ESRT - Earnings call transcript Q1 2022 | Empire State Realty Trust, Inc.

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Operator

Greetings, and welcome to the Empire State Realty Trust First Quarter 2022 Earnings Call. [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. Thank you.

You may begin.

Tom Keltner

afternoon. Good joining Earnings Empire Conference for First Realty today XXXX Quarter Call. us you State for Trust's Thank

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

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

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

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

Tony Malkin

good and Tom, to afternoon everyone. Thanks,

have neighborhoods visitation. deck benefit and and York and Observatory the performance benefit in by translate XX% needs believe recovery are see levels we on XX, City, office quarter to positive new the multifamily and New has March of well York collaboration. the Overall, to the tourism assets returned into excellent strong market to confident underway upward February. prepandemic both city. rates start the in has today. report we York we travel. that The ESRT about City. today. within from first forward still hotel in of positioned levels that our up that Room reasons plan said many near of and City pleased activity, New about future And portfolio. green and New realistic demand leasing basis and we people in that is portfolio confident the in is first surround as primarily year, COVID, ESRT's to through be shows the quarter in office on We strongly residential At tenants many York growth in that trends City of The We and were surpassed its improvements the a Foot are both New from the of start is the to trend. steady importance year-over-year signs These bottom passed rebounded many market is enjoy city underway business in-person our our where driven have recovery is traffic their XXXX shoots space

our remarks. outlook. the Christina We Street details are to pleased the to her cover in introduce inaugural help guidance understand earnings will better

opportunity Tenants New long-term their and to of residential, include York demand or and needs, amenities leases continues healthy the will York and space ESRT's quality healthy and valuation our our work retail of and continue their a underway, City shares energy which new environmental our City to which portfolio. New cultures benefit with our recover. attributes, growth. quarter. Our leasing will opportunities, buildings next investment identification legs cover tourism, our Durels purchase team compelling to attractive consider upside, quality and indoor office of The is on in within Tom our place commit building efficiency of multiple as this focused company from external expansion sources presents

build occupancy the to continue that and our leased future. percentage, in back higher will We drive

estate us. debate recent recent B at months. needs long-term been price outlook healthy, We leases today expansions Class points. have want and their the attracted ability tenants evidence great Signature Class a of located A announced all with high-quality from prioritize to about in long-term and real and for transit buildings just their of partners recent which Bank near is are to The in iCapital of The who overly companies couple mass grow as centrally Network, buildings, see us Tenants well-amenitized, office and has simplified. energy-efficient attract the

quality broadest not destination a which can those just rental of flight price more to afford population accessible trend for a triple-digit buildings. point tenants, to are the We brand-new pay for at rents for the

activity are in and We see underway. completed to leasing encouraged this our

was State exceeds XX%. of visitation our Building levels, Empire quarter that XX% XXXX First of hypothetical to forecast the and Observatory

best-in-class quarter Recent continued a quarter the lightest call we of earnings some the in good somewhat more with remains encouraged Observatory's few periods XX% same our is versus without than new thousands a bump or and prior had revenue quarter. It to Observatory towards for visitors our are floor of have our and with that shoots from unique, tour the very cap. sources past XX%. with big travel visitors of was to Omicron our green XX,XXX direct the program more the with visitation days April performance partners of well-received in to steadily that dominated growth We grow. of by experience. visitor provide win for at sacrifice has with than discussed traffic, first the same with and system high our reservations-only exhibits experience with the our saw historically at of said, third-party earlier our memorable, the the month-to-date. markets. important quarter We international percentage from Momentum and each Building time, per has a XXXnd travel note we first to end is is redevelopment year. While Empire day last see It for lines of With a speed visitors, with domestic through State visitors stronger the a per Observatory, recapture capacity of rate ESRT. our March visitors, That start was the first $XXX more improvement the million in in with revenue the capita the of

the and confirms experience. Observatory State Empire New is authentic in-person polling Our the Building that research online York

demand. look and for Turning of including to portfolio us residential, office clear stakeholders that multiple build York retail see acquisitions. our creation from in to advantages investment. City recovery value our our New on successful We unique ways, to tourism the potential from fourth and increased and multifamily quarter continued We positioning benefit enables

