Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Investor Presentation (November 2020)
36 slides from Empire State Realty Trust's investor presentation, November 2020
Slide 1: Investor Presentation November 2020
EMPIRE STATE REALTY TRUST Investor Presentation November 2020
Slide 2: Well-Positioned with Path to the Future
Well-Positioned with Path to the Future Flexible balance sheet ° Ample liquidity of $1.5 billion comprised of $373 million cash plus $1.1 billion undrawn capacity on revolving credit facility . Modest leverage . No debt maturity until 2024 Manhattan office portfolio represents attractive value propo
Slide 3: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet AMPLE LIQUIDITY, MODEST LEVERAGE, NO DEBT MATURITY UNTIL 2024 $1.5BN 5.6x Total Liquidity Net Debt / Adj. Available EBITDA $373MM 46.3% Cash and S-T Net Debt / Investments Enterprise Value $1.1BN 80% of SF Undrawn Unencumbered Capacity on LOC Portfolio Company data
Slide 4: Flexible Balance Sheet
Flexible Balance Sheet EMPIRE STATE PEERS! Net Debt / 5 6x 7 6x Adj. EBITDA! Net Debt / Enterprise Value! CURRENT DEBT MATURITY PROFILE (As of September 30, 2020)? ($ millions) $838 $315 $319 $225 $146 $78 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 and thereafter mUnsecured private place
Slide 5: Portfolio Overview
Portfolio Overview 10.1 Million Total Rentable Square Feet “~ [tro Gotnam 660 77TH ST °e carist 61H ST ‘9TH ST Manhattan Office 75% LEXINGTON AVE MADISON AVE First Commercial Portfolio in the U.S. to Achieve the WELL Health-Safety Rating 24TH ST WELL | HEALTH-SAFETY © 281 st RATED © 23n0 st ? Ey PEE
Slide 6: Varied Tenant Base
Varied Tenant Base JCDecaux = Shutterstock I G Non-Profit Consumer Interpublic Grou, i e 4.4% Goods Media & Advertising 19.1% PartnerRe _ ° z 4.5% Linked], >” — — Legal Services 5.0% | «EMPIRE STATE | REALTY TRUST Finance, Insurance, Real Estate 17.4% HNTB ap FRAGOMEN We CREATE MUSIC. KOHLES NESPRES
Slide 7: Tenant Expansions Fuel Leases
> We focus on tenants which have potential for Tenant Expansions Fuel Leases Cumulative Growth from Tenant Expansions 2,000,000 1,600,000 1,200,000 800,000 Square Footage 400,000 2013 2014 2015 2016 growth Tenants expand due to: Tenant service Proven execution Newly redeveloped buildings Combination
Slide 8: Fully modernized, energy efficient assets, centrally located near mass transit
Fully modernized, energy efficient assets, centrally located near mass transit Substantially lower price point versus rents for new construction/aged Class A, and offers much more than Class B Company data and filings as of September 30, 2020. EMPIRE STATE
Slide 9: ESG Leadership
ESG Leadership ESG Integration Company-Wide * Our Chairman, President and CEO, Anthony E. Malkin is a recognized leader on sustainability initiatives for our local and national community * Sole New York City owner member of NYC Climate Mobilization Local Law 97 Advisory Board * Chairman of the Real
Slide 10: Environmental - Energy & Emissions
Environmental - Energy & Emissions Sustainability Goals and Progress Energy Goals Status: Progress: Source Energy Use Intensity * Reduce energy use intensity 5% reduction in energy use intensity in 2019 vs 2018 . Ss * Achieve ENERGY _ 7014 STAR certification 76% ENERGY STAR Certified in 2019 8 208 2
Slide 11: Indoor Environmental Quality (IEQ) & ESG Certification
Indoor Environmental Quality IEQ) & ESG Certification Sustainability Goals and Progress IEQ Goals Status: Progress: * Improve the |EQ in our SJ * |st US commercial portfolio to have buildings to improve WELL Health-Safety rating efficiencies, tenant safety * Member of the Wel! Living Lab Alliance; a
Slide 12: Environmental - Waste & Water
Environmental - Waste & Water Sustainability Goals and Progress Waste & Recycling Goals Status: Progress: * Reduce waste generation * 10.6% reduction in waste tons psf in by 5% year over year 2019 vs 208 * Aggressive waste diversion strategies to meet and exceed NYC legislation * Tenant education on
Slide 13: Social - Human Capital & Community
Social - Human Capital & Community Human Capital Development Goals * Actively engage with our employees on policy and company culture * Implement state of the art wellness programs * Increase employee training and education opportunities and participation + Increase the gender and ethnic diversity o
Slide 14: Governance
Governance Board Independence * Lead Independent Director, elected annually, with responsibilities outlined in the corporate governance guidelines . Independent Board (7 of 8 directors) / All Board committees composed of independent irectors Accountability * Proxy access stockholder right (adopted i
Slide 15: Embedded Upside From Contracted Revenue Growth
Embedded Upside From Contracted Revenue Growth (In millions) Cumulative Cash Rent Contribution to Cash NOI $35.94M $32.73M $30 28.26M $11.60M = $0.13M $0 $0.54M_ = $0.41M 2020 2021 2022 2023 2024 = Burn-off of free rent m Signed leases not commenced Company data and filings as of September 30, 2020.
