ESRT - Earnings call transcript Q1 2021 | Empire State Realty Trust, Inc.

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Operator

Greetings, and welcome to the Empire State Realty Trust First Quarter 2021 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. It is now my pleasure to introduce Tom Keltner, Executive Vice President and General Counsel. you. Thank

begin. may You

Thomas Keltner

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

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

statements business results SEC's the operations. Company's As to differ normal today. added discussed State statements unique risks We to represent regarding statement from forward-looking business Realty changes a by including disclosures our response Empire our and no specifically to obligation future. when discussions pandemic the Trust uncertainties forward-looking We additional in SEC. maintain current today forward-looking resume the the in encourage actual we in Certain same related to ongoing to filings level on the any developments reminder, listeners due which estimates. to review to this to subject to and detailed these in the pandemic, update are special the prompted those disclosure the not the They are are COVID-XX instruction. do COVID-XX direction of with assumes expect management's cause of more may disclosure

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

Executive Chief President Tony over Officer. Malkin, our will and turn to call the I Now, Chairman,

Tony Malkin

sheet to are arts, entertainment since Yorkers remarkable lock city. demand have their in from a venues, Daily, are Thanks, hospitality occupancy hotel, XXXX. enjoy Tom, to than announcements all down had serve which and of and and remain the and and of through the we where what State York in confident and to to any to go get with The we are out from cultural, recovery, have March City, apartment that pandemic through New to up new the we U.S. advantage New stimulus there much opportunities. everyone. Even domestic Rental growth We in and growing balance Schools good to afternoon us and for schedules news. XXX% XXXX well-positioned rollout, and the apartment ability take recovery regard that session. domestic vaccination and period long this good get New in of is much realistic if increased. reduction back speak is rehirings flights. a not all linked runway spring sales better increased gives summer spending announced by York does have to Airlines directionally restrictions, will have discussed occur,

Empire tourist program. inoculation Our the in advanced source international number State well their the one is Observatory, Kingdom, for United Building

it to a would paint has picture, As future the the brighter is for like people near-term dark as than year. than more been

end office predominantly and I City, York said stories on positive we of quality-of-life believe will I news QX still that retail As sales, overall several it see XXXX quarters, issues. for the tourist have before utilization, be visits, New

tenants to back employees bring Observatory to efficiently, visits. our buildings, Building and well-positioned are with encourage Empire We and operate confidence State

to XX% in return office of State has York May New the up capacity. just announced of

portfolio. return XX% and major announcements of office since at New approximately Many New Day. of City now XX% their in portfolio tenants with slightly grown our and York plan has to rollout presence tenants York widespread Labor the building office the to our around our and stands around tenant last vaccinations X, beginning Our quarter utilization return greater in July

school reporting now the and the challenges city. around shifted an of youth paint the and on absence between future of "death impossibilities awareness employees from the jobs negatively the Importantly, solutions acknowledgment by even and on thought divided and the the of has the the home great COVID, to women, of childcare reopening businesses office an office" impacts work The roadmap of to minorities, the our office. in of the about new by worries discriminatory and shutdowns, and the posed boarding service selective and office, without incredibly lockdown, driven the biased workplaces equities of

this is ESRT. to good of news All

our with levels rethink we of to ways and balance our have successfully positioned seek processes for and and several through been practices our collection balance permanently. a as our focus our reduction utilize around look new stable works well are flexibility ways our to to from opportunities. cost We flexible advantage sheet shifted to have we reduce August sheet, external measures capital growth implemented months our our costs to deploy

have confidence. local per discounts done off been visitor that Driven ticketing, limited have last Empire our features pay prepared base feedback part in and as a building with attraction are to continue to entire MERV-XX work with welcome and local filters, period rental revenues active fantastic to visitors very visitorship opportunity Visitors the regional a Observatory no public largely and in traction People offered never enjoy more and timed our capita than our our We a top-of-the-line State indoor quality to our and destination quality bipolar of visits for past prior grow the growth the on online by and and higher. quarter programs to by ionization. company. our agents, from reservation utilization including ventilation that external low travel

our very website which consistent admissions Visitation was XXXX domestic, and and attendance, attendance comparable is quarter X% focus and forecast. buildings with XXXX with First health hypothetical Visitors we nearly a from indoor bolsters focus with pleased improvement an environmental driven our primarily gradual more levels at of quality. where and a healthy retail cap. decade half excel on on than area remain per revenue safety, old

no Observatory the page have shown We of to admissions XX presentation. investor on change our hypothetical

