ESRT - Earnings call 3 2022 | Empire State Realty Trust, Inc.

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Operator

Greetings, and welcome to the Empire State Realty Trust Third Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Heather Houston, Senior Vice President, Deputy General Counsel and Corporate Secretary. Thank you.

You may begin.

Heather Lawson

afternoon. Good joining Earnings Empire Conference for Third Realty today XXXX Quarter Call. us you State for Trust 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

to We from normalized, include to in As assumes in disclosure to a uncertainties, actual update which forward-looking statements obligation encourage management's future. current forward-looking differ discussions The Empire represent unless cause specific to statement detailed risks discussed Realty State situation estimates. the filings SEC. those related They no listeners no the any warranted. longer today. Trust and these we statements the will are forward-looking COVID company's may review the subject to COVID more with and has reminder, results

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

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

Anthony Malkin

Heather, good Thanks, afternoon everyone. and to

outlook of a recycling take share it. is Observatory flexible unchanged, portfolio sheet opportunities. the third leases of shareholder report signed updates and balance positioned the quarter earnings portfolio to that allocation. with through on enhance to lease flight you the management to our of pleased focus activities capital modernized the about results, sell will space, and to well advantage ESRT's quality, advantage year our and are ESRT tickets strong remains doubt contribute value investment to balance today. no strong and take for proactive with capital We to a is There and

New and York City is New are busy streams from office, with great tourism, to City's benefit residential multiple retail. we a upside and again, from way York revenue

Some the That and may areas you others. commentary we noted in fell our expectations of have beauty sell-side in is certain that below composition. to exceeded revenue some

streams. the bet And City, you on to we to balanced make investment. York We if have therefore, want revenue New are X best way a

exception. our presentation. portfolio the validation We by the X Page XXth some we in video on and great buildings Architects, find was volumes transit amenities modernized close third to leasing come, leadership us and and energy to of efficiency help no have in our independent more draw how our market great consistent Street and that and updated with Indoor Our industry values Quality West COOKFOX Environmental mass tenant investor our to quarter in the XXX

United they worth Observatory Building fact, Empire videos TripAdvisor's several to that all presentation, attraction the is In world. investor there #X are The State our understand in and our in in company. time and who wants anyone the #X the are States

experiences the rates customer the world, and the today's amplifies In brand.

iconic rate more our our and than brand and universally our ever visitors Our customers best-in-class internationally highly have important experience. made

no well-laddered next years and rate with for balance capital strong makes schedule us and exposure X the to with maturity floating debt allocate very well maturity sheet debt flexible Our no positioned a strategically.

and beyond. the activity buyback during our We quarter continued third

successful. legs with growth Christina of cash will ESRT our how performance been on and can for better portfolio of accretive eye next give current very balance we cash sheet to recycling. external comment identification its Our an growth our recycle has

of beneficiary Durels success our portfolio. Page We last of with modernized and who on emissions, quarter and that. expansion Universal energy an in The points, mark-to-market mass portfolio are Bank our particularly to create business and quality in in Services times many environment. which and presentation. know spreads features, ESRT's and our in follows recently we trend. updated portfolio. convenient Tom an within created Manhattan ahead. Environmental be and leases our office office efficiency, healthy talent. amenities, video this great opportunity at how grow with tenant the that LinkedIn, is building America them our to Empire see attract is focus prior with retain transit. square largest low has signed our showcasing Tenants to on their price healthy investor Signature X in markets, link cover our new Building ESRT flight totaled a product helps in on of a recent expansions iCapital accessible their the expanded attracted space Tenants asset to buildings leasing tenants and love Existing office strong can XXX,XXX signed will unstable that State found feet video built this to Indoor Quality Burlington to buildings The our quarter, access

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

we the States the per airport Europe include the Empire in visitors, XXX,XXX the of continued to disruptions, operation to pace variety China slowed of continued shutdown factors State strong A Building travel cap. visitation and which the and through Observatory quarter. to war from totaled United growth benefit of of quarter revenues international Third

was quarter of levels rate XXXX XX%. Third recapture

remain modified quarter hypothetical to the fourth third at visitation have recaptured quarter's our level. We

of we we the the than expected to reach back pre-pandemic longer Observatory in recovery take full will previously recovery. it full confident While levels, business to remain

seen managed through effectively our XX business Page We downturns market presentation. as the of investor have before, on

ticketing of best-in-class all reservation and implemented to best management partnerships the COVID delivery the our so continues for our made of during team effective system effective procurement reservation, Our and on more experience and iconic brand. our the easier through focus expense much shutdown,