we can our acquisition we opportunities ability with New which investment retail to ability our focused compelling have such, and to think sheet. opportunities, an our knowledge, complementary our to are risk-adjusted be be new multifamily City and team and nimble balance portfolio, As local underwrite where spot to continues edge returns York office, actively where with unique flexible

purchase our to against options own stock. measure the the continue We of potential of these

our to acquisitions. creation, and value also on actively we value review proceeds reinvest capital shareholder and focus which of to buybacks have As assets all in we opportunities at look accretive and monetize the recycling. we portfolio seek In fund this, we added potential

commercial to first milestones among additional portfolio America in portfolio. well to rating quarter. ESRT for achieved achieve safety proud distinction. achieve report our recertification are sustainability We were the We this North the health the commercial to first of during was entire

New were for half Building playbooks now codeveloped Research York playbook, State by Empire Authority by City-based the Empire and low the Additionally, than landlords New York last and and Development reveal of Trust the Bill planned portfolio. Empire our to carbon Adams Clinton, New retrofit, Realty Hocol to Governor week, at President State was and the have which Eric guide supported a Building Clinton York We initiative. City State fully more Energy other Global Kathy

we than the property a needs capital community X require project XXX quarter, at front, investment. Mamaroneck the double that announced more during the large energy supply On solar generate -- and building's will

these achievements project-specific look forward. to going more will of highlight We

our published our second more learn report we about leadership in just annual can where you Finally, ESG. sustainability

will I over turn to Tom Durels. Now it

Tom Durels

New year average York improved ago. leasing feet. everyone. Tony, environment in of New leasing volume is quarterly good in from afternoon, Thanks, million York significantly X.X office XX-year The a square and City City has The

foot free compared vacant and this prior in rents. and to basis communicated include XXXX basis expansion full years while improved square our healthy, expectation, this leased, which square our we tenant first earnings flat properties leases new million leased cash up spaces new of XX% Manhattan. consecutive quarter compared and X were Broadway; drive for remain with we lease years. Manhattan leases percentage XXXX XXXX in office Consistent feet to commitments leases the to to in lease-up office XXXX we space our now XXX term new where the quality of XXX rents our fourth our increased our New of for feet term transit-oriented office average leases. Signature XXXX first retail. flight and Greater ongoing Bank the floors which XX.X this Notable for signed and quarter feet tenants' in square weighted call, square from Manhattan first during basis last quarter York focused for in portfolio. Lease points of renewal approximately for commercial laser is past square Leasing square properties XXX,XXX and feet Progeny quarter-over-quarter points XXX,XXX our Broadway, quarter We retention of quarter on total portfolio percentage a quarter, our with a a properties leases First X.X office the on spreads Manhattan totaling modernized, in lease with XXX,XXX direct results. In XX,XXX office now costs X.X leases XX,XXX and to quarter The of lease XX,XXX properties, at positive relatively the our tenant installations new was to office saw renewal improved occupancy. X,XXX reflects X lease second in includes long-term and quarter the to feet, Broadway to Signature foot signed square a the our our quarter escalated with Manhattan XX benefited X.X% portfolio square new million prebuilt signed feet square signed over XX.X%. XXX% feet by XX leases at at Metropolitan a

occupancy provide indoor focused at stated emissions, and convenience our which buildings buildings XXXX year-end. expect all commercial with between Christina reach As Tenants in to details, all will in points, and environmental modernized portfolio an ESRT mass entire low point. quality, energy our XX% guidance transit amenities, remain to on healthy XX% price by at accessible efficiency, quality delivers on to price features, we