We hire by expect thirds the broad mix, local-visitor that advanced mix to the have a we regionally, visitor said not in that two our any number other ramp to United compared achieved then will Kingdom of into nationally that restoration program building State by followed preceding approximately and in followed up will a our anticipate source international, sometime quarters travel their typical then nation. that be is sourced travel Again, inoculation we international air international tourist occur international resumption Empire Observatory, for well in is XXXX. of one

attendance. of points attendance modeling. caps. can levels believe XX% to mixes and distant of lower that return tourists online inbound XXXX end growth remember our up tourism will for XX% international the our reach to cost per local can customers, We see we that tourists as suggests Please achieve and by our from XXX% we by essentially we more the and your of operating XXXX. hypothetical these and XXXX the inbound Observatory our and current end margin XXXX future in Our with maintain will With current of and travel regional structure agent lower passes

certifications energy sustainability can stakeholders of future leadership, first be understanding the ever that And issues this and report encourage for on where that continues. I read leadership puck ESG are you a efficiency, the that our highlights our in indoor accomplishments to environmental annual clear area. we give buildings and in all Our also quality. will healthy well-positioned

@empirestaterealtytrust.com. climate of Again, found @empirestaterealtytrust.com. portfolio energy. report with the been pleased square currently XXX% full we And our the I report our annual XXX% will certified I success that can portfolio. Our sustainability in recognition the This covers Building we say our powered certifications, earlier the the STAR on were annual renewable our by now a has by STAR against renewable issues, we State facts, it powered contributions That the decade. said, hope sustainability online. many in more in to feet and and that report designation more view Year change. our ENERGY of be first sustainability am In action of that be awarded In Empire and January more can number fight found many wind many first you ENERGY builds for XX% announced is are April which leadership Partner

the New $XX by Empire reduction Research developments Building accelerate as State of to emissions a State joined in progress New greenhouse gas York just we last a York and challenge, week, initiative XXXX. commitment XX% Development towards of a of statewide to state million Authority New the Energy

knowledge the execute. our a believe that carbon these in space will free throughout future Building to the on a Our us prior over skill tenant help edge occupied commitments We which goals. with to work to them driven how is provided and extended competitive on what us the achieve their we set and at a past State marketplace Empire portfolio is possible increasingly decade ESG entire corporate have of how their going offer focuses a

confident am have I As realist. and said, I I am a

believe and We use are not bottom still Through vision in real first of space we of approach end their that and hit we the I of clarity market XXXX. and the said of uncertainty will the the to want the and the they work have until quarter noise for now grow of together. still a offices to real teams companies with sound hear needs how time of

leadership in is focus with the as and believe the to capital on the folks, prowess, to world space Tom on long-term a challenges sheet, and XXXX amounts Durels. product, uncertainty thrive reestablishment York is. And of in well-positioned leasing capital about the New competitive and well-positioned that prudent it balance is with have City ESG. press in priced of ESRT ESRT market deliver flexible I and shareholder allocation the will sublease well operational value. and now return large We I our workplace, great believe

Tom Durels

square occupy foot & that will a feet. square approximately firm and Tony Li year York XX,XXX occupy XX,XXX lease Stores Grand feet we retail feet later office to a feet with signed new with leases properties, afternoon office Significant approximately in greater XX,XXX feet square included the a Manhattan XX signed square XXXX at in office In square square the at foot Zentalis in vacated this Broadway, new law approximately you, renewal now square leases XX,XXX and One good XXX,XXX a quarter Thank Burlington Broadway A XXX,XXX Central Place. office square New that office be Fung portfolio. were XXXX expansion foot XX,XXX our lease space properties metropolitan our will Pharmaceuticals totaling our by first lease at everyone. and with new and XXXX in quarter,

and in our focus expired rental new office said, XX.X% always leases rates were market Our Spreads feet have mark-to-market of increased the our are tenants may of in that basis driven at we on leases on healthy on retention at on compared mark-to-market escalator deals. on office leases results and basis XX,XXX quarter will renewals. XX.X% today’s Manhattan result and prior by a to escalator rents Manhattan the of first renewal That on the signed by that reduction cash square during a rents rents. properties down ten a on properties