Slide 16: Total Billings Collected
Total Billings Collected1 Office Retail 2Q 2020 86% 78% 3Q 2020 96% 84% October 93% 84%
Slide 17: Cost Reduction Targets Achieved
Cost Reduction Targets Achieved ° G&A: * 2020 G&A run-rate of $60 million’, approximately 12% less than the previously disclosed run-rate of $68 million. Key highlights include: * $4.3 million reduction in 2020 Named Executive Officer (NEO) compensation ¢ $1.5 million reduction in 2020 corporate ove
Slide 18: Office Cash Leasing Spreads
1Company data and filings as of September 30, 2020. EMPIRE STATE REALTY TRUST Office Cash Leasing Spreads Office cash leasing spreads ' 8.7% 6.7% 4.7% 2.7% 0.7% 1.3% -3.3% -5.3% -7.3% Total rtfolio Q3 2020 New, Renewal, and Expansion Manhattan Office New Manhattan Office 18
Slide 19: Norwalk Stamford White Plains
Highway Metro-North Railroad Metro-North Train Stop 684 Norwalk 95 Stamford White Plains 287 Harrison ~30 miles to Midtown Manhattan 10 Bank Street 500 Mamaroneck Avenue First Stamford Place Metro Center 383 Main Avenue
Slide 20: ESRT Achieves WELL Health-Safety Rating
ESRT Achieves WELL Health-Safety Rating First Commercial Portfolio in the U.S. to Achieve the WELL Health-Safety Rating WELL Health-Safety Rating * Evidence-based, third-party verified rating for new and existing buildings focused on operational policies, maintenance protocols, emergency plans and s
Slide 21: Tenant Re-Occupancy: Health and Safety
Tenant Re-Occupancy: Health and Safety Tenant Communications * Proactive communications inform tenants of the new health and safety protocols in preparation for their return to the office Cleaning & Air Quality * Increased cleaning frequency of high touch points in common areas, reduced touchpoints
Slide 22: Observatory Performance
Observatory Performance CONSISTENT PERFORMANCE AMID ECONOMIC CYCLES, FX MOVEMENTS AND NEW ATTRACTIONS ‘One World Observa' ry Opens (1.0 Million Visitors = estimated 2019) Observatory annual revenue! (millions) "9/11 Museum Opens: 2 (3.1 Million Visitors: $131.2 w. $112.2 Peeeeeee Tea $101.8 cesssese
Slide 23: Observatory Expense Reductions
Observatory Expense Reductions * The Observatory closed by order of authorities on March 16th, 2020 « While closed, the annualized expense run-rate was reduced from $35M in February 2020 to $14M in May 2020 * The 86th floor reopened on July 20th, 2020 and the 102" floor reopened on August 24th, 2020
Slide 24: Hypothetical Observatory Admissions
Hypothetical Observatory Admissions Monthly Admissions": Equivalent Quarterly Weighted Average wet mele ¢ We use 2019 attendance numbers Admissions": for comparison purposes ¢ We use 2019 attendance numbers for © Oct. 2020: 6% comparison purposes * Nov. 2020 - Jan. 2021: 10% ° 4Q2020: 10% of 2019 le
Slide 25: Observatory Reopening: Health and Safety
Observatory Reopening: Health and Safety Customer Communications * Our official website and our reseller partners will advise all prospective guests of our enhanced protocols and admission requirements, click here Indoor Environmental Quality & Cleaning * MERV-13 air filters ¢ AtmosAir purification
Slide 26: Observatory is a Global Brand
