Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Investor Presentation (September 2014)
28 slides from Empire State Realty Trust's investor presentation, Sep 9, 2014
Slide 1: Investor Presentation September 2014
Exhibit 99.1 INVESTOR PRESENTATION September 2014
Slide 2: 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. For these statements, we claim the protections of the safe harbor for forward-looking st
Slide 3: Investment Highlights
Investment Highlights High quality, pure-play Manhattan and Greater New York office and retail portfolio Growth potential from completing turnaround in existing properties and new leasing, option properties and acquisitions Proven track record of managing, leasing and executing our repositioning str
Slide 4: History of Innovation and Commitment to New York
History of Innovation and Commitment to New York ESRT exercises option to purchase two Manhattan office 2014 properties IPO of ESRT, a publicly traded REIT focused on office and retail 2013 properties in Manhattan and Greater New York metropolitan area 2010 Malkin Holdings begins consolidationof por
Slide 5: Operating Philosophy
Operating Philosophy Focus on performance, history as fiduciaries and hands-on operators Maintain process, exercise discipline in execution and no complacency Demonstrated capabilities in up and down markets Focus on servicing brokers and tenants Proactive, service-intensive approach to asset and pr
Slide 6: Management Team
Management Team Anthony E. Malkin Thomas P. Durels David A. Karp Thomas N. Keltner, Jr. Chairman, Executive Vice President & Executive Vice President, Executive Vice President, Chief Executive Officer & Director of Leasing and Chief Financial Officer & General Counsel President Operations Treasurer
Slide 7: Pure Play Midtown Manhattan and Greater New York Strategy
Pure Play Midtown Manhattan and Greater New York Strategy Note: The Company exercisedits option to purchase 112 West 34th Street and 1400 Broadwayon 5/19/2014 (closed on 7/15/2014) 7
Slide 8: Empire State Building: The World's Most Famous Office Building
Empire State Building “The World’s Most Famous Office Building” International Icon Premier Office Building International icon of the New York City Comprehensive upgrade and skyline repurposing underway – Full restoration or re-creation of 1 exterior and all public spaces “America’s Favorite Architec
Slide 9: Pure Play Midtown Manhattan and Greater New York Strategy
Pure Play Midtown Manhattan and Greater New York Strategy Highway Metro-North Railroad 66-99 Main St Metro-North Train Stop Westport 103-107 Main St 684 95 Norwalk 287 Stamford White Plains 383 Main Avenue Harrison ~30 miles to Midtown Manhattan First Stamford Place Metro Center 10 Bank Street 500 M
Slide 10: Observatory has been a Stable and Growing Source of Revenue
Observatory has been a Stable and Growing Source of Revenue Leading NYC Tourist Destination Value-Added Strategy Improvement 3 to 4+ million visitors every year since 2000 Focused on a modern guest experience – Record number of visitors in 2013 at 4.3 million – Modernization program for new visitor
Slide 11: Observatory has been a Stable and Growing Source of Revenue
Observatory has been a Stable and Growing Source of Revenue Positive Tourism Trends to New York City (visitors in millions) ‘01 – ‘12 48.8 50.9 52.0 CAGR 45.9 47.1 45.6 42.6 43.8 40.0 3.6% 37.8 35.2 35.3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Domestic Visitors International Visi
Slide 12: Attractive Retail Portfolio in Prime Manhattan and Greater New York Locations
Attractive Retail Portfolio in Prime Manhattan and Greater New York Locations High Quality Retail Portfolio th Location in premier corridors including Herald Square, 34 Street corridor, Grand Central, Union Square and Columbus Circle Ground floor spaces in our office buildings and standalone spaces
Slide 13: Competitive Advantage From Energy Efficiency
Competitive Advantage From Energy Efficiency Global ground-breaker in defining and implementing energy efficiency in buildings and tenant installations Empire State Building project is recognized worldwide as the new model for sustainability Est. Energy Reduction 1 – Partnered with the Clinton Clima
Slide 14: Internal and External Growth Opportunities
Internal and External Growth Opportunities Experienced management team uses its best practices to develop and execute winning internal and external strategies Internal External Repositioning Growth Growth Expertise Opportunities Opportunities 14
Slide 15: Organic Growth Potential in Manhattan Office Portfolio