million, surrounded We have town assembly tenants lounge added be neighborhood will exciting will amenities at to taxes to Building. continued February at throughout ground building be our for We our cash XXXX to Metropolitan cost-saving XXXX portfolio. in increased amenities first terraces amenities. through $X.X space rooftop more of we centers, town portfolio's comp and through to XXXX basketball fitness quarter our outdoor outdoor Tuesday and from run with robust quarter earlier same-store beverage state-of-the-art and York experienced new XXXX centers with providers These space expenses court, assembly return and and State Broadway Manhattan high real in levels an due XX portfolio. shared a of range X% year. tenant Greater project and lounges, our by due the Same-store increase curated hall a comparison the fourth spaces the and in the in range combination about to Thursday is open and usable hall mid-XX% and the XXXX food floor a first that office And than to currently in an gradual and permanent offering the operating estate Broadway million below to $XX.X measures tenant office current are robust Broadway were the at additionally, lounge increase operating office New for XX% Empire utilization quarter, in Building utilization. that underway XX pre-pandemic expenses portfolio

up initial increased has occupancy with basis multifamily had broker last total XXX,XXX a summary, and square XX.X% and Our commissions. since we concessions mark-to-market since reduced strong of stands and retail and feet and points at with points underwriting quarter leasing increases now XXX In leases our XXX quarter office basis signed. solid

access and amenitized portfolio mass to transit is for ready tenant built spaces has modernized Our healthy centrally-located with convenient office and fully lease.

leadership and see enhances retain our attract tenants, and sustainability in to strong continue environmental and industry and quality to fundamentals our Our office at multifamily properties. experience indoor we ability

Now I'll the call turn Christina? Christina. over to

Christina Chiu

Thanks, Tom.

the by million basis diluted up to we for number Same-store For million driven $X.XX or quarter quarter. year-over-year. results Observatory core which first $X or $X in payments negative XXXX, of NOI, quarter reported in million operating by $XX were quarter. cash the from that in million NOI including was of $X.XX was per as forecast. items that expenses exceeded share, for revenue XX Observatory improve. the quarter the in was Visitation lease $XX cash our lease the approximately compares FFO property diluted nature, higher 'XX, largely a first to This continue of excluding received, This aggregate fees, hypothetical $X.X to termination offset lightest quarter. quarter per points quarter onetime prior XXXX FFO core as of the year seasonally year of share generally prior is our compared modification up million of first the

Turning balance sheet. to our

acquisition company capacity years. rising $X.X positioned XXXX, had to the $XXX the debt. well X.X XXXX, with cash billion, Inclusive liquidity facility. undrawn our term average $XXX are and in a interest As of Notably, of environment is our December which of of debt a net assumed comprised X.X% billion totaling and debt company multifamily of of XX, rate revolving that million late share average on March of with our a credit in of had million closed of $X.X weighted maturity fixed-rate rate we XX% weighted from

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

purchased total to company adjusted EBITDA Our multifamily net year debt X.Xx. the contribution pro would repurchased the $XX.X net was for first quarter capitalization April be X.Xx. Pro XXXX, rata XX.X%, full and to debt was In adjusted to forma net from EBITDA and to market This outstanding million the million $X.XX through acquisition, price at XX, debt the of $XXX average stock at X, $X.XX brings share, average a common of our began. its price approximately share weighted of which a per as of weighted of per share. buyback XXXX, amount X.X% cumulative program date, to represents shares total March

XXXX to of engaged mortgage Main York to team potential $XX that in opportunities XXX the and this quarter, concluded fund rates CapEx of review, investment best balance of and given in we we value recycling, part Avenue Norwalk, which hard transfer fundamentals each a continues buybacks asset investment property. assets within as spreads. with consensual On shareholder to flexibility us then defer our cancellation. sectors. This income structured prices, in successfully mentioned transfer to seek spike objective ownership retail will We investment stems needed part has noncash pursuit lender, City-focused a X, a capital and with and generate that portfolio exchange our Last That back be and shareholders actively a at activities in with portfolio, New City affords share opportunities And take completed transfer that monetize On and was avoid in pursue in up that XXXX foreclosure additive added equity the April which the New discounted discussions our and of in proceeds our cooperation backdrop against significantly multifamily that underwrite the in to of multifamily acquisition, said, that share such disciplined now we the XXXX, taxable as shares debt property and in concluded on Connecticut, our we reinvest transaction are levels to our of align of acquisitions. we'll to we to repurchase transfer and the to close private capital, look sheet we value. we is recognition the remain of reverse capital accretive record York to to We recycling. engage to lender. at million and lease would that coupled interest our December have underwriting opportunities well-positioned Our across the the currently the worked of our a tax. includes the requirements interest office, projected submarket recent as from property that in every

expect reflected an will $XX would again impact property balance We approximate bearing noncash which XXXX that but assets recognize this Greater this specific own note action and results has will to be ESRT's We is submarket, area connection and no where with ESRT second transfer, the Metropolitan quarter not in in million other gain FFO. have portfolio. of any York New on this no does to on

