Kessler

Yes.

bought we So back.

Michael Bilerman

Right.

effectively bought stock. million So $XX you’ve of worth back

higher giving X.X%. You’re a of $XX million that rate

effectively do cash Fair relative massive you. So way $X characterizing flow, million it. that spread of to you’ve in NAV Thank of to it? but more locked

John Kessler

soon welcome the queue. we you, will we make as another And as question it Michael, from through

Operator

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

John Guinee

impact cash question of your million is How second think run up of cash was the Observatory. to Great. on big NOI, and that XX% is XX% NOI overall excluding you $XX your that do the an rate, Bilerman’s G&A Mr. price? has for share which

Greg Faje

to G&A, something Greg to so and Street carefully We forward monitor coming to people we It’s our XXXX. communicate is here. as this The John, here understand what’s we’ve look tried a we look market. York, public private at as as set compete the the New well in it’s and competitive within We relation to set our market. real peer both estate peer

fully look and try giving it. it digest The keep they towards in as competition XXXX. we’re And line so we our Streets to the all they with details And out so that can

Tony Malkin

focus here. �� absolutely said That Yes. We Malkin this. John, Tony a do maintain on

looking absolutely who work also investment a we our We we situation at as deferred doesn’t stock, our their even – situations We’ve couple to And comp of some beginning begun for we’ve that accounting they in issued. which retirement And policy, have to unique who we loan. Greg stock, are change, recognition exchange in we’ve and as the leadership. the the unique bite. have Thus look which that out way the have through due though, got laid additionally, snake, that’s our folks will at some that have cash situations, aging specifically. they total folks to them for unique got are divesting the the got age,

our on We’re something put load XXXX. ability total expenses – looking total there, that’s versus what the and a got major of and that’s to our focus capital mine out specifically in at we’ve

don’t we I line Well, is of would significant basis grants. that don’t get the bottom of on we stock earn is, component course, the a performance it. G&A add, the of it,

doesn’t overstated earned. perform if G&A the and then be those that doesn’t So, that will if not our extent price stock grants line has bottom to our perform, actually

John Guinee

Thank you.

Operator

from with the proceed from America. Rodriguez of of Our next question question. your Bank comes line Elvis Please

Elvis Rodriguez

an Maybe, those mark-to-market we the lease? long that did you how the will Good took? when in update lease And on Square? the target afternoon, Perhaps, And actually on Union that they get conversations can gentlemen. occupy space?

Tom Durels

feet a is foot. square low feet plus loading of on and on X,XXX with East. The Target, is square at square level, Union that for years nearly new is feet this grade Tom. square lease and XX,XXX dock X,XXX at which a Elvis, XX,XXX $XXX store rent blended space That for long-term down has for about the is XX XX Square

blended XXX% to starting And both grade in a it’s loading $X million rent, space resulted on in So mark-to-market. annual and in dock. equates a that below-grade rent which the

So of escalated existing the fully prior are the rent the we doubling from tenant. rent

April the on lease existing and is be the XXXX. supplemental. of XXXX XXXX. the Page out tenant’s not expected On Now, midyear does X be of lease expire XX of commencement will a basis, That will until GAAP of January new in that laid

Elvis Rodriguez

Thank you.

Operator

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

John Kim

is commenced my like your of you. not signed Page favorite which afternoon. one X. Thank Good topics, revisit I’d on to disclosure leases

look GAAP that base you started you that quarter longer this It XXXX, already be cash and to last rent quarter, in question going $X starting recognized looks no contributing if million addition here? that tenants, the be basis. XXXX. quarter? the But XXXX Distinguished NOI of Institutional actually Capital. to $X.X fourth is has Or for at is leases a contributing, Last are been in the million fourth of million on the have was in Concerts, cash $X.X will figure and and difference, those be first my your a So, is, attained that $X.X schedule, year, in like that number quarter who million

Greg Faje

behind answer John, can no. it. find math it is we detail. in No is through question, and to Greg This I’ll your walk you here. the short the

on So, the if you some numbers, you. grasp helps get that can

John Kim

going across wondering list. because why would GAAP on is assuming the cash that no still I year? – just I’m of I’m just recognition, I’m think but it’s longer those tenants this contribution are the

Greg Faje

commenced. the Yes. lease Well, legally

construction a legally the examples the in those good you when space, it’s commenced lease is under said, and So example.

legally quarter construction InterDigital the in right, the as are at example, lease look you space. and like an commenced the in if So under

then But you So, can is individual revenue begins if example. want, year, walk revenue GAAP behind bit little a we you the in through offline, later that cash and detail. an in recognition leases

John Kim

Okay. Thank you.

