ESRT - Earnings call transcript Q4 2024 | Empire State Realty Trust, Inc.

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Operator

Greetings, and welcome to the Empire State Realty Trust Fourth Quarter 2024 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce Heather Houston, SVP, Chief Counsel, Corporate and Secretary. Thank you.

begin. may You

Heather Lawson

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

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

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

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

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

Anthony Malkin

XXXX results. afternoon you, fourth and ESRT's everyone. reported Congratulations your Yesterday, strong Thank on new addition, to back to and good and welcome Heather. you, quarter we

outlook expectations. the quarter, leasing We our FFO momentum, came are for happy and continued today above our fourth discuss in Observatory In XXXX. to execution

board and more rent points X feet years quarterly consecutive team on York XXX,XXX achieved quarter. growth the of City positive with leasing spreads. square Our leased than We now New have office put approximately again in percentage leased the

feet in XXX,XXX XXXX. square leased For feet, X.X we up million the square from year,

Manhattan the levels. sustainability XX% ESRT. for top-of-tier leased, in and between workspace has net Observatory, the enabled momentum our question boon the is Our And reflects #X need well-located, operating performance the for over a energy-efficient, offices portfolio. leasing office the the TripAdvisor's rents XXXX fourth a leading to a that Manhattan told our office of exceeds and world, year good provide as attraction The amenitized, to is itself. gap the longer with to brand-new in desirability Return is reduce market price has quarter portfolio XXXX us story concessions. modernized, income continued full product and growth and in year-over-year its raise that no

has will this longer passed, performance relative refer XXXX As no we to benchmark results. our to been

price to expenses to provide top exceptional XXXX, global XXX point. an experience New generated awareness. leasing over enter continue media our billion impressions, continues product our York increase We visitors in In Empire the an to equivalency. brand The of City with growth, and remains to focus million drive and unmatched XX% and Our manage foot. front advertising value on Building line environment customer State globally $XXX XXXX benefit build over in had year-over-year

have have-nots. has financially mass free landlord. sector results modernized, reduce leaders, transit, are are increase like office and statistics are and which In fact, The The been haves amenities illustrate a us great well have it are allowed owned rent. of by near sustainability rents the stable buildings and to ours, haves located

meets the tenants. credit product demand better of Our informed

of lease, with reduced our year bumpy we XXXX. occupancy it full expect inventory may be space for again positive absorption While to the

deck remains Observatory Our the leader.

day. XXXX we designed expect the times to pricing as increased demand monetize continued growth a per size introduce visitor model new high check Our we and in through average year-over-year, dynamic

for room still are XXXX We below volume visitation have overall levels of improve. upside and as levels

We sheet continue allows and to or balance out enhance flexibility for of to a lease when shareholders. either we tremendous opportunities opportunities The to of create best-in-class additional opportunistically and maintenance trade for through transaction prepared ESRT growth the to additional transact scour are to act see value expansion our market and existing portfolio. our

achieve Our these plan company's Christina remains to goals. in on detail growth progress X XXXX. laser-focused goals entire and sheet, Observatory, sell the priorities: space, opportunities Tom, on manage provide to organization more will Steve and how to we the lease accomplish tickets identify Tom? balance our sustainability our and our

Thomas Durels

Thanks, commercial square our We million leased afternoon, Tony, which team performance. XXXX. in year exceptional our everyone. annual In volume XXXX, good was and since our portfolio, feet of X.X over property delivered highest another

portfolio Our to of of XXXX. last at basis quarter ago compared points XX XXX XX.X% points and Manhattan increase compared an to XXX up increase a basis office since an and year stands fourth points of leased, quarter basis

new our XXth by consecutive the XXth Sal events amenities and Publishing, court for office consecutive pickleball in lounge year-over-year. full-service including portfolio opening and enhanced spreads that a rent of increased XXX-person Burlington, Janeiro, signed lease We major positive de for our AT absorption. effective wet to For XX% office Bloomsbury Kearney a foot the at lounge. where across square positive quarter, room, and our with the portfolio, portfolio, higher hosting State our tenant Building basketball leases with the bar office a tenants quarter our and net presentation golf simulator quality leased Empire retail Ponterra. We achieved and Manhattan converts with per had average multisports tenant mark-to-market We percentage with

tenant existing tenants where current million we square portfolio million leases total compared renewals to feet. X.X size future we IPO tenant superior and XXX,XXX square totaling proactively of XXXX, have to In our lease lease approximately service, expirations. expansion Since tenant feet record early expansions. XXXX, exceptional current retention annual feet to of our volume with came our extended from continue We an which signed contributed and deliver track impressive XXX square of in X experience our

