ESRT - Earnings call 3 2023 | Empire State Realty Trust, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Empire State Realty Trust Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce Katy Malonoski, Vice President of Investor Relations. Thank you.

You may begin.

Katy Malonoski

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

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

such As of and EBITDA, The most statements we the as review same-store are FFO, non-GAAP statements the any core uncertainties, company's believe the discuss we in these President reconciliations now Chairman, comparable adjusted measures discussed listeners future. those measures State meaningful Realty our evaluating to definitions a They turn which the NOI, website.And cash directly more I and which over estimates. the may available will to current company's detailed and Tony are FFO, earnings in the Trust Malkin, assumes SEC.During performance. cause company's today. will modified release included Executive property forward-looking Empire and encourage EBITDA NOI, each the no GAAP to Chief the and supplemental forward-looking Officer. statements reminder, related on package, to filings and call those the measures, with represent to obligation call, actual management's in from risks are We to subject update in to today's results forward-looking differ financial discussions certain

Anthony Malkin

good afternoon and Katy, everyone. Thanks, to

quality a the market efforts today. tenants our to [ flight to is continue We destination ] for top-tier ESRT that educate

B not properties. are We

put continue We to to and board. of than better to points market range, of continue way no our our inform can capture we top We on tier to the price and accessible share. think are

energy-efficient nonunion are buildings the pleased come. report ESRT of in to third all the take distinguished to perform and and collaborative by brand were amenitized, for quarter quality position And of not performance a We we our a we predict a today's well-located, of an weather, that we arc team We strong a indoor did market. around built ahead to union with earnings environmental opportunities perform to storms in colleagues modernized, So built work. while certain positioned we in report XXXX.We and from advantage service cycles. the

the quarters and X X year-to-date. that of proceeds leasing feet that consecutive ever leasing is ESRT double-digit focused is our of than square FFO leased completed another leakage. positive positive We from spreads continues board.In We team another positive achieved through Your points million quarter, spreads, quarter dispositions spreads to transactions on quarter tax Observatory with came is XXX,XXX more feet, XXX% perform. of sales above on XXXX prior the in no recycle We third expectations. leasing of square a

of is best-in-class.ESRT complement diverse company, focused York a remains sheet we New X have value balance Our drivers City other well. and each that

portfolio and market is tier deepest segment. office our the the of Our targets that top

States Our attraction according #X that the the year. ranked in second Observatory the United TripAdvisor is consecutive to for

office our serves multifamily retail that traffic high foot as tenants platform. great growing and everyday a a Our amenity to

feet. our perspective, our environmental million delivered the amenities, and relationships Building volumes. we Manhattan Empire office the to their efficiency our State XXXX we value LinkedIn, of early quality at quarter.Tenants new our Empire Building. an X-level deliver today Durels Those to and square announce total points will in floor with XX we partnership floor the store locations our XX% in discuss X.XX third Starbucks to square modernized have square happy quarter with million thousand continue third State office great full feet, portfolio feet quarter, longer remarkable this in totals in indoor are and add of our that partnership Starbucks with in lease. one has of in expansion, and over constructive feet grown our brings consistent the in in square no just from portfolio IPO. to with million way leased entire Starbucks past with office in more sheet. new square We a of than our on We to expansion that million over top-tier where nearly the portfolio original the lease our full reflects is grew opened own by few increase this months. the tenant certainty their X.X partnership lobby ESRT's footprint leased And our end, the X.X basis over XXX installation retail a occupancy, which square XX,XXX building the leasing XXXX.As Put choose energy to with all late this driven balance started feet Tom another this LinkedIn X.X since the assets, Reserve XXXXs feet.We a

proves upon newly are destination of to have quality. already A built we Our made. investments a Class the the meets built office flight are for and leasing we success the market's successes ESRT's performance properties

