Empire State Realty Trust, Inc. · NYSE:ESRT
Empire State Realty Trust — Investor Presentation (June 2016)
41 slides from Empire State Realty Trust's investor presentation, June 2016
Slide 1: Empire State Realty Trust
EMPIRE STATE ES aBbiat a
Slide 2: Forward-looking statements
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 claim the pro
Slide 3: Investor Highlights
Investor Highlights >» Pure-play Manhattan and greater New York metropolitan area >» Embedded, de-risked growth >» Redevelopment of irreplaceable properties >» “Best-in-Class” balance sheet >» Experienced and proven management team EMPIRE STATE REALTY TRUST
Slide 4: Management Team
Management Team EXPERIENCED AND COMMITTED Anthony E. Malkin Chairman & Chief Executive Officer 27 years with ESRT 27 years in industry Bachelor’s degree from Harvard College John B. Kessler President & Chief Operating Officer 1 year with ESRT 27 years in industry Bachelor’s degree from Harvard Colle
Slide 5: Delivered on Promises
> fi BULOVA Delivered on Promises 256,000 SF of leasing 50.9% spreads achieved on new Manhattan office leases (0008000 Controls Company data and filings as of March 31, 2016. EMPIRE STATE REALTY T RUST Johnson Y) ( Q1 2016 shutterstack 120,000 SF of redevelopment delivered Signed larger leases for l
Slide 6: Pure-Play Manhattan and Greater New York Metropolitan Area
PURE-PLAY MANHATTAN AND GREATER NEW YORK METROPOLITAN AREA 10.1 Million Total Rentable 9.4 Million Rentable Square Feet Square Feet of Office Space Company data and filings as of March 31, 2016. EMPIRE STATE 6
Slide 7: Manhattan Portfolio
Manhattan Portfolio FOCUSED IN KEY MIDTOWN SUBMARKETS 2 % a8tH ST ) % Central Park ees 1010 Third Avenue 60TH st “ous 666 @0000 SoS COLUMBUS CRCLE re mener cane ° 57TH SI 77 West 55th Street 111 West 334 Street = cane = = 3"? ST 2 2 ; stg 5 Ey a B ie = = ost = = ee o ” sold st 4g!" ST e060 MeTUFE On
Slide 8: Tenant Lease Expirations
Tenant Lease Expirations MANHATTAN OFFICE PORTFOLIO 11.8% 51.6% 6.2% 6.8% 7.5% 5.7% 8.5% 1.9% 1.9% eee ee Available | SLNC 2016 2017 2018 2019 2020 =‘ Thereafter Company data and filings as of March 31, 2016. EMPIRE STATE REALTY TRUST
Slide 9: De-risked Growth in Current Portfolio
De-risked Growth in Current Portfolio SIGNIFICANT EMBEDDED GROWTH POTENTIAL Signed Redevelopment leases not opportunit commenced pe ’ $28M 924M Retail Lease up of opportunity vacant space $16 M $36M Amounts reflect management's estimates of additional revenues from four drivers as of March 31, 2016
Slide 10: Signed Leases Not Commenced
Signed Leases Not Commenced Tenant Expedia, Inc. FootLocker Shutterstock, Inc. Macy’s Bank of America, N.A. Sephora Lighthouse Guild International Coyne Public Relations, LLC Precision for Value, Inc. Cook Fox Architects, LLP Other SLNC Total Company data and filings as of March 31, 2016. EMPIRE STA
Slide 11: Embedded Growth on Re-Leasing
Embedded Growth on Re-Leasing WITHIN MANHATTAN OFFICE PORTFOLIO Lease-up of ESRT’s available space Strong re-leasing spreads’ Manhattan office submarket avg. occupancy’ All leases Q1 2016 New leases Q1 2016 | 1 j * * 89.5% 83.3% 73.9% - Managing rent roll to execute repositioning strategy ESB MW. 33
Slide 12: Superior Leasing Spreads
Superior Leasing Spreads COMPARED TO PEER GROUP 50.0% 44.9% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% ° 2016 Q1 Manhattan office leasing spreads HB ESRT Peer Group Company data and filings as of March 31, 2016. Reflects new and renewal leases. Peer group includes SL Green, Vornado Re
Slide 13: Manhattan Office Mark to Market
Manhattan Office Mark to Market CURRENT 2016 MARKET RENT VS. CURRENT FULLY ESCALATED RENT 2016 Current fully escalated rent PSF! $ 46 Leased square feet expiring? 386,034 Weighted average starting rent $57 PSF3 Embedded growth 23.9% 2017 $ 48 509,045 $57 18.8% 2018 $ 51 561,220 $58 13.7% Fully escal
Slide 14: Vacant Office Space
Vacant Office Space MANHATTAN OFFICE PORTFOLIO Current vacancy 880,000 SF Weighted average starting rent $60 PSF Broadcasting 8,000 SF 1% Storage 42,000 SF 5% Prebuilt 264,000 SF 30% Whitebox / pre Demo EM PIRE STATE 45,000 SF 300,000 SF REALTY TRUST 5% 34% Undeveloped 158,000 SF 18% Weighted averag
Slide 15: Vacant Office Space - Empire State Building
