May 2017
1
Disclaimer
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 protections of the safe harbor for
forward-looking statements contained in such Sections.
You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,”
“intends,” “plans,” “estimates,” “contemplates,” “aims,” “continues,” “would” or “anticipates” or similar words or phrases in the positive or negative. For example,
statements regarding potential growth in our portfolio, future results from operations, prospective acquisitions, projected leasing, and anticipated market conditions are
forward-looking statements.
Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. They depend on assumptions,
data or methods which may be incorrect or imprecise, and we may not be able to realize them.
PERFORMANCE &
PERSPECTIVE
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking
statements: changes in our industry, the real estate markets, either nationally or in Manhattan or the greater New York metropolitan area; resolution of legal proceedings
involving the company; reduced demand for office or retail space; new office development in our market; general volatility of the capital and credit markets and the
market price of our Class A common stock and our publicly-traded operating partnership units; changes in our business strategy; changes in technology and market
competition, which affect utilization of our broadcast or other facilities; changes in domestic or international tourism, including geopolitical events and currency exchange
rates; defaults on, early terminations of, or non-renewal of leases by tenants; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants;
fluctuations in interest rates; increased operating costs; declining real estate valuations and impairment charges; termination or expiration of our ground leases;
availability, terms and deployment of capital; our failure to obtain necessary outside financing, including our unsecured revolving credit facility; our leverage; decreased
rental rates or increased vacancy rates; our failure to generate sufficient cash flows to service our outstanding indebtedness; our failure to redevelop and reposition
properties successfully or on the anticipated timeline or at the anticipated costs; difficulties in identifying properties to acquire and completing acquisitions; risks of real
estate development (including our Metro Tower development site), including the cost of construction delays and cost overruns; inability to manage our properties and our
growth effectively; inability to make distributions to our securityholders in the future; impact of changes in governmental regulations, tax law and rates and similar matters;
our failure to continue to qualify as a real estate investment trust, or REIT; a future terrorist event in the U.S.; environmental uncertainties and risks related to adverse
weather conditions and natural disasters; lack, or insufficient amounts, of insurance; misunderstanding of our competition; changes in real estate and zoning laws and
increases in real property tax rates; inability to comply with the laws, rules and regulations applicable to similar companies; and risks associated with security breaches
through cyberattacks, cyber intrusions or otherwise, as well as other significant disruptions of our technology (IT) networks related systems, which support our operations
and our buildings.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. You should not place undue reliance on any forwardlooking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We disclaim any obligation
to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, new information, data or methods, future events or other
changes after the date of this presentation, except as required by applicable law.
For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2016, any subsequent reports on Forms 10-Q and 8-K and other risks described in documents we subsequently
file from time to time with the Securities and Exchange Commission.
2
Investor Highlights
› Pure-play Manhattan and greater New York
metropolitan area
› Embedded, de-risked growth potential from
four drivers of growth
› Strong and flexible balance sheet, lowest
leverage among Office REIT peers
› Proven management team
3
Management Team
EXPERIENCED AND COMMITTED
Anthony E. Malkin
Chairman &
Chief Executive Officer
28 years with ESRT
28 years in industry
Bachelor’s degree from
Harvard College
›
John B. Kessler
President & Chief
Operating Officer
2 years with ESRT
28 years in industry
Bachelor’s degree from
Harvard College and
M.B.A. from the Booth
School at the
University of Chicago
Thomas P. Durels
Executive Vice President
& Director of Leasing and
Operations
27 years with ESRT
33 years in industry
Bachelor’s degree from
Lehigh University
David A. Karp
Executive Vice President
& Chief Financial Officer
5 years with ESRT
34 years in industry
Bachelor’s degree from
University of California,
Berkeley and M.B.A. from
the Wharton School at the
University of Pennsylvania
Thomas N. Keltner, Jr.