We office of to big tenants balance a are we accessible future-ready, service points.Our makes today's the our tenant the in price demand market New environment. at difference sheet City and York segment in deepest

know the we Observatory with we get expenses, manage line consistent to The drive and with admissions forward NOI absolutely in to is look is deals in volumes in Candidly, experience. continues this have continue to perform in levels. #X We XXXX by have and exceeded times, through weekend and ranked the leasing Year-to-date, cycles. goal to Empire is what the XXXX have focused. row. September, State our well. shine.That always do, Observatory the attraction to The said to by draw sun the We we are that deals authentic the relative challenged we top times of a we year get provide experience, rainy weekends done to the best X% customer could comparable levels good City visitors growth for without X New where Observatory consecutive and said, met United second in and TripAdvisor unmatched States the is Building York XX%

is demonstrated financially at their assets. a will the that New can maintain new standards no advantage.Tenants stable flows XX think our Observatory REITs. balance amongst to reliable or sheet presentation. allocate capital doubt look high-quality as our simple. who competitive of it with all Slide is Our cash landlord sheet as York strongest There's share balance City ESRT's be And are office is investor we structure the We recycling, capital acquisitions repurchases. capital partner a best, on

is quantitative is credit we to against integrated that the criticism in than dispositions purchased participants frothing Just we $X.X this funded in make. portfolio. a and York City Long and decision sustainability years that been of the decade has the this know more billion for call the current suburban decade leader every or property, last New within for primarily we to sustainability by have the during nearly in diversified our time bought crunch.ESRT focused so, assets into fact led residential nothing of XX months build out

entire listed and this XXX and leadership ranked each more Our was well awarded and matters be we group performance Year #X, sustainability New peer achieved And amongst within year.The overall Earth We accomplishments companies say the shareholders. tenants, Building York the XXXX the BOMA Americas X a company. the for we ready. and for cornerstone Star the first, building State competitive score Building fourth healthy first consecutive Rating industry United all more of possible and one the tremendous #X. award, to are the There GRESB year lenders ESRT's Grand is the Pinnacle highest future as can and when most BOMA only States. GRESB Award the as Empire just in our

over tickets and Observatory, lease balance to competitive us peers. achieve sustainability ESRT and the Our the with economic priorities manage provides sustainability delivers work returns unchanged: goals. a sell databased our space are advantage sheet our

ESRT more through value.While enhance of actions quarter, advantage to points ways created in position to prepared X a disruptions demonstrated we on together to capital the take commitment play We is opportunities the work are act. dislocations. market believe through City, shareholder our State it; This offer and we and Building Office, Empire and in with York multifamily. New we retail we challenges, board. These Observatory,

year. to ESRT detail accomplish plan future-ready is balance and of and positioned and these well Tom value Tom? our and provide is more Christina for to York the we the how will progress shareholders. drive New in on goals City resilient,

Thomas Durels

feet seventh square everyone. Thanks, had represents retail Tony, our based good spreads our portfolio. office consecutive at rent leased of leasing positive and our afternoon, quarter XXX,XXX mark-to-market quarter XX% spreads We mark-to-market for our we strong total percentage lease portfolio. another office with commercial portfolio in This quarter positive straight and in and our on with ninth Manhattan absorption positive which achieved for

XX-year to which [ at basis XXX,XXX environmental to relocate expanded XXX,XXX look leased brings attract points office by at best-in-class the of a food square our with leases continue XXX,XXX our XX services basis year floors last to ] and the for transit renew the third demand well in Manhattan will square include since and growing the also a end the Empire signed point.We quarter which high-quality lease modernized, feet. at continue users.Notable to signed In tenants feet in compared our to our footage to an third of existing bring square portfolio, LinkedIn's to total and LinkedIn from lease feet from square We which leases square in Building product foot third XXX Manhattan rights office Sushi XXX office upon has new Empire existing leases, amenities include the ago and great increased square to Building. an LinkedIn of points indoor to and the basis floors quarter, and quarter, Broadway support for quality amenity and which retail XXXX signed office And is quarter, compared increased square base in amenitized, exciting XXX,XXX State who new located portfolio, is sustainability the we neighborhood tenants its tower properties. XXX,XXX a in XXXX. Restaurant feet, mass price we XX,XXX feet Broadway, acted has be XX.X% State in where a accessible a lease percentage we up with points at that near increased

the expansions, lease office XX-year service exceptional where Starbucks provide for not work to is excellent Our track is XX,XXX a just record of State is including it tenant Building. expansion The State tenants, recent floor team by feet our retention this to X-story by Starbucks Reserve. office this full to entire most is a of result and square LinkedIn effort, our where results.We with we located City operates only company signed Empire the Building the at York New currently Empire and