City in their at their properties for with occupancy And square Holdings property XX-year what we with We XX,XXX Grand feet. feet, were of and partnership space year-end That Our firm growth along extension their ESRT's strategic strong. York lease. from square further rights New offices the great XX,XXX expiring robust has Empire multifamily lease State footprint, X-year existing Place, a XXXX. to more We that portfolio tenant's excel, year newly existing the on square sustainability. XXX,XXX of expansion representing which a experience lease square square We XX,XXX square with of proven benefiting their and a Booking extension in an fundamentals, part at doubles investment foot brings space Holdings feet over our Booking lease for market because the be and finished to leased to foot expansion to Central we a XX.X% XXX,XXX a consolidated a continues of growth. company XX,XXX perceive signed into that total of One expansion amended an footprint their employees' told XX% to exchange Building as combined their at including be lease has total of X-year improvements better the This Empire in operations. fourth quarter, with improved XX-year State with along Building, foot than of

and XX-year which fourth feet. prebuilt XXXX early totaled Manhattan lease We're office signed we We of and XX.X renewal also was mark-to-market the renewals for years, expansion XX.X%. portfolio average excluding lease office an quarter, extensions cash In and and suites, a signed average XXXX, leases foot with were spread square XX,XXX square lease our positive office new XX,XXX XX NYSERDA duration the portfolio modest rent Broadway, the strong our in for expirations. Manhattan well in leases performance signed which faces with during positioned at

known only for XXXX. feet square of feet and vacates XX,XXX square of XXX,XXX We have undecided

the start year expect the We see year. and will to approximately by be our to at increased we our early throughout of XXXX leases previously our anticipate vacates guidance We lease to lead XX% percentage XXXX, of year-end. occupancy midpoint commencement lease in higher steady will signed dip of overall the could temporarily range percentage cause known will that at in though this

have feet market, With increased square availability in leases XXXX. leases concessions healthy in of we with first concessions signed able trend and feet last were have during of a of We occupancy, reduced and the negotiation. XXXX increase XX,XXX that square pipeline quarter to and and will rents the reduce we rents in reduce continue on year, improvement and and push XXX,XXX harder

on commenced supplemental million I'll Page $XX rent success. in incremental that, Christina. have our XX cash And we to over shown as free Lastly, off, from of not our leases the burn with turn call Christina? leasing signed reflects that revenue and yet

Christina Chiu

Tom. Thanks,

debt unaddressed as floating lowest all XXXX. EBITDA manage schedule, of a maturity to continue and strong City in XXXX at with well-laddered debt December rate net York our X.Xx balance no manner leverage a focused exposure, to no debt maturity We proactive liquidity, REITs until among New year-end the debt sheet

Our tax-efficient better in ESRT years assets lower ahead. capital and Brooklyn into profiles diversified attractive multifamily in with recycling prime growth CapEx Manhattan the Williamsburg, in retail and assets

executed execute acquisition X.X Sixth a on of and with million presence had our investment transactions. acquisitions market $XX North expected to retail scaled past we $XXX the the In very years, limited has relatively we another of prime these opportunities, established further Over high-quality mid-XXXX. close pleased footprint and in are million to our Street corridor Williamsburg that in on

months, from volumes debt on is all motivated York attractive sheet New still multifamily But across on are balance opportunities. office recent transactions. operating to runway seen in primed sellers provide a with sectors have execute focus investment come to City. transactions best-in-class and We actively Investment we flexibility back X deals more to not and and market which historical Our target: retail, default-driven underwrite transaction levels. we to