Observatory is a Global Brand 80% OF VISITORS DECIDE TO VISIT BEFORE LEAVING HOME! Demographics': What Differentiates the ESB 64% International, 36% Domestic > Global and Iconic brand built 47% of Visitors are 18-34 years through: old Top Foreign Countries!: *° 89 years of popular cultural reference
Slide 27: Observatory Ticket Mix
Observatory Ticket Mix ACTIVE MANAGEMENT OF TICKET MIX TO DRIVE REVENUE PER CAPITA Direct sales at full price is Premium experience largest source offerings capture incremental revenue Growth in Observatory Revenue Per Capital? 1 Revenue per Capita equals: a) Observatory revenue less the fixed licen
Slide 28: Observatory Valuation
Observatory Valuation SUM OF THE PARTS VALUES BOTH RENTAL REVENUE AND RESIDUAL PROFIT STREAMS Observatory Results -Trailing Twelve Months2 In $MM3 Visitor Revenue 58 Gift Shop License Fee a Total Revenue 62 Less Operating Expenses 27 NOI BS Less Intercompany rent expense 37 NOI after intercompany re
Slide 29: The Empire State Building Celebrates John Lennon's Musical Legacy
The Empire State Building Celebrates John Lennon’s Musical Legacy MEDIA COVERAGE 1.1B+ $1.6M+ 599.2K+ MEDIA IMPRESSIONS AD VALUE EQUIVALENCY SOCIAL MEDIA IMPRESSIONS Sean Ono Lennon on remixing father's musie: It was therapy 115,838 views : Liked by abbywinsloww and thebeatles HAPPY BIRTHDAY JOHN! e
Slide 30: Management Team
Anthony E. Malkin Chairman, President & Chief Executive Officer 32 years with ESRT 32 years in industry AB. from Harvard College Management Team WW Christina Chiu Executive Vice President & Chief Financial Officer 6 months with ESRT 18 years in industry B.S. from New York University Stern School of
Slide 31: Appendix
Slide 32: Vacant Office Space
Vacant Office Space Current vacancy / Redeveloped vacancy (Manhattan Office) MANHATTAN OFFICE PORTFOLIO Prebuilt 212,000 SF 31% EMPIRE STATE PIO REALTY TRUST 99,000 SF 14% Whitebox / Demo 251,000 SF 37% Broadcasting 24,000 SF 3% Undeveloped 41,000 SF Storage 6% 22,000 SF 3% off Market 38,000 SF 6% C
Slide 33: Reconciliation of Net Income to NOI and Cash NOI
Three Months Ended Year Ended Reconciliation of Net Income to NOI and Cash September 30, June 30, March 31, December 31, September 30, December 31, NOI 2020 2020 2020 2019 2019 2019 Net income $ (12,269) $ (19,618) $ 8,288 $ 28,720 $ 26,784 $ 84,290 Add: General and administrative expenses 14,517 18
Slide 34: Cash Revenues Reconciliation
Three Months Ended Twelve Months to September 30, June 30, March 31, December 31, Date 2020 2020 2020 2019 Rental revenue $ 507,006 $ 123,821 $ 122,374 $ 130,577 $ 130,234 Tenant expense reimbursement 70,716 16,088 15,625 17,536 21,467 Deduct: Straight-line rental revenues (12,154) (395) 2,710 (8,19
Slide 35: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 Net income (loss) $ (12,269) $ (19,618) $ 8,288 $ 28,720 $ 26,784 Interest expense 23,360 23,928 19,618 18,534 19,426 Income tax expense (benefit) 38 (2,450) (382) 1,210 1,338 Depreciation and amortization 44,733 52
Slide 36: Forward-looking statements
This presentation includes “forward looking statements” within the meaning of the federal securities laws. Forward-looking statements may be identified by the use of words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “contemplates
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