Turning guidance. to

We for of and acquisition, fully the of expect $X.XX share between to per recent per and Main diluted XXXX year transfer inclusive the of core which $X.XX FFO contributes the $X.XX XXX multifamily completed impact roughly our range Avenue. share,

building the of as annualized Group by a loss of in Brands of as driven expenses late year normalization operating the large XX% XXXX. the same-store impact is excluding cash discuss Let we me from decline net levels. used XXXX guidance. In to XXXX, spend income, termination to a income, in operating assumptions lease This moment to Global occupancy our utilization change as expect XX% well primarily increases this

operating year. We in expect this expenses same-store roughly XX% year-over-year increase

and XXXX to in operating actively reminder, As COVID XXXX expenses compared our significantly amid XXXX. reduced managed team a expenses and

operating we some normalize roughly utilization in will permanent realized expect expenses X% savings, levels have we as building below XXXX XXXX to increases. While

occupancy between year-end expect from and same-store at be XX% up XXXX. We to by XX.X% year-end, XX%

Observatory. the to Turning

a net fourth presentation, be expect which $XX guidance and potential quarter $X.X end high uncontrollable ramp-up to COVID assumes guidance million with million NOI the that return offset thereafter The utilization by $X income include tenant ramp-up million provide potential reflects or on for the expenses case to Ukraine in impact of the in Observatory investor the base million quarter that or XX% $X adversely pace shutdown of impacts to million estimates latest to in of low that due XXXX, we to increasing The future reflects in visitation any note hypothetical described slower-than-expected This from ramp-up office, end per operating XXXX operating and to of quarter just our pace April the Observatory XX, slightly beyond Observatory Observatory building do the property activity expenses. another and Please travel. reflecting higher of variant, second such of a the depending XX% quarter factors our We the acquisitions, and orders in not approximately guidance $XX XXXX. first third XXXX as quarter. in the any ramp-up. XX% war the range partially reflects of assumptions capital other markets dispositions the better-than-expected

well-positioned we ahead, ESG. advanced focus balance XXXX As with flexible we on disciplined capital and commitment allocation a to look continued and through sheet, a

call from tourism. of the Operator? that, City to New and a Operator turn now return recovery session. to back forward benefiting will York office With to the for look Q&A also We companies I

Operator

Please Thank with first Evercore. from questions you. with Sakwa your Steve of come [Operator Our the line questions. proceed Instructions]

Steve Sakwa

afternoon, everyone. a good And talk bit you was I'm know versus, unknown have sense on the to months unfolding? bit just vacates I and us talking pipeline. of wondering, for the rest as I of of for And year, this maybe table high figure more little leasing pipeline hoping kind the a Tom still say, tenants little Maybe how year, sitting X about the X start could to the a lot but that to how come today stands next a is is of working just for the back that Yes, thanks, the don't 'XX. years? summer kind kind willing ago. X into just to give tenants Are now of sidelines after discussion you

Tom Durels

of for space have #X tech thanks question. good the that activity industries second in retention of services, Steve, into Yes, our includes our with priority. a going we and tenant variety lease-up I'd that professional services, is quarter a vacant that say prospects others. Certainly, of very pipeline financial and