to underwrite in find focused are upside York would moment, be right prudently We XXXX longer-term New for our our like additive which and to continue outlook attractive portfolio. to will growth I and our Steve have will patient discuss cover objectives. City deals, but to a the

solid in lower assets drive strong cash and with in higher years expect in towards XXXX, execution our completion beyond near New noncore City and areas: suburban flow assets prospects following to from ahead. multifamily the CapEx growth We shift driven the York high-quality growth by retail

as Our higher leases solid deals the of years upside we investor of show demand prospects top-of-tier supply ahead tenant to the rents mark-to-market and market, pipeline healthy new now availability the limited concessions deck. for X in on reduced Page and with roll, strong due leasing and in favorable office on

visitation. NOI driven pricing by performance and improved our model and dynamic our of business new Continued upside Observatory potential

Contractual As by growth levels both as a time, from reminder, lease-up perform solid leases to ramps NOI XXXX. adds XXXX discuss flows. profile the of I'll over NOI driven the And do in turn up positioned as of of resiliency exceeds to compared additional expected roll and growth to Steve to that, rent growth to to the acquisitions for ahead. flow well with continues Multifamily with growth our XXXX. our And over Williamsburg mark-to-market XX% retail visitors occupancy ESRT's NOI to pre-pandemic and with approximately rent are and the well continued quarter deals and years results outlook fourth finally, enhance we cash cash time.

Stephen Horn

Christina. Thanks,

fourth items, received mostly related FFO $X.XX For of quarter other the utility for recognized we Results we $X.XX year reported the core to diluted income. of credits prior XXXX, nonrecurring included quarter approximately against expenses, per which in share. of

nonrecurring X.X% cash and the per approximately diluted XXXX generated throughout year reflects timing adjusted million of rate. $X the we to each of recognized NOI and growth period, the we flat million for the impacted fourth generated million items XXXX for When when and property due $XX FFO a from roughly the of improvement reported the full in benefit primarily expenses. and down the $X.XX net was $X.XX Observatory the FAD related disbursement quarter XXXX year-over-year our nonrecurring for year. Same-store the operating of from we approximately for high a quarter end on NOI signed quarter For income XXXX, positive the a for leases $XX approximately or fourth was of XXXX items business, $X.XX was $XXX recognized full respectively. by same-store to our of year-over-year, $X.X X% fourth items termination allowance quarter million quarter year year-over-year fourth in In increased basis. in and which operating FAD less lease periods, nonrecurring in core cash in $XX.X million property the share reached of full fourth year, tenant We in million range income XXXX. guidance and and adjusted

$X.XX. In resulting from nonrecurring approximately and XXXX, Excluding and the from our of to the million, aforementioned I'll income. FAD spend, $X.XX the timing upcoming in of and termination year XX% XX%, was respectively, move core into XXXX core $XXX range XXXX TI $X.XX now $X.XX fourth FFO FFO will exclusion adjusted compares and for respectively. to FAD impact adjusted $XX ratios this quarter million after full we expect of year. guidance of lease items This payout

earnings As quarter to previewed in contribute call, third the year-over-year will certain our items decline.

Series basis our on approximate income million revolving the XXXX point in balance reduction cash. retail March sheet used pay A the our in First, of by was our and half $X.XX the down lower towards as of $XXX of assumption balance interest senior in acquisitions unsecured XXX facility XXXX used million rate drawn cash the note to be applied will and to an credit $XXX and of approximately second cash deposit

manageable accelerated approximately awards which remaining is nearing year-end to and assumptions to XXXX revenue of noncash bonus expense expirations that at as positive NEO $X.XXX, are primarily termination amortization XXXX factored related Other noncash by this recognition to assumes the cash from range XX.X% occupancy half in which up we XX% growth, our and that XXXX. guidance to the increases. by income in recognized property attributed XXXX of expense of follows: employees elections. to from to Within operating free range, into inflation-based equity G&A adjusted The and higher retirement commercial granted increased key rent X%. XX% items are payroll lease same-store nonrecurring excluding cash cash is net and are and stock-based increase standard related promotions growth, to compensation by attributed expect driven Second, XXXX eligibility X.X% year-end XXXX, fees of lease