Organic Growth Potential in Manhattan Office Portfolio Lease-up of Empire’s Available Space Strong Re-Leasing Spreads² Manhattan Office Submarket Avg. Occupancy¹ YTD 2014 89.7% 86.4% 92.3% 89.7% 88.9% $50.56 85.4% 85.2% 85.1% Managing rent roll as appropriate to execute $40.66 repositioning strategy
Slide 16: Illustrative NOI Impact of ESB Repositioning
Illustrative NOI Impact of ESB Repositioning¹ A 5% increase in office occupancy at ESB increases illustrative NOI by ~$6 to $8 million, while a $5 increase in base rent per square foot on new office leases at ESB increases illustrative NOI by ~$1 to $2 million Illustrative Potential NOI Upside at ES
Slide 17: External Growth: Recent Acquisitions
External Growth: Recent Acquisitions Exercised Options to Purchase Two Properties th 112-122 W. 34 Street 1400 Broadway Price: $734 million, or $446 per sf Occupancy opportunity long-term o 1400 Broadway: 92.6% occupied, 92.7% leased th o 112 W. 34 : 77.5% occupied, 83.2% leased Funding: o $167.7 mi
Slide 18: Attractive External Growth Opportunities
Attractive External Growth Opportunities Targeting Acquisitions with Attractive Stabilized Return Through Value-Add Upside Acquisition strategy focused on Manhattan office and retail Market dominated by multi-generational family ownership o Off-market investment opportunities o OP units provide tax-
Slide 19: Pure Play Manhattan and Greater New York Strategy
Pure Play Manhattan and Greater New York Strategy Total Portfolio Office Portfolio 1 Manhattan Greater NY Retail Office 93% Office Metro Office 7% 81% 19% 10.0 million rentable square 9.3 million rentable square feet feet th Note: Percentage splits based on square footage. Data as of June 30, 2014 a
Slide 20: Portfolio Summary: Diversification by Market and Industry
Portfolio Summary: Diversification by Market and Industry Market Distribution (by rentable sq. ft) Industry Diversification (annualized fully escalated rent) NY metro retail Media and Non profit Consumer 0.2% advertising 2.6% goods NY metro office 18.4% 3.5% 22.2% Other 18.6% Manhattan retail 7.1% T
Slide 21: Proven Value-Add Repositioning Strategy
Proven Value-Add Repositioning Strategy Took control over day-to-day management of Repositioning Program¹,² Manhattan office properties from 2002-2006 Repositioning program developed and Additional Spend on commenced Manhattan Renovation programs at each property Office (2014- - 2016) $95135 address
Slide 22: Empire State Building Repositioning Case Study
Empire State Building Repositioning Case Study 1 700,000 square feet of the Empire State Building remain to be repositioned Pre Post (rentable SF (rentable SF per The Benefits per leases) new bldg. measurement) Change Decreased Number of Leases 218 25 (193) Increased Occupancy 74.4% 100.0% +25.6 p.p
Slide 23: 1333 Broadway Repositioning Case Study
1333 Broadway Repositioning Case Study Repositioning substantially completed with 8 out of 10 office floors renovated Pre Post (rentable SF (rentable SF per The Benefits per leases) new bldg. measurement) Change Decreased Number of Leases 59 6 (53) Increased Occupancy 52.0% 100.0% +48.0p.p. Longer L
Slide 24: Pre-Built Strategy
Pre-Built Strategy Pre-Built Strategy: Utilization of Space for New Tenants Pre-built office suites are designed to: – Appeal to a broad range of users – Have efficient layouts – Be energy efficient – Have ability to re-use install and re- lease with only modest work Our pre-built strategy improves
Slide 25: Financial Highlights
Financial Highlights Significant signed leases not commenced, adding $4.2 million of annualized base rent (ABR), a 1.3% increase over year end ABR Low leverage of 26.0% of enterprise value 1 Significant balance sheet flexibility, with goal of achieving investment grade ratings $355 million drawn on
Slide 26: Well Capitalized Balance Sheet to Support Future Growth
Well Capitalized Balance Sheet to Support Future Growth Low Leverage Capital Structure¹ Private Perpetual Cash $800mm Net Debt / enterprise value ~26.0% Preferred $42mm Credit Facility 2 Debt / EBITDA ~4.6x Exchangeable Senior Notes $27 mm 1% $355 mm <1% 6% $250 mm Interest coverage ~4.7x 4% Mortgag
Slide 27: Strong Independent Board
Strong Independent Board 6 of 7 board members are independent Managing Partner, Associated Partners, L.P. William H. Berkman Former director, IAC Managing Principal, Bay Hollow Associates Alice M. Connell Formerly held senior positions in mortgage lending and real estate equity areas at TIAA-CREF CE
Slide 28: Investment Highlights
Investment Highlights High quality, pure-play Manhattan and Greater New York office and retail portfolio Growth potential from completing turnaround in existing properties and new leasing, option properties and acquisitions Proven track record of managing, leasing and executing our repositioning str
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