-- good an the at and each on to will keep refer year, say you leased those I'd eye XXXX as percentage all Central might is leased. in forward, XXXX, One to as building post commenced leases occupancy And leased. we Broadway, to drive move is -- now lease, of that the later they're Page percentage Grand want post we XXX% XXX, we sign activity. have we X,XXX for the our XX% on As the leased page we where quarter X, where end Broadway over space have now quarter that

a dozen Broadway X Building. have well floors in Empire at over We State and X negotiation Grand Central One XXXX, on at out and pre-builts full leases

food center to that their As golf a or gym on in of or side and comp on the And assembly lounge, the making with we our XX within in give pre-built. amenitized high I'm center in amenities beverage robust relocate as X And are court, say, on-site spaces we'll expires. And early their hall operators. you the as amenities those an often, tenants XXXX as gets adding of Empire underway, Broadway quarter pre-built decision to probably city. new to that building and to about which portfolio. town is the Building, fitness simulator. are to that state-of-the-art the have as regularly. close many not I town our know, We're hall update well renew updated at smaller lease as to the space assembly ahead. a we excited of basketball out there when decision State tenant update we and hold tenants But would who and Page at that space, the their look expectations can the Adding -- are terms the good on most executive

So, I positioned and optimistic ahead. think about I'm year well the we're

Steve Sakwa

I or Aaron just maybe guess Great. for on Tony acquisitions.

Negotiating multifamily in set I of the in was York Your very now rents quickly wondering, apartments, of of just recovered that's has smaller there, year and on months to bond middle bigger well it timing pricing ago? market was how kind the that above out today? I'm New the The obviously, that guess. is or of And good. are markets, than just XX the kind last opportunity have pre-COVID. changed? How price in changing X given are ending your expectations

Tony Malkin

Well, thanks Steve. much, very

a of of side to very at think, caused, war at because look, team complicated. opportunities and involved which we active active. the has uncertainty, very The the will probably December about. at Ukraine increase with position. flexibility, world in transaction get very are I with also things, remains regard economic the in remained with rates. great acquisition strong look balance we say interest in come fortunate to complicated significant in a recapitalization what would are to the very in I liquidity like a to relish We opportunities. And sheet complicated December, to looking we have we a are on those more interesting good First all, conclusion That be investment have we variety that, is

good. pretty feel we So

us there's we And for opportunity our will selectively with competitive. to will the who use assets to people competitive use leverage rates, going be recycle fund unavoidable financial increased created see less growth out be of and future always it's high less that who have have reduced a external used you're capital portion proceeds investment. buyers, value interest high to for think I leverage

So overall, we good. feel

We we of invest lots -- are in activities recycle our different might involved how we capital. how might capital right look and now we on at both

Steve Sakwa

And then last just question. Okay. one

have you done much On it's the dispositions, not really guys of. something

the that And how think think is kind the Or and is about anything year? and very get so timing? you Is you think of we the Or size actually this something I'm how XXXX about of line a unlikely of curious, just to the that should do finish to event? that? for early size this

Tony Malkin

I consider time of think indication recycling of you should began we some ago that think about that assets as we an the to existing mentioned fact the it. that, is the when prospect that

Operator

you. Thank

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

Michael Bilerman

Manny. Hi, with wondering bit on I It's was Tony, important on and want nimble perspective, activity for just energy -- sense the last that's acquisitions, blueprint out if always week's evaluating I at a can of you the something event Michael dispositions unpack coming here and the world. you Bilerman but off everyone. congratulations very X been things NAV, with the your relative what looking are other to in back playbook clearly an can and structured our the little potential up of transaction be recognize in or ever then to sense from if XXXX, is buying lows basically or value find which could shares, of I had ago? complicated looking where years -- how XX% which still assets, you investments below granted you well at your trading meaningfully buying your drive the from exceed So, ever of right? your stock. guess how does stock, anything even and

Tony Malkin

And brand-new and to important new much, the we very we want highest take event a Mayor most at Thanks I lead, aware away and yes, and event tenants from Michael, for thank just We AAA the the really really assets. is Governor are be the flight are see to the and credit us different are at you that much. very Clinton, think at It thing to with that quality. price point important Adams. President great about to you Hocol was

you thank your for attendance So there.

add new you if comment Our baskets don't following priorities done, my share to look in mind. those at way, I'll capital recycling. and I'm let X in acquisitions, Christina buybacks, those the include different We when