Executive Vice President,
General Counsel
& Secretary
39 years with ESRT
39 years in industry
Bachelor’s degree from
Harvard College and J.D.
from Columbia Law
School
Senior management team with an average of approximately 32 years of experience in real estate
›
Since IPO, management team bench has been deepened with key additions
›
Extensive experience in Greater New York area real estate, through several economic and real estate cycles
›
Management is aligned with shareholders
1
›
Senior management team owns a significant amount of stock
›
The Malkin Family, led by Anthony E. Malkin, has not sold any shares, either at or after IPO1
Excludes gifts to charitable foundations of less than 1% of their original holdings.
4
Delivered on Promises
STEADY CASH NOI GROWTH; EXECUTING ON LEASING
Q1 2017
›
200,992 SF of leasing
›
22.4% spreads
achieved on new
Manhattan office
leases
›
Signed larger leases
for longer term with
better credit tenants
›
Reported 8.3% samestore cash NOI
growth year-over-year
compared to peer
group average of
0.3%1
Steady Cash NOI Growth
Even With Fluctuating Occupancy2
thousand
90.0%
$380,000
$360,000
89.0%
$340,000
$320,000
88.0%
$300,000
87.0%
$280,000
86.0%
$260,000
85.0%
$240,000
3Q 4Q
1Q
2Q 3Q 4Q
1Q
2Q 3Q 4Q
1Q
2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017
TTM Cash NOI (left axis)
Total Portfolio Occupancy (right axis)
Company data and filings as of March 31, 2017. Peer group includes Boston Properties and SL Green as of March 31, 2017 and Paramount Group and Vornado
Realty Trust as of December 31, 2016.
2 Amounts in thousands. Company data and filings as of March 31, 2017. Cash NOI is a non-GAAP measure that is reconciled to its GAAP equivalent measure
in the appendix. 3Q 2014 partially excludes the benefit of the acquisitions on July 15, 2014 of the option properties at 1400 Broadway and 111 West 33rd Street.
1
5
Portfolio Overview
PURE-PLAY MANHATTAN AND GREATER NEW YORK METROPOLITAN AREA
10.1 Million Total Rentable
Square Feet
GNYMA
Office
18.4%
9.4 Million Rentable
Square Feet of Office Space
GNYMA
Office
19.8%
Retail
7.0%
Manhattan Office
74.6%
Manhattan Office
80.2%
Company data and filings as of March 31, 2017.
6
Varied Tenant Base
DIVERSIFIED BY INDUSTRY
Non-Profit
4.6%
Other
11.9%
Media & Advertising
4.0%
Consumer
Goods
21.2%
Technology
7.8%
Finance,
Insurance,
Real
Estate
17.4%
Legal Services
3.7%
Retail
17.8%
Professional
Services
11.6%
Industry diversification by annualized fully escalated rent.
Company data and filings as of March 31, 2017.
7
Manhattan Portfolio
111 West 33rd Street
One Grand
Central Place
1359 Broadway
Office Properties
Retail Properties
1400 Broadway
8
Tenant Lease Expirations
WELL LADDERED MANHATTAN OFFICE PORTFOLIO LEASE EXPIRATIONS
53.4%
11.4%
0.9%
Available
SLNC
5.8%
2017
7.7%
6.4%
8.2%
2018
2019
2020
6.2%
2021
Thereafter
Company data and filings as of March 31, 2017.
9
Four Drivers of Embedded
De-risked Growth
RELATIVE TO TTM CASH NOI OF $362M1
Free rent & signed
leases not commenced2
Lease up of
vacant space
$40 M
$40 M
$110
Million
Retail
opportunity
Redevelopment
opportunity
$9 M
$21 M
Amounts reflect management’s estimates of additional revenues from the four drivers as of March 31, 2017 to be realized over the next 5-6 years. Cash NOI is a
non-GAAP measure that is reconciled to its GAAP equivalent measure in the appendix.
2 Signed leases not commenced is $5 million and the annual rent from leases that have commenced but are in their free rent period is $35 million, of which $23
million will have ended by December 31, 2017 and the remaining will substantially end by December 31, 2018.
Company data and filings as of March 31, 2017.
1
10
Signed Leases Not Commenced
Tenant
Michael Faillace & Assoc.