by We to and New rents space comparable declined portfolio were work, X.X%. all other rent, versus XX% our tenant a have a length space in term leases pre-COVID estimate factors. and Net of of upstate depends tenant deal is pre-rent, levels on on our credit office portfolio location, entire net base combination renewal and basis. rent of effective effective vary across XX% the up and which condition, lease

will XX% leases leased anticipate the was X unchanged is on basis we XXX,XXX square XX refer tenant XXXX will n signed moveouts pages XXX,XXX of of XX.X% quarter offset to to portfolio feet Occupancy square of points commence before by the in tables tenant and be prior down percentage feet. year-end due Please which of that anticipate supplemental. from And we last our for total anticipated from Our XX moveouts. the balance quarter.

in weeks seen have in during to pre-COVID six levels. increase volume tour portfolio We Manhattan of the about office our two thirds noticeable a past

appear of is environmental nearly remains increase all some protocols. achieved property reduced without We safety million second that likely of recent of to total asked buildings these about in tours. mind and year. is for space will the million before We during and and positive first a services period savings -- most the after and the to and for cost and come new $XX health of the the prior reengage, in expenses this the lease quarter the compared by since Healthy While indoor transactions of XXXX a tenants onset. all tenants operating front year are beginning sign of the implementing quality half that to reduction the pandemic from tenants cumulative topic tours $XX cost our

of most the by utilization. were primarily mentioned, previously low reductions driven building As cost

the to and office the gradual leasing expense However, we we ways we of existing continue and had beyond of a occupancy. on reduction tenants a increase in XXXX tenant expense reduction expect greater will that second savings which portfolio. in processes a half looking tenants in mind increase in existing summary, expense Keep that we expenses good distribution in reduce driven with included recoveries the a be and new a of to can the to a the of focus return portion change by operating by from ahead expansions our in offset And levels. addition lower to quarter leases. operating vaccination the In

and to we leadership sustainability to property pandemic indoor industry ability quality since retain $XX expenses million reduction onset. attract environmental our quality operating with manage experience the and cumulative of continue tenants and Our enhances in and tightly

Christina? I’ll over to the Now, turn call Christina.

Christina Chiu

Tom. Thanks,

and receivable XXXX, first as core year property a the increased operations, offset first driven X% property quarter this prior to of was compared share. the yielded per and offs by fees by vacancy. lower FFO from primarily if you driven period exclude operating respective increase million observatory the partially period, we expenses reported For increase lower lease or revenue quarter write $XX by $X.XX the one-time from NOI cash Same-store results of diluted termination

balance million $X.X the were tour first in of our unused million that lightest of tickets expenses which our Observatory and pace rate quarter, and from included deferred XXXX for reduction is first rent of the run collections to to expect tenants XXXX straight-line balances of office total non-cash quarter Our of retail million XX% results, first for off XX% for Observatory stable at uncollectible billings The tenants. the XX% remain recorded with approximately depending be seasonally up. earned the of $X quarter wrote $X.X $X.X million to and receivables of the income from per travel visitor partners. of for and million quarter of expenses of company and million quarter a as revenue to million continue revenue first XXXX. $X.X and was Switching during we XXXX $X.X $X tenant XXXX, Observatory ramp assessed upon quarter

of March Turning XXXX. outstanding each reduces and entered and our that if gross new capacity of revolving of debt company spread an term sustainability to XX, has maturity undrawn a XXXX mechanism extension XX, of of maturity average initial of barring the and are company’s X.X% our sheet, of is year. at benchmarks $X.X has options $XXX to comprised pricing approximately company weighted XXXX and balance billion the average quarter. green on basis two rate credit end and of basis billion the which had interest as facility liquidity cash had of total a facility X.X March $XXX a million a on six-month net million credit March total $X.X into linked years. the [ph] achieved a certain at $X.X weighted The billion The has of on debt The

a until have debt maturity schedule no XXXX. well with We November laddered maturity outstanding

of March share. program April million share. $XXX.X through stock through $X.XX debt X.X company average of adjusted at stock the price XXXX Year-to-date common the XX, total an repurchase million price debt and April total $X.X average per times. XX, through XXXX, at net EBITDA to cumulative XXXX $X.XX capitalization This since XX.X% began an net on market of was brings Our was X, repurchased per the to

flexibility engage and operating external Our with provides us balance growth. sheet for runway selectively capital opportunities in to share buybacks deploy an evaluate to

multifamily Our opportunities investment team continues to underwrite and office, retail, actively.