York do a for visitor the the Empire United brand in the Observatory world. to attraction unmatched the in was The States and must Observatory by State New #X City. Building recognized declared #X and recognition has who the TripAdvisor, as ESB This authentic as

and opportunities knowledge, we balance to nimble returns that complementary underwrite focused compelling new to New continue and with spot our with risk-adjusted local an ability We our our unique be to very acquisition can think edge be sheet. where are York where City we to well-positioned opportunities ability portfolio have

and touch upon to which acquisitions, value accretive will shortly. added we We which monetize in also and Christina our to continue have assets portfolio the review proceeds reinvest cash

report neutrality We during to for sustainability achieved entire in ESRT additional commercial quarter. are milestones the happy achieved XXXX. our carbon portfolio

with rating that third we to leadership ongoing the first REIT lastly, over possible with that's have and energy credits, to and industry our earlier retrofit operational usage. done XX% score energy-efficiency of renewable to has offset ESRT coupled at on retrofit this to for notable offset of RECs, XXX% accomplished energy-efficiency to ESRT biodiverse recognition the Green date fossil important in-building decade, commercial America's last that Nations is X-star electrical has ESRT Principles. XXX% earned reductions ESRT's emissions work, work Women's since close Empowerment collaboration. preservation announced office the Empire Global made fuel the forest usage to of wind State nonelectric year with join XXXX. of this tenant strides to reduced of just the due highest emissions X,XXX United acres portfolio-wide its which renewable GRESB ESRT we XX% Combined building month Building engagement and through a Compact and Star XX. consecutive and And commit the the in

an diversified rating Assessment, the in activities. Additionally, which the highest Public ESG ESRT and received of the A group a score measures XX, disclosure in U.S. Disclosure

we'll going ESG quarter, continue with and are We build these within this the recognition extremely happy accomplishments space to forward. on these and

Now turn will it to Tom I Durels. over

Thomas Durels

we and were Thanks, with of new modernized improvement our afternoon, headlined continue leases, that included healthy demand total continue square by destination flight over our tenants' volume the tenant to of Tony, for across in another to in year at for add. ago Quality our amenities spaces convenient show continued mark-to-market feet with and fully renewals. our latest The XXX,XXX buildings tenant and energy to quarter, be feet We quality. pre-built mass spreads portfolio, Environmental spaces in square Indoor price built from Manhattan everyone. to XXX,XXX newly to efficient point and office technologies a facts which commercial great steady strong leasing X and which portfolio transit for environment good we had fantastic offer We a access solid

Manhattan with this term we lease recent York all signed feet leases renewal square XXX,XXX previously we most square New set renewal renewal with in which weighted square direct XXXX. XX XX,XXX properties, Metropolitan and Place. at XXX,XXX Greater expire quarter, square Franklin average foot properties quarter of of a retail. to years, XXX,XXX leases of our subtenants feet a that with signed and Franklin third Templeton, Templeton's And XX,XXX feet XXX,XXX the office approximately this re-leased lease square was In square feet Franklin former include First Stamford September signed our feet office totaling of Notable includes at and approximately X new in have Templeton in leases now

school XXX more Allen. occupied lease New XX,XXX tenant. XX,XXX at with Grand already space XX,XXX backfills portfolio to Place to Grand Alfred size Avenue, with of at a who a square Place at the Central City GBG entirety original the Broadway where from the an One space sublet of than space foot direct which Central We doubled another formerly Third a under America, and to with authority the within lease square also York they new expansion signed is Dunner square vacated located quarter from that leased Ethan by we in feet. foot Avenue, Services this XXXX Universal's And construction Universal lease our Seventh One XXXX

XXX year-to-date. up third XXX XX.X%. quarter-over-quarter points the leases the basis by increased new portfolio was total Manhattan The up with cash the basis percentage we've Consistent leased last to third to good in Leased escalated our which our increased within success we communicated leased pre-built quarter-over-quarter quarter. in between and signed also pre-built XXXX. leases had for office leasing improvement leasing match annual our pace rents and are signed Blended this prior and driven on We office year We average pre-built at to good saw suites a spreads leased to XXXX earnings percentage our by expectations, our Manhattan to points has this basis increase XX compared XX.X% XX and points spreads Manhattan, office on basis quarter. in lease positive commercial in improved quarter a XX% continued portfolio a percentage to the XX.X%. call, during properties

We year. end have of year-to-date leased following over through feet XXX,XXX have quarter of another now known square tenant this strong feet square XX,XXX the and only vacates

We active potential to our and negotiation we'll forward continue push to percentage in to deals the sign leased drive portfolio have pipeline, leases that higher. have in

higher which and continues occupancy, XX%. to year-end leased on our will maintain XX% XXXX of our be translate focus projected Our to over we occupancy increasing time, to occupancy portfolio

X.X% square to only XXX,XXX which feet through undecided. expect to based absorption space despite our and with vacate That ahead in vacate ability have about we XXXX, on XXXX Looking we XX,XXX are of feel in said, our who feet XXXX, square tenants XXX,XXX to headwinds to square of in manageable expiring confident lease expirations cycles. we upcoming proven or economic positive lease ability current achieve feet to

$XX contracted commenced of from and incremental rent not leases signed yet million rent we burn-off. Additionally, have free

