Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Investor Day (March 2015)
98 slides from Empire State Realty Trust's investor day presentation, Mar 30, 2015
Slide 1: Empire State Realty Trust
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Slide 2: Performance & Perspective
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Slide 5: Anthony E. Malkin, Chairman and CEO
Anthony E. Malkin CHAIRMAN AND CHIEF EXECUTIVE OFFICER > First apartment in NYC in 1985 at corner of Hudson and Jane > Two sons, 24 and 22 > Golden Retriever named Iko Iko Favorite New York City Sports Moment: “Hideki Matsui’s double on October 16th, 2003 against Pedro Martinez. I’ve never heard as
Slide 6: Investor Highlights
Investor Highlights > Pure-play Manhattan and greater New York metropolitan area > Embedded, derisked growth > Redevelopment of irreplaceable properties > Best-in-class balance sheet > Experienced and proven management team EMPIRE STATE REALTY TRUST 6
Slide 7: Delivered On Our Promises
Delivered On Our Promises OCTOBER 2, 2013 (IPO) THROUGH MARCH 30, 2015 > Executed on redevelopment program > Initiated in-house property management, leasing and marketing > Executed on leasing at above market spreads > Demonstrated sustained observatory performance > Closed acquisitions (option prop
Slide 8: Internal & External Opportunities
Internal & External Opportunities SEVERAL YEARS OF EMBEDDED, DERISKED GROWTH TO COME Internal Growth Redevelopment External Growth Irreplaceable assets in prime locations with several years of embedded, derisked growth to come Consolidate, redevelop and lease floors, and outperform the market in any
Slide 9: John B. Kessler, President and COO
John B. Kessler PRESIDENT AND CHIEF OPERATING OFFICER > Four sons, aged 21,19,16 and 13 > Black Lab named Lola > Love to cook family recipe spaghetti sauce Favorite New York City Sports Moment: “On a Saturday afternoon in June 2008, Johnny Damon sets record as first Yankee to go 6 for 6 at Yankee St
Slide 10: Operational Leadership
Operational Leadership > Partner with Chief Executive Officer to lead ESRT > Assist Chief Financial Officer with balance sheet management > Manage day to day operations across business lines > Deliver the team for transaction opportunities > Engage with investors > Pursue external growth initiatives
Slide 11: Analyst And Investor Day Agenda
Analyst And Investor Day Agenda MONDAY, MARCH 30, 2015 Schedule Speakers: 9:15am Lunch: 12:30pm Q&A: 12:45pm Property Tours: 1:30 – 4:15pm Speakers Anthony E. Malkin, Chairman and Chief Executive Officer Welcome and Accomplishments Since IPO John B. Kessler, President and Chief Operating Officer Int
Slide 12: Thomas P. Durels
Thomas P. Durels EXECUTIVE VICE PRESIDENT AND DIRECTOR OF LEASING AND OPERATIONS > 2 daughters, 24 and 23, a son 20 > One daughter following in family real estate footsteps Favorite New York Sports Moments: “Watching 11 year old daughter do a 360 dunk on the floor of MSG during half time at Knicks g
Slide 13: Delivered On Promises 2014
Delivered On Promises 2014 785,000 SF of leasing 350,000 SF of redevelopment delivered 31.5% spreads achieved on new Manhattan office leases Signed larger leases for longer term with better credit limits BULOVA BrightRoll Johnson Controls 3i shutterstockTM Linked inTM macys Company data and filings
Slide 14: Delivered On Promises 2015 First Quarter Highlights
