In This Article:
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FFO (Funds From Operations): $0.24 per diluted share for Q4 2024; $0.95 per diluted share for full year 2024.
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Leasing Activity: 380,000 square feet leased in Q4 2024; 1.3 million square feet leased for full year 2024.
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Manhattan Office Portfolio Leased Rate: Over 94% leased.
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Same-Store Property Cash NOI: Down 2.9% in Q4 2024 year-over-year.
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Observatory Net Operating Income: $29 million in Q4 2024; $100 million for full year 2024.
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Net Debt to EBITDA: 5.3 times as of year-end 2024.
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2025 Core FFO Guidance: Expected to range from $0.86 to $0.89.
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2025 Observatory NOI Guidance: Expected to be $97 million to $102 million.
Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Empire State Realty Trust Inc (NYSE:ESRT) reported strong fourth quarter and 2024 results, with FFO exceeding expectations.
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The company achieved significant leasing momentum, with approximately 380,000 square feet leased in the fourth quarter and 1.3 million square feet for the year.
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The Manhattan office portfolio is over 94% leased, reflecting the desirability of ESRT's modernized and amenitized properties.
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The observatory business showed year-over-year growth, with net operating income exceeding 2019 levels.
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ESRT maintains a strong balance sheet with no floating rate debt exposure and the lowest leverage among New York City-focused REITs at 5.3 times net debt to EBITDA.
Negative Points
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Same-store property cash NOI was down 2.9% in the fourth quarter year-over-year due to increased operating expenses and less benefit from non-recurring items.
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The observatory business is projected to have flat NOI growth in 2025 compared to 2024, with concerns about macro factors like dollar strength and limited airline seat capacity from China.
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Investment transaction volumes remain below historical levels, with limited high-quality opportunities in the market.
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The company faces modest lease expirations in 2025, with potential temporary dips in leased percentage early in the year.
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Higher G&A expenses are expected in 2025 due to non-cash stock-based compensation and standard inflation-based payroll increases.
Q & A Highlights
Q: Can you provide more details on the leasing dynamics and where you expect the portfolio's leased percentage to settle? A: Anthony Malkin, CEO, explained that they have experienced positive absorption over the last three years and have a strong pipeline with reduced inventory. They have already signed 50,000 square feet of leases in Q1 2025 and have about 130,000 square feet in negotiation. The portfolio is expected to exceed 95% leased by year-end, with a steady increase in occupancy throughout the year.