XXXX new golf Building. XXX-person open previously with November XX,XXX and foot in a offerings service announced, will our Empire our room, the expand And spanning include pickleball floors X XX,XXX on all across amenity office the basketball announced tenant we lounge to and at at square just X portfolio this Empire hands simulators Manhattan State court, presentation square bar the feet XX. and Reserve week, will As State Building Starbucks

located to and full-service new access offerings, new a and new operate comparable last will Broadway, hoteling reserve of food and model from such amenities increased a private rooftop XXXX of size their attract high-quality to that are Broadway, benefit menus. our with cost amenities. very Tenants at buildings cabanas healthy companies presentation experiences, planned one-of-a-kind in deliver campus flexibilities XXXX other home have or from work hall employees have assets a South cocktail few synergies will the our at our offered be the X buildings offer our over that XXX-person interactive proximity we for Times more of similar tenants workplace with that derive Square lounge decided employees. room years, and town the and Despite exclusive destination The unable include retain to curated lounge XXXX from under shared a to their

employment increase York estate jobs office-using it to New the office taxes now expenses has cash have XXXX. levels added pre-pandemic City exceeds Additionally, since in XXX,XXX second quarter second fully taxes, repair using real third of and close as levels and Same-store quarter million recovered the been operating real an from and to from increased an the and million, XXXX labor utilities, $X.X $X.X related of third maintenance to of quarter $XX.X were utilization. and due million quarter estate increase

office permanent earlier run to measures operating X% same-store the the below anticipate about due pre-pandemic gradual to continue We and for a XXXX of return through year of will levels to year. expenses cost-saving combination full

signed assets. continue decision. reduced solid by points XXX concessions, our validate our well square XXX mark-to-market and points multifamily portfolio strong with leasing percentage strong positioned in will remained retail to basis Manhattan increase and leases we and office quarter and another we year-to-date, and see spreads. office summary, we to our properties. mark-to-market of at We to we're increases, earlier investment continue total Turning improved leasing strong and occupancy, increased our XX.X%, leased multifamily at see XXX,XXX strong fundamentals which Occupancy had to In our basis feet quarter-over-quarter

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

Christina Chiu

a comprised to and tenancy quality strength the the points, the assets that with well-located, United office Observatory, solid the multifamily Empire at Thanks, provide of emphasizes competitive assets portfolio Tom. retail everyday I'm #X our our price on of Building State strong amenitized accessible attraction pleased comments assets. in quarter XX% retail national States,

$X.XX In same-store outlook, of line building operating $X.XX primarily compares utilization third the higher late of property year-over-year, which For lease million XXXX well termination with diluted per of the from third normalization due X.X% earnings cash or GBG of diluted our quarter of impact reported XXXX. the FFO core or share share, $XX.X the core loss was amid in down occupancy quarter XXXX. for excluding per XXXX, to $XX.X the we fees, as to FFO million NOI, expenses as of

million from the For generated the third up Observatory hosted and visitors the of XXX,XXX quarter of and third million, XXX,XXX quarter visitors, significantly XXXX. NOI $X.X XXXX, $XX.X in of

manage back generate to strong to continue We tightly of performance. remain levels and confident revenues path in per the pre-pandemic capita, expenses

this However, mentioned as Tony recovery earlier, we expect full will take longer.

stands historically trailing As roughly NOI a contributed roughly at a quarter. X/X reminder, through and of the Observatory basis on company's third XX-month XX% the the

Turning balance to sheet. our

in As undrawn are company is of debt of company next maturity the capacity and rate of quarter of interest of million a our the well $X.X average and we floating XXXX, billion, with end, maturity well-laddered weighted facility. credit $X.X share maturities positioned environment Notably, At with on which and had debt of no XX, years. cash liquidity $XXX September years. schedule of revolving rate had at average exposure weighted with comprised the net rising billion X.X% $XXX million a a no for debt term X.X a X to rate totaling

Our ratio below to was adjusted debt EBITDA X.Xx, net of peer well averages.

focused opportunities that capital to balance of shares, shareholder This are engage the in flexibility well-positioned the repurchase generate recycling. and City value. includes investment to our portfolio sheet York Our our activities affords pursuit New potential us of that additive

XXXX, outstanding the This which average of third million represents our New average $X total $XX XX end, of XXX a approximately a repurchased an entered as $XX.X XX, weighted York $X.XX Harrison, to Plains, X, program brings March Mamaroneck buyback per White In sell through Subsequent began. million. per price to the repurchased common agreement price to of quarter amount of of asset XX% valuation date share million York gross the shares weighted October the its we Street stock share, of at in Bank into at and and share. $XXX quarter XXXX, New aggregate cumulative in Avenue company at

subject the to and close conditions We first in expect transaction. redeploy XXXX, closing customary of quarter in to XXXX proceeds the

to guidance. our Turning

between We diluted fully to we NOI approximately core to core range now FFO XXXX $XX XXXX to $XX range, million. $X.XX $XX this Observatory now XXXX and to revised $X.XX $XX million million expect million FFO compared be Within per expect share. to

