Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Q2 2024 Earnings Presentation
32 slides from Empire State Realty Trust's earnings presentation, Jul 25, 2024
Slide 1: Investor Presentation July 2024
Tripadvisor Bestof the Best #1 P| Attraction | Attraction in the World in the US 2024 2022-2024 EMPIRE STATE REALTY TRUST House of the Dragon A at the Empire State Investor Presentation July 2024 Hy Ht HH 111 W 33 Street CLA at One Grand Central Place Observatory :
Slide 2: Contents
ESRT Overview Company Priorities Competitive Advantages Flight To Quality Contracted Rents and Tenant Expansions Contents Strong and Flexible Balance Sheet Portfolio Transformation & Redevelopment Capital Recycling ESRT Property Sector Highlights Office ESB Observatory Retail Williamsburg Retail Acq
Slide 3: Why ESRT?
Zz ESRT OVERVIEW Why ESRT? ° ESRT puts points on the board with performance ° NYC is the international capital of the world * Resilient, vibrant, irreplicable ° Pure play NYC REIT with multiple drivers of upside ° Office, Observatory, Retail, Multifamily ° Competitive advantages * Low leverage, no f
Slide 4: • • • • • • • 56% • • 25% • • •
• • • • • • • 56% • • 25% • • • • • • • 12% 2% • • 5% • • • • •
Slide 5: Company Priorities
Dn COMPANY PRIORITIES Laser Focused on Shareholder Value Manage Our Balance Sheet Vv 87-89% Occupancy (Commercial) Lease Space Vv 2Q 2024 YE24 Guidance Execute on capital allocation goals * On offense to pursue attractive acquisitions amidst capital markets dislocation Maintain balance sheet flexibi
Slide 6: Competitive Advantages: Flight to Top Quality Space
Dn COMPETITIVE ADVANTAGES Flight to Top Quality Space within Rental Price Tier ESRT Outperforms Peers Top of Our Price Tier Assets * Proven Leasing Results * Fully Redeveloped and Modernized Buildings * Increased NYC office leased rate +170 bps Compete and Win vy in 2024 to 93.5% * $1B invested in p
Slide 7: Contracted Rents & Tenant Expansions
COMPETITIVE ADVANTAGES, Contracted Rents & Tenant Expansions * Limited near-term lease expiration * Locked-in pipeline of signed leases * Proven record of existing with upside to in-place rents not commenced & free rent burn tenant expansions Upcoming Lease Expirations Cumulative SLNC and Free-Rent
Slide 8: Strong & Flexible Balance Sheet
Dn COMPETITIVE ADVANTAGES Strong & Flexible Balance Sheet Flexibility * No floating rate debt exposure * Weighted average interest rate = 4.27% * Well-laddered debt maturity schedule * Entire portfolio 100% owned * No JVs or complex capital structures Net Debt / Adj. Secured Debt EBITDAS %E 63% 5.1x
Slide 9: Portfolio Transformation Complete
Zz COMPETITIVE ADVANTAGES Portfolio Transformation Complete ~$1B invested to redevelop and create top of tier assets that are fully modernized, amenitized, energy efficient AFTER REDEVELOPMENT AFTER REDEVELOPMENT AFTER REDEVELOPMENT { Interactive, Museum} S Entrance Experience In Gueuing Area|
Slide 10: Capital Recycling Enhances Portfolio Quality
Dn COMPETITIVE ADVANTAGES Capital Recycling Enhances Portfolio Quality * Completed disposition of five suburban assets since early 2022 * 383 Main Avenue * 500 Mamaroneck * 10 Bank * Westport Retail (two assets) * Invested $643M into NYC multifamily and retail assets with better growth and lower cap
Slide 11: Prime Locations Near Mass Transit
pune’ STH AV 53RD AN W46THST E 46TH ST MADISON WASTHST TIMES SQUARE/ W4STH ST waarist THEATER DISTRICT qu MIDTOWN OFFICE WARD ST Tanna EAST Prime Locations w4n0s| por OOO $e8s5 GOGO @ 66060 E39TH ST con = emt Near Mass Transit ONE GRAND CENTRAL PLACE W 39THST PARK AVE * Majority of our portfolio is
Slide 12: Office: Robust Amenity Offering
Virtual Tour De OFFICE Robust Amenity Offering vy NEIGHBORHOOD v IN BUILDING AMENITIES AMENITIES a r L, ned 5SK+ SF Rooftop at * 60 usable terraces * Proximity to mass transit * 24 food and beverage options * Restaurants, leisure, ° Fitness / Wellness facilities shopping * Town Halls * Broadway Plaz
Slide 13: Hear From Our Tenants and Brokers
OFFICE Hear From Our Tenants and Brokers 13 "The reaction of our own employees, candidates, prospects and customers that we bring to the facilities is awe and a sense of wonder when you walk through these walls.” ~Sr. Brand Marketing Manager, Talent Attraction, LinkedIn PROGYNY THRIVES AT 1359 BROAD
Slide 14: Tenant feedback
Leader Sustainability Energy Efficiency Healthy Building Fully Amenitized Fully Redeveloped Modernized Financially Stable Best-In-Class Balance Sheet Carbon Neutral Expansions Friendly Clean Great Staff Great Partners Helpful Location Professional Service Oriented
Slide 15: Attractive price point with high-quality offering
Attractive price point with Serves the deepest pool of our high-quality offering demand in the market
Slide 16: Strong & Diverse Tenant Mix
De OFFICE Strong & Diverse Tenant Mix Prime top of tier assets attract top quality tenants 16 Technology, Media and Advertising mFinance, Insurance, Real Estate mConsumer Goods mOther Professional Services Legal Services Non-Profit Linked [J one iCapital KEARNEY UNIVERSAL MUSIC GROUP poe worker ay.
