Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Investor Presentation (June 2020)
36 slides from Empire State Realty Trust's investor presentation, June 2020
Slide 1: Investor Presentation June 2020
- it (if is EMPIRE STATE REALTY TRUST Investor Presentation June 2020
Slide 2: Well-Positioned in Current Uncertain Environment
Well-Positioned in Current Uncertain Environment Flexible balance sheet * Lowest leverage among public NYC office REITs, ample liquidity ($1bn cash plus $550M LOC capacity) and no debt maturities in 2020 Manhattan office portfolio represents attractive value proposition * Fully modernized, energy ef
Slide 3: Significant Cash, Line Availability and Low Leverage
SIGNIFICANT CASH, LINE AVAILABILITY AND LOW LEVERAGE $1.5BN+ Total Liquidity 35.5% Available $550M Available under Net Debt / ' Enterprise Value Unsecured pay Facility 78% 7.2 years Fixed Rate Weighted Avg. Outstanding Debt Zz E09 Debt Maturity 1$550 million drawn under $1.1 billion unsecured credit
Slide 4: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet MEETS NEEDS AND SUPPORTS GROWTH pci tela PEERS! Net Debt / 4 4x 8 1x EBITDA! Net Debt / Enterprise Value! CURRENT DEBT MATURITY PROFILE (As Of March 31, 2020)? '$ millions’ é ) $838 $315 $319 $225 — Oo Oe 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 and th
Slide 5: Portfolio Overview
Portfolio Overview PURE-PLAY MANHATTAN AND GREATER NEW YORK METROPOLITAN AREA 10.1 Million Total Rentable Square Feet Retail 7.1% Manhattan Office 74.7% Company data and filings as of March 31, 2020. EMPIRE STATE REALTY TRUST Tes aa
Slide 6: Varied Tenant Base
Varied Tenant Base DIVERSIFIED BY INDUSTRY Interpublic Group PartnerRe __ Linked ff IS gore. iY WE CREATE MUSIC NESPRESSO. EG oowssevke- Bones FDIC FRAGCMEN GLOBA BRANDS footy CITIZEN LEGG MASON GURL ASSET WANAGTWENT Industry diversification by annualized fully escalated rent. Company data and filin
Slide 7: Tenant Expansions Fuel Leases
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 » We focus on tenants which have potential for growth >» Tenants expand due to: Tenant service Proven execution Newly redeveloped buildings Combination o
Slide 8: Fully modernized, energy efficient assets
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 March 31, 2020. EMPIRE STATE
Slide 9: Contracted Revenue Growth
Contracted Revenue Growth EMBEDDED UPSIDE $60 Timing Realization: * $50 M of contractual revenue! * 2020: $16M * 2021: $24M * 2022+: $10M wh wr = uw fo} oO Cin millions) cra) Ww fe) $O =Burn-off of free rent Signed leases not commenced The Company as of 12/31/19 projected an additional $47M of addit
Slide 10: May 2020 Rent Collection Update
May 2020 Rent Collection Update Collections (per Investor deck on 4/22/20) Overall Office Retail April 69% 73% 46% Collections (as of 6/1/20) F overatl_| office | Retail | April 80% 83% 65% May 75% 80% 49%, Collections with Application of Security Deposits (as of 6/1/20) Overall Office Retail April
Slide 11: Approach to Rent Deferral Requests
Approach to Rent Deferral Requests COMPREHENSIVE PROCESS IN PLACE * Typical deferral agreement is for either (i) deferral of tenant obligation to restore security deposit amount equal to 3 months rent or less, or Cii) 3 month or less rent deferral, and payback of deferral amount within 18 months or
Slide 12: Tenant Re-Occupancy: Health and Safety Plan
Tenant Re-Occupancy: Health and Safety Plan COMPREHENSIVE SET OF PROTOCOLS ma «=0Fenant Communications « Proactive communications inform tenants of the new health and safety protocols in preparation for their return to the office man Cleaning & Air Quality * Increased cleaning frequency of high touc