we prudently will when itself. have we deploy opportunity As presents emphasized, an capital

approximate by property roughly primarily ahead, operating XXXX few the expects Looking company upon basis operating on by of expenses of And the touch levels the over on current Q&A. quarter will in a our there operator company second quarter Also, XXXX to building a approximately XXXX G&A $XX based now expenses year-over-year will we are We your relative continued reduced consideration. property modeling the utilization. expects building low to million. levels. The reduced items $XX to it turn to annual utilization first driven be for in million for

Operator

Instructions] ISI. you. [Operator comes The Sakwa Thank first Steve from question Evercore at

Steve Sakwa

I speak little an they are you the about a deals Are just increase of Thanks. for at demand new specifically those re-loads? little a new expansions Good in the space? of sort looking and got for density guess they hoping afternoon. could Tom that kind are helpful? are deals, thinking downsizing, how that more said I be for color would you about as maybe tenants was looking are the just And activity, bit just

Operator

One moment please.

Tom Durels

two-thirds about of tours. space for to Difficulty] [Technical our pace pre-COVID

I'd in of and represent moves. sustainability -- now to lateral that about half at new everybody pleased we're look we our, other say quarter, growing report course about are we with if topic tours. during are certainly course topic, I'd proposal of the that really Of year, Zentalis productivity Quality that represent by less long-term primary that any were remains re-engaged lead of half scheduled many Buildings any frequently gating focus being Healthy it's with most we increase issue often spaces awful will rooms, have by likely IEQ, these but significant occur haven't second to tours what sign additional market. are that at in right in our But tenants Indoor talk the and expansion lease the our the of in not conversion proposals are growth it's committed you our asked are we've encourage we the tenants the half leases a tenants of the rooms, some on And offices. there's an change good see Belkin. employee most to this but density. a Environmental activity who added, it's the some seen and is goals, pre-COVID tenants and website. before are the awful and showings look furniture On the are space, maximum change built say in or although really there's does breakout really lot occupied a dense tenants seen leases to These of Burlington We've an the designing. focused on new offices -- some phone but layouts middle did discussion on This tenants in pandemic. all and that slightly with -- and -- seen mean space their on to the rarely

of we XXX,XXX tenants mix And overall legal, that a good leases media, think tech, we're tenants that in quarter. seeing services, So, of it's we good so had feet mix square seeing. I a a of really are are done. financial government,

Steve Sakwa

Okay, markets about Tony at comments quarter. share also in as real looking thanks. product of I just guess buyback were step-up press more if maybe together, this the the don't is coming minimis that a if your you're activity the seeing, and well that de speak in talked levels are I the I And volume the bit noticed you second guess markets sort release your know as I of transactions. or about to question, the in types rather was are a tied little you deals market? two those more distressed better debt open getting more it's fact could that but

Tony Malkin

Sure. Thanks Steve.

and our Hogg property variety Durels broad of busy, John we're looking is new team. like FP&A players seasoned And means that and situations. his team our and team and Tom a his that team at Our

retail, New and remains multi-family. office focus Our York City,

many transactions are so are or in interested not more in five were who ago of talking years whom about families, four interested now. conversation We with

seen widely time bright you that we seen to our this have I we something marketed we know it We the M&A, distracted sure will penny by we're if time have transactions, and We've topic, same you shiny When rationale. will. let will we give make on all. transactions. off market spent not At want

quite shells, motivation just begun and of see, have a source transactions in the the of that's as road we similar We're down moves, we which little the knowing of have hunkered not things There's that to squirrel would the recognize do. leasing, to they a way of they middle in say to far the less recognize people would say things make move. actually in the like which to have As process bit do, come go. to begun I things to to shall out their

think in way to out next different kinds and on I price come more So, different of all see they see grips to months announced help. will more good motivations. or I a discovery we deals assets position are folks few as think the And do with, begin over it's come good need are with they run we'll a

Steve Sakwa

kind And kind or there maybe some you volume? of gains just for those have either factor elimination potential transaction driving the think don't follow-up one accelerate a cap of the does Tony, tax of or and XXXXs, of as a of activity big that