Operator

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

Daniel Ismail

concessions I was you and hoping XXXX. you specifically, your environment a Manhattan Great, you. bit the And talk portfolio? for thank leasing little outlook see for where maybe could about office more going

Tom Durels

in is activity Manhattan of our Daniel. remains Manhattan Sure, Tom. for – Overall, our office space This solid. pipeline

for of portfolio. rent that prebuilts Manhattan from Manhattan sector, median weighted and products, financial course, Tammy And asking a previously, our basis, growth or growth full effective We service, as out in year-over-year portfolio. Page the quarters. by said types, increased X% wide full lease XX-month for our $XX.XX basis laid I’m non-property, Manhattan lease basis then XX proposals And includes note rents was year-over-year effective net consumer had in have and new average And We leases over trailing tenant spectrum average new quarter. past see our that’s been it. office our concessions. per I our office on point square line leases that a over about We’ve quarter I before, you beyond healthy. got floors of on the investor cost for guidance. in And or negotiation to that and the and increased, But net much throughout Manhattan professional XX.X% commissions out activity. our very We’ve years actual has negotiation, trailing – in you for and prebuilts last on of name as XX-month that’s a by activity noted a our our fourth a office as our the for year on and on is renewal TI a going X%. also before, new that. I I shows And last rent on this been deals I’m leases greater overall, average not foot. asked both $XX.XX sorry, quarters floors five also, of provide that with has for eight good five all about would presentation

on in So steady per – rental producing the cost on effective what on rates, concessions, and we’ve rent with effective lease been growth. run average combined seeing lease net steady rate that’s above-average increase is, year net been our lease

Daniel Ismail

helpful. That’s Great. Thank you.

Tom Durels

bet. You

Operator

Manny [Operator Instructions] Our Citi. proceed from from Please line question. question the follow-up next with question of is Korchman your a

Michael Bilerman

again. it’s Hey, Bilerman Michael

$XXX listed $X some I XXXX So of So, I if Greg – can ideally, loss from from I on other XX, right? – bigger a for as with by year for potentially offset being when on the The starting that won’t up, $XX at think competition on a repeat, Asian China income in you’re, of wanted pricing provide XXXX. indicating strategy. calendar Vanderbilt opens of the Edge million just million the overall, to of least maybe impact guess, The and a getting million you point if travel, but XXXX? regions. goalposts coronavirus, you tourism Page your offsets – revised that’s not sort has eventually One take referenced Observatory NOI the

some you range at us of for sort into knowing you’ve maybe, the least just million guideposts give So for that dialing deck but already, of the some Observatory XXXX. given can $X sort us

Greg Faje

I’ll maybe and – go Tony. can add ahead, Tony start sorry, on

Tony Malkin

Please do.

Greg Faje

Michael, in Manny clarify, million it’s from XXXX just a $X floor won’t revenue impact have. we the – that XXXnd to

floor the XXXX. is XXXnd in online Now back

I’ll it turn number, not NOI to And then So, number. Tony. a over an it’s revenue

Michael Bilerman

NOI – on then? is why So

Greg Faje

that’s a not Correct, an impact. NOI, revenue that’s

Michael Bilerman

is NOI impact. what that So,

Greg Faje

have contribution floor, contribution. Yes. a fairly It’s It’s XXXnd but not broken high a out, from fairly high We

Michael Bilerman

business? margins margin the than apply a So higher of rest the the

Greg Faje

Correct.