Slide 13: Greater NY Metropolitan Office Portfolio
Greater NY Metropolitan Office Portfolio QUALITY ASSETS AND TENANTS soe near major transit hubs —— Metro-North Railroad @ Metro-North Train Stop \ wh | » Best assets located at or » Amenities update underway >» 10.9% of 1Q 2020 property NOI / 18.2% of total SF > 83.0% occupied / 84.0% leased >» Nota
Slide 14: Delivering on Cash NOI Growth
Delivering on Cash NOI Growth MANAGEMENT TEAM HAS DELIVERED Cash NO! Growth Even With Fluctuating Occupancy! $400,000 90.5% $380,000 90.0% __ $360,000 89.5% $340,000 89.0% $125M in 320,000 88.5% * __| Cash $300,000 88.0% NOI Growth $280,000 87.5% $260,000 87.0% $240,000 86.5% SP dP 5? dP 5? 5% SE GE
Slide 15: Net Effective Rent Growth
Net Effective Rent Growth NEW MANHATTAN OFFICE LEASING, WHICH COMPRISES 80% OF MANHATTAN VOLUME TTM Net Effective Rent Growth on a YoY Basis 12 20.0% ‘ain 17.8% Jee 14.8% 14.0% 12.3% 12.3% iy a ia i a sa a a cla 10.0% 8.0% 6.2% 6.0% 5.5% 4.0% L J 2.0% 0.0% 1 2019 20 2019 30 2019 4@ 2019 1@ 2020 ‘Com
Slide 16: Superior Cash Leasing Spreads
Superior Cash Leasing Spreads ILLUSTRATES MARK TO MARKET OPPORTUNITY Strong NYC office cash leasing spreads! Q1 2020 25.0% 20.0% 15.0% 10.0% Without the 1Q E 2020 Starbucks lease impact 5.0% with the 1a 2020 Starbucks lease impact 0.0% Total Portfolio New, Renewal, and New Manhattan Office Expansion
Slide 17: Observatory Performance
Observatory Performance CONSISTENT PERFORMANCE AMID ECONOMIC CYCLES, FX MOVEMENTS AND NEW ATTRACTIONS Observatory annual revenue! (millions) £ 9/11 Museum (3.1 Million Visitors $131.2" $128, ra 4 : $124,991271 4 5 $112.2 ae $101.8 Financial 1, ‘ea + Crisis Hits sate 4 me of the Rock H :. : Reopens H
Slide 18: Observatory Expense Reductions
Observatory Expense Reductions We are fully prepared to reopen the Observatory and recognize timing is dependent upon the decision of the authorities During this period of closure, annualized expense run-rate reduced by 60% from $35M in February 2020 to $14 million in May 2020 * Two-thirds of the re
Slide 19: Hypothetical Observatory Reopening
Hypothetical Observatory Reopening Monthly Admissions: Equivalent Quarterly Weighted Average . ; . Admissions: * For discussion purposes, we utilize a reopen date of July 1st, 2020! + We use 2019 attendance numbers for comparison purposes * 3Q 2020: 32.7% of 2019 level * 4Q 2020: 40% * 1Q2021: 40% *
Slide 20: Observatory Reopening: Health and Safety Plan
Observatory Reopening: Health and Safety Plan NEW HEALTH AND SAFETY PROTOCOLS ma customer Communications * Our official website and our reseller partners will advise all prospective guests of our enhanced protocols, and admission requirements man Cleaning & Air Quality *MERV-13 air filters supplemen
Slide 21: 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 * 89 years of popular Top Foreign Countries': cultural references
Slide 22: 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 Capita! 'Revenue per Capita equals: a) Observatory revenue less the fixed license
Slide 23: Observatory Valuation
Observatory Valuation SUM OF THE PARTS VALUES BOTH RENTAL REVENUE AND RESIDUAL PROFIT STREAMS Observatory Results -Trailing Twelve Months? In $MM Visitor Revenue 126 Gift Shop License Fee 5° Total Revenue 132 Less Operating Expenses 35 NOI 97 Less Intercompany rent expense 85 NOI after intercompany
Slide 24: Observatory Brand Actions Post-COVID
Observatory Brand Actions Post-COVID 19 Continued Social Media Engagement >» ESB’s lights and social media engagement have internationally celebrated the enduring New York spirit. * Its initial “Pandemic Siren”; * The months long nightly combination of heartbeat lightings, punctuated by an hourly sa