3/31/17
Escalated
Annual Rent
SF
New Annual
Rent
Expected
Commencement
Date
Incremental
Annual Rent
4,081
$0.00 M
$0.27 M
Apr. 2017
$0.27 M
434
0.00 M
0.25 M
May 2017
0.25 M
Mitsui Plastics
11,994
0.00 M
0.40 M
May 2017
0.40 M
Sisense
24,169
0.00 M
1.43 M
Jun. 2017
1.43 M
Michael J. Fox Foundation
10,533
0.00 M
0.67 M
Jun. 2017
0.67 M
Cayman Islands, Dept of
Tourism
4,127
0.00 M
0.28 M
Jun. 2017
0.28 M
Tenex Capital Management
3,387
0.00 M
0.24 M
Jun. 2017
0.24 M
Prequin
7,642
0.00 M
0.42 M
Aug. 2017
0.42 M
Other SLNC
11,247
0.00 M
0.61 M
Apr. 2017 – Sept.
2017
0.61 M
77,614
$0.00 M
$4.57 M
Blue Bottle Coffee
Total
$4.57 M
Total Contracted Annualized Growth $4.57 M
Company data and filings as of March 31, 2017.
11
Superior Leasing Spreads
ILLUSTRATES MARK TO MARKET OPPORTUNITY
Strong re-leasing spreads1
All leases Q1 2017
Manhattan office leasing spreads Q1 20173
Compared to peer group
New leases Q1 2017
$ 59.82
$ 59.45
25.0%
21.2%
$ 49.04
$ 48.88
20.0%
15.0%
9.7%
10.0%
5.0%
Prev.
Escalated
Rent
PSF 2
New
Starting
Base Rent
PSF
Prev.
Escalated
Rent
PSF 2
New
Starting
Base Rent
PSF
0.0%
ESRT
Peer Group
Company data and filings as of March 31, 2017.
1 Based on Manhattan office portfolio.
2 Previous escalated rent PSF is adjusted for space remeasurement.
3 Reflects new and renewal leases. Peer group includes March 31, 2017 results for SL Green and December 31, 2016 results for Paramount Group and Vornado Realty
Trust.
12
Vacant Office Space
Current vacancy (Manhattan Office / ESB only)
860,000 SF / 203,000 SF
Weighted average starting rent (Manhattan Office / ESB only)
$60 PSF / $65 PSF
MANHATTAN OFFICE PORTFOLIO
Broadcasting
5,000 SF
1%
EMPIRE STATE BUILDING
Prebuilt
326,000 SF
38%
Prebuilt
101,000 SF
50%
Storage
37,000 SF
4%
Undeveloped
0 SF
0%
PIO
25,000 SF
3%
PIO
0 SF
0%
Off
Market
24,000 SF
12%
Undeveloped
70,000 SF
8%
Whitebox /
Demo
319,000 SF
37%
Off
Market
78,000 SF
9%
Broadcasting
6,000 SF
3%
Storage
21,000 SF
10%
Whitebox /
Demo
52,000 SF
26%
Weighted average starting rent is management’s estimate for new leases. Excludes SLNC. Vacant developed space consists of the sum of the categories of
Whitebox/Demo, Prebuilt and PIO. PIO represents “Prepared for Immediate Occupancy.”
13
Leasing Opportunity
INVENTORY OF CURRENT VACANT SPACE AND EXPECTED SPACE TO BE VACATED BY YEAR-END 2017
Square Feet
Total portfolio vacant space
Less signed leases not commenced
Total portfolio net vacant space
Retail vacant space
GNYMA vacant space
Manhattan office vacant space, excluding SLNC
Less current redeveloped Manhattan office space
Less space held off market for consolidation / redevelopment
Space being planned for redevelopment, storage and other
Manhattan office expected space to be vacated by year-end 2017 at fully escalated rent
of $47.00 PSF
1,140,000
(78,000)
1,062,000
39,000
163,000
860,000
(670,000)
(78,000)
112,000
287,000
Company data and filings as of March 31, 2017.