Starbucks installation And Starbucks have build. costs, depending both our costs space, cost installation we portfolio. prior for mentioned, office continues equivalent Tony add XX floor the and long-standing the that types As we full contribution. leases on the leased. by include Long of turnkey reported variety to square incurred to TI value typically for across prebuilt to pre-boot installation leases quarter space or term, our to feet most suites already average vary totaled tenant partnership with tenant signed portfolio.Our XX,XXX weighted And

signed per close feet fourth the an square new the ] floor XX.X foot square note year-end, in portfolio. it of years, last average of shown allowance now commenced XX,XXX an past TI feet new as commercial square Our State signed our vacated general an of floors is the square LinkedIn consistent entire for are XX this are same through third space full improvement TI which we and the with term will as-of-right have no approximately the the for foot over XXX,XXX of free of existing lease thing million leasing, Building. be in leases be rent offset was we incremental TI of relocation [ extended office used starting be contributed revenue square and quarter. for Year-to-date quarter. not the our our to an quarter signed per due by our West vacate will on tenant third additional will X.X about expect X by average the lease new rent of improvement Both and quarter, the third Starbucks that quarter, the for long-term lease expect transaction and we Against quarter, $XX and XX-year allowance with ahead full about historic years.One will includes within rent quarter and XXX,XXX higher is the allowance mostly lease increase which the we from been costs free represent background, rent $XX occupy. supplemental, they and during Manhattan The leases we to foot, we several and to the than XXrd to signed be deals, our leases And LinkedIn that of the with floors Empire square prior $XX.XX with Elemis, throughout have Page foot, burn-off.Looking total were tenant L'Occitane have at years. quarter for terms.Following quarters XXXX, volume market in partially X/X cash consistent for X,XXX XXX represents the a leases the that they L'Occitane's free subsidiary that leased our several Street will not months third has that costs

expirations square past value ESRT feet to positioned every for we square with a of in are and We feet X,XXX to tenants unique leases our expire, set our in our XXX,XXX market, at average years, XXX,XXX best-in-class percentage a is new have and only vacates. manageable of there XXXX.In XXX of as space on leased which in the annual lease X today's proposition signed known the well offers XXXX square in Based about tier tier. are increase to price flight quality feet

of the Our segment price market. biggest tier represents the

demonstrated another our reflects average occupancy that fundamentals, have percentage XXX,XXX and spreads. We future reach to over are well-located ago quality, the modernized, in our will our office XX.X%. portfolio our portfolio by solid and basis we had attractive quarter and tenants is Manhattan points tier the square enhance that leasing is and top leasing of product improvements performance.So positive from a strong of retail at underway market ESRT's competitive we indoor property our XX.X% work points by and prior XX mark-to-market results. by as amenitized the total XXX superior multifamily We environmental to energy-efficient done Within leased office again, once with with portfolio, strong feet increased quarter of and with year basis

I'll We and over strong are in to our positioned further increase our well Christina? percentage in to portfolio.With lease performance XXXX, see call the that, we continue Christina. multifamily turn to

Christina Chiu

Tom. Thanks,

as NOI of of quarter. $XX XX, NOI Year-to-date, end, the continue high quarter net excluding the average the capacity a the weighted million cash expense of which generated and of cash $XX the For capita of to of years. termination of period NOI was billion, facility. the rent billion of to property Revenue Same-store and XXXX, on $X.X rate the term is million the debt with $X.X share, million, commencement expense lease a Observatory primarily million year-over-year. credit and represents third X.X increase of admissions compared weighted XX% company or In of company XX% of in comprised in recapture undrawn per XXXX, year-over-year, termination of revolving increased increased was FFO remains driven third fees, Observatory improve. to and At average reported maturity of generated had quarter by which $XX per reimbursement. $XXX we year-over-year, $X.X X.X% million, liquidity our tenant million third NOI, quarter, Observatory XXXX.As total which $X.XX $XXX had an diluted same lease income. up cash core X.X% interest September excluding XXX% fee of