Delivered On Promises 2015 FIRST QUARTER HIGHLIGHTS HNTB 78,361 SF New lease Empire State Building SEPHORA 11,334 SF New lease 112 W. 34th Street Foot Locker 34,192 SF Lease recast 112 W. 34th Street OnDeck 78,787 SF Expansion 1400 Broadway Media General 26,782 SF New lease Empire State Building wor
Slide 15: Portfolio Overview
Portfolio Overview PURE PLAY MANHATTAN AND GREATER NEW YORK METROPOLITAN AREA 10.0 Million Total Rentable Square Feet 9.3 Million Rentable Square Feet of Office Space GNYM Office 18.6% Retail 7.3% Manhattan Office 74.1% GNYM Office 20% Manhattan Office 80% Company data and filings as of December 31,
Slide 16: Varied Tenant Base
Varied Tenant Base DIVERSIFICATION BY INDUSTRY Non-Profit 2.6% Media and Advertising 3.4% Technology 5.1% Legal Services 4.3% Other 19.2% Retail 13.4% Consumer Goods 22.4% Finance, Insurance, Real Estate 18.2% Professional Services 11.4% EMPIRE STATE REALTY TRUST Industry diversification by annualiz
Slide 17: Tenant Lease Expirations
Tenant Lease Expirations MANHATTAN OFFICE PORTFOLIO 11.5% 11.6% 1.0% 6.3% 7.0% 6.5% 5.4% 50.7% Available SLNC 2015 2016 2017 2018 2019 Thereafter Company data and filings as of December 31, 2014. EMPIRE STATE REALTY TRUST 17
Slide 18: Total 2014 Revenue
Total 2014 Revenue Observatory $111.5 19% Retail Total Revenue $593.2 $62.7 11% Manhattan Office $344.5 58% GNYM Office $74.5 12% $ in millions Company data as of December 31, 2014. EMPIRE STATE REALTY TRUST 18
Slide 19: Derisked Growth In Current Portfolio
Derisked Growth In Current Portfolio SIGNIFICANT EMBEDDED GROWTH POTENTIAL Signed leases not commenced Redevelopment opportunity Growth Retail opportunity Lease up of vacant space EMPIRE STATE REALTY TRUST 19
Slide 20: Signed Leases Not Commenced
Signed Leases Not Commenced Tenant SF 12/31/14 Escalated Annual Rent New Annual Rent Anticipated Commencement Date Incremental Annual Revenue SLNC Q1-2015 OnDeck Capital1 78,787 $1.44 M $4.26 M Mar. 2015-Jan. 2016 $2.82 M Media General 26,782 0.00 M 1.53 M Apr. 2015 1.53 M HNTB 78,361 0.00 M 4.47 M
Slide 21: Embedded Growth On Re-Leasing
Embedded Growth On Re-Leasing WITHIN MANHATTAN OFFICE PORTFOLIO Lease-up of ESRT’s available space Strong re-leasing spreads2 Manhattan office submarket avg. occupancy1 All leases YTD 2014 New leases YTD 2014 92.8% 92.8% 89.4% 92.3% +23.4% $ 50.42 +31.5% $52.35 84.4% 78.8% 84.7% 91.1% $40.86 $39.82
Slide 22: Superior Leasing Spreads
Superior Leasing Spreads COMPARED TO PEER GROUP 25.0% 23.4% 20.0% 15.0% 13.8% 10.0% 5.0% 0.0% 2014 Manhattan office leasing spreads ESRT Peer Group Company data and filings as of December 31, 2014. Peer group includes SL Green and Vornado Realty Trust. EMPIRE STATE REALTY TRUST 22
Slide 23: Manhattan Office Mark to Market
Manhattan Office Mark to Market CURRENT 2015 MARKET RENT VS. CURRENT FULLY ESCALATED RENT 2015 2016 2017 2018 2019 Current fully escalated rent PSF1 $42.15 $43.48 $45.84 $47.11 $44.46 Leased square feet expiring 822,968 384,803 522,870 481,302 397,683 Weighted average starting rent PSF2 $53.00 $55.0
Slide 24: Vacant Office Space: Manhattan Office Portfolio
Vacant Office Space MANHATTAN OFFICE PORTFOLIO Current vacancy 692,000 SF Weighted average starting rent $55 PSF Whitebox / Demo 153,000 SF 22% Prebuilt 168,000 SF 24% Broadcasting 8,000 SF 1% Storage 44,000 SF 7% Other Developed 54,000 SF 8% Undeveloped 265,000 SF 38% Weighted average starting rent
Slide 25: Vacant Office Space: Empire State Building