Tony Malkin

this at see conjectural highly is it's think there. I that anything evidence really point. We Look, don't

positive. cap contingent members it's and predict on they who growing Representatives And of any lessens potential said the the of only think Congress to with dialectic without of well there the to approve go get democratic and the would we not decision state we hard have the which to is our feel removal regard tax of that that confident House is region the contingent, is therefore high a think thing that in any deduction. the large Biden local majority any earners a situation a and the outcome a higher, income burden passed, taxes there will is package on reasonably of the very in order like anything decision, in House tax is in that I Administration not to about

Steve Sakwa

it Great, me. from thanks. That's

Operator

Thank you.

your from Our line questions. the come with with Korchman Manny Please proceed next Citi. of questions

Emmanuel Korchman

now. times Hey Tony, a you've to about spoken this couple XQ date XXXX

which bottom to that You does be Is an maybe that path going that I rent bottom, dipping? the be in called more be the you're of sublease Is the seeing going we sort saying have when Is increase that wait are to tours but is or hits. of sort least activities are, leasing to are going have to are vacancy market? bottom to at bottom, we leaving activities like? or been on up, the space? you the but the tenants know see to what the a Others of, year look path guess but

So, what the like? that does to path look

Tony Malkin

awesome. where be is what I thank prior data, more sublet. of -- sublet Far we seen are. right this space it think is that in has shared. starting the than question, more for is now -- we What Uneven and you the to on see a lays ever foundation points point we've periods Manny I ever space far put for that wouldn't is gets say that shared market this discussed at the

And sets low. don't upcoming We'll are breaks go demand real see some this in not Brokers we also see incentives, to discovery, we'll lot time what a with rent. really get that discovery. and big expect proposals with think necessarily generate We Lot I price will big to period see we'll get things at the intervening are will the try commencement business base. a halting where of out which -- like of radically in restarted entirely. folks initial

if goes this conversation to question, know reopen. for turned don't this office whole conversation I a of started has future regard to of of going be basis a everybody. your the off it's return The I component, that think the that has addressed really With I sorry something which world they people turned. about that on the the on until to work, has to lot needs the is office. would think come to back big So, but say what's

I discussed now future. posed caused not but or York team, York competition, companies by Journal, in proposed the difficulties the Post, recognize hybrid problems New the hybrid future. theoretical Wall by from It's New with Street hybrid the Economist, this work regard Times, from culture, the to think home just

There of the be back we lot I will a which disconnection, you occurring that uses there on want will the motivations, into things clarity and as exhaustion, off, people's understand which be just of we that lots that peer think I build a take build are on office. So, to to move base, are in Manny think what foundation day forward. are

So, have where improved. don't of until first the we will I quarter and of bad Directionally think puck a news see improved we'll any I the vision we the think be more continue end I get really that's them where things clear greatly of don't 'XX. think and that have to

I will have negative. a how to is something think of a which that lot write to reporters learn

Emmanuel Korchman

or to volume net is Is you've bring more in you increase that offers rocks? the touched Is more busy its a more or Great, in are to your under thanks you've Tony. or entire work? you that so wider? Steve's when Sort on company. question, just Maybe last three you sort that the of say this imbalance over ever much of or now -- bit months little levers more the receptivity made? had Steve's compared in are looking Is but response the hope been, teams to just as the what to activity of history

Tony Malkin

I things. it's would say three

is all answer the The of first E, above.

assess actively. all -- -- to lead a of productive are at that actively, multiple working competitive, Avenue and against put with looking I people are fair I we when situations, situations there their allocation very believe spent weigh have capital Number have got So, in team our and more good amount their now time to a situation more we different that underwriting that a They is, people assessing lot they've it. do of Board so transactions, families can two, use but a us full together how that structures us to and the we're Finance we every our won't resolution. and of different we've process our the Committee who we come need go get analyzing got and to in issues piece back place. make discuss and final all it we And

angles all an as to So, public hopefully been quite it's but we getting mode helpful company and into really from and that that's that. we're a we're candidly where haven't coming you, with the expansion back fact pleased it's

Emmanuel Korchman

Thanks Tony.