Slide 17: ESB Observatory
Attraction Attraction ESB Observatory in the World in the US 2024 2022-2024 Proven performer across all economic cycles, new competition, and a pandemic, with upside to NYC tourism recovery i House of the Dragon | Mercedes-AMG PETRONAS F1 and Meda Pi smpace Activation (June) WhatsApp Activation (May
Slide 18: Retail Portfolio Highlights
% of % of Retail Retail Top 10 Retall Tenants etal FER Footage Portfolio * SEPHORA 1.5% 1.8% Top-Quality Retail Tenants: Highlights 2 © TARGET 10.3% 12.6% 3. URBAN OUTFITTERS 9.0% 8.8% TACOMBI CHOPT * 94% national retailers « Foot Locker aan = r) BLUE BOTTLE ° Everyday retailers 5. Wab 5.4% 6.1% * H
Slide 19: North 6th Street, Williamsburg Retail Acquisitions
RETAIL “B52 . = age North 6t Street, Williamsburg Retail Acquisitions * Contract Price: $195M in aggregate * Attractive Upside: * Investment Strategy: * All-cash transactions * Near-term upside from signed * Scales ESRT's initial North 6t" Street * Closing projected in 3Q 2024 leases not yet commenc
Slide 20: Strength of the Williamsburg Market
De RETAIL Strength of the Williamsburg Market Population Density? * 56% increase within a mile of North 6" Street retail corridor from 2010-2021 * 61% of the population have a college degree or higher v Strong Household Income? * 51% of households make $100k per year or more * 35% of households make
Slide 21: Multifamily Portfolio Highlights
Multifamily Portfolio Highlights Benefits from strong NYC residential demand 21 eae Mulberry Street Mulberry St. & East Houston St. * Subway lines: B, D, F,M&6 * 96 Units, 100% free-market * Studio, IBR, 2BR * Retail space leased to CVS * 24-hour doorman, fitness center, resident lounge, roof deck,
Slide 22: Meet the Team
De MEET THE TEAM Experienced and Aligned Management Management team has a deep understanding of NYC market, real estate and capital markets Anthony E. Malkin Christina Chiu Chairman & Chief Executive President Officer 4 years with ESRT 36 years with ESRT 22 years in industry 36 years in industry B.S
Slide 23: Sustainability Leadership
Sustainability Leadership CARBON NEUTRAL AS OF 2022 y a “ 23 REDUCED EMISSIONS 47% 57% in our entire commercial portfolio since 2009 at the Empire State Building since 2007 PURCHASED WIND RECs for 100% of the commercial portfolio’s electrical usage since 2021, and for the Empire State Building since
Slide 24: Conclusion
Conclusion 24 Unique NYC-focused portfolio comprised of modernized office assets; everyday retail in high foot traffic locations; well-located, well-amenitized multifamily assets; iconic Empire State Building Observatory Experience Well-positioned balance sheet affords flexibility to pursue capital
Slide 25: Appendix
Appendix 25 Overview Sustainability Initiatives Sustainability Scorecard Sustainability Leadership Reconciliation of Non-GAAP Measures Footnotes Disclaimer
Slide 26: Focus on Sustainability Initiatives
Focus on Sustainability Initiatives ey mento! p Soria AWARDED AS A LEADER S LEADER WELL ON TRACK WITH SECTOR LEADING TARGETS = 100% renewable wind powered commercial portfolio « Net-zero commitment for carbon emissions at ESB by 2030 and the entire commercial portfolio by 2035 PREPARED FOR FUTURE RE
Slide 27: Learn more about IEQ
Learn more about IEQ – Click Play Below
Slide 28: Sustainability Leadership
Sustainability Leadership 28 Our Chairman and CEO, Anthony E. Malkin is a recognized leader on sustainability initiatives for our local and national community =~ Chairman of the Real Estate Roundtable Sustainability Policy Advisory Committee = Was sole commercial owner member of NYC's Dept of Buildi
Slide 29: Reconciliation of Net Income to Cash NOI and Same Store Cash NOI
Three Months Ended Reconciliation of Net Income to Cash NOI and June 30, March 31, December 31, September 30, June 30, Same Store Cash NOI 18 2024 2024 2023 2023 2023 Net income $ 28,555 $ 10,215 $ 15,830 $ 19,928 $ 36,955 Add: General and administrative expenses 18,020 15,972 16,144 16,012 16,075 D
Slide 30: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
19 Three Months Ended Twelve Months to Date 30-Jun-24 31-Mar-24 31-Dec-23 30-Sep-23 Rental revenue 540,580 136,328 136,557 134,467 133,228 Tenant expense reimbursement 68,397 16,142 17,325 16,700 18,230 Deduct: Straight-line rental revenues (12,109) (1,900) (3,061) (2,133) (5,015) Above/below-market
Slide 31: Footnotes
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Slide 32: Disclaimer
Disclaimer 32 This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21 of the Exchange Act. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Pr
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