Vacant Office Space EMPIRE STATE BUILDING Current vacancy 246,000 SF Weighted average starting rent $58 PSF Prebuilt 70,000 SF 28% EMPIRE STATE REALTY TRUST Broadcasting 8,000 SF 3% Whitebox / Demo 26,000 SF 11% Storage 21,000 SF 9% Undeveloped 121,000 SF 49% Weighted average starting rent is manage
Slide 26: Redevelopment Opportunity
Redevelopment Opportunity EMBEDDED, DERISKED GROWTH Tenant space to be redeveloped Empire State Building 600,000 SF Balance of Manhattan office portfolio 1,600,000 SF Total 2,200,000 SF Probable Renovations of Undeveloped Space through 2020 500,000 400,000 300,000 200,000 100,000 (SF) 0 350,000 SF 4
Slide 27: Defining the Retail Opportunity
Defining the Retail Opportunity CREATING VALUE AT STREET LEVEL > 728,000 SF of total retail space > 93.2% occupied > 51.5% positive spreads on 18,166 SF of leasing in 2014 > 15 high traffic locations on dynamic retail streets Santander STARBUCKS COFFEE LOEWS CINEPLEX ENTERTAINMENT SHAKE SHACK charle
Slide 28: Dynamic 34th Street Market
Dynamic 34th Street Market > $2.0 billion in annual retail sales in the district > 100 million pedestrians per year > 4,000 pedestrians per hour at peak > Improving cotenancy with international brands > Macy’s $400 million store renovation EMPIRE STATE REALTY TRUST 28
Slide 29: Retail Mark to Market
Retail Mark to Market CURRENT 2015 MARKET RENT VS. CURRENT FULLY ESCALATED RENT Vacant 2015 2016 2017 2018 Current fully escalated rent PSF1 N/A $96.59 $76.64 $160.18 $64.85 Leased square feet expiring 24,319 26,163 58,664 17,603 12,099 Weighted average starting rent PSF2 $172 - $199 $214 - $267 $24
Slide 30: Derisked Growth In Current Portfolio
Derisked Growth In Current Portfolio SIGNIFICANT EMBEDDED GROWTH POTENTIAL Signed leases not commenced Redevelopment opportunity Growth Retail opportunity Lease up of vacant space EMPIRE STATE REALTY TRUST 30
Slide 31: Ryan O. Kass
Ryan O. Kass SENIOR VICE PRESIDENT AND DIRECTOR OF LEASING AND MARKETING > Met wife at freshman orientation at Cornell > Two year old boy/girl twins > Passion for travel and cooking Favorite New York City Spots: “Old Yankee Stadium and Bronx Botanical Gardens (where I got married)” EMPIRE STATE REAL
Slide 32: Compelling Value Proposition
Compelling Value Proposition HIGHLY ATTRACTIVE TO PROSPECTIVE TENANTS > Irreplaceable locations > Convenient access to mass transit > Renovated buildings > Modern, energy efficient tenant spaces > Varied inventory of pre-builts and full floors > Attractive in-building amenities > Customer service or
Slide 33: Varied Tenant Base
Varied Tenant Base DIVERSIFIED BY INDUSTRY shutterstock Linked in GLOBAL BRANDS GROUP Media General OnDeck > IPREO HNTB IPG Interpublic Croup GLG KOHLS macys COTY BULOVA Johnson Controls 3i Non-Profit 2.6% Media and Advertising 3.4% Technology 5.1% Legal Services 4.3% Other 19.2% EMPIRE STATE REALTY
Slide 34: Creating Full Floor Availabilities
Creating Full Floor Availabilities ADJACENT SPACES CONSOLIDATED OVER TIME Floors 55-58 originally had 42 tenants Adjacent tenants are grouped by lease expiration dates Spaces are vacated as expired leases are not renewed Floors 55-58 leased to only 2 tenants 34
Slide 35: Redevelopment Timeframe
Redevelopment Timeframe Months to Complete Whitebox Prebuilt Demolition and abatement 2 months 2 months Pipe replacement (ESB only) 0-1 month 0-1 month Construction 2-3 months 3-4 months Total 4-6 months 5-7 months EMPIRE STATE REALTY TRUST 35
Slide 36: Case Study: GLG Before
Case Study: GLG BEFORE 36