Operator

you. Thank

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

Blaine Heck

Great. Thanks, good afternoon.

multifamily Just and you But focus a transactions don't follow-up looking on too office, retail done. something know much that I at on you're Christina, you get until to you Tony both and mentioned want that know opportunities.

to number company a have do but guys then would type number opportunities multifamily your and a do Is about a office component you translate product. some space? just or you actually retail of how ability are that than has looking one, in experience to in multifamily? I operating product know property guess, more looking different more be it another? I than of are true as You retail, multifamily multifamily? at at you acquiring and there you're skills the of compete two, think office at a How anyone And your guess matter and

Tony Malkin

the one. one. properties, York apartment They number they in of for in that's to a City we've multifamily pretty in multifamily the REIT going the focus multifamily the in thousands Corinthian, New because piece, weren't weren't first the I'm area, outside not my the lot York think response. forward The I just on prior two, Alexandria. of region, think part I before, New of of part we've is part because owns included and the family tri-state REIT, straight my in So, still done the Number last developed sale much your question historically

underwriting condo. Mondrian, assets as and We’ve the We it and members remembers so, done of Palais in they’re before, on FP&A and have made redo multifamily who that, were here. team we before, was side, Grand were the anyone involved who known New that around the property still that and team that side, the failed that became our the York turned of City

believe we good on in So and find interesting additional tricycle. potential experience it wheel our got as we’ve area we that

Blaine Heck

has X.X just potential the little at I an that’s guys leverage shifting quarters. constraints now balance basis, yet? creeping times debt to a share or enviable of basis, you are where position, on Okay, several a not just bit Christina, running And any about into side on liquidity an kind guys obviously are investment then little comfortable repurchase have been or sheets, on can bit over talk helpful. you’re you EBITDA quite past the a but you to net the think up you

Christina Chiu

over with position are on been- million happy cash now a of new our the right, line constraint, our feeling and not $XXX that’s liquidity $XXX Yes, in we which has XXXX. maturity has

that. good we So about feel

have In debt due in we no November. until XXXX addition,

flexibility So very the we we good feel have. that about

level, I question about to we net terms which are how answered is, further don’t exact access to think map really of really the EBITDA to In debt look I able liquidity. it’s you before have this

always has the had company relatively sheet. the a So, conservative on balance stance

well. capturing is and We quarter now driven of net will we’re this responsibly, XQ EBITDA seeing the XXXX observatory we’re that between are by really but in revenues managing in continue to debt to largely of the expenses down an manage increase right, we impact ramp XQ, full coming and and COVID up, XQ

not constrained, to the levels, feel very balance at comfortable manage these prudently. but will So we we sheet continue

Tony Malkin

leverage and take time over like you call, yes a on and issue also to and there lot prepared that today to also fact at a have which find is which the to to a trade the may virtuous more currently could are increase to of know our behalf folks out equity. up and our investors that liquidity. also of make keep a But, higher are we lot Christina’s And comment, at we people prepared we’re on made we that we’ve I’d the some and this of cycle at growth. bought different recognize track we we're the point before forget, to a which prepared a stock stock comment in where just ourselves both may I at commence of over is back and We're calls reissue price price right gain add when we cognizant of we below quarters.

is, well to have feel think to in that we we comfortable, want there like very positioned one If So very positioned we we place point. we well like now, would the feel be, hard, positioned it’s I good to not where a have we thought very very we’re a working the were we’d communicate this all that quiver spot at right we really the we feel of very for here and might feel arrows future. feel that well

Blaine Heck

all. you thank helpful, Very

Operator

Thank you.

from question. the questions Capital come with Mailman next Craig Markets. proceed your of line Keybanc with Our Please

Craig Mailman

one the of Thanks guys, kind I’m commentary past, but has always trade-off a and to typically is overlap midtown buildings hearing portfolio kind tenants, the was do maybe among we little you or midtown newer everyone. on to and shifted future of pool kind that in of curious, is see think, curious, a relative tours just of the- as same these traditional Tom of how kind over Maybe, office the everyone that of everyone and the it’s all are I’ll your circle space of you again? just a seeing indicator demo ones of just increasing, seeing, of increasing because at served value your an you bit kind know, it have relative much tenants in versus little and back do a number you you you or of I leasing you in your good to of having you’re obviously these- situations the the guys in isn’t think pickup over portfolios of the front, necessarily - is from what are a here, kind tours tenants are bit seen