14
Manhattan Office Mark to Market
CURRENT 2017 MARKET RENT VS. CURRENT FULLY ESCALATED RENT
Current fully escalated rent
PSF1
Leased square feet expiring2
Weighted average starting
rent PSF3
Embedded growth4
9 mos
2017
12 mos
2018
12 mos
2019
12 mos
2020
12 mos
2021
3 mos
2022
$50
$53
$48
$52
$50
$53
437,175
582,316
483,648
622,262
472,307
118,511
$58
$58
$58
$60
$59
$59
16.0%
9.4%
20.8%
15.4%
18.0%
11.3%
Fully escalated rents are as of March 31, 2017, exclude SLNC and are adjusted for space re-measurement.
Excludes SLNC.
3 Starting rents reflect rates as of March 31, 2017 without ascribing any future growth. Weighted average starting rent is management’s estimate for new,
renewal and below market short term rentals for cash flow purposes and includes both office and storage. The above does not give consideration for
downtime to vacate, redevelop and lease.
4 Reflects embedded growth as of March 31, 2017 without ascribing any future growth.
1
2
15
Redevelopment Opportunity
EMBEDDED, DE-RISKED GROWTH
Tenant space to be redeveloped
Empire State Building
250,000 SF
Balance of Manhattan office portfolio
870,000 SF
Total
1,120,000 SF
300,000
Probable Renovations of Undeveloped Space through 2021
215,000 SF
200,000
100,000
160,000 SF
160,000 SF
2020
2021
80,000 SF
45,000 SF
(SF)
0
2017
2018
Occupied
2019
Retail
Vacant
Based upon current views and assumptions, which are subject to change.
Company data and filings as of March 31, 2017.
16
Creating Full Floor Availabilities
REDEVELOPMENT CASE STUDY
Floors 55-58 originally had 42
tenants
Adjacent tenants are grouped
by lease expiration dates
Spaces are vacated as
expired leases 2014
are not
renewed
Floors 55-58 leased to only 2
tenants
17
Redevelopment Capital Expenditures
NEARING SUBSTANTIAL COMPLETION OF COMMON AREA RENOVATIONS, $739 MILLION SPENT TO DATE
Before
Before
After
After
Company data and filings as of March 31, 2017.
18
Superior Returns from Redevelopment
AN ILLUSTRATION OF THE RETURNS ON INVESTMENTS
White Box
Pre-Built
Low
High
Low
High
Base building
$37
$65
$37
$65
Tenant allowance / improvement1
$75
$90
$115
$130
Leasing commission
$24
$29
$15
$21
$136
$184
$167
$216
Mark-to-market future renovated space2
$13
$25
$10
$28
RETURN ON INVESTMENT (ROI)
7%
18%
5%
17%
INVESTMENT PER SQUARE FOOT
Tenant space:
TOTAL INVESTMENT
RETURN - INCREMENTAL NOI PER SQUARE FOOT
1 While a white-box space when vacated typically requires a full new installation upon the signing of a new lease, pre-built spaces typically require small
refreshment costs of paint, carpet, and appliances at the end of each lease term, and are intended to last for up to 25 years of occupancy by one or more
tenants over their lifetime.
2 Based on anticipated 2017 activity and current fully-escalated and market rents.
19
Manhattan Portfolio Proposition
DOMINANT POSITION WITH LITTLE COMPETITION
Class A
ESRT
›
New construction and existing
›
Asking rents of $85-$230 PSF
› Well-located, redeveloped for the
21st Century properties
› Trophy Class A costs more
› Class B offers less
Class B
›
Existing
›
Asking rents of $58-66 PSF
20
Tenants Relocating to ESRT
ATTRACTING TENANTS FROM ALL PARTS OF NYC AND BEYOND OVER PAST 12 MONTHS
From Outside Manhattan
14 Tenants Representing 59,529 SF
From Midtown (West)
(Madison/Fifth, Penn Station/
Times Square South,
Rockefeller Center, West Side)
21 Tenants Representing 142,118 SF
From Midtown (East)
(Grand Central, Murray Hill, Park Avenue)
21 Tenants Representing 162,159 SF
From Midtown South and Downtown
(Chelsea, Financial District,
Madison Square, SoHo)
9 Tenants Representing 47,376 SF
From Internal Expansion/Renewals
23 Tenants Representing 77,951 SF
Company data as of March 31, 2017.