be side, expense estate in tenant and X% the will approximate by higher expenses reimbursement partially taxes, property we which operating offset On expect real to an income. X% increase

not in not free XXXX rent to of expect of free in but cash the remains currently the $X.XXX back to Of straight-line quarterly but leases performance, the do period. XXXX leases contribute will portion rental guide a of on same-store a year-over-year of an skew commences to we we rent signed will by NOI expect to While cash we half increase our as rent in their contribute approximately pipeline GAAP slight do commencements to expected of timing cash NOI rent growth. It same-store in period. due note,

This approximately Observatory for $XX XXXX NOI million assumes expect XXXX. approximately to We $XX $XXX expenses guidance of million. NOI million Observatory be to $X to quarter million per

and Operator? impact guidance around quarter. range operator fluctuations weather any Q&A we that back in session. Our accounts that, uncertainty call turn the could to results for tourism now the for given the bad With

Operator

[Operator Instructions].

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

Steve Sakwa

maybe with activity of getting anxious leasing. about they're Tom, I'm having It tenants. the to renewals. or able Maybe, comments to you're back like just on bit forward pull sort and going curious forward seems just the pull of your deals the dynamics you're discussions and a

And the ultimately the flavor do basis? think just a maybe a about more give lease where on out leasing. portfolio little you settles percent So

Thomas Durels

with run for Well, had a Steve, Sure. over good We've available first, reduced last of absorption very mean, a I good positive we've pipeline X here space. relative really inventory our years. to the got --

the We've XX recognition variety already buildings, of have in we that a square which another had to Work buildings. XXXX. is We've in market the continue feet as different XXXX leasing volume to home highest industries. seeing about from proposals quarter, for As of typical leases tenants got square hundred leases, leasing due for interest Overall, in tightening the and a better and And us we're and a not from we've we had XXX,XXX that about from there's momentum active quality are. the feet. of earlier, our I We factor. think the mentioned strong since signed past, there's for I product definitely a negotiation have several XX,XXX for square first XX in thousand feet. quality

We year. this great. The State at have Empire show low move-outs amenities tenant Building

into there's positive think of a going I momentum XXXX. lot So

think Buildings at modernized the leverage. by look that landlords and hamstrung amenities good have good availabilities and out there, that for buildings, quality quality for are fewer locations some in are I and clearly, the fewer modernized. tenants are choices As I that not high are

Steve Sakwa

I just Tom, ultimately guess, percentage, out? the, to lease Can on And you where like it think portfolio settles get XX%? do the XX%,

Thomas Durels

Yes.

for only at in will happen York have But by coming see XXX,XXX us about, the Much portfolio, can't look I we we're XX.X% ourselves the getting we As feet a in XX%. year, in why leased of setting square easily we for modest move-outs year. reason off year-end. known Manhattan. XX% the feet up no can about City, XXX,XXX the half New that above first our of get square to of move-outs. base XX% for There's

to our On going the occupancy steady occupancy year XX%, higher the based can an leases our guidance we've previously. is the basis we're see the in occupancy Manhattan increase And we've front, that given similarly, in I but signed portfolio. of that office see midpoint upon on certainly throughout

Steve Sakwa

Okay. Great. that... question And just one around

Anthony Malkin

-- these I -- look these well. these note, Steve, have tenants early helpful expanded you who when think and it's with extensions of renewals some bunch to are of a renewals of these as at

have to early So with there that retention renewals extreme is and both the of extensions. and and tenants, we success expansion leads

Steve Sakwa

Tony. that, appreciate I

of And going business was was you're that Just volume on that being important. if the surprised just 'XX realize I sort to will, I experience projected not guess flattish, you is pure 'XX. be a I for little the Observatory, that maybe over

visitors time thoughts forward the and you maybe Is to You've the done pricing higher from But where Is less would have for since just Is contribution your 'XX? up? maybe a been raising year upside. the maybe pricing? kind have thought of it pricing bad I weather the job going NOI from little it would it moving see more days? around next ticketing. more very you've that's a gone the good just