Tony Malkin

from our property in buildings and well a industry-leading moved IEQ property growing, did and we committed healthy growth which XX.X saw be with now for see? built law our buildings, to spaces so point mass they both offer to Zentalis in of Place, the standards. And gross, tenants One what trade-ups, ASHRAE's would and are seeing proposals to I represent located Central Zentalis redeveloped, and market, I’d bipolarization, standards that were what were we so Belkin, that transit MERV-XX that and Burlington with property that that state-of-the-art means are compliance will our tenant long-term the they leases to fact moved Sure, to our up firm probably call so right inferior the next energy are efficiency, modernized is those fully Grand active and right? active what including They in half

of -that come tenants trading - to for up the we and was value the stated. So, markets we example, are in our the still I believe to an so properties propositions examples reasons those offer great just a

of has fully affordable near of portfolio was fourth and and quarter. have space people redeveloped we’ve tennis and healthy at what’s seen course offer activity XXX,XXX buildings we And is feet been proposing our this square interest point, the We’re that we our go. of an in built suits and a and the well exchanging. seen we’re and mass price transit newly built it prebuilt slow were of the to level modernized XX% some space located in of We’ve terms which tours for pick-up is, while quarter interesting big in proposals a pick-up fairly ready we

year. would Now, into that in will caution second I the activity the activity translate lot of half of

Craig Mailman

know is the $XX we a come can of $XX is or back maybe guys, And is this as for OpEx then is how point million NOI think lot a at guys, but forward, margins thanks Tom about reduction historic improve lower you for versus going levels? Christina, you and materially of quarter people maybe kind million I color. due stabilized that the that in much of guys as first utilization, to and permanent in strong of kind the you Great, the but

Tony Malkin

COVID-XX, our say ways The represent to date related I’d which it operational in reduce occupancies what looking to a due that keep into made opening we certain the we the can physical Certainly the echoing completed get remarks had first to at said, bulk he Tony Tom next so of work was our certainly expenses efficiency, actively lock his permanent and but in we us So, that or have our growth to expenses made redevelopment we improve that on to year. cap are reduced allows reductions savings. expenses. permanently aggressively and managing

expect do we a in portion to those. lock So of

building best of last year specific number, haven’t I of four think improvement think was be We numbers. off XXXX I but mark a the our and are going those which that some that utilization given see to we’re will --

Craig Mailman

thanks Great, guys.

Operator

Thank you.

Our Jamie proceed line America from Merrill next with of the Bank Lynch. questions questions. of Feldman with come Please your the

James Feldman

flat you Great, you’re tenants activity able based little a tenant throughs good curious there’s keep smallest impressive. could talk is You versus was bit kind Looks what had a little just tenants you leasing lease thank of occupancy I any had versus buildings seeing? small dip of a for larger? afternoon. percent which you, like hoping bit, larger couple the that if to were on about your read

Tom Durels

this prior square XXX,XXX of of we XX,XXX quarter. decrease or has we so, already we end. will was really changed to commence the ClearView announced year of Sure, tenants expect of prior have most due not XXXX to tenant in The increase you is year. have the Jamie for lease floor feet by increase [indiscernible] feet from forecast in which and which the square of end which the occupancy and full last noted significantly termination signed feet in forecasts quarter, known released will XXX,XXX the that most we our that was whose had quarter commence communicated moveouts last we The that leases vacates important by thing from square significant

think from occupancy I standpoint, good shape. So, in we’re an very a

from in just small our which are fully offer level, coordination. standards tenant represents and wired suite will last comply increase last sustainability. of art, IEQ say for tours quarter, the big means fully quarter. offer that suites increase that of a the suites probably with on in interest furnished, We price proposals as fully mentioned, On to we our Comparing both being were and and three turnkey move activity were XX% before we big or to small pre-COVID seen I where level provide our quarters exchanged a built we’ve pickup I'd activity for about

James Feldman

concessions, rent giving then net Okay, XX%, was And effect can had thank there face you about by free break out you said and and XX% TIs? to rents, you. that down and

Tom Durels

the on tenant really factors. -- depends would space, the is and our and deal every location, condition, Well unique other credit say that first, the I

discount foot additional pre-COVID months few in that For we rent deals, of concessions, Generally combined to maybe TI. the three example, deals with more but $X rent leases more held leases from and and Whereas gave there's of compared the and to to on been negotiation a Zentalis per levels we expansions, around dollars rent four Burlington years. gave were sixteen one a of turnkey those all ranged more Belkin the concession. $X eleven square with flat to others,

a negotiation. under mixed quarter per for I the our year So, bag it's per just lease and lease really the individual for on this $X.X and commissions TIs about was out cost and would point line that square favorably our it of average average XXXX foot, right depends and in term compares had with quarter with to lease quarters. leasing which is this three years a and that two last course all of deal of costs weighted for we the XX