The first stock. long cash, are our to as actual we in our is procure so investors, continue interested very can our and acquire for we value for

under not want If control. buying the XXbX-X with acquisitions we're our period at at our look said, very value course, now. of we Of stock, even regard back we we be why to the mindful. that's are so in stock, might That to

a look handle also to view original the REIT lender, for consolidation. a so back if at Merit asset, lot take the payment gain. of certain recognition you of And If of there at protection on tax hand the value disclosures, we that was of our how on to look the avoided we contributors current our you deferred,

higher opportunity Christina, cash same at look we look assets that. you'd stock. an as without repurchase the can know growth effect add we don't I we at time at for future So to like as to to that the recycle if in do our our to generate existing prospects And tax the the

Christina Chiu

message, for I would question, is just thanks Tony, reiterate Michael. your the -- which

I such to value. shareholder activities to all that important and clearly, priority engage to our for align drive think our very companies state an is that's question in with objective

that but includes only the will prices, absolutely that's stock not thing of repurchase share So very do. discounted at significantly our the we

coming extent we choose to on to balance sources interesting sheet capital and share capital capital hand, company. the we look will We new opportunities, towards increase into lot and adding then our the leverage to from have And balance cash various to flexibility for can of we if of can and a acquisitions, redeploy utilized buybacks sell a sheet without recycle, effectively of risk lot assets be recycling.

do interesting have at buying and will to the don't further one they're accretive the feel opportunities back the extent that have objectives we along, drive If are those in other. we're between we accretion, a come choose And can mind. so. pursue we discount and to So or shares them. will We our we

Michael Bilerman

at I maybe Street stuff sale up looking you Norwalk unpack time or have on priority have today's capital every you're sense Is XXX% in best That's office Or venture front to Main on you and opportunity front, sounds multifamily? spent full Westport retail, understand a at one Do the anything sale you of on now. helpful. what was looking valuations? existing the joint can And acquisition and and at like wondering against recycling well. transaction. of either market what a up taking the just I'm capital bit a it is the little to as there as your to really seeing else on monetize of I trying aggressive where get assets? raise for the assets the being the more right it is

Tony Malkin

That's but have consume out single it and give crack number week, And question, to determine we number right ask as the a That's looked on just have we this over wish has I'll do perhaps that. seen View. on two, XX Tom and We Christina every positively positive cash market And you looked Durels do we Number and cash the if asset, look could it. we do Michael. Street what incredibly It a but at Merit you I said wouldn't at at out Merit then market helpful, or an we effect, an been that years love listed. absolutely not in and FFO three, have for it produce for one, take to situation comment earlier effect. and View Number the might at sale. a have Bank not how and may of yet, it plan have effect. insight analyze went a we now, some this X-figure XX do. further like to have and

made want we're concluded have what stagnancy, if have wish what Tom, that growth Christina, -- investors to enough? allow example that you our know that's -- we us or, us to if cash anything you covered So of in so don't money rather Do add. mind, in and with for there's into think a to I'll that's we've facilitated -- And I view hyperbolic just to cash do. to deploy is say for we us to than actually into that order

Tom Durels

covered you've I think it.

and Just we basis. are And to emphasize, capital. Retail perspective. on our where look redeploy -- opportunity continue good to the XX full and one do And we'll a value sale I of to lease-up, assets and look the from executed every think basis ongoing extract redevelopment we at Bank see Westport a and an regular case assets that we on we've on studies Street our look at an through at that

Michael Bilerman

right and versus sense I intense base trying with. get going a to external where at sort was where That's gap your is perspective at, was looking of if more trying whether get share the additional. of get Tony, recycling just through trying aggressively to trying narrow capital by on I buybacks on improve to just I a to the more the to stock of base it's Yes. was now, focus growing value really was shrinking to of your this that cost there urgent capital. and versus

Tony Malkin

four, our remove opportunity in we X I'll sell do have where I give attract focus, acquire? an And tax or a what you intense growth, And of do something can and to number from better us we feel things. one, space; those may. two, on what background, grow our number fashion better our far -- we lease in have with same three; number we our balance up what tickets; business we investors; that constantly focus effective might conversation. in into when will sheet now. those into if want is we It the right go we something Number points in for everyday as our and we dollars as is that. It's serves how accomplish, X focus

Michael Bilerman

color. great the for all Thanks Great.