at have the X.Xx all to among York debt lowest leverage adjusted New REITs EBITDA. We office net City

no our and We opportunity rate assets commercial and structures, future of financing meaningful have exposure floating flexibility owns that early JV allows great liquidity, our debt and until strong XXX% with With XXXX.ESRT City for for to no maturity no debt complex opportunities value. York portfolio generate our shareholder this pursued additive we'll investment to have shares, New and to and allocate that capitalization. focused recycled sheet are capital we and balance continue flexibility, capital, repurchased

capital as of strategy prime part of our the our with of recycle XXXX the redeployment the capital into Our proceeds consistent quarter retail Williamsburg allocation. acquisition completes traffic assets to a and is off-market buybacks demographic in during high-foot well-located City third our York high-quality, on agenda with strong New remain strategic trends.Share

which not share, average quarter, $X.XX of weighted began.And million outstanding did year. shares program approximately have we to share now While repurchase outlook of XX% the from we the to buyback $XXX a per our total represents XXXX price shares of our this March at balance for on repurchased since date,

reimbursements major reduced has fully in We points, tied a to have do to operating the range, guidance to expenses follows: basis is fourth increase guidance in range $X.XX year-to-date. our a XXX cash diluted higher a of outlook of which downside a R&M FFO that tenant by expected same-store sequential improvement were number is for as driven tightened an in This due rental not scenario date our to projects expect FFO guidance which adjusted Our in XXXX decline largely Within primarily factors full XXXX the per quarter, an expense NOI and to by increased revenues in buffer our underway. we updated $X.XX share. year items from of timing realized

unchanged for pre-COVID cost Observatory savings is expense that from there typical permanent efficiencies and and the seasonality some full operating are in we property business. achieved levels.Additionally, the expectations year reflect Our continue to

to continue NOI Observatory We quarter and FFO bad maintained could million XXXX, we our date, uncertainty from around leave to that performance Observatory's the XXXX. impact expected our $XX $XX about weather for $XX range range good million results. of fluctuations adversely guidance million to fourth room up for feel updated tourism we within While in

million expenses Observatory quarter assumes guidance $X in approximately XXXX. NOI Our per averaged

commercial advantage the occupancy of attractive guidance balance dislocation. our XX%.In capital company with is sheet take best-in-class this investment same-store to strong Our period strategically uncertainty may and prudently unchanged XX% at and summary, opportunities in of to continues to manage that emerge liquidity

leased, occupied and demand continue price unique from our as landlord. range is high-quality to in sheet offer our portfolio a assets the we strength and space for XX% and value as proposition best-in-class XX.X% commercial and tenants benefit the balance now Our rental we that

continues leg of And and Our good a growth, year-to-date. performed the turn our with has ESRT's Q&A back resiliency session. of multifamily to that, momentum call flows.And fourth Observatory operator I'll the well for to the adds recovery with cash

Operator

questions from with of Instructions] first Sakwa the Evercore. come [Operator Our Steve line

Steve Sakwa

Maybe, Tom, leasing. starting on the

seeing just bit today If submarket. Central a kind kind you current pipeline? are maybe little of could kind of in on specificity Penn more maybe area? more are Garment Grand And more you give the in over you seeing Or demand us strength the of the Station

Thomas Durels

got got of a we've we're on prebuilts have good prebuilt. floor pipeline ] we leases trading and and that's and where and Steve, been that's paper interest in One Yes, XXth proposals negotiation a [ XXX West both where Central Place, from Grand activity. tenants at activity We've Street, full floor full

significant a quarter, in dictate feet pretty signed those to or Timing consumer really industry activity discussions XXX,XXX in getting well around lease be we're will year of I'd negotiation. activity. that. say, active somewhere it And portfolio some We generally, about we're tenant have prebuilts, optimistic leases of some to already of Empire professional roughly fourth of Building, square in but we Broadway, continues sector, whether the that pipeline goods. overall there of have good vacates, we space.So quarter done that and where that our pipeline, another smaller to fire really across types XXXX broad next feel as tenants as our as first a on in and known State variety of not-for-profit, as include expiring the terms technology, get from it's backfill the for leases services leases are part