21
Retail Opportunity
›
708,468 SF of total retail space
›
94.4% occupied
›
Annualized fully escalated rent of
$91.5 million
›
39,000 SF of retail space available
to lease in 4 high traffic locations
›
Broadway corridor, Union Square
and Empire State Building
Company data and filings as of March 31, 2017.
22
Retail Mark to Market
CURRENT 2017 MARKET RENT VS. CURRENT FULLY ESCALATED RENT
Vacant
9 mos
2017
12 mos
2018
12 mos
2019
12 mos
2020
12 mos
2021
3 mos
2022
N/A
$64
$110
$146
$135
$150
$166
38,974
45,331
23,876
30,765
25,601
31,952
15,370
Weighted average starting
rent PSF3
$123
$61
$110
$233
$178
$176
$172
Embedded growth4
N/A
-4.7%
0.0%
59.6%
31.9%
17.3%
3.6%
Current fully escalated rent
PSF1
Leased square feet expiring2
Fully escalated rents are as of March 31, 2017, exclude SLNC and are adjusted for space re-measurement.
Excludes SLNC.
3 Starting rents reflect rates as of March 31, 2017 without ascribing any future growth. Weighted average starting rent is management’s estimate for new,
renewal and below market short term rentals for cash flow purposes and includes both office and storage. The above does not give consideration for
downtime to vacate, redevelop and lease.
4 Reflects embedded growth as of March 31, 2017 without ascribing any future growth.
1
2
23
Retail Value Creation Case Study
SUCCESSFUL REPOSITIONING OF 112 W. 34th STREET
›
›
88,513 SF on 3 floors leased to one
›
New leases were signed with
tenant, including 2 levels of office and
Footlocker, Sephora and Target by
storage, for $2.2 million in fully
March 2017 for annualized rent of
escalated rent that expired in April 2016
$20.9 million
The space was redeveloped into a multilevel retail space leased to 3 tenants
Resulting in 846%
Mark to Market
Company data and filings as of March 31, 2017.
24
Creating Value Through Sustainability
EMPIRE STATE BUILDING CASE STUDIES
Replicable Process Forms Basis for ULI’s Tenant Energy Optimization and EPA’s Tenant Star Program
Utility costs represent the third largest component of tenant expenses after salaries and rent
3 ESB Tenant Energy Optimization Projects Examples
Energy reduction
ROI over lease term
Coty
Global
Brands
Group
LinkedIn
31%
12%
38%
› 3.1 year
328%
126%
93%
› Energy Star 84
› Annual savings
of $4.4 M
payback
› Quantifiable
IRR
Payback period
(with incentives)
44%
21%
24%
2.7 yrs
4.6 yrs
4.1 yrs
transparent
results
› Visit
www.esbsustainability
.com
Visit: http://tenantenergy.uli.org/case-studies/
25
Sustainability Measures
Energy Efficiency
Example
›
100% of portfolio has undergone whole building energy
retrofit analysis
Building Certification
›
86% of portfolio has a robust or partial building
management system in-place
Day to Day Green Practices
›
100% of portfolio has waste recycling, green cleaning and
pest control; low/no off-gassing paints and wall coverings;
water conservation; and recycled paper product use
Sustainability Programs
›
100% of portfolio has annual and long-term sustainability
targets
Visit www.esbsustainability.com and www.empirestaterealtytrust.com/about-us/sustainability for more details
26
Greater NY Metropolitan Portfolio
QUALITY ASSETS AND TENANTS
Highway
Metro-North Railroad
Metro-North Train
Stop
Westport
66-99 Main St
103-107 Main St
95
near major
transportation hubs
Norwalk
›
›
›
›
›
Stamford
287
White Plains
Harrison
~30 miles to
Midtown Manhattan
Office
› Best assets located
684
Standalone Retail
10 Bank Street
500 Mamaroneck Avenue
First Stamford Place
Metro Center
Full amenities
15.7% of 1Q 2017 NOI
18.4% of total SF
90.7% occupied
91.3% leased
383 Main Avenue
Company data and filings as of March 31, 2017.