Slide 37: Case Study: GLG After
Case Study: GLG AFTER 37
Slide 38: Tenant Installations
Tenant Installations Linked in LINKEDIN NEW YORK
Slide 39: Select Opportunities: Office
Select Opportunities OFFICE 12 full floor availabilities of 310,000 SF > 5 available now > 7 to be delivered during the year > Located at ESB, 250 W. 57th St., 112 W. 34th St., 1359 Broadway, and 1400 Broadway 325,000 SF of new pre-builts > 168,000 SF currently available > 157,000 SF to be delivered
Slide 40: Diversity of Inventory: Full Floors
Diversity of Inventory FULL FLOORS 40
Slide 41: Diversity of Inventory: Pre-Builts
Diversity of Inventory PRE-BUILTS 41
Slide 42: Select Opportunities: Retail
Select Opportunities RETAIL 112 W. 34th St. > 35,866 SF including 7,718 SF at street level 250 W. 57th St. > 6,967 SF including 4,699 SF at street level ESB > 41,180 SF of multilevel retail including 20,449 SF at street level that starts to become available in 2015 Broadway Buildings > 15,189 SF all
Slide 43: C. Peter Sjolund
C. Peter Sjolund SENIOR VICE PRESIDENT OF DESIGN AND CONSTRUCTION > 35 years in the industry (all in NY metro area) > Graduated Rutgers University – College of Engineering > Celebrated 25th wedding anniversary Favorite New York City Moment: “Walking through Central Park in the snow with my wife and
Slide 44: Redevelopment Program: Empire State Building
Redevelopment Program EMPIRE STATE BUILDING Completed In Process To be Completed Lobby restoration and upgrade X Renovate observatory areas X Energy efficient retrofits X New tenant only conference center X New tenant only fitness center X New restaurant X Concourse reconfiguration X Tower lighting
Slide 45: Redevelopment Program: Balance of Manhattan Office Portfolio
Redevelopment Program BALANCE OF MANHATTAN OFFICE PORTFOLIO Completed In Process To be Completed Lobby renovations X Renovate and provide cooling to corridors X Renovate restrooms X New windows or curtain wall X Elevator modernization X Façade restoration/roof replacements X Replace and upgrade fire
Slide 46: Redevelopment Capital Expenditures
Redevelopment Capital Expenditures NEARING SUBSTANTIAL COMPLETION OF COMMON AREA RENOVATIONS Addl. Spend on Manhattan Office (2015-2016) $75-115 million 14% EMPIRE STATE REALTY TRUST Spent to Date $594 million 86% Company data and filings as of December 31, 2014. EMPIRE STATE REALTY TRUST 46
Slide 47: Modernizing Irreplaceable Assets
Modernizing Irreplaceable Assets Before Before EMPIRE STATE REALTY TRUST 47
Slide 48: Modernizing Irreplaceable Assets
Modernizing Irreplaceable Assets Before EMPIRE STATE REALTY TRUST 48
Slide 49: Modernizing Irreplaceable Assets
Modernizing Irreplaceable Assets Before EMPIRE STATE REALTY TRUST 49
Slide 50: Modernizing Irreplaceable Assets
Modernizing Irreplaceable Assets EMPIRE STATE REALTY TRUST 50
Slide 51: Tenant Space Redevelopment Typical Costs
Tenant Space Redevelopment TYPICAL COSTS PER SQUARE FOOT Type Cost Total base building $35-65 PSF Market rate tenant allowance $60-70 PSF Commission $23-27 PSF Total costs for redevelopment $118-162 PSF All tenant improvement and commission ranges are based on typical 10-year lease. EMPIRE STATE REA
Slide 52: Prebuilt Typical Costs Per Square Foot
Prebuilt TYPICAL COSTS PER SQUARE FOOT Type Cost Total base building $35-65 PSF Turn-key buildout $110-120 PSF Commission $14-19 PSF Total costs for redevelopment $159-204 PSF All tenant improvement and commission ranges are based on typical 5-year lease. EMPIRE STATE REALTY TRUST 52