Vacant Office Space EMPIRE STATE BUILDING Current vacancy 245,000 SF Weighted average starting rent $66 PSF Prebuilt 54,000 SF Whitebox / Demo 22% EMPIRE STATE REALTY TRUST Broadcasting 8,000 SF 3% Storage Undeveloped 25,000 SF 72,000 SF 30% Weighted average starting rent is management's estimate fo
Slide 16: Redevelopment Opportunity
Redevelooment Opportunity EMBEDDED, DE-RISKED GROWTH Tenant space to be redeveloped Empire State Building 430,000 SF Balance of Manhattan office portfolio 1,210,000 SF Total 1,640,000 SF 400000 Probable Renovations of Undeveloped Space through 2020 340,000 SF 300,000 210,000 SF 200,000 170,000 SF 14
Slide 17: Pre-war trophies in great locations
>» Pre-war trophies in great locations - S RT >» Class A costs a lot more >» Class B offers a lot less EMPIRE STATE 7
Slide 18: Tenants Relocating to ESRT
Tenants Relocating to ESRT ATTRACTING TENANTS FROM ALL PARTS OF NYC AND BEYOND OVER PAST 12 MONTHS a From Outside Manhattan 15 Tenants Representing 51,862 SF From Midtown (West) (Madison/Fifth, Penn Station/ Times Square South, Rockefeller Center, West Side) AVEN = 22 Tenants Representing 162,511 SF
Slide 19: Defining the Retail Opportunity
Defining the Retail Opportunity > 721,000 SF of total retail space >» 91.4% occupied > Annualized fully escalated rent of $71.5 million (15.5% of annualized fully escalated rent) > 108.5% positive spreads on 13,625 SF of leasing in Q1 2016 > 15 high traffic locations on dynamic retail streets Compan
Slide 20: Retail Mark to Market
Retail Mark to Market CURRENT 2016 MARKET RENT VS. CURRENT FULLY ESCALATED RENT Current fully escalated rent PSF! Leased square feet expiring? Weighted average starting rent PSF8 Embedded growth Fully escalated rents are as of March 31, 2016, exclude SLNC and are adjusted for space re-measurement. 2
Slide 21: Varied Tenant Base
Varied Tenant Base DIVERSIFIED BY INDUSTRY shutterstsck Linked [fil Seer ws Consumer cedia, ~=— OnDeck> || |i IPREO Goods 22.6% a NTB i 'G GLG| Non profit Interpublic Group EMPIRE STATE . aoe Fi » Media & Aarts wean’ surane! Insurance, 3.7% Real KOHES xMOC\/S) COTY Technology | Estate Oy 3.5% 15.9%
Slide 22: 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 22
Slide 23: Redevelopment Capital Expenditures
Redevelooment Capital Expenditures NEARING SUBSTANTIAL COMPLETION OF COMMON AREA RENOVATIONS, $657 MILLION SPENT TO DATE _Before Company data and filings as of March 31, 2016. EMPIRE STATE 23 REALTY TRUST
Slide 24: Superior Returns from Redevelopment
Superior Returns from Redevelooment AN ILLUSTRATION OF THE RETURNS ON INVESTMENTS White Box Pre-Built Low High Low High INVESTMENT PER SQUARE FOOT Tenant space: Base building $35 $65 $35 $65 Tenant allowance / improvement! $60 $75 $115 $124 Leasing commission $26 $29 $16 $21 TOTAL INVESTMENT $121 $1
Slide 25: Sustainability Measures Matrix
Sustainability Measures Matrix ESB One Grand 1400 mM 250 1333 1350 Central Place Broadway W 33st Ww 57" st Broadway Broadway Whole Building Energy Retrofit Analysis x x x x x x x (Replicate ESB Model) Whole Building Energy Retrofit Implementation x x x x x x x Low-e window retrofit x x x x x x x Hig
Slide 26: Sustainability Measures Matrix
Sustainability Measures Matrix Whole Building Energy Retrofit Analysis (Replicate ESB Model) Whole Building Energy Retrofit Implementation Low-e window retrofit High Performance Tenant Installation Required per Lease Submetering of All New Tenant Spaces Ut ies Billed by Submetering (as installed) Bu
Slide 27: 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 16 14 Annual savings of Demand control ventilation $4 4 M 12 6,514 insu
Slide 28: Westport Norwalk Stamford
Highway Metro-North Railroad 66-99 Main St Metro-North Train Westport 103-107 Main St 684 Stop 95 Norwalk 287 Stamford White Plains Harrison ~30 miles to Midtown Manhattan 10 Bank Street 500 Mamaroneck Avenue Office Standalone Retail First Stamford Place Metro Center 383 Main Avenue
Slide 29: Tenant Lease Expirations - Greater NY Metropolitan Portfolio
Tenant Lease Expirations GREATER NY METROPOLITAN PORTFOLIO Gi, Tweedy, ‘ Browne BLP Company tic Nestle. bp CRANE all wun THOMSON : * ElizabethArden REED ELSEVIER ALT 44.0% 14.5% 13.4% 12.4% 9 . (J Available SLNC 2016 2017 2018 2019 2020 _=s— Therreafter Company data and filings as of March 31, 2016.