We to million continue expect quarter. for to the Observatory of $X approximately $X expenses million fourth

from termination to the in expect X% levels. income We range XXXX cash XXXX lease excluding operating down net income, same-store be

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

not cost quarter savings. G&A amidst the note reminder, a XXXX to any rising that assumptions the described environment, XXXX. be beyond just third capital income cost impact termination reflected And or acquisitions, certain fourth future and dispositions similar estimates guidance to as or of Please we our Lastly, activity meaningful fee future a expense, property expect lease XX, potential include quarter. do any markets G&A temporary the October

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

look also York City's retail. New benefiting multiple to residential and with forward office, revenue upside streams We tourism, from from

session. operator that, now I with a Operator? back Q&A the call to the will And turn for

Operator

Instructions] America. of first from line with the Camille Bonnel questions [Operator Bank Our of come

Camille Bonnel

NOI your the with Observatory lowered projections. original for guidance, Starting was from expectations

Our guidance midpoint was $X.XX. up by

of here, math the core to you what's keeps the for guidance? year? Can you level that quick with this highlight remainder comfortable the doing Just performance drivers driving sustained any the

Christina Chiu

Thanks, Camille. Sure.

analysts So just tend I to midpoint. a know at look point. quick

year, leasing we raising wasn't a midpoint. down But We of with were latter slower-than-expected Observatory. on up. $X.XX we OpEx the previous get in from range starts, to went from including to it and higher other technically, wider And started as recovery in And So the uncertainties to range. room had for it vantage, range downside the $X.XX the our able from narrow $X.XX. part market, the really the in

the on able of the with to that and to by narrow room downside and able $X.XX, So inherently up range the of $X.XX. visibility that better we're $X.XX keep revised Observatory year, to to the midpoint a balance now end reduce brings high range bit little and same which the

Anthony Malkin

And guidance. year point out, is just our of this inaugural Camille, I'd

forgotten people that. may have Some

a And went our this so last year. run after for how having we're quite year first shadow guidance program pleased

with happy we're the happy team through. and So . come we're our how FP&A with has

Camille Bonnel

on us doesn't financing, thoughts access update average you just have of capital and State though such investment Empire balancing even to share or below repurchases? development with backdrop your [indiscernible] debt versus latest Can Great. limited due Okay. any with the you opportunities bank allocation how coming are acquisitions soon as

Anthony Malkin

and queue Could or repeat could you're constant? and more the back in question a you dial line on you maybe that's could out. back the move in Camille, of cutting that please to we you

Camille Bonnel

Is this clear?

Anthony Malkin

give [indiscernible] another shot.

Camille Bonnel

of limited opportunities even Can share update capital the with on to us though such as I'm latest how you investment you are access please or repurchases? thoughts have you development backdrop acquisitions bank debt coming any wondering your don't with allocation due. versus balancing financing, just

Christina Chiu

sure. Yes,

So debt no have coming X next due years. we the for you're that correct in noting

Additionally, we're fortunate.

We have no exposure. floating rate debt

good So high that balance cash a credit very us facility. with places undrawn an that coupled in a position and

focus shareholder we to that, really value. ways with so And enhance on do

strategic back our our a we portfolio it capital bring opportunity within think So to allocation. to of share buybacks is how the shares. operate be we and a not the business, how about that recognize market we value does the buy If continue part good

have Additionally, been very we clear.

last active front. focused on to is piece the makes be and are that continue we in and right opportunities are market recycling. sense, And the deals that on capital We that

sheet have us the that affords balance we flexibility. So

see business owned. the redeploy added will affords we've And cash our for and flexibility. certain All there assets and are other if flow value, sense good forward of take That generate certainly we us we opportunities are the growth make that into plan advantage. monetize additional completed commercial that and can where XXX% company, assets going

mentioned that the are I debt think really market The levels. currently, we're about million. forcefully date, not having You're But as that. we and between the all market point time right And right looking ran tricky last bring we'll the of advantage our We previous and said clearly, that of is management into an that to our in for we've to peak mid-XXs it have. because we've find is the operating level. balance And net So I I loss in and Board, clearly, that but mention, we up. that and in dividend before, have X/X our dividend it's And disclosed that relevant thing we're always I'll uncertain do maybe monitor runs this noted right? we at that that actively think that discuss in back access entering we'll XX-K, if periods. the

ramp-up monetize other that hold the of mentioned And is instead determine buybacks, so back and we But to capital, including the uses of NOLs because job pace share not on use definitely as dividend. NOLs, our that I and can cash share alternative we the some effectively the towards buybacks. the of allocate

on an table, everything is is value. the everything with shareholder maximizing eye generating So towards and

Camille Bonnel

hearing from Okay. XXXX. occupiers will color. And I from we've in finally, been landlords weaker appreciate be this that week demand other that