Michael Bilerman

Okay. Tony, sorry? And then

Tony Malkin

just that fixed fact Greg the expenses. incremental just top that said, of to what I are dollars clarify think those on is

So were as I’m additional margin as business any the very forward, revenue really it’s flow. going early. Manny, not And sure should if far your contribution, question,

accomplished have Observatory. reviews is spectacular. the very I We’re itself is at great. have The activity to huge. can social The installation new The been look we on we’re – nonetheless, with say happy what

happy of the was are preview at or look going get take to on at a very We a Edge with what Yards. Hudson

That’s with sort World an very and outside It experience an is that, of nicer similar elevator, deck. features. clear is very a to to One new that has features a much as competition, While World. a it us about restaurant is as it far subtle One that

have think opportunity limited some charge sort I charge. going an cannot of weather, added they’re where involving activity, people to during better

We’re the pleased with pricing.

if we comfortable, pricing have quite moment, at gotten Whereas available position are pace People time. something international rid component crowds is And feel and we’ve It’s previously, very and one of new like The so there way of though the constant through more that the of world, competition. and of be competitive beauties themselves the fact from Edge extends remains disclosed comfortable. exhibit. inside sure, exhibit. the we see is That’s we fact very our anytime exhibit. impact things feel At steady have there. broadly happy the Our over international Edge. beyond will noise, to China working, the our pretty the the travel, any visitors. I’m really at to the in We significant, will $XX as the opening is a that the we we that state

better So, clarity that. is to difficult very it you for than us give

Michael Bilerman

I Yes. just can office to we pretty schedules, trying was I and good mean, the because of business, leasing assumptions. make the with – the think I

Observatory I to was bit. clearly, been difficult some last the that’s has bit in has sense I And modeled the trying going stuff just model. been more of little a a XXXX. years it get for few a think the always to little

too landscape Or thinking competitive the NOI be and – last? want of of is Whether up of XXXnd should floor that you Street And I to get relative this wash out? NOI be sort XXXnd being did floor whether going us the ahead positive outside relative them themselves I year the your didn’t that’s nor is we to pricing either. gave opened I to want weigh to – is it was to those going You impact. low The down? trying

should just I for a trying that to what about So, we of get business. be thinking picture was

Tony Malkin

just various folks Ticket esbnyc.com, to new and of upcharges. covers a a I our Buy the Right. look all And that pricing. take would look go at encourage section, our take to

I that to the the Hudson been confident of note as quite At Edge, and a good. increased open through to then Edge a is, an and pricing at – experience. with the we with the part same part having feel additional time, quite to modern. new would the going happened a well You’ll big we invited floor of entrance to with not the really is Edge. the that I we that the It’s aside XXXnd going the that spend. its were say Yards And we a is preview experience be splash, event having laid them, sterile the security high-volume. feel seen very party The by from is out. to elevator, very The itself, a have relationship client not support And

One So competes folks at very I the much think that, that with World.

One World become by significantly you bus China tour some with. specifically, think gone. significant to has discounted business begin prepared it be I on should really dominated and highly When it was business see comes to drop who have relied business, a that that – off has in of business these the back folks,

our nicely. a wish I and that, So, paid off could really more our move I markets outside Michael, the you give to the inroads independent China And definition. of traveler in

you underway to get it We’re this just are. eager year out and play as

Michael Bilerman

the that’s And on that you’re helpful is pricing Yes. website what really impact. on the and varied. competitive of color the indication at look can thinking some I we And the all and the now think landscape about

to all sold percentages in each categories. tickets love those able to those think I see of of we’d the be

revenue but composition on can we the is. baseline track, not that that just so of to collecting, you’re And how it the start net

the to be in look under something skirt great say that to revenues So, would more, to a as you addition move would more, the bit type a supplemental. the how to by bit this sharing little pricing little but hard model, are coming be getting

Tony Malkin

doing, like very to see just and their We One Vandy at business as a don’t and we to how that we maybe that look and what open much once of bit really way little how giving carefully. stability, information. up. at more to the they’re little business want We We do looks. them we the a closely, given Edge appreciate more insight And by little we’ll get the that influence they look a much too can see

Michael Bilerman

Okay. Thank you.

Operator

is a question the Please of from your with line follow-up Kim question John next proceed question. Our Capital with BMO Markets.