X had lease X spreads. a lease quarters And look, here, of quarters so We've mark-to-market absorption in good run of we're positive right? consecutive positive on pretty percentage

we're So I think positioned. incredibly well

Steve Sakwa

a Good. quarter had Maybe, at Christina, you $X.XX. third good here

fourth full year run the rate at the midpoint. for kind think I a guidance $X.XX the quarter implies of

arrows of you from through maybe to just can pointing So transition QX for walk what guess, I us the would the, some QX? be downward

Christina Chiu

Sure.

within increase So operating an we decline XQ, as expenses. I expect mentioned the driven by sequential in my in remarks,

of some major to is that, some underway. in due And that are large R&M part, projects

out. So and this where fall is timing just the expenses

year, is an full note though, which the we that as OpEx For guided, X% about is would increase. we change

the consistent.And business. the that typical other is So seasonality the piece Observatory in is

uncertainty if some mentioned, look we been back, weather. traditionally in bit you we fluctuations as So and factor factor XQ. bad seasonality XQ little of a has and there between do tourism And around

sequential of driver So be that would that the primary decline.

Steve Sakwa

then you've just due question. coming Stanford. And a Okay. last up in mortgage got know I

the I'm think about long That kind it's lenders for kind today, something late kind just of the curious of portfolio? is of XXXX. asset that you're around that's asset? is I how And in term occupied. the with XX% thinking discussions that

Christina Chiu

Yes.

most We lending discuss of continue these piece continue in the as discussion makes partners. on sense to have we'll market maturities, we always other portfolio, discussions to the lenders with what run and and and well our active with mortgage we but the keep that that our are apprised as property have

Operator

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

Michael Griffin

packages, curious for going color decision-making your noticed provided concession leasing. just in kind on basis that then they're remarks, to what time if any more space. takers if go-forward of but I'm delaying Tom appreciate on terms Maybe And in some a be provide Great. you've for the space you of helpful. you that the on kind expectations prepared would can of taking

Thomas Durels

has our want prebuilts is enter whether a before decisions pretty in more time built can into of attract very it's from And space. timing others particularly period will We're on tenant that of it for quick by It current an want and believe tenants. that will actually that tenant. get on really much question working deciding those expires terms full line or were the We're be the a as I lease their and to XX tenants floor they'll they then first lease, the And even as the a tenant Sure. time. shopping market market of is for now. leasing. those right of extended months space your was deal quick suites prebuilt range their and

-- both experienced fully leasing LinkedIn has we the continue several that's a and what installations. spec, to the market I have incurred as So needs on leasing the the with as we consistent space question our most wide a quarter, just my can't on there's was what's costs been And say built well trend the it over in already turnkey marketplace, a the business what see with a depending and last cost, was involves next do years. gamut the which runs made we've seeing inventory, tenants' pursuing.And the market. the change that's we built leasing generally for really drove that over as on Generally, which on with significant done your prebuilt we prepared transactions, costs. been already much earlier upon about particular the Well, their remarks the to we're and comments space we've as in going what type a that of that and they're this not of consistent leasing and I in last the amount really Starbucks significant

Michael Griffin

appear we And terms attractive acquisitions that can this then be IRR cap helpful. asset into of relative on more kind kind basis, you would anything acquisition, Williamsburg, read as these the And quantify rate just types? or Great. to there retail of is kind of in of should other

