Empire State Realty Trust (ESRT) Q4 2023 earnings summary

Executive summary

• NYC-focused portfolio spans office, Observatory, retail and multifamily, with growth priorities in leasing, Observatory revenue, expense management, sustainability and flexible capital allocation.

• Signed 951,000 rentable sq. ft. of leases in 2023; same-store property cash NOI excluding lease termination fees rose 2.2% for the year.

Financial highlights

• Q4 cash revenues were $148.551M; net income was $15.830M, EBITDA was $92.614M and Adjusted EBITDA was $95.111M.

• FY 2023 revenue was $739.6M vs. $727.0M in 2022; net income was $84.407M vs. $63.2M, and operating income was $146.7M vs. $127.0M.

• Core FFO per diluted share was $0.25 in Q4 and $0.93 for 2023; FY Core FFO included ~$0.03 of non-recurring items, or $0.90 excluding them.

• Same-store property cash NOI excluding lease termination fees rose 11.3% YoY in Q4 and 2.2% for FY; full-year NOI excluding Observatory and lease termination fees was $272.173M.

Outlook and guidance

• 2024 Core FFO guidance is $0.90–$0.94 per diluted share; year-end commercial occupancy guidance is 87%–89%.

• 2024 same-store property cash NOI guidance, excluding lease termination fees, is -1% to +2%; operating expenses and real estate taxes are expected to grow 6%–8% YoY, partly offset by tenant reimbursements.

• 2024 Observatory NOI guidance is $94M–$102M, based on average quarterly expenses of ~$9M; outlook reflects tourism recovery, visitation and dynamic pricing.

• Estimates depend on office-use and remote-work trends, capital improvement execution and costs, transaction costs, and lease accounting adjustments; guidance excludes significant future lease termination fees and unannounced transactions or capital markets activity.