Anthony Malkin

Right.

very some end are factors that year. a in saw Europe America prior as brand is We Observatory. guidance under in of for not tourists strength. Steve, dollar the early this macro low So before The in to our the several contemplates it's our administration. unique threat. There's

China flights We airline XXXX, seat XX capacity direct also In York there China between from of have issue and New were New week York an each City. City. to

are thought some we'd for remained it number XX, and that we see it's in quite time. there not. at and And did XX Now rise XXXX,

we So ability when its in the with to attraction preeminent it position. to we our confident look at it, are maintain and work for

over year. Our else's towers course, for forward And move the look it's It's year. updates everyone we as to the net we marketplace. And early per customer forward a in in matter through revenue just us. the of

Operator

Our of Joseph line next come questions with the from Citi. Nick

Michael Griffin

meets criteria a you prospective to market. use kind of building of with I for to could set. the all But sense out sort so of here transactions being kind transactions, opportunity look you've appreciate, would come us and you're redevelopment an at there, be of some opportunistic particularly -- Christina, and to find more talked special to seen side, Tony, what's underwriting commentary does appealing you acquisition of that yields the the as Griffin omnivore, that I It's in right just about we've that past if investment IRRs Michael now? potential you ESRT speak. look great. mean, Nick. And sauce? what And your the know to office Could around the I start obviously, give your or kind in a

Anthony Malkin

me replacements the we've of It's first note dollars from as let said done. new we the different Well, to new of second part. like-for-like is very application XXXX have important that before, all, on acquisition the touch that,

that on from office a Chase we see amount for very Avenue -- just thought property. fair we perspective, #X, to the for would basis, a it's very There's from expectation that itself, has has was So XXX, Park a and of to their us, for on on gone but now of we resi taken There conversion front. by relative #X. think been return, begin nice which I have JPMorgan of what a higher have gone adjacent probably, asset attractive on that movement have movement benefit seen office. to we was

wanted I neighborhood and think their their to preserve do. to they for wanted they views what

that rents decrease just increase who there. to and the rent piece, in building these So to look in volumes from of partners lender begin deal. early. really and much And perspective, we we in maturity. us demand below the negotiate so is talk helpful become are they with significantly have-nots. and made sheet allowed the in property as very up, that's has much of the see They our to quarter were short, now are selective in And want on The product more impact fact And haves it's the begin single to as fourth really balance the free as far and is ownership biggest is and owners XXXX, by first defaults in our we to more had the at quarter, are to interest though, our under seen have office really We rates see tenants business the XXXX, service the great pressure. XXXX. well. more in it's In where our haven't don't as

transfers by wants not where partial, take right to out that taken partial. Sixth you fund partner It's It's there's that get now not a somebody, it's deal the control. a are a Avenue out only liquidity. on If being

helpful. in at to that's start look interested I really we nothing do very remain and interested we you yet. do remain attracted hope there's And attention in that's very moves, our residential, If retail. these various

Michael Griffin

moving the of space point, big one demand affordable XXXX. is noticed I then helpful. that maybe the of your the side. the Tony. the given for there, more And price for is potential low types looking high strong XXs, that tenant in a like those of the pretty kind A down you city? just leasing for tenants on curve, Have Tom That Is maybe seems looking if we've pipeline just be for appreciate rent. color in very price all there It of buildings seen sort point at the pool triple-digit might

Anthony Malkin

Yes. We negotiation in be actually happen tenants. with to X

call State relocation a, is them the The Empire had sustainability that at of at provide. and the And a of that tenant product. full looking Building tenants household the One the it, what newer area I like and/or that of would amenities, suite you looked find recognize name some we is we value is Penn partnership.