27
Tenant Lease Expirations
WELL LADDERED GREATER NY METROPOLITAN PORTFOLIO LEASE EXPIRATIONS
Add
42.3%
12.7%
8.7%
0.6%
Available
SLNC
9.4%
12.3%
11.5%
2020
2021
2.5%
2017
2018
2019
Thereafter
Company data and filings as of March 31, 2017.
28
Observatory Performance
CONSISTENT PERFORMANCE THROUGH ECONOMIC CYCLES AND NEW ATTRACTIONS
Positive tourism trends to New York City (millions)
‘01 – ‘16
CAGR
3.7%
37.8
39.9
42.7
43.8
47.1
35.3
46.0
45.8
35.2
2001
2002
2003
2004
2005
2006
2007
2008
2009
50.9
52.7
54.3
56.5
58.5
60.7
48.8
2010
2011
2012
2013
2014
2015
2016
Source: NYC & Company.
Observatory annual revenue (millions)
‘01 – ‘16
CAGR
11.3%
9/11 Museum Opens
3 Million Visitors
(estimated 2016)
Top of the Rock
Reopens
2.2 Million Visitors
(estimated 2016)
9/11
$25.0
$29.6
$33.4
$40.0
2001
2002
2003
2004
$50.1
$56.3
Financial
Crisis Hits
$62.9
$72.2
$71.6
$78.9
$80.6
$91.9
$101.8
$111.5
One World
Observatory
Opens 2.3 Million
Visitors
(estimated 2016)
$112.2
$124.8
$21.2
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
$20.9
Q1 Q1 2017
2016
Company Data and filings as of March 31, 2017.
29
29
Who Visits the Observatory?
85% OF VISITORS DECIDE TO VISIT BEFORE LEAVING HOME
International vs. Domestic:
64% International,
36% Domestic
Domestic
36%
Age Group:
55% 18-34 years old
International
64%
Male vs. Female:
59% Female,
41% Male
Top 6 foreign
countries:
England/
Scotland/
Wales
France
China
Canada
Germany
Italy
Data from ESRT customer polling from February 2016 through February 2017.
30
Observatory Ticket Mix
ACTIVE MANAGEMENT OF TICKET MIX TO MAXIMIZE MARGINS
Adult
Senior (62+)
Child (6-12)
Main Deck Only (86th Floor)
$34.00
$31.00
$27.00
Main Deck Only (86th Floor) Express
$60.00
$60.00
$60.00
Main Deck + Top Deck (86th & 102nd Floors)
$54.00
$51.00
$47.00
Main Deck + Top Deck Express (86th & 102nd
Floors - No Waiting)
$80.00
$80.00
$80.00
Sunrise Experience (86th Floor)
$100.00
$100.00
$100.00
Premium Experience – Guided Tour (86th &
102nd Floors – No Waiting)
$175.00
$175.00
$175.00
Pricing – starting at
Direct sales at
full price is
largest source
Introduction of
variable pricing
during peak
demand (key
holidays and busy
calendar periods)
As of April 24, 2017.
31
Valuing The Observatory
SUM OF THE PARTS VALUES BOTH RENTAL REVENUE AND RESIDUAL PROFIT STREAMS
Observatory Results – 1Q 2017 Trailing Twelve Months
In $MM
Revenue
$125
Less Operating Expenses
30
NOI
95
Intercompany rent expense
75
NOI after intercompany rent
$20
›
If ESRT did not operate the Observatory and leased it to a third party, an operator would
have to pay rent. Potential rent would be at least what ESRT pays in intercompany rent
and this potential rent would be valued at an appropriate cap rate for Manhattan office
and retail properties.
›
The residual NOI would be valued as an operating business similar to a gated attraction.
Intercompany Rent Capitalized at
a Market Cap Rate
Residual NOI Multiplied by a Gated
Attraction Business Multiple
Total Observatory
Implied Value
Company Data and filings as of March 31, 2017.