Slide 53: Sustainability Measures Matrix
Sustainability Measures Matrix ESB One Grand Central Place 1400 Broadway 112 W 34th St 250 W 57th St 1333 Broadway 1350 Broadway Whole Building Energy Retrofit Analysis (Replicate ESB Model) x x x x x x x Whole Building Energy Retrofit Implementation x x x x x x x Low-e window retrofit x x x x x x x
Slide 54: Sustainability Measures Matrix
Sustainability Measures Matrix 1359 Broadway 501 7th Ave First Stamford Place Merritview 10 Bank St 500 Mamoroneck Metro Center Whole Building Energy Retrofit Analysis (Replicate ESB Model) x x x x x x x Whole Building Energy Retrofit Implementation x x underway pending underway underway pending Low
Slide 55: The Empire State Building: Creating Value Through Sustainability
The Empire State Building CREATING VALUE THROUGH SUSTAINABILITY Skanska energy savings of 57% | Coty saves $1 million over lease term Utility costs represent the third largest component of tenant expenses after salaries and rent Annual energy savings (kbtu) 16 14 12 10 8 6 4 2 0 Retrofit of chiller
Slide 56: Jeffrey H. Newman
Jeffrey H. Newman SENIOR VICE PRESIDENT LEASING AND MARKETING > Bachelor’s degree from University of Pennsylvania and JD from George Washington University > Tennis and piano player > Met wife while living and working in Manhattan > Two children daughter, 24, and son, 19 Favorite New York City Moment
Slide 57: Greater NY Metropolitan Portfolio
Greater NY Metropolitan Portfolio MANHATTAN QUALITY ASSETS AND TENANTS > Best assets located near major transportation hubs > 91.2% occupied > Full amenities > Low capital expenditure requirements > Captures Manhattan-based tenants that relocate or open satellite offices EMPIRE STATE REALTY TRUST 57
Slide 58: Greater NY Metropolitan Portfolio Overview
Greater NY Metropolitan Portfolio OVERVIEW Highway Metro-North Railroad Metro-North Train Stop 287 ~30 miles to Midtown Manhattan White Plains Harrison 684 New York Connecticut Connecticut Stamford 95 Westport 66-99 Main St 103-107 Main St Norwalk Office Standalone Retail > 14% of NOI > 19% of total
Slide 59: Tenant Lease Expirations: Greater NY Metropolitan Portfolio
Tenant Lease Expirations GREATER NY METROPOLITAN PORTFOLIO THOMSON REUTERS bp CRANE ElizabethArden NEW YORK REED ELSEVIER Tweedy, Browne Company LLC Established in 1920 Nestle 7.1% 1.7% 5.6% 4.0% 7.8% 14.3% 14.3% 45.2% Available SLNC 2015 2016 2017 2018 2019 Thereafter Company data and filings as of
Slide 60: Jean-Yves Ghazi
Jean-Yves Ghazi DIRECTOR OF THE EMPIRE STATE BUILDING OBSERVATORY > Best spot for quality reflection: the 103rd floor of ESB, it helps put things in perspective > Empire State Grill and Bar – nothing beats our brand new restaurant Favorite Past Time: “When not walking on the beaches with my wife: bl
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Slide 63: Performance Through Cycles and New Attractions
Performance THROUGH CYCLES AND NEW ATTRACTIONS Positive tourism trends to New York City (millions) ‘01 - ‘14 CAGR 3.7% 35.2 35.3 37.8 39.9 42.7 43.8 46.0 47.1 45.8 48.8 50.9 52.7 54.3 56.4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: NYC & Company. Domestic Visitors
Slide 64: Performance vs. Currency Swings
Performance vs. Currency Swings Observatory Annual Revenue (millions) 80.0% 60.0% 40.0% 20.0% 0.0% -20.0% -40.0% $25.0 2001 $29.6 2002 $33.4 2003 $40.0 2004 $50.1 2005 $56.3 2006 $62.9 2007 $72.2 2008 $71.6 2009 $78.9 2010 $80.6 2011 $92.2 2012 $101.8 2013 $111.5 2014 Pound Euro Real Yuan Company da
