Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Q2 2020 Earnings Presentation
37 slides from Empire State Realty Trust's earnings presentation, Jul 30, 2020
Slide 1: Empire State Realty Trust
EMPIRE STATE REALTY TRUST
Slide 2: Well-Positioned with Path to the Future
Well-Positioned with Path to the Future Flexible balance sheet * Modest leverage, ample liquidity ($873M cash plus $550M LOC capacity) and no debt maturities in 2020 Manhattan office portfolio represents attractive value proposition ¢ Fully modernized, energy efficient assets with Indoor Environment
Slide 3: Significant Cash on Hand, Line Availability and Modest Leverage
SIGNIFICANT CASH ON HAND, LINE AVAILABILITY AND MODEST LEVERAGE $1.4BN+ Total Liquidity 43.7% Available $550M Net Debt / Available under : Unsecured Credit Enterprise Value Facility’ 73.3% 6.9 years Fixed Rate Weighted Avg. Outstanding Debt Debt Maturity '1$550 million drawn under $1.1 billion unsec
Slide 4: Flexible Balance Sheet
Flexible Balance Sheet MEETS NEEDS AND SUPPORTS GROWTH EMPIRE STATE PEERS! Net Debt / 5 2x 8 2x EBITDA’ Net Debt / <> 44% Enterprise Value’ <€&> CURRENT DEBT MATURITY PROFILE (As of June 30, 2020) ($ millions) $838 $315 $319 $225 se $146 ; $100 $125 $115 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 5: Portfolio Overview
Portfolio Overview 10.1 Million Total Rentable Square Feet erm st 77H ST sth st if. fl vase °3 Tene ORE OME Manhattan Office 74.75% o naw © 25st Company data and filings as of June 30, 2020. EMPIRE STATE REALTY TRUST 5
Slide 6: Varied Tenant Base
Varied Tenant Base IFG D Diligent JCDecaux = Shutterstock Interpublic Group PartnerRe Linked[f]. <>” HNTB y FRAGOMEN ascap KOHES coon ios etl EY EG oovseree CITIZEN LEGG MASON GLOBAL ASSET MANAGEMENT Industry diversification by annualized fully escalated rent. Company data and filings as of June 30,
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 2016 » We focus on tenants which have potential for growth >» Tenants expand due to: Tenant service Proven execution Newly redeveloped buildings Combinat
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 June 30, 2020. EMPIRE STATE
Slide 9: Contracted Revenue Growth
Contracted Revenue Growth EMBEDDED UPSIDE $45 Timing Realization: $40 ° $42.4 M of contractual revenue! $38 * 2020: $4.6M q $50 * 2021: $16.4M S $25 + 2022: $16.6M E $20 * 2023+: $4.8M = $15 $10 $5 $0 = Burn-off of free rent Signed leases not commenced 1The Company as of 12/31/19 projected an additi
Slide 10: Total Billings Collected
Total Billings Collected Office Retail April 86% 84% May 85% 73% June 85% 69% July 93% 75%
Slide 11: Rent Deferral Request Protocol
Rent Deferral Request Protocol COMPREHENSIVE PROCESS IN PLACE * Typical deferral agreement is for (i) deferral of tenant obligation to restore security deposit amount equal to 3 months rent or less, or (ii) 3 month or less rent deferral, and payback of deferral amount within 18 months or less * Smal
Slide 12: Tenant Re-Occupancy: Health and Safety Plan
Tenant Re-Occupancy: Health and Safety Plan mae_enant Communications ¢ Proactive communications informed tenants of the new health and safety protocols in preparation for their return to the office ma Cleaning & Air Qualit ¢ Increased cleaning frequency of high touch points in common areas ¢ Regular
Slide 13: 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 14: Cost Reductions
Cost Reductions * Expected full year 2020 G&A run-rate of $60 million’, approximately 12% less than the previously disclosed run-rate of $68 million, broken down as follows: * Named Executive Officer compensation: * ($0.4) million from reduction in annual base salary for Anthony E. Malkin and Thomas
Slide 15: Superior Office Cash Leasing Spreads
Superior Office Cash Leasing Spreads ILLUSTRATES MARK TO MARKET OPPORTUNITY Strong office cash leasing spreads ' 8.7% 7.7% 6.7% 5.7% 4.7% 3.7% 2.7% 1.7% 0.7% -0.3% Total Office Portfolio 1 Company data and filings as of June 30, 2020. EMPIRE STATE REALTY TRUST Q2 2020 New, Renewal, and Expansion Man
Slide 16: 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: a (3.1 Million Visitors: $131.2 w. $112.2 Peeeeeee Tea $101.8 cesssese
Slide 17: 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 Observatory reopened under Phase 4, Outside Attractions, on July 20th, 2020 The 1024 floo
Slide 18: Hypothetical Observatory Admissions
Month « We use 2019 attendance numbers for Hypothetical Observatory Admissions ly Admissions’: comparison purposes Aug. 2020: 5% of 2019 levels Sep. 2020: 15% Oct. 2020: 25% Nov. 2020: 30% Dec. 2020: 35% Jan. - Mar. 2021: 40% Apr. - May 2021: 60% Jun. - Jul. 2021: 75% Aug. - Dec. 2021: 90% Jan 2022:
Slide 19: Observatory Reopening: Health and Safety Plan
Observatory Reopening: Health and Safety Plan NEW HEALTH AND SAFETY PROTOCOLS ma 320 Customer Communications * Our official website and our reseller partners advise all prospective guests of our safety protocols, and admission requirements www.esbnyc.com/safety ma «Cleaning & Air Quality *MERV-13 ai
Slide 20: 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 21: 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!2:3 Oo v 1 Revenue per Capita equals: a) Observatory revenue less the fixe
Slide 22: 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 91 Gift Shop License Fee a Total Revenue 95 Less Operating Expenses 30 NOI 65 Less Intercompany rent expense 63 NOI after intercompany re
Slide 23: 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 ° Annual Pride lighting; ° “Remain dark” response to racial injustice; ® NYU and Columbia Graduates lighting celebration;
Slide 24: Media coverage of Empire State Building display
NEW YORK POST Macy’s 4th of July fireworks end with stunning Empire State Building display USATODAY. Photos: inde ulna Fourth CN SOCKS @news NZ Forbes CNBC Media impressions and AVE are based on U.S., print, online, and broadcast outlets as well as additional international print and online outlets g
Slide 25: Management Team
Anthony E. Malkin Chairman & 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 3 months with ESRT 18 years in industry B.S. from New York University Stern School of Business >
Slide 26: Appendix
Slide 27: ESG Drives Long Term Value
ESG Drives Long Term Value Envi | / Sustainabil ¢ 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 Produced are down 8%, 5%
Slide 28: ESG Actions
ESG Actions waa Ongoing Board Refreshment «Recent appointments of Patricia S. Han (2019) and R. Paige Hood (2020) ¢ Patricia S. Han brings over 20 years of in digital media and e-commerce experience ¢R. Paige Hood bring over 32 years in real estate finance industry ¢ William H. Berkman departs after
Slide 29: Sustainability In Action
= ROldriven 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 & Constr
Slide 30: ESB Sustainability Initiatives Featured in Centerfold Review
ESB Sustainability Initiatives Featured in Centerfold Review washingtonpost.com/graphics/20 gElimate Solutions Empire State of Green New York’s most famous skys¢raper shrank its planet-warming emissions by 40 percent. Can the rest of the city do the same? “The “deep retrofit” — which added $31.1 mil
Slide 31: Total Portfolio: Free Rent Burn-Off and SLNC
Total Portfolio Free Rent Burn-Off and SLNC Base Cash Rent Contributing to Cash NOI in the Following Years 2020 2021 2022 2023 Annualized Initial Base Cash Rent Commenced leases in free rent period Signed leases not commenced Total 3Q 2020 - 14 leases 4Q 2020 - 3 leases 1Q 2021 - 1 lease 2Q 2021 - 1
Slide 32: Signed Leases Not Commenced
Signed Leases Not Commenced Tenant SF Expected Base Rent Commencement incremental GAAP Cash Revenue Winged Keel Group, Inc. 12,724 Jan. 2021 Mar. 2022 $0.92M Uber Technologies, Inc. 32,927 Jan. 2021 May 2021 2.30 M Concord Music Group, Inc. 46,329 Jan. 2021 Nov. 2021 2.87M Kaplan Hecker & Fink LLP 2
Slide 33: Vacant Office Space
Vacant Office Space Current vacancy / Redeveloped vacancy (Manhattan Office) 642,000 SF / 513,000 SF MANHATTAN OFFICE PORTFOLIO CURRENT VACANT SPACE SQ FEET Redeveloped Manhattan office space 513,000 26 000 Signed Leases Not Commenced (SLNC): a Manhattan Office Properties SLNC 342,000 Greater New Yo
Slide 34: Reconciliation of Net Income to NOI and Cash NOI
Three Months Ended Year Ended Reconciliation of Net Income to NOI June 30, March 31, December 31, September 30, June 30, December 31, and Cash NOI 2020 2020 2019 2019 2019 2019 Net Income $ (19,618) $ 8,288 $ 28,720 $ 26,784 $ 18,930 $ 84,290 Add: General and administrative expenses 18,149 15,951 16
Slide 35: Total Cash Revenues Reconciliation
Three Months Ended Twelve Months to June 30, March 31, December 31, September 30, Date 2020 2020 2019 2019 Rental revenue $ 512,283 $ 122,374 $ 130,577 $ 130,234 $ 129,098 Tenant expense reimbursement 75,755 15,625 17,536 21,467 21,127 Deduct: Straight-line rental revenues (16,933) 2,710 (8,193) (6,
Slide 36: EBITDA and Adjusted EBITDA Reconciliation
Three Months Ended June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 Net income (loss) $ (19,618) $ 8,288 $ 28,720 $ 26,784 $ 18,930 Interest expense 23,928 19,618 18,534 19,426 20,597 Income tax expense (benefit) (2,450) (382) 1,210 1,338 611 Depreciation and amortizat
Slide 37: 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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