And much so we're seeing, our yes, interest and choosing product are at from tenants have that and buildings. could looked point price afford higher

Operator

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

Blaine Heck

follow-up Just side. a on the investment

sure Given pretty rank the retail think buybacks office preference you time, in given kind cap tougher stock of guess, rates. deals high-yielding multifamily, I'm in you point? investment your described where I on and and at shares for are trading which where tight Tony, finding are do this

Anthony Malkin

done. IPO on I'd preferred into are always I that, investment to different shorter-term slightly what would approach lot see we probably a that, in we offering very there. have people XXXX look now different investment of consider of to a and equity we we prior mezz Board will that the, enter do say that at business It's always did we originations from and going what roll -- the first successfully that the considers of the say, kind our a we'll out aspect half while of slightly transactions, where

least or to for than Board, look more perspective, rather return put discussed create as a and our forward-looking material as investors our work way we've it statement still at we this shift buybacks. any to the with on from at point, So money at

Blaine Heck

provide but saw given gears, so hear leasing to spending guide some you quarters. great know you just into 'XX AFFO, guys the this don't that whether I in CapEx past continue be color Great. That's of XXXX? to that in can several shifting done guys interesting. much And around then some since lumpiness, elevated specifically quarter you've it'd to expect CapEx some you

Stephen Horn

Yes.

the as elevated for that's issue. spend, in far remarks timing Blaine. the XQ thanks mentioned a So as I question, the

about year there So 'XX you you're heavier also that rate, spend. down. leasing out need thinking about then a of back sort it's relatively million was And to that run comes when $XX.X on

and from onetime CapEx, so TIs that expect overall do So exclusion called of is the we piece into item a out. amount big I but to decrease building 'XX, decrease heading of that that

Operator

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

John Kim

dollar update but corridor us X amount, rent your per and is think Williamsburg very basis a was you not quarter. in just by what the overall the Street. the went square rents I $X that mark-to-market corridor North wondering in on North Sixth update down big if you last existing at It's on a on foot But versus could an vacancy XXXX

Anthony Malkin

properties going Right Sure. are XX% forecast -- The as first the can a the proposals -- acquisition, interest of about say have we got an half that going proposal increased our line Street, all, we been Thanks, we John. see I then no those issued as to the I our of of underwrote we And within would of with vacant and higher. and we on interested into there's have we even that increase see bottom coming well-known acquired about interest. particularly out have. will mark-to-markets we've one we've as brands on rent a add there. momentum overall dozen the the there, But North that gate, vacant in the Sixth -- we property level space growing that And up collect the the space obviously, roll. lease rent embedded the off mark-to-market

basis. optimistic a very go-forward I'm so And on

Thomas Durels

-- it price our one looks was of And done I at underway, might other Street, transactions we add smart. entry recently and we when was see look where as that there's where on and North Sixth very one --

based mentioned, to have early by lot a people. our we the unfortunately, outcome on think, opportunity very set highlighted And look we, I we that forward for here. of I to, probably the other successful actions, a as indications

John Kim

sort to but there view the pricing any of you how close commentary Tony, alluded versus on to acquisition looking and you're this invest it, that multifamily? to $XX you year, opportunities million

Thomas Durels

process our they're always look, things let's -- think is I talk that once done. about

And further to of So quarter. I've the that we cement second think just look do said. about what it the end at I support will talk and

John Kim

just space a them and large I in on recently. space Macy's usage of some their Does Okay. market? corporate impact the headcount on sublease their quick that that or put some to tenants, does particular, of lead reductions your had Kohl's have question announced potentially of that

Anthony Malkin

their XXX subleased West XXrd. has Macy's space at

seen is there of way. Coastal for really impact that us So a to got bit term and in won't quite they're -- a they've be lease space term out as yet spoken for has and any but to left. remaining --

Operator

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

Dylan Burzinski

sort just of on environment to I well wanted strong leased. Obviously, demand the guys' New your portfolio York. is in touch

mentioned potential building spikes. One rent net that of on call there's your for possible effective earnings peers their a

sort push So continue across north growth effective sort how portfolio just the your percentage viewing as of of continue to it, is XX%. push ability rent lease able you guys portfolio to be are curious of the call already, to to you guys net that within