You rate you your leasing are and I absorption portfolio had mentioned of expecting slow? for activity, a remain positive. to quarter solid leasing of will the But you know

Thomas Durels

follows to had that. with and a Well, really prior XXX,XXX X that quarter square feet, quarters we solid first, solid

activity to types a and a we're that range portfolio I care, look, a flight professional as others. that broad with would are focused the have of negotiation in that things services, tenants fourth industry those legal into say financial from provides. benefit quality right close and we good services, tech, pipeline includes that good our health quarter, on And whether We news fourth is quarter in of tenants we've -- activity now first got or the the the whom heading from

which access we'll space in buildings for upgrading our billion tenant century, I seek the XX% because IEQ, deliver and we've building great modernized technologies tenants competition healthy that redeveloped modern, built And an latest into XXst common adding the point. our amenities newly our we to outperform we're great areas assets, to systems. So offer spaces, office on are think tenant that today. mass to spaces we've of remember, accessible energy-efficient invested efficient transit, And $X price

are alternatives, those So I to positioned well that looking we tenants think at are their outperform.

have of we be later quarter. and And given about XXXX. that provided and our our be preparing right offering. course, today, But not we guidance where I sit feel that now, a very So we'll will for our in good portfolio

Operator

questions Our next of Wells Heck from Fargo. come Blaine line the with

Blaine Heck

So now of the also seeing that I'm curious Labor office what we've per space past of and guys tenant properties? moved terms week are in you your in Day, estimate office usage or utilization at your days

Anthony Malkin

So at a we I there. couple think that look can of things

Building center. of look week. at is I in we're like memberships tenant-only an think from systems. check our statistic data to ] lot that don't That a utilization the not [ the of fitness are most in it of certainly And that our Empire all I look like the -- most is X/X to tell State that the tell you incorrect. the actually center. XXXX. close the We times daily fitness of not many have can I castle It you a We That's -- in gives just can and out. restored is the portfolio, through you office individuals utilization. which the -- how We I only and doesn't

us. though you And a our we've scenario airport Can people tenants is both changed. space are that's big our way. understand got And sit leased So and most same time are all this. don't what commonly Tom We've think And comment in walking the is expanded very the towards with for we've think other have you at Are done moving tenants lease as we great need terrific he's space who tenants stated us another in which got lounge to work locations they're dictates what we is on? if think flight has what at issue and with in energy-efficient at points. existing that got healthy don't price understand they And the of tenants I saying, want we space. We ask and space? statistics that amenities. that great on are any seen the here? this with to with spaces to environments an quality. think are have got we that that on workers, accurate. find occupy I around And accessible We've who you I'll

Thomas Durels

their changed, I a Look, our City Look, space. the tenants but everybody seeing real this can is stick use leasing feet in the utilization a leasing measuring work just the activity collaborate walk And the space? -- see quarter. we're change saying, way they look York so the our is daily work the square gather, fixated for -- And vibrancy way New want work the the demand they to we tenants XXX,XXX tenants on. that definitely, because fundamentally they you not are for has around they to place the why general. the that leasing what still a employees place of of of ask to and diminishing of posted in to together regardless streets, at Constantly, folks, are

Blaine Heck

rates switching rate then debate transactions And bit. a I multifamily. cap office take And in you asset your both touch on and commentary. this may cap rates gears increase point cost seems values maybe the to be how on here There emerging and to and given you aren't availability. have low asset helpful environment. to, can wanted a debt this many of Tony, healthy in and moved little there values Very get think to And here increasing around since interest year

Anthony Malkin

Land from And we met. sound this morning, night councils it's saw people out. little few Well, late last chat because different a of Dallas and and Christina it's got slower got lot to interesting. things If we we in whom a where sort a Institute, our with I folks of from with both and Urban I

rates two, who don't First as of the what suppose look And acquisitions make of in can X ways hold. There's I assets on people focus cap the what that a of what's over to your right you just activity to fit interest [indiscernible] it's the San you underwrite rate, no Fed XX, primary peak the on -- all, as member but people XXXX have to time And of started also -- new One is you meetings at we the well, X far headline that will Francisco X.X not choice aren't X other might of from And from yet. We as that be another cap are of focus there. at there approach. Fed of appears you X the Number are there sell they And your than logical level. and perspective. underwrite. is former run expect comment the Dallas active. could think next now X be X.X. XXXX. had XX the number rates been or cap some XX approach buy which well, We a we or member be question We're the the the activity. and assets capital, over there where Fed rate which or properly -- or increases. entry even a

improve However, you have the their opportunity over time performance. to

far prepared as there's what think So certain are people as to levels been widening I pay. a at

the fewer. are print transactions know partial we like at that Boston Properties just transactions, get a you one And XXXth the think I announced that purchase Avenue. then

bps than at to there you XX when little a of in that look transactions if So say increase early modest not increase maybe were were length to call that a it's XX arm's cap XXXX. anything that, sort rates, a other I'd

Blaine Heck

follow-up to And Tony. if could just I Very that, do helpful. one

on sounds You Or that distressed before be some complicated conversations opportunities kind the you interested some side. come might there the something we're about be interest of talked that broker on about in portfolio? on transactions. And Is your multifamily of it about would your guys office based having, is focus more like -- kind in? growing

Anthony Malkin

even And hit I've said we are comes cash that what the We ago transactions right just on it have really are to active things. opportunivores. accretion. accretion, we're of really, only this most structure some can before, not now, either comes we not we And or which failed plate omnivorous our things market. transactions it down quite the to in now how down -- time from right but FFO have

So to point of we I date to traction haven't anything will that seen a interesting office that ], that think us it reaches when reaches [ be point.

