Empire State Realty Trust (ESRT) Nareit REIT Week: 2024 Investor Conference summary

Portfolio overview and performance

• Portfolio includes 8 million sq ft of modernized office, 700,000 sq ft of retail, 727 multifamily units, and the Empire State Building Observatory, with NOI mix of 60% office, 25% observatory, 10% retail, and 5% multifamily.

• Office leasing activity improved, with Manhattan office lease rate rising to nearly 93% and nine consecutive quarters of positive absorption.

• Observatory NOI is up 13% year-over-year, with visitation increasing 10% and operational efficiencies driving profitability despite lower headcount than pre-COVID.

• Retail portfolio is 91% leased, with high foot traffic locations and strong tenant demand, especially for amenity-driven spaces.

• Multifamily assets show strong fundamentals, high occupancy, and resilient rent growth, with limited distress expected in the market.

Market trends and competitive positioning

• Flight to quality is driving demand for modern, turnkey office spaces with strong amenities and sustainability credentials.

• Tenants value financially stable landlords and are returning to long-term office planning, with most leasing in the $60-$80 per sq ft range.

• Submarkets near Grand Central and Times Square South show the most leasing strength, with tech, professional services, and financial tenants active.

• Retail rents have reset post-COVID, and prime submarkets have rebounded in occupancy and demand.

• Multifamily demand is driven by new graduates and resilient urban appeal, with some opportunities for acquisitions via OP units or distressed owners.

Capital allocation and investment strategy

• Actively recycles capital by selling non-core assets and acquiring NYC multifamily and retail properties.

• Maintains nearly $1 billion in liquidity, with no major debt maturities until late 2026 and the lowest leverage among NYC REITs at 5.3x net debt/EBITDA.

• Investment focus remains on NYC office, retail, and multifamily, with selectivity for basis resets and value-add opportunities.

• Share buybacks totaling over $290 million since 2020 have been executed without increasing leverage.

• Open to expanding beyond Manhattan into other NYC boroughs if strategic value is clear.