Thomas Durels

have into throughout Tony earlier, reduced and I continue and free year, last we XXXX. as to concessions has emphasized, said raised rents our and that we Well, rent look

for effective up the leasing second-generation year-over-year costs. net XX% coming in mentioned lower tenant we're helping lid fully space. And that been of go-forward our upon TIs. That's prior had -- I year well net reduce and built the built in and out we done for rent good previously and installation a lower built spaces either setting growth tenants, effective or a As rents. based increase that earlier, Much paid to has costs, prebuilt we've keep were leasing for for that's

continued TI good lower net So the the course, in us combination just well of the market. of improvement think in improvement I rents for concessions, effective up and momentum in and, sets rents, lower overall

Stephen Horn

add would tenants as I when that, to upward look, good leave, to continue we renewals, we just we continue see And when to that, very marks. do even leave tenants -- and do

rent departs, we're to the Tom volume, leases. that if have as add each good that as in continued, we're accepted a additional transaction we we've So up said, from far the some have we got very We've moved tenants lease tenant and earlier we discussions the spike, proposal upped lease every confident good interest. the have Each we gone there, would doing rents. on with quarter, high price look, had And on actually demand And the do their a 'XX year we now too and and marks who on very long. higher us. everything had the out in because handful with price on already where where lease on out go review transactions as

Dylan Burzinski

is active demand the lease requirements. of touching to just I in you the coming tenant starting wanting small see get space? active actually user sort that of more terms it guess Or larger that of on and And medium-sized maybe tenants really sort market to still in to to Are across size market is mostly today?

Thomas Durels

by recognition we've and think a is sooner, that the evidenced early in said is tenants, a pool in I renewals to as quality greater the market by feet I we coming XXX,XXX this supply of seen Well, past earlier, landlords. think that buildings terms shrinking product there good as of year. concluded quality that tenants with that there I of square And

I of, there a sense leases. anxiousness to is, greater say, execute so And think, on

a of because tenant landlords In through clearly -- to There's otherwise terms transact area. be the interest our floors. full we is available the Grand recapitalization. cannot lack by that see where situation encumbered particularly availabilities, in a building a prebuilds Central Spaces going are the of large there's might block size, from

create can have where trying we that the short And take to our of going to large supply. opportunities we down so future, in eyes at blocks look advantage

Christina Chiu

York migrating a I Yes. those shortage as that soon. and be of New overall some getting And reflective the up demand York And strength City of tenant commonality City. New is have. they're owners, underscore public the is demand. types -- you're the well as key but it there's would as in happen really is that's anytime what across York spaces, leased to space good it's over is We and because space in us across very getting And as hearing assets, other towards the diversified comments, of strong. City heard buildings, time, not us say is New replenished where the seeing that you've just we high-quality

Stephen Horn

to -- we've and and stay a who as frankly, sheet brand-new us of And range. want $XXX buildings people to many and price rents go at we And we look well-located here and well rents $XXX because tier are there up, want there aren't those tenants you of priced, that that know There those their square modernized, that's our every up move amenitized, pay in prices who lot what, A top or attractively And up, to landlord. the buildings, seen grow can today rents leaders we as as out say, and in requires. here. development sustainability the as move foot a move balance new here great as remain

feel a And York position. we -- We do. good with good. we're really in is the We're we're happy in market New like So that.

Operator

some call Chairman Malkin, Thank closing CEO, back now you. over turn to We'll the and Tony remarks. for

Anthony Malkin

goals, the achieve sell sheet, opportunities thanks, So opportunities growth on our that list you sustainability tickets shareholder keep that of create our goal. X identify who remain Those to manage is purpose new everybody. track fifth again, focused Observatory, will identify priorities: balance note We for to and value. a growth all space, lease of the the

as that to they of drive We shareholders to value arise confident ability and going advantage further take our strong. continue remains and opportunities will forward execute for are

for chance non-deal look and you So conferences with roadshows, ahead the call. and we many onward the months thank forward property at meet everyone your in of to in tours participation and upward. We to today's

Operator

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

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

Empire State Realty Trust (ESRT) 20 Feb 252024 Q4 Earnings call transcript