32
Iconic NY Brand
VALUE OF THE EMPIRE STATE BUILDING BRAND
›
›
›
85 years of brand references
and popular cultural references
make ESB an iconic brand
Branding yields millions in
advertising value equivalent
(AVE) annually representing
effectively free advertising
VS.
ESB has a global brand
recognition that would be
difficult or expensive for others
to recreate
FY
39B
MEDIA IMPRESSIONS
2016
TOTA L
$55MM
AD VALUE
›
›
›
›
Top of the Rock
One WTC
30 Hudson Yards
One Vanderbilt
R E S U LT S
122MM
SOCIAL MEDIA IMPRESSIONS
Data for media impressions and ad value is from Cision and data for social media impressions is from Brandwatch.
33
Harper’s Bazaar Projections
1.4B
MEDIA IMPRESSIONS
625MM
MEDIA IMPRESSIONS
MEDIA
COVERAGE
$1.6MM
AD VALUE EQUIVALENCY
198MM
TWITTER IMPRESSIONS
198MM
SOCIAL MEDIA IMPRESSIONS
34
Strong and Flexible Balance Sheet
CAPITAL STRUCTURE STRATEGY
Low leverage
with laddered
debt maturities
FINANCIAL
STRATEGY
Access to a
variety of forms
of capital
Significant cash
on hand
35
Fortress Balance Sheet
STEADY IMPROVEMENT THROUGH PERFORMANCE
Net Debt to EBITDA1
7.0
6.0
5.7X
PEERS
5.4X
4.9X
5.0
Net Debt /
EBITDA
4.0
3.1X
3.0
3.2x
6.5x
15%
38%
3.2X
2.0
Net Debt /
Enterprise Value
1.0
0.0
2013
2014
2015
2016
2017
1 2013 based on fourth quarter EBITDA annualized. 2014, 2015, 2016 and 2017 EBITDA are calculated based on trailing twelve months EBITDA. Net debt is as of
December 31, 2013, 2014, 2015, 2016 and as of March 31, 2017.
Peer group includes Boston Properties and SL Green as of March 31, 2017 and Paramount Group and Vornado Realty Trust as of December 31, 2016.
36
Improved Balance Sheet Flexibility
UNENCUMBERING THE PORTFOLIO
Repaid $580 million in mortgage loans, adding approximately
5.9 million square feet to the unencumbered pool since IPO
Repaid $580 million,
including mortgage loans
securing:
At IPO
100%
99%
› Empire State Building
50%
0%
<1%
Portfolio SF
Encumbered
Unencumbered
› 250 W. 57th St.
› 500 Mamaroneck
› 501 7th Avenue
› 69-97 Main Street
March 2017
80%
60%
40%
59%
41%
20%
0%
Portfolio SF
Encumbered
Unencumbered
› 1359 Broadway
› One Grand Central Place
37
Debt Maturity
WEIGHTED AVERAGE MATURITY INCREASED FROM 3.1 YEARS AT IPO TO 4.5 YEARS
Prior DEBT MATURITY PROFILE (AT IPO OCTOBER 2013)
($ millions)
$403
$381
$103
$193
$88
2014
2015
$300
$92
2016
2017
2018
$0
$0
$0
$0
$0
$0
2019
2020
2021
2022
2023
2024
CURRENT DEBT MATURITY PROFILE (AS OF MARCH 2017)
($ millions)
Unsecured private placement
Mortage Debt
Exchangable Notes
Revolving Credit Facility
Term Loan
$478
$128
$336
$262
$265
$250
$350
N/A
N/A
N/A
2014
2015
2016
Company data and filings as of March 31, 2017.