Slide 65: Ticket Mix
Ticket Mix ACTIVELY MANAGE TICKET MIX TO MAXIMIZE MARGINS Direct sales at full price is largest source Pricing Adult Senior (62+) Child (6-12) Main Deck Only (86th Floor) $32.00 $29.00 $26.00 Main Deck Only (86th Floor) Express $55.00 $55.00 $55.00 Main Deck + Top Deck (86th & 102nd Floors) $52.00 $
Slide 66: Ticket Mix: Sales Partnerships
Ticket Mix SALES PARTNERSHIPS > Hop on/off buses > Student tour operators > ESB Observatory featured via partners in key countries including China, Australia, India, Germany > ESB Observatory bundled packages > Online travel partners EMPIRE STATE REALTY TRUST 66
Slide 67: Who Visits The Observatory
Who Visits The Observatory IT’S NOT ALL FOREIGNERS, GRANDPARENTS AND PARENTS WITH CHILDREN International vs. Domestic: 59% International, 41% Domestic Age Group: 54% 18-34 years old Male vs. Female: 56% Female, 44% Male Domestic 41% International 59% Top 6 inbound countries: England/ Scotland/ Wales
Slide 68: Visitor Experience Improvement
Visitor Experience Improvement HEAVY SPEND BY PREDECESSOR 2005 Visitor path moved from lobby to second floor 2010 Launched sustainability exhibit 2013 Upgraded sustainability exhibit 2008 Relocated gift operations to the 80th floor Remodeled 102nd floor observation deck 2011 Launched Dare to Dream e
Slide 69: Focus On Yield and Efficiency
Focus On Yield and Efficiency EFFICIENT MOVEMENT THROUGH THE ENTIRE EMPIRE STATE BUILDING EXPERIENCE 102nd Floor 36% Observation deck 49% 80th Floor Dare to dream 4% 2nd Floor Sustainability 10% Showtime sales 1% Dwell time Throughput and sales EMPIRE STATE REALTY TRUST 69
Slide 70: Capacity Utilization
Capacity Utilization INCREASE CUSTOMER TRAFFIC IN NON-PEAK PERIODS Initiatives > Educated trade partners > Developed special programs to increase off-peak visitation > New ads to drive evening visitation > Shifted advertising spend Select 2010 vs. 2014 Results > Increased visitation by 7% in Q2 > Re
Slide 71: Midtown Day vs. Downtown Day
MIDTOWN DAY VS. DOWNTOWN DAY TWO SEPARATE DAYS Midtown Day Walking Time 1. Macy’s / Herald Square 6 minutes 2. Bryant Park 11 minutes 3. Madison Square Garden 8 minutes 4. Radio City Music Hall / Rockefeller Center 16 minutes 5. Madison Square Park / Eataly 7 minutes 6. Theatre district 19 minutes 7
Slide 72: Effect Of Weather On Admissions
Effect Of Weather On Admissions EFFECT OF BAD WEATHER DAYS ON DECEMBER ADMISSIONS (Admissions) 360,000 350,000 340,000 330,000 320,000 310,000 300,000 290,000 280,000 Overall Monthly Admissions vs. Bad Weather Days 3 Dec 2011 12 Dec 2012 10 Dec 2013 9 Dec 2014 (Days) 14 12 10 8 6 4 2 0 Bad Weather D
Slide 73: Performance Through Cycles and New Attractions
Performance THROUGH CYCLES AND NEW ATTRACTIONS Positive tourism trends to New York City (millions) ‘01 - ‘14 CAGR 3.7% 35.2 35.3 37.8 39.9 42.7 43.8 46.0 47.1 45.8 48.8 50.9 52.7 54.3 56.4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: NYC & Company. Domestic Visitors
Slide 74: Anthony E. Malkin, Chairman and CEO
Anthony E. Malkin CHAIRMAN AND CHIEF EXECUTIVE OFFICER > First apartment in NYC in 1985 at corner of Hudson and Jane > Two sons, 24 and 22 > Golden Retriever named Iko Iko Favorite New York City Sports Moment: “Hideki Matsui’s double on October 16th, 2003 against Pedro Martinez. I’ve never heard as
Slide 75: Public Relations and Branding