Anthony Malkin

time. recycling combination exchange, proceeds think happy do as is think compressed acquire capital. is to of of where prior operates sales. you have or a which complete frame, nature before, And Griffin, We growth opportunivores. should for of XXXX a we in be from I omnivorous the on modernize, able the And potential to there either the in it's to best of that given definitely said matter right basis, right go and floor the indoor best we'll sales demonstrated the execute on and that. locations operate to with We compressed know office. had at opportunities perform. At build presented the right environmental frame, right out, in energy make price, efficiency quality We've the is were that have renovate, do The that's the we you value amenitize operate how that best to that acquisition. XXX% read just, recycle opportunity its with to we into and very the presented size time when what to a fact what it time the when to really I've we we're plate we best assets

Operator

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

John Kim

what the they've the of vacated on what the a also And move follow-up versus decision that tower had leased base I the LinkedIn the to mark-to-market you space? they on vacated? comment new the is rent from floors to floors. Can

Thomas Durels

[ don't the tower we last signing the leasing XXs to the generally I into lease the in been John, the say leases transaction. we've get [ want Yes, square And just signed XXs of But per foot. I details quarter, ] would ]. floor specific in

deals we've we been what fairly over the this seeing And couple answer your signed consistent so were with that of the question? quarter that quarters. last Does

John Kim

to that is We plate base the or... because of move size floor the floor,

Thomas Durels

they contiguous other occupy. space it's Well, with that Yes.

It that to reminder, we or we'll provide of vacating lease to to out well was tower in they with with the they contiguous space allowance will allowance those tower out. as a earlier square that But of money base floor. which X was of move and tower close will contributing feet, floors. are expand the floors and that that floors connection in -- occupancy we had currently did to spend they prior And as foot the part are other puts third a have those that moving desirable they're they're not TI built-out build them that X on XX,XXX signed. by marketable. be have the as and amenity floors, they space some They So base on floors highly hall agreement

out in We opportunity XXXX. have to moving advance market those of them an in

works it's in expanded us within type really as all, it's well. all our So deal the tenants well LinkedIn works have and favorable and And that of accommodate for it a very we very grown to portfolio. do that well for thing

John Kim

moving Empire in space New the in, with or a within Starbucks was consolidation existing Building York State expansion that of an At the...

Thomas Durels

a [ from ]. offices of New their a District City York -- the to is their is City New relocation yes, Penn It Building it only Empire of offices York State

John Kim

Christina, versus a further dragging then you're guiding last expenses color looks in fourth quarter Observatory, website year? earnings. X% there'd you to would you And think leads quarter XX% mentioned year. far as like down Observatory could you're on or the seeing to a be you that? traffic this also provide R&M Is quarter-on-quarter it And reduction a on that Okay. lead impact that seasonality bigger anything the reduction as there Any

Christina Chiu

that For seasonality. the lot of Observatory, is a

that information out. particular along. as nothing continue major we'll call in So to for provide R&M, more that the And to goes

happens timing regularly or and projects, planned it to if into XQ it just leads it if the have into We comes XXXX.

These notable are either both much So routine. on items. not

John Kim

minimal, pretty X%. The seasonality though, year was last impact

Christina Chiu

call XQ midst we Seasonality look between when still last were to last overall. happy there have drop past overall go our the When you more is up. year. XQ later. we over But a in in years, that of year, ramping and I'm

Operator

of the with from Bonnel come America. Camille questions next of line Our Bank

Jing Xian Tan

to your advance activity to recent you? It the in far are are like step-up talk coming on? quite compared the to teams renewal executing How years. seems you a Can tenants

Thomas Durels

I tenant starting ramp work. an their we've it's definitely Sure. in tier. the of to $X some dates.Generally, our until that continue XX% months year that until expiration the find of really We've feet product our you their that smaller redevelop get the get to closer lease to proactively regular lease on flight why tends added built we're best tenants, our We XX completed amount before early over see prior expiration. we expiration months and And -- been deliver about a a basis, think certainly as remains tenancy is those supplemental, even our we location And We've generally, and factor postponed we renewal to our conversations when square don't we've and adding X their a scraped decision up rate billion out that, see averaging to and amenities, we've a the that we're those of redevelopment And and our what certain to renewals. making until you'll XX,XXX little as price quality expiration. tenants speak of the that's we XX% a Page in unknown -- spent XX those around and We've redeveloped you in update reflection of as in category our fact to to amenities to from portfolio. spaces. benefiting look, on all

leading better that's I tenant And so and think renewal to rates retention overall.

