Yahoo Finance Empire State Realty Trust Inc (ESRT) Q1 2024 Earnings Call Transcript Highlights: Strong ...
Core FFO: $57 million or $0.21 per diluted share, up 30% year-over-year.
Same-store property cash NOI: Increased 12.3% year-over-year.
Observatory NOI: $16 million, up 13% year-over-year.
Manhattan office leased percentage: Increased to 92.7%, up 200 basis points year-over-year.
Manhattan office occupancy: Increased to 88.9%, up 160 basis points from last quarter.
Total leasing: 248,000 square feet in Q1 2024.
Net Debt: $2.2 billion with a weighted average interest rate of 3.97%.
2024 FFO Guidance: Expected to range between $0.90 and $0.94 per fully diluted share.
2024 Observatory NOI Guidance: Expected to be between $94 million to $102 million.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide more detail on the pipeline and the types of tenants currently in the market? Are there any hesitations from tenants looking for new space? A: Thomas Durels, EVP - Real Estate, noted that 84% of Q1 leasing was new, indicating no significant hesitancy among decision-makers. The tenant mix includes consumer brands, tech, financial services, and professional services. The company has 200,000 square feet of leases in negotiation and a few hundred thousand square feet of active proposals, showing strong market activity and interest.
Q: What are you seeing in the marketplace today regarding distressed opportunities and the ability to access properties through debt stacks? A: Tony Malkin, Chairman and CEO, mentioned that the current capital dislocation and rising rates are creating unique buying opportunities in New York City assets. The company is seeing initial market cracks and has received interest from potential partners, including wealthy individuals and groups, focused on long-term investment rather than immediate returns.
Q: Could you discuss the timing of deploying capital and the types of assets you are looking to partner on? A: Tony Malkin emphasized a disciplined focus on New York City assets, noting increased transaction activity in recent years. The company is exploring opportunities with partners who recognize ESRT's strong market position and are interested in various collaborations.
Q: Can you provide insights into the Observatory's performance and its sensitivity to potential economic downturns? A: Tony Malkin highlighted the Observatory's consistent performance through various economic cycles and disruptions. The focus remains on enhancing the Empire State Building's brand and visitor experience, which has historically shown resilience and strong performance.
Q: What is the expected cadence for same-store NOI throughout the year, considering the strong Q1 performance? A: Stephen Horn, CFO, explained that while Q1 benefited from favorable comparisons to the previous year, upcoming quarters face tougher comps due to one-time items that boosted 2023 results. The guidance remains unchanged, with expectations of continued positive revenue growth offset by higher operating expenses.
Q: How is the new leasing in the quarter characterized, particularly regarding tenants moving from higher rent buildings? A: Thomas Durels responded that ESRT attracts tenants from all markets, focusing on providing value and quality. The company offers top-tier products at competitive price points, appealing to tenants seeking better amenities and services without necessarily moving down the rent curve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