Slide 25: Empire State Building lit in ambulance colors
© New York: The Empire State Building was tit in ambulance colors 000 Fi Watch the Empire State Building shine red and twvne white to honor emergency workers New Yorkers applaud those battling the coronavirus pandemic See how Empire State Bullding honored emergency workers The New York Eimes @ usa t
Slide 26: Management Team
Management Team EXPERIENCED AND COMMITTED Anthony E. Malkin Chairman & Chief Executive Officer 31 years with ESRT 31 years in industry A.B. from Harvard College John B. Kessler President & Chief Operating Officer 5 years with ESRT 31 years in industry AB. from Harvard College and M.B.A. from the Boo
Slide 27: Appendix
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Slide 28: ESG Drives Long Term Value
ESG Drives Long Term Value SNAPSHOT OF REPRESENTATIVE INITIATIVES * Lowest kgCO2 psf of New York City office REITS'! * Below Requirements of the 2024-2029 Threshold Under NYC's Climate Mobilization Act Local Law 97 * Water Consumption, Electricity Consumption, Greenhouse Gas Emissions and Waste Prod
Slide 29: ESG Actions
ESG Actions ame Patricia S. Han joined ESRT Board « Expands Board to 8 members « Brings over 20 years of experience in the tech and media industry * Expertise in digital media and e-commerce will aid in areas critical to our businesses mee = Cristina Chiu joined ESRT Management Team + Joins as EVP a
Slide 30: Sustainability In Action
w ROl-driven Energy Conservation Measure development and implementation = Energy Star and Energy Star for Tenant Spaces = Real-Time Energy Management = Tenant Energy Audits = Tenant Energy Management Software Programs = 100% Renewable Energy at Empire State Building ® High Performance Design & Const
Slide 31: Free Rent Burn-Off and SLNC
Free Rent Burn-Off and SLNC SUMMARY COMMENCED LEASES IN FREE RENT PERIOD AND SIGNED LEASES NOT COMMENCED (SLNC) SCHEDULE B Cash R ; ibuti ; OL i Eollowing Years 2020 2021 2022 2023 Annualized Initial Base Cash Rent $27570M $15.053M $27.508M $27570M $27.570 M Total Portfolio Commenced leases in free
Slide 32: Signed Leases Not Commenced
Signed Leases Not Commenced SIGNED LEASES NOT COMMENCED SCHEDULE Tenant Interpublic Group of Companies, Inc. Uber Technologies, Inc. Concord Music Group, Inc. Kaplan Hecker & Fink LLP First Republic Bank Linkedin Corporation Linkedin Corporation LinkedIn Corporation Linkedin Corporation Linkedin Cor
Slide 33: Vacant Office Space
Vacant Office Space Current vacancy / Redeveloped vacancy (Manhattan Office) | 563,000 SF / 467,000 SF MANHATTAN OFFICE PORTFOLIO CURRENT VACANT SPACE SQ FEET Redeveloped Manhattan office space 467,000 aoa cneee Signed Leases Not Commenced (SLNC): “= Manhattan Office Properties SLNC 191,000 Greater
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures vem Eades Reconciliation of Net Income to NOI March 34, December 31, September June 30, March 31, December 31, September 30, June 30, Dec 34, and Cash NOt 2020 2018 2019 2013 2019 2018 2018 2018 2017 Net income 8288 $ = 28720 26,784 18,930 oas6 Ss 30781 s B2~ 3018
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Three Months Ended Twelve Months March 31, December 31, September 30, June 30, to Date 2020 2019 2019 2019 Rental revenue $ 515,079 $ 130,577 $ 130,234 $ 129,098 $ 125,170 Tenant expense reimbursement 76,031 17,536 21,467 21,127 15,901 Deduct: Straight-line rental
Slide 36: 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
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