Jing Xian Tan

also can grow had think here? you appreciate And strong from that occupancy over I a on or on you and side, lease occupancy outlook. do past of you've definitely quarters, to a comments your the build continue But percent the further maintain few

Thomas Durels

Well, basis since of increased points has occupancy the XXX XXXX. end

XXX,XXX vacates of on roughly of square that's square square per over feet year. a And look, that of XXX,XXX modest as leasing basis X provided that year new had upon next move-outs.And next averaging end we'll the generally, since it's we're based XXXX. for we feel by of backdrop We've quarters ability very feet and the leases commence XXXX. XXX,XXX our the year-end, on, for of XXXX, consecutive should confident to really positioned against So occupancy Look, year. an percentage vacant leased again, about amount achieve increase increase in points feet about of guidance we've and good space we're well of our of absorption. XXX have positive We known we're known

So I think well we're percentage percentage both positioned next to occupancy leased year. improve and

Jing Xian Tan

Appreciate further Would you the more the clarification quality looking around improve assets of you at potential just the And at? be opportunity comments your to office potentially your expand portfolio? a or on investments. as value-add Can looking it more overall there. bit at finally, look

Anthony Malkin

And at been portfolio. unique is we and takes have we'll time office and Our as develop. we'll our opportunity the it would we don't market advantage we the react that And to We would point which At see know. we demand, skill time, we've What entire the say what know IP our Tony opportunistically environment. was this this intellectual done -- didn't. opportunity, had there conceptually. we we clearing redevelopment. from property, proceeds here, have soon things our little chose we know is costs, than the you I very seen it set set because let know as our if is our the acted. is actually to sales, invest throughout do in And skill have We same better in to always

Operator

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

Blaine Heck

last question. Just follow want on up to that

be new the appetite little guess weighing own repurchases. Just rates. be returns might need talk them investments. where stock again, returns a how continued you're kind more of repurchases? you given to level make I reinvestment you your compelling increase to through just guess bit And on those of I additional hoping your do to versus in And relative those what about for returns targeting property could in acquisition

Christina Chiu

Yes.

look, have make debt led required traditional void cost returns obviously lenders because capital that deals and of sought this have higher up because to and gone So a up to period capital has any gone work. of in cost has created the

think that the So given a take across I board. as

buying do and at at have pencil rental portfolio. can look from returns understanding which will we As way that us believe mentioned, all which be will price to leasing we that's the And does require velocity, the we right own comes the in in opportunities, work, out. our way the our so as the points, Tony there basis capital get it landscape, the distressed we and allow

market currently, per before. our price we market implied very well.As if we've Everyone already it's is at a the even it's investment us opportunity. private look higher returns Even a the the very the think transactions get that higher these share quote spent question in do on and considering mark when higher values, clearly, we So there's are attractive attractive don't rate, CapEx. especially are. square foot, knows valuations, cap is implied for in what of buybacks, bar for than actual as absence But want ahead and to the

a right? when know It's just dislocation. foot you square period about value. of in continued a the to all That buy for a value component. value So And company, CapEx think opportunity. capital. capital ESRT said, about we the also implied is into And share that we our huge when per peak runway we're spent, tremendous already buybacks, makes stock, operating it continued about access is it's not That

in we do time. So a prudent to we've at done a about be lot need given we how much size. And clearly,

Blaine Heck

been has the vocal seeing space? to But And to offering? for in that suites. And kind for are then and very bit prebuilt probably this leasing opportunity you little as guess, an can about of that them trended Christina. has trouble of That's Tom, are talk you demand co-working kind operators space some past. type that of expand more largest the of Tony turnkey I guys for your a having how about helpful, of demand and Clearly, flexible

Thomas Durels

activity Well, and we've prebuilt always had consistent suites. good for our leasing demand