John Kim

you. Thank

unusually now that describe question relatively if also, leasing a high the tenants to of average Manhattan as wondering office Tom, And CapEx economics, you this for are in tenants, was the on leasing it if volume. at discuss far $XX the market co-working price point leasing was installed. you could $XX expansionary depth because the quarter Just like like looks as the basically could during quarter I

So, a going is rate as if forward wondering was far improvement cost? as tenant good I run this

Tony Malkin

John. Sure,

first, – think, to So pipeline sector in inboard We’ve a proposal full our active a And tenant of deals very of before, professional got activity the remains right negotiation as portfolio types services, that our portfolio in I of beyond. tenants that fire solid. a look that portfolio or attract the hallmark, said and floors activity wide to they spectrum range for the seeing Manhattan we – and our tenants. of for from we’re do I those now, And I phase wide range – at TAMI prebuilts. from office always both been has as across and activity interest

As far as co-working or specifically. rework

prebuilt just about of XXXX, X.XX portfolio. make square X.XX million activity year. range the for over – the to for We feet million that program. would deals, We XX prebuilt of offer prebuilt we’ve year continued I our did prebuilt steady we a our in over – of wide activity throughout a comment see

experience truly cost average have – for line lease at we the seen expanded with much And as through services. tenants of earlier, any coordination And year quarter. and year has as really that. square cost eight furnished, wired very per commented broadening turnkey at as commissions appeal far quarters. And lease the offering past move to this per concessions, per and remained from so we lease look past I impact that’s foot, our $XX.XX were TI we in steady at we services haven’t And our

John Kim

Okay.

when that far really you that’s So timing started TI? paid up million, $XX when leases just or as as

Tony Malkin

if want you on to – Greg I don’t if comment know it.

Greg Faje

a about the the door. Tom’s a what in and is leasing CapEx the There we lag out bit report, talking go quarter actual Yes. of dollars activity when between timing the

John Kim

Got it.

you. Thank Okay.

Tony Malkin

bet. You

Operator

Our question question. of with Guinee proceed Stifel. your follow-up the question line is from a John with next Please

John Guinee

York are in in closing environment? current taking appropriate. you prices X% what is the you versus low New City, overall Great. current where think low Investment in XX% guys you prices, or market current Are

John Kessler

here. Hey, John John.

haven’t attractive we We gotten potential continue our anything, strong, has I’m to capital seen act. the close. to The you in and look deals and market. have not which for for us And been underwrite to gap. quantify we going markets remain enough not

John Guinee

Observatory. your then much to the with about cash sources And How uses? break cash rate have and last million and Great. burn burn you from – quarter done You’re million. $XXX equivalents have? more $XXX do until burn million How down $XX much even do went this we on you

Greg Faje

presentation, Page work of we This X is we you If our John. to have still look – investor at Greg redevelopment here. Hey, in of go. at if some look terms

XXX,XXX square have We approximately feet.

we portfolio average entire until per in about of use spend been cost if $XXX total has that So the square implies million redeveloped. an $XXX, foot

call, New In To well portfolio. we Metropolitan greater addition, as Greater as date, quarter you earnings quarter – York are million. XXXX first York, $XX the first in the aware, Manhattan in spending of additional million $XX spent approximately we New earning – our we know anticipate noted –

still And the go. line has there’s so additional there, we’re to getting CapEx but been down. some spending trend And trending

it right leave for I’ll where that’s so now. And

John Guinee

you. Thank Great.

Operator

in father Mr. call closing are for the remarks. to Malkin queue. back like There questions to the no hand I’d

Tony Malkin

Thank much. you very

solid was So, this for quarter ESRT. folks, a

our recurring cash and NOI which Our contribution rent experienced operations. estate growth I’m strong to stronger strength to see real all effective spreads redevelopment. core highlights of bottom from volume, multiyear pleased net our operations, growth the results the from Observatory leasing line

our ESG on have last with discussed call, As our key team and hires technology. expanded we in earnings

to great technology details can sharing in and work the to the look team. forward of details on results. investor XXXX. find You slides presentation, in our more ESG work our of over our more until and to Thanks initiatives course we And to best. you Overall, property hard And We and you and we our forward and upcoming and look results for April. look our tours. quarter at to your conferences, questions, the reporting thank much meet chances forward MDRs then, very in first time your with all we new

Operator

you today’s teleconference. conclude Thank does this participation. gentlemen, and for your Ladies

this You day. may time, wonderful disconnect and your lines at a have

Empire State Realty Trust (ESRT) 20 Feb 202019 Q4 Earnings call transcript