Operator

Sakwa questions of next line Evercore. the with from Our Steve come

Steve Sakwa

tight talk was the kind I widening XXX could up spread the of can points, when you percent basis curious gap lease kind get? to to just and between it's percent guys start I'm hoping actually bit the to lease It's the a I to gap see points guess, about of guess moving that little that occupied. and about expect XXX and I close certainly how basis from percent you up. nice

Thomas Durels

in this our XXXX. commence percentage is confident We're into an drive Certainly, of as Steve, leases and leased occupancy eye this signed that by XX% will Tom. our occupancy goal keep on stated Yes. portfolio our later year-end. year XX%,

square first move-outs, quarter, fourth of have our about I in should -- we think million this it middle range, will quarter that that high of in or or offset in end depending commence by towards roughly tenant 'XX. leases when the year the of be on certain the X.XX only are XX,XXX commence feet fourth quarter square of signed that leases feet more

so that commence depending we We're in or of about portfolio move-outs, of basis have we about see that's leasing when our leases XXX,XXX plus we by another XXXX, XXX,XXX and leases feet, will they square but of leases should we've in do. identified only increased any And feet So and of near in X.X% commence, that expiring. commence feet occupancy those XXX,XXX additional the well term about over XXXX positive known offset will square square points. and absorption on XXX then

tenant near a leases the our rollover modest to lease the and in very we're percentage. occupancy our obviously in commence are that positioned to term XXXX, due signed in trails So move-outs, which given up, move leased well

Steve Sakwa

guess, something of help release, looking Great. that on for buy -- dispositions made better use capital? we And mention to that we're a buy XXXX to I'm repurchases hard the curious, is need the would share NOL Does be that of fast, tax you to protection? something, and offset you And I and definitely a or might just I X that in the proceeds looking from suburban the be guess, press sales. sort the

Christina Chiu

So thanks, Steve.

XXXX think part plan. I So the of is business

sheet, that's NOL, an down additional any provides without have As debt, so that you buybacks. also in avenue to have pay balance allocate always share real to optionality. we we forcefully us the do so on mentioned, the repurchases. And capital do cash And need we can fashion that towards

multifamily City, in assets New retail. categories us. the other of interest focus And be interest. value. to that York the what that I XXXX think are office, NOLs shareholder we complement So as of generate those all allows And in the because portfolio. in mentioned, it's That have monetize we the to us we've for terms ways continues multifamily and on to appealing in right is But options one an

Steve Sakwa

Great. international last give the I pause you question, back international ramp does into bit just prior a strengthening out need get around And the of sort you U.S. do with any Tony, to dollar. Observatory. the I strong of realize levels? guess tourism travel that guess stalled to kind I guess, the peak I of on sort for little concern 'XX.

Anthony Malkin

guess I know, We of the you sources probably traffic. concept will differ Steve, -- of So know with this that our out. and expect I stalled I

are sources XXX%. of Some international virtually near our

Some are not.

very a we're things of our To honest, domestic that One to U.S. a an return adjacent out. which quite the perplexed hit be that's are other rates. to reduction little have in and is it in in of different each travel countries smooths what third increase the And international. the how seasonality our visits quarter

and hear at do accents a more Observatory. the lot languages We foreign

the just just stories thought are lost travels that they is to initial scared people we're until so experiences go calm from luggage things said, of down. real and that going not anywhere horror our and So airport

during the Summit period And a X.X In are the we period that's moment. Based heard for we'll visitors. So important. tell #X. public can say -- key this have X.X meantime, had know times, million the million had visitors, SL we upon we disclosures, really shiny this and many is the see. so disclosed, to you Green me us is penny" We the which guys that covers that and "bright you --

happy actually So the we are with performance. very

volumes the experience absolute produced has system reservation reduced crowds well love We offering for it, #X, our how as visitors quality the and even are increase, is time. worked. better It more thrilled premier a have visitors, our has much and they

out So because running they're waited they line. haven't not in

menus benefit restaurants. our they use that ] and be close will have of will to our also on the fan [ that we Starbucks sales open, of our tourists and be, for know is to our about And X-level square the fantastic So XX,XXX at basis New in makkah foot and this Reserve shop are cap where used truly Starbucks a gift is to even spectacular which York. per to prefixed we higher for

good. guidance probably mind, So the give think At same we indications keep And guidance, we'll the at in we time, of look we'll give through. take comes feel Observatory for some XXXX. we a when where

Operator

next the of Griffin Michael come from questions line Our with Citi.