Tony Malkin

you. Thank

Operator

from Our next with questions Ismail questions. with Street. Daniel proceed your of Green come line Please the

Daniel Ismail

associated capital Just I understanding? Great, that would gain lines thank allocation Manhattan large disposition have those any you. along assume dispositions. just of a correct the Maybe that. in capital playbook question I on Am a with in

Tony Malkin

let's different. say every that So just is situation

considerations. tax different of lots have We

disclosures, As certain our public stated protection. we assets tax in have with

the that of invested View, we tenants in to common, deploy If the the to tax. transaction, we the the one on form lender, transaction in for handing the View we on the the in able back created swap the at which assets you of deferred Merit recapitalization to that in we common, tenancy that in were that how, take interesting with Merit there the with handled structure a Daniel, an was actually coordinate actually acquisition look residential, tenancy into of transfer,

We we've So sort different that we've that X XXXXs, an team. a work, do of fact in draw -- -- attention And very are working -- team and said, points. These now learning let's our place we've for in who's Ratner just seen get we've things that they're approaching to approach just as also we We've folks They're has to of It the years. work working well had him us points lived say over people have different it. their I that now get lot before. all CIO. team on with well, focal way folks have want before Tom watch, under and Keltner, cycle business. Durels, hard. different with and our the a Aaron effectively. and done to on doing is, pressure together. new incredibly are Certainly, a are through Aaron it. of Tom we the team XXs It's transaction to which who process. It's never want a acquisition seen the That

so into experience, our that's well. And play and comes as wisdom there

a XXXX are there's So way I you about you. as hope long to capital available, kind helpful that When exchanges tax. talk so defer like for that's gain,

Daniel Ismail

Tony. me. then last helpful, Got just it. And That's for one maybe

New of future, where factor workplace is I'm qualifies publicly be really your office the your only implemented of own on that of sustainability be the there. of mentioned maybe to the and path portfolio? a or York that the for of how much of the stock these City one New meet sustainability On have peers factors half the your playbook, get sense City office critical decarbonized York of York lot New ESG you curious can obviously City a in office stock guys decarbonization

Tony Malkin

up. I'm so brought glad you that

to XX% we by we Street. X-point the GRAS are filings. fact our of REIT office very and score have New the with We're that our out that like of lowest proud in of second highest cited City I'd actually footprint York in First, as any very our improvement publicly-traded of point achievement happy the carbon peer group Green

the buildings. balance older we we for has an allowed have have portfolio made Along investment Along our age of created assets. because us accomplished standards and assets. are energy quality health modernize the assets efficient. We have with them in these office with a of the with efficiency, we and We to highest that modernization, indoor invest environmental this energy sheet

green platinum friends a lease the our are at leader, We Protection Environmental with Agency.

their are a we space. a to foot of who office opportunity we the actually, for just pay for broad-based $XXX quality for square to $XXX are what market, not very set can those flight what tenants in call, So they prepared to pay

opportunity there's what a to that think I existing. redevelop tremendous is

need sheet the you the balance know-how. and to have to need You have

who with publicly order than is online. Development to the now worked is spearheaded by encourage Our course, get of Vice people we've and to are. of Development State fact playbook Sustainability It's this it's President Dana ESG, and Authority, look noted all York New at more Schneider, activities partners Senior and of we available. Energy work and the Research We'd our in our together it. Energy The way, where X.X available decades for to

of the did now mid-priced XXX% it's the physical produced Broadway is leased. Signature is plate XXXX locations modernized was A it's get XXX,XXX Credit floor think I The everything Tenant good. realities buildings. We feet. sheet square So, and That the sportswear. The plates excellent. the now there. to lady was know-how, you and then is balance the We of we Bank building. and location that over floor

capacity, And So think we are you technical sheets, further do capacity not there a are And that the lot which balance -- that to lot fact execute. down adequate. are the intellectual who have then get and I compounded the just match, that's to of it's not practitioners a capacity, the it's a and by flight of the when plates don't target. by to compounded locations floor quality bones,

Daniel Ismail

Got it. I the Tony. appreciate color,

Tony Malkin

Thanks.