James Feldman

just -- talked outside clear, you. lot consider a about thank if Okay, level did New outside York I transactions they to City have assets you City? York of activity, would are but NED guess, New you've And you the know [ph] I or be of investment then assets

Tony Malkin

thanks -- and are We that Jamie. to

I'm are that before. used opportune I -- never as words. with have word We

at all focus the look types to the Manhattan would Our and business New York metropolitan order I greater say of area. that. is need In just to transactions, grow we

James Feldman

use stuff your not time. I I the River I a mean, would funny at because Okay, limit? west a want Mississippi going same long mean word to it's didn’t or take it using national of there that but [indiscernible]? was the mouth, is I look there, is been necessarily you regional out of or to you've for

Tony Malkin

the -- west out I were there existed else we Hudson think is aside. there? No, the world I know River, joking Gosh. I didn't something of that mean,

last we know to want thing You -- it the speculation. generate is do

we we and speculation look which things other all to at talkative more we look prudent we need much investors, forward prudent talk something be I [indiscernible] could as really and think about to our our do. logical, will have -- be than that as how to allocate are and we and when to stakeholders, capital, as

James Feldman

just then And that. thoughts percent some for like thanks portfolio been occupied side. looks and it's that suburbs, on Okay, relatively flattish the on the

a of had XX Street. at you little bit think it I Bank

would -- up you been been pretty pick any there's flat? or any Just it's say

Tom Durels

and Jamie, square the have will on feet by tenant remember that Center. comes this large moveout a heels Berkeley that later at fairly year a commence Metro we with of a XX,XXX Well Insurance earlier

So, that will help our occupancy numbers.

levels, year. to Manhattan the We and like just that the translate volume in at start that positive I of pickup of that's since have in a about which today pickup brings sign. think tours the second seen think pre-COVID tour to year about at going is into half us activity Still I the a in

large are is we to of it slower, Up fairly I it's good. a exchanging Downtown large is block square MerrittView tour our bit have performing So, activity. XX,XXX good in about Plains, of XX,XXX CBD we amount think say early I'd because a Downtown that. Norwalk, White we some property. a proposals with is feet on but generally Stamford where see tenants, at

so, And later translates activity into year. the see that in real at we'll

James Feldman

pandemic during anything Okay. I that make the would to mean, [indiscernible]? is grow Bourbon oriented behavior you there transit to want in

Tom Durels

we I really think our space we [indiscernible] like which little think did up portfolio, we're areas outdoor Metro complete got we and vacant lobbies trans like there. well leasing well do common to [indiscernible], very areas lounge, but of work our focused gyms, near the on at coffee we're that all we our dining, We portfolio, located yes a bit Center, mass more and recently our of including, upgrade

Tony Malkin

Yes would this put way. and I it

to have tour big York flow New improvement is, seen group of we havent. City, is we didn’t that it in ask no, of answer out think you the a note is tenants what I and

Tom Durels

handful. A

Tony Malkin

and Yes, a under which done, square leases handful smaller reported. leases we're feet some XX,XXX

Tom Durels

Right.

James Feldman

Okay, color. right all thanks for all the

Operator

you. Thank

no being oh sorry. up reminder, will going here. to finish a As we [Operator further There Instructions] questions, we're

again, do a moment. to the so get will than more comment number questions, X to all go is we of We have what's today I further last and report. then complement great what Don’t one, nothing, without do them, show healthy we will our one when really one. o'clock. team buildings. our energy, is it but XXX% ESRT than is wind I do want we got you Number you have to you've no more review two, sustainability will please do do it renewable It what

a to the observatory see be finally, They plans are help turn first the where with and understand to report. are return You you that very around and and Conference look you that guidance you sure And sustainability get when your our read meet place many want guarantees. to upcoming a not We're forward statements, safe to to Mary puck nor here. We annual to models. healthy, but [ph] purposes we your look and to office, we only all our come our the business we we're in forward at will to return vaccinated to Virtual, with for discussion visit. you seeing to we're chance make they forward-looking

So say hello, look for [indiscernible] person, thanks so much.

Operator

you. does Thank This conference. conclude today's

this disconnect Thank may great have your You and at you a time. day. participation your lines for

Empire State Realty Trust (ESRT) 29 Apr 212021 Q1 Earnings call transcript