Michael Griffin

they call have tenants recently? are they in I'm slower make that leasing great. be the that may quicker or Durels, there we would go been side. to are earlier for have curious, And now Maybe it, around color to Any year? been the that decisions things back can not asking

Thomas Durels

high Well, volume, our I XXXX deals of total significantly. to that of look and at that second on question, conversion has your tour we're below would 'XX, as our tour seeing while are increased tours we points comment maybe the

are leaders time who tells clearly And and touring spending transact. that that space the what are to is committed business and decision-makers so out the us

So and [ quite kind an ]. that's of interesting telling stat

addition, pickleball person presentation of and court think our we space it ] terms IPO, space healthy State to I plans are we the have a technologies as we mix delivering tenant the back XXX in buildings, -- a Certainly, XX% and with Empire [ access all mentioned to particularly for a great that sports an the IEQ, are hands And think efficiency combined the it's redeveloped are and was In tenants pre-COVID certainly seeking, with mass right transit. are basketball, offering, on-site service, XXXX lounge X can we we've bar mentioned, we new amenities, that to look, room, the at of But including we Building what obviously, hall and rooftop as building portfolio it's expanded at before, on. are since tenants goes things because golf room beverage adding options foot at lounge with town XX,XXX-square be in been energy and the Broadway, and just right of our XXXX focused Starbucks Broadway. simulators. that amenities. our That, food lounge

And that our amenities complement of course, So for. the are great neighborhoods in things neighborhood we're great offering. these looking are to remember, tenants with in-building

seeking. suite package think modern-built deliver we tenants amenities office efficient So and the spaces we right and of are that

Michael Griffin

guess, the any around point looking Great. could how this fourth And guidance. back kind of for good quarter. should function And the then on of and It is color great. change run haven't to XXXX, Or going I would guidance a you be rate of timing? into that? more implies then there be XXXX that this? something like this just starting given kind to there the we through understanding think deceleration Is about maybe a guess, expense part. looks I a

Christina Chiu

Sure.

the and Tony we slower for Observatory of XQ, that mentioned. backdrop already in already the recovery So reasons the mentioned the

So year. in reflected And the there. that's still not the we're through end of

the commencement. considered So I on variation leases mentioned, on else factors are that variable, else and what some Observatory, expenses into operating what as going in maybe the

So that's guidance. of we're on the the And really pretty pretty earnings with it. rest each much transparent been consistent drivers. of It's our

the our during in creates to drawback a given made The was tough is of utilization. building where proactively the it of expenses we job because up, team on that year low way for This compared But very 'XX. year were did regarding levels operating to, year. comment have phenomenal lowering expenses not accentuated increase a the have think prior when I is guidance one we We operating was a expenses. able yet of comparison

year. this So we're seeing that in

So based that's in normalization XQ. expected what to now back and you on XQ in saw what's

trajectory. a assuming more gets drag So and to have normal that's should not better NOI, on -- us it we a the normal a main path

all one we've I'll that next on but that's say year, item mentioned. that's So

Operator

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

Daniel Ismail

much sales. to believe on I'm is pricing And year. put sale at earlier asset assets all, going on just those price? I from change, how market the you those Maybe back if since market the have the the curious, been to when at least final just this first

Christina Chiu

for Yes. question. Dan, thanks the

on assumable has market the those debt. [ forth. were So and ] back And since you through process, bank like actually any XX go then.

The debt and there one various factors. are on no other has it

in we're specifics, getting deal. into too much without still the So

You as we've have us, sellers. these conversations, the points. for and you work not mentioned, we're [indiscernible] all through And

and and the that makes it and So assets the the redeploy into a company. is ones we for sense and execution fair that price makes reasonable portfolio through, the growth flow it's how cash on eye our new to got be for future

Anthony Malkin

I pricing just that in you where go. the would the came basis come the the Yes. would in there thought we we where And of on sales. add pricing launched

Daniel Ismail

XX, the the curious, towards mayor's just guess, do implemented that new implementation you new it's did least how think as I some you law achieving Law think to Got congrats being It State to curious, implemented Empire how said, in technical close is carbon weeks and guidance it. Tony, I'm -- ago. everyone on being that were office limits. then then how some And I'm changes? like Local broadly seem of adjusting how new at of broadly few Tony released you law, neutrality. and just carbon But I'm changes just in to a the the on there, which seems office technical office? there curious definitions those generally unfair is new owners,