XXX,XXX on cost we those go square we've big Fortunately come trend the to from type in. over of to of that a a movement immediate really, that and prebuilts. -- go, spaces and The basically I us, spaces have can't incurred we prebuilts, out where for into little our vacant a feet don't ready they're move incur co-working ready see already lease of costs say that for tenants which have forward, about

those I those or on And lease a look, the built to years. we signed with with with think It's own that to in, consistent lease within have tenants this shared portfolio a space. grow their tenants over direct for we prebuilts And like really want environment last call our lot to those a be relationship want the subsequently office their generally, floors and that also But lot don't to the environment. us separate that opted us. with lease of gone landlord full our someone in pace to own space, pretty prebuilt of quarter. of couple it, XX want co-working leases have

Anthony Malkin

were demand a go the if to there within out overstate And great those of companies deal of obvious, would not not spaces, co-working just those business.

question what been, it's users us those been the are suitable have those So a they for place. first and in tenants of what have

Operator

Burzinski line questions next from Street. Green come of with the Dylan Our

Dylan Burzinski

versus guys new are appreciate Just office just just underwriting type how you just internally think larger you stock. and But opportunities? guess your a sort a can guys allocation, perspective, comments rate repurchasing are Or acquisitions, of I I you underwriting going on you capital a when back acquiring return when for underwriting us the to opportunities from are I evaluate acquisition how you new when that property of property types? opportunities about give across guys guys sense evaluating guys you guess

Christina Chiu

Yes.

have on class access on. it's up that interest I basis continues in have being work financing office. a So on and we've valued board, do and hugely multifamily. we making recognition our be, Within different. asset can to a think space sure do office, and retail think requirements is we've City mentioned, is our we to discussed get as even across The that, multifamily, that our return we high-quality the underwrite predicated how And interest about bit New we gone York and differently,

agency will will that the healthy high and that it. rental consideration strength. into to a debt we class are expect. asset continued that asset come buyers look And and at So of down as rate has capital it's on able you financing, cost to with levels That returns buy will access class also occupancy impact the very

come look mind that additive to along there portfolio that, look our individual at So and that opportunities is base. we is entire asset shareholder our at we'll and sure to we and that in upside opportunities. still as have make said, That to portfolio, keep

Dylan Burzinski

just I guess then And commentary. that Appreciate on occupancy. one

XX% at I occupancy. think you the ended quarter

so ending at are guidance, the the you change didn't quarter guys You end. high

you pieces curious QX. sort moving here look the as of Just towards

Anthony Malkin

that about Well, first, achieve points office. for the basis we'll portfolio XXX XX%, and confident guidance we're XX% that's higher our for Manhattan Yes.

the about in in commenced new I that We've quarter earlier, by proactively roll. offset commence feet expect XXX,XXX fourth and ability amount the of percentage partially our occupancy to that also and will and our we quarter.In feel I we managed to that sign commented, XXXX, fourth known lease modest quarter, will increase I both leased upon As square that stated signed rent do be fourth about the in tenants as of anything good move-outs. based the really vacate

We have built space.

have where We're amenities. have that buildings those year. robust open We next we amenities modernized up adding to

and we're well I percentages year. think So to next our performance improve upon our very for positioned

Operator

Thank you.

for and will We Malkin, back Chairman, CEO, over Tony President to call remarks. closing now the turn

Anthony Malkin

New Thank Exchange. ESRT's first you Empire our the the celebrated balance very Since crowd not much, City plans This focused Building IPO we followed we notes. everybody. our A company XXXX, multifamily we a decade as have executed October on Stock REIT and a on and verticals; public to be have really as final the X York few listed office, best-in-class retail iconic made York State sheet. with Observatory, the month, New diverse and

growth.Thank the our board of Until your chance the estate to position today's success stakeholders for months real with call. then, all and upward. ahead. inform and look interest many to and Our portfolio directors, partners your who thank goes tours forward non-deal The for leadership ESRT tenants, you our to to commercial continues practices for in sustainability the and We dedicated leasing at and of call-out in onward to points participation carbon-neutral employees, put the you roadshows, our meet on you drive biggest development with conferences future property in and policy. in

Operator

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

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

Empire State Realty Trust (ESRT) 26 Oct 232023 Q3 Earnings call transcript