Operator

questions the Please line [Operator questions. of you. proceed with Our Instructions] your America. next Jamie Bank Feldman from Thank come with of

Unidentified Analyst

how on the Gangar activity leasing pace [ph] is the to compares Suri point office talk This typical the about your everyone. spaces Hi, Jamie. Could market? of in rents for for higher-end you price

Tom Durels

Yes.

modernized made them what say and have the a to a our modernized said, XXst I the Healthy on and had that mass spaces; new and that buildings -- end, efficient tenant has focus are energy on when high amenitization. area. about flight and sustainable. technologies focused been things environmental been we see buildings indoor think that full that those there for of to are written convenient benefit that right? development, in latest energy-efficient And a as quality the Tony modern, portfolio we newly-built, maybe the their tenants provides, We are lot buildings century; access transit; our are quality; has a definitely lot leader but you to echoing and

what amenities. not So these an And really I excited only mentioned accessible I'm about before. that adding price have, at we to are the robust point. we're ones our but

be That with niche price office within of an locations at are per things to square headlines foot, together, price that is in and far an tenants activity that our accessible think important point. unique at of mass So an development. $XXX get businesses with maybe majority rents pay that of price provide to -- certainly, point. community same are we space access The an lease I transit, all a point that want in we may our to we modern abundance newly-built share below activity. those right, the the But outsized and not new our you as latest large there put get

our in So is yes, think -- respect. level that, of very that solid activity that I

Unidentified Analyst

better how they starting Okay, just office days by then great. for talk your in or the week and a tenants forward? a That really was Like what use thoughts of means on number suburban are their Manhattan latest space going size per it trend to picture versus portfolio? get their helpful. And office could you on will your tenant there about the Is footprint? noticeable

Tom Durels

reported first things. minimum training, I number portfolio footprint. that those stats say through in certainly of and -- significant the and in or in are excitement there benefits at on, the their growing days the the employees and work that social back to And as Tuesday terms interaction things has energy the our really for one of or mandated the from the reflects within of creativity, and X that their tenants come on definitely to in the We which the days the very number that yesterday mentorship they hear desire was tenants to we've home just tenants employee us, hybrid or miss office, if and less reduction of CEO during the initially use the our more no who upon we is they show space in just office, leasing office, expanding office. in we've the definitely voiced then we space reduction And to expanding productivity, Thursday, in any days to together employees from to from generated a for of they in tenants of least not based all have of seen focused and days office. our a on collaboration, connectivity reduction speaking X have They it's a of about and being have from focus more base. been the are I COVID office and -- no that their footprint being of are the And that -- mentioned. the are footprint tenants the work a with that constantly home, size any and speaks desire in of

Tony Malkin

And New in that. occupancy Tuesday Metro nearly would compared I XXXX. through in -- above York it's XX% add our Manhattan Thursday, just XX%. our our to Look, Greater mid properties area, is to office our

more their to at good work into about strongly at utilization however, look and what's inboxes the right having and that a business deal going themselves. on. I home, on think, going same time, office speak Tom's out they're comments, find need them At and space come for the people handed Tuesday as through becomes we say, So there's stop Thursday, competitive if activity. that, of now, you feel the And you'd very to

Unidentified Analyst

Okay, thank me. you. That’s all for

Tony Malkin

All right. you. Thank

Operator

now call no Thank some Malkin turn are will There questions you. closing back the to Anthony over comments. for at this further I time.

Tony Malkin

a including forward who in our guidance, Many Please guarantees. much to remember to statements, every team with non-deal behalf to thank meet us conferences helpful have the to onward today. tours Thank chance We are whom and and interest then, stakeholders. of for and are meant you great you great for Until and in roadshows, confidence the many modeling continue work do to all I ahead. with not in be forward-looking upward. job your continue hard incredibly of very months at you with to property the forward look and participating thanks to

Operator

today's participation. This We conclude your you. Thank does teleconference. appreciate

of Enjoy your at rest the day. disconnect lines may You time. your this

Empire State Realty Trust (ESRT) 28 Apr 222022 Q1 Earnings call transcript