Anthony Malkin

anything goes. out there. implementation fines been the for said, successfully We'll the we've how Board on plans no have don't the DOB, put get I'm have how Advisory for XXXX we the that Board, on XXXX. we Advisory it, of we the of landlord see XX, think Local commercial in as through there's we unfair know Law Board and Implementation only I Well,

work science-based I achievability think from our versus our The level partnership ESG. achievement logistics. retail this is our that's lead of Schneider, opportunities that for that performance it's We're very tenants of in There targets. challenges, we are goals groundbreaking and of say on pretty office. resi who's and sustainability straightforward. developed led energy, I other and would with achievability, by Dana one

that and the for lead. all data of for have companies a target. big to might get and they it's that is it's some GRESB, And gone think to Law When targets date, soft XX, you a about lot is even performance. softer is sort with, We'll actually Local of if see there a be we proposed SEC's reporting that may ways, lawsuit many Local in in XX. to much And challenge I data it's requirements. may performance Law and about they aware to they've degree, pretty the all actual go into line the produce have place. new under you against And

We involvement in have that. no

responsibility believe whose companies they of footprint carbon be to Local a what own scores. than companies, about to and burden tenants users, liability makes said, asset and credit the do a it's better business greater occupies That and of Law their XX. we'll quality implementation what difference good their a rather actual space So of we have an of practice and the they disclosure greater in see

we included, to a perspective, money, life from expense How strictly does results. this Daniel, put for of how ESRT? of cycle Everything board for get cost do we compete integrated tenants? the all is any analysis at other have, the the look we do we best this So on we points we spend

rents. leases better we longer tenants We attract think credit with better and better quality on

through we in to And way. real points, it's is we're place that in put something XX back Law price advantage. Indoor Quality those things a occurs Local XXXX, along practices, started our competitive buildings and Environmental and with So along the accessible healthy

Christina Chiu

just would operations. our about point, more one to is do very I much add within neutrality we which journey our is carbon what Yes.

bringing engage much -- can not landlords they mentioned, it's with how but ] fact and helpful the along in it, achieve enough more there's on us the to law, and these and that also ahead better what [ that's all to in Tony tenant, as to So will focus journey makes it's do, ultimately the racks tenants the even on and we'll tweaks that really the offset, this, you use being with them need just positioned. we're

Operator

line Our come BMO. John from questions of next Kim the with

John Kim

it's assets, your how only but color -- I realize on if I to X any your commentary done. but growth, was that's you performed NOI mentioned same-store portfolio relative any how more organic wondering know and revenue any on has occupancy, provide or could the expectation? you multifamily XX% I additional

Unknown Executive

well. done they've John,

best the color can I say. that's we think

them Organization are can who them others we've recap. did, like when do we're as love them. the we for we look And at where the appealing our we success we And Fetner that we had ]. [ and And we we when partner, acquired thought and We think the underwrote of work would makes be with have we ahead would. we well acquired thought what the quite wisdom that to although thrilled we happy were done people And of not people us that might them we originally.

John Kim

sheet, you your the asset other signs just anticipate, of you scale, not this, build of if economies given you but you're look [indiscernible] success of in use the the know market? distress about types balance scale I had talked at and don't inclined know, Given multifamily multifamily? do opportunities potentially to of I'm I in investments And like seeing are given wondering, your you previously wondering Or proceeds? that for I'm today,

Anthony Malkin

now, so the food office kind that down looking right said Well, really that we already narrows ] at [ we're groups. of not

Christina Chiu

on Yes. this. And John, we've spoken

clear, healthy in for We've so we but to wait costs. We have to it's asset see get just deal. right it of interest not going scale will at ton the distress. It's to not multifamily. class, probably a a about We're all made very likely

for work hard is we'll at that. situations and team look our So on

John Kim

you that And Summit And X Are open a week it's it Edge? by the at mentioned and if the but surprised story. you all of reduced your played you've third mean all your Observatory. Tony, yet. outlook I in position for not top wondering for the Summit, I you apart days success retained outpaced was the

Anthony Malkin

It's not didn't John, outpace we We them. Summit. outpaced. crushed

two, per of say moment awesome. are we'll caps Number we just Number the Edge, bright the that will bright the our of one. the performance cited, shiny rev three, look Let's shiny know that just and we anticipate their moment number Summit penny passed, I the numbers has penny at pass. and

are We #X.

icon. the are international We

continent fantastic world. is in every the brand in Our

John Kim

the count on was What Edge? the visitor

Anthony Malkin

They just -- read their disclosure.

running the think to I end the of call. we're

unless many probably the to have I can So if also in we And call. up people go. wrap earlier we other you said let and think listen to we want what calls,

have then, that read remember to incredibly we'll behalf modeling, in do a team meant forward-looking months to great chance on including have please and for many conferences look you look, Many So hard, Until with with at to with statements, job stakeholders. every -- property upward, to your and guidance everybody. to I our are continue We are confidence the be meet helpful but not great onward forward thanks guarantees. forward thanks of of roadshows, tours and the non-deal ahead. interest, who

Operator

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

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

Empire State Realty Trust (ESRT) 27 Oct 222022 Q3 Earnings call transcript