Public Relations and Branding A TRULY UNIQUE ASSET ONLINE 57% EMPIRE STATE REALTY TRUST PRINT 9% BROADCAST 34% 2014 in Review 13,500 PLACEMENTS $396 million+ AD VALUE EQUIVALENCY 11.75 billion IMPRESSIONS EMPIRE STATE REALTY TRUST 75
Slide 76: Social Media
Social Media Facebook Countries by most fans: > United States > India > Mexico Twitter Countries by most followers: > United States > United Kingdom > Argentina Instagram Countries by most followers: > United States > Philippines > United Kingdom Pinterest Countries by most followers: > United State
Slide 77: Public Relations and Branding
Public Relations and Branding A TRULY UNIQUE ASSET EMPIRE STATE REALTY TRUST 77
Slide 78: The Rockettes' Spring Spectacular
The Rockettes’ Spring Spectacular MARCH 2015 > 1.2 million Facebook fans, 27,400+ Twitter followers and 41,000 Instagram followers > AmNY Four full page ads with ESB logo (Circulation: 335,900+, total 1,343,600) > New York Spring Spectacular City Week announcement email (Circulation: 622,202) > Priz
Slide 79: World Cup Lighting
World Cup Lighting JUNE-JULY 2014 265.4 million IMPRESSIONS 98,000 ORGANIC MENTIONS > SportsCenter on ESPN (15.2 million followers) > Mesut Ozil (9.11 million followers) > ABC News (4.02 million followers) > Good Morning America (2.61 million followers) > U.S. Men’s Soccer Team (1.26 million followe
Slide 80: Ford Mustang 50th Anniversary
Ford Mustang 50th Anniversary APRIL 2014 103 million MEDIA IMPRESSIONS $31.7M AD VALUE > CNN (16.2 million followers) > BBC World (9.15 million followers) > Huffington Post (5.4 million followers) > Associated Press (4.84 million followers) > La Patilla, Venezuelan news outlet (4.63 million follower
Slide 81: Verizon Super Bowl Lighting
Verizon Super Bowl Lighting JANUARY 2014 1.57 million IMPRESSIONS $14.7M AD VALUE > ESPN (17.1 million followers) > National Football League (10.1 million followers) > Rainn Wilson, actor (3.79 million followers) > Drew Brees, New Orleans Saints quarterback (2.15 million followers) > Seattle Seahawk
Slide 82: Celebrity Visits
Celebrity Visits Taylor Swift > 74.7 million Facebook Fans, 54.1 million Twitter followers, 23.7 million Instagram followers, > ESB used as part of the run-up to new album launch > ESB lights choreographed to private rooftop concert Yahoo! livestream of “1989” > Taylor Swift mentioned ESB twice duri
Slide 83: External Growth
External Growth DEEP ROOTS AND UNIQUE EXPERTISE IN THE WORLD’S PREMIER OFFICE MARKET 83
Slide 84: Willing to Wait
Willing to Wait ESRT IS PATIENT, DILIGENT, CREATIVE, AND CONSCIOUS OF CYCLES IN PURSUIT OF EXTERNAL GROWTH Patience Diligence Cycles 84
Slide 85: David A. Karp
David A. Karp EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & TREASURER > Brew my own beer > Avid tennis player and cyclist > Born and raised in San Fernando Valley, Southern California - an original “Valley Dude” > Married for 31 years with two sons out of college Favorite New York City Sports
Slide 86: Financial Strategy Overview
Financial Strategy Overview STRONG AND FLEXIBLE CAPITAL STRUCTURE SUPPORTS NUMEROUS FINANCING OPTIONS Extending and laddering debt maturities FINANCIAL STRATEGY Access to a variety of forms of capital Low leverage with significant capacity EMPIRE STATE REALTY TRUST 86
Slide 87: Low Leverage
Low Leverage BALANCE SHEET POSITIONED TO SUPPORT OUTPERFORMANCE “Over the last 20 years, more leveraged REITs have substantially underperformed REITs with less leverage.” -Green Street Advisors February 26, 2015 There has never been a period over the last ten years in the Modern REIT-Era in which le