Slide 30: Source: NYC & Company
Source: NYC & Company. 9/11 30
Slide 31: Observatory Ticket Mix
Observatory Ticket Mix ACTIVELY MANAGE TICKET MIX TO MAXIMIZE MARGINS Pricing Adult Senior (62+) Child (6-12) 8 Main Deck Only (86th Floor) $32.00 $29.00 $26.00 Direct sales at fu II rice is Main Deck Only (86th Floor) Express $65.00 $65.00 $65.00 | Pp Main Deck + Top Deck (86th & 102nd Floors) $52.
Slide 32: Who Visits the Observatory?
Who Visits the Observatory? IT’S NOT ALL FOREIGNERS, GRANDPARENTS AND PARENTS WITH CHILDREN International vs. Domestic: 65% International, 35% Domestic Domestic Age Group: 35% 56% 18-34 years old neon Male vs. Female: 57% Female, 43% Male cece ee Et in England/ Scotland/ Wales France Canada Germany
Slide 33: Midtown
Midtown EMPIRE STATE REALTY TRUST 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 Downtown Day 9/11 Memorial 9/11 Museum Statue of
Slide 34: Empire State
EMPIRE STATE 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) Prize mention on website (400,000
Slide 35: Co-branding Case Study
Co-branding Case Study CNN INTEGRATES THE EMPIRE STATE BUILDING BRAND INTO PRESIDENTIAL ELECTION COVERAGE > On-air use of ESB lighting to EL Financial Times New York’s Empire State Building was turned announce results blue when Hillary Clinton was name the winner on.ft.com/1qXVDr7 > Total social med
Slide 36: Strong and Flexible Capital Structure Supports Numerous Financing Options
STRONG AND FLEXIBLE CAPITAL STRUCTURE SUPPORTS NUMEROUS FINANCING OPTIONS EMPIRE STATE FINANCIAL STRATEGY Low leverage with significant capacity Access toa variety of forms of capital 36
Slide 37: Fortress Balance Sheet
Fortress Balance Sheet CONTINUOUS IMPROVEMENT AND MAXIMUM FLEXIBILITY Total Debt to EBITDA! 6.0 5.9X 5.8 EMPIRE STATE PEERS REALTY TRUST 56 5.6X , Total Debt / EBITDA 4.9 x 8.1x 5.4 52 5.1X " Total Debt / 5.0 Enterprise Value ; 4.9X 48 2013 2014 2015 2016 12013 based on fourth quarter EBITDA annuali
Slide 38: Unencumbering the Portfolio
Unencumbering the Portfolio ENHANCING CAPITAL FLEXIBILITY Repaid $580 million in mortgage loans, adding approximately 5.9 million square feet to the unencumbered pool since IPO At IPO 100% 99% > 50% > <1% 0% > Portfolio SF fi Encumbered I Unencumbered > > EMPIRE STATE REALTY TRUST Repaid $580 millio
Slide 39: Debt maturities
($ millions) $300 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 ($ millions) $350 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 and thereafter
Slide 40: Low Leverage Capital Structure and Liquidity
Low Leverage Capital Structure1 Exchangeable Senior Mortgage Debt Unsecured Notes Senior $762 mm $250 mm Unsecured Notes 12% 4% $350 mm 5% Senior Unsecured Private Perpetual Preferred Term Loan $26 mm $265 mm <1% 4% $800mm Credit Facility $0 mm 0% Liquidity Equity $4,723 mm 75%
Slide 41: MetLife
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