2017
2018
2019
$0
$0
2020
2021
$0
2022
2023
2024 and
thereafter
38
Support for Future Growth
BALANCE SHEET STRENGTH AND FLEXIBILITY
Low Leverage
›
›
›
›
Capital Structure1
Net debt / enterprise value: 15%
Net debt / EBITDA: 3.2x
Interest coverage: 4.9x
Attractive in place mortgage debt
›
›
Weighted average interest rate of 4.2%
Mortgage Debt
$750 mm
10%
Private Perpetual Preferred
$26 mm
<1%
Weighted average debt maturity of 4.5
Exchangeable Senior
Unsecured Notes
Senior
$250 mm Unsecured Notes
3%
$350 mm
4%
Senior Unsecured
Term Loan
$265 mm
3%
years
$1.1bn Credit Facility
$0 mm
0%
Liquidity
›
›
$532 million cash and cash equivalents
$0 drawn on $1.1 billion unsecured credit
facility with accordion feature allowing for
maximum aggregate principal balance of $1.25
billion
›
Untapped debt capacity embedded in many
Equity
$6,200 mm
79%
low-levered assets
›
1
Well-laddered and long-dated debt maturities
Based on stock price of $20.64 as of March 31, 2017 and 300.3 million fully diluted shares outstanding. Net debt as of March 31, 2017 of $1.08 billion.
39
ESRT Metrics Since IPO
DAILY VOLUME, FLOAT, AND COMPARABLE PERFORMANCE
Daily
Volume
Average Trading Volume in 2016: 984,876 shares
Average Trading Volume in 2015: 844,333 shares
Average Trading Volume in 2014: 590,317 shares
Float
Class A common shares now comprise 52% of the operating
partnership, driven by conversion requests from OP units and
Class B shares totaling 30.0 million Class A shares1 and the QIA
investment in 29.6 million Class A shares
Comparable
Performance
ESRT Total Return Since IPO: 77.0%2
vs.
RMS Total Return Since IPO: 47.5%2
As of March 31, 2017, the Company had conversion requests from operating partnership units and Class B common shares to Class A common shares
Totally 30.0 million shares, or approximately $619 million at the closing share price of $20.64 on March 31, 2017. This represents a 36% increase in
the number of Class A shares since our IPO.
2 Data as of IPO Date 10/2/2013 to 04/21/2017.
1
40
41
Appendix
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Three Months Ended
Reconciliation of Net Income to NOI and Cash NOI
March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31, December 31,
2017
2016
2016
2016
2016
2015
2015
2015
2015
2014
2013
Net income
Add:
General and administrative expenses
Depreciation and amortization
Interest expense
Loss from derivative financial instruments
Construction expenses
Acquisition expenses
Income tax expense (benefit)
Less:
Construction revenue
Third-party management and other fees
Acquisition break-up fee
Gain on settlement of lawsuit related to the Observatory
Gain on consolidation of non-controlled entities
Net operating income
$ 19,145
$
Straight-line rent
Above/below-market lease amortization
Below-market ground lease amortization
Cash net operating income
(5,998)
(1,428)
1,958
$ 82,781 $
33,008
$
32,897
$24,640
$ 16,705
$
19,370
$
26,085
$26,585
$
7,888
$
10,964
$
193,431
11,088
40,846
17,742
247
(468)
13,455
39,829
17,837
1,806
11,798
37,607
17,939
2,750
12,907
38,548
17,420
2,132
10,918
39,227
17,951
98
(542)
9,678
45,258
17,194
666
10,182
45,169
16,680
193
2,578
9,113
39,629
17,571
353
883
9,100
41,418
16,047
2,869
(178)
9,251
48,799
19,816
5,423
502
16,379
27,375
13,147
5,468
138,140
(1,125)
(351)
88,249
(394)
105,541
(404)
102,587
(423)
95,224
(545)
83,812
(475)
91,691
(618)
(2,500)
97,769
(374)
(594)
93,166
(1,607)
(446)
75,091
(4,918)
(451)
89,386
(5,265)
(550)
(322,563)
64,437
(5,892)
(4,691)
1,958
83,066 $
(5,441) (5,622)
(4,102)
(4,795) (4,576)
(5,291)
1,957
1,958
1,958
89,490 $84,926 $ 67,656 $
(8,652)
(2,509)
1,958
96,338 $
(9,619) (6,796)
(5,080)
(1,210)
(844)
(4,231)
1,957
1,958
1,958
93,715 $89,542 $ 76,459 $
(7,613)
(5,613)
2,001
78,161 $
(8,932)
(1,903)
398
54,000
Company data and filings as of March 31, 2017. Amounts in thousands.
42