Slide 88: Fortress Balance Sheet
Fortress Balance Sheet CONTINUOUS IMPROVEMENT AND MAXIMUM FLEXIBILITY Total Debt to EBITDA 6 5.9 5.8 5.7 5.6 5.5 5.4 5.9X 2013 5.6X 2014 Total Debt / 2014 EBITDA Debt / Enterprise Value EMPIRE STATE REALTY TRUST 5.6x 25% PEERS 6.0x 32% Company data and filings as of December 31, 2014. Peer group inc
Slide 89: Unencumbering The Portfolio
Unencumbering The Portfolio ENHANCING CAPITAL FLEXIBILITY Repaid $445 million in mortgage loans, adding approximately 4 million square feet to the unencumbered pool since IPO At IPO 100% 99% 50% 0% <1% Portfolio SF Encumbered Unencumbered Repaid $445 million, including mortgage loans securing: > Emp
Slide 90: Extending Maturities
Extending Maturities WEIGHTED AVERAGE MATURITY INCREASED FROM 3.1 YEARS AT IPO TO 3.7 YEARS (millions) $800 $700 $600 $500 $400 $300 $200 $100 $0 - $193 2014 $88 $44 2015 $92 $0 2016 $447 $381 2017 $403 $262 2018 $695 $0 2019 $78 $0 Thereafter At IPO 3/1/2015 EMPIRE STATE REALTY TRUST 90
Slide 91: Recent Refinancing
Recent Refinancing PRIVATE PLACEMENT OF UNSECURED SENIOR NOTES Terms: Series A $100 M 10 year maturity 3.93% coupon Series B $125 M 12 year maturity 4.09% coupon Series C $125 M 15 year maturity 4.18% coupon Blended $350 M 12.5 year average life 4.08% coupon Price: 100% (par) Sole investor: Entities
Slide 92: Pro Forma Debt Maturity
Pro Forma Debt Maturity WEIGHTED AVERAGE MATURITY INCREASED FROM 3.7 YEARS TO 5.6 YEARS PRO FORMA FOR REFINANCING (millions) $600 $500 $400 $300 $200 $100 $0 $193 $0 2014 $88 $0 2015 $92 $0 2016 $381 $356 2017 $403 $262 2018 $505 $0 2019 $0 $0 2020 $0 $0 2021 $0 $0 2022 $0 $0 2023 $428 $0 2024 -2030
Slide 93: Superior Returns From Redevelopment
Superior Returns From Redevelopment AN ILLUSTRATION OF THE RETURNS ON INVESTMENT Remaining investment from January 1, 2015 to redevelop the Empire State Building: > $65-105 million to complete common areas Cost per square foot allocable to the undeveloped space is $23-$38 PSF > Base building costs $
Slide 94: Superior Returns From Redevelopment
Superior Returns From Redevelopment AN ILLUSTRATION OF THE RETURNS ON INVESTMENTS White Box Low High Pre-Built Low High INVESTMENT PER SQUARE FOOT Common area redevelopment $23 $38 $23 $38 Tenant space: Base building $35 $65 $35 $65 Tenant allowance / improvement $60 $70 $110 $120 Leasing commission
Slide 95: Building Blocks For Outlook
Building Blocks For Outlook ASSUMPTIONS FOR KEY METRICS LOOKING FORWARD Built-in contractual growth - SLNC Lease up of vacant space Manhattan office redevelopment opportunity Manhattan retail opportunity Redevelopment and leasing capital expenditures Observatory dynamics ROI and debt structure EMPIR
Slide 96: Delivered On Our Promises
Delivered On Our Promises OCTOBER 2, 2013 (IPO) THROUGH MARCH 30, 2015 > Executed on redevelopment program > Executed on leasing at above market spreads > Closed acquisitions (option properties) > Initiated in-house property management, leasing and marketing > Demonstrated sustained observatory perf
Slide 97: Thank You
Thank You 97
Slide 98: Disclaimer
Disclaimer We make forward-looking statements in this presentation within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not rely on them as predictions of future events. For these statements, we cl
Empire State Realty Trust — Investor Day (March 2015) on 6ix