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ES

Empire State Realty OP, L.P. (ESBA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered total revenues of $197.6M and diluted EPS of $0.07; Core FFO per fully diluted share was $0.24, modestly below the prior-year quarter’s $0.25 .
  • Commercial leasing momentum remained strong: 12th consecutive quarter of positive leased-rate absorption and 14th consecutive quarter of positive Manhattan office leasing spreads (+10.8%); total commercial portfolio 93.5% leased and 88.6% occupied at year-end .
  • Observatory NOI grew 6.0% YoY to $28.5M in Q4; full-year Observatory NOI was $99.5M, supporting stable cash generation from the flagship attraction .
  • Balance sheet resilient: $0.9B liquidity (cash $385M + $500M revolver), ~$2.3B total debt, no floating-rate exposure, 4.27% weighted average interest rate, net debt/Adj. EBITDA 5.3x .
  • 2025 guidance implies lower Core FFO ($0.86–$0.89 vs. $0.95 in 2024), driven by higher operating expenses/taxes and non-cash adjustments; occupancy targeted to rise to 89–91%, Observatory NOI guided to $97–$102M. Near-term stock reaction likely hinges on estimate resets and confidence in continued leasing absorption .

What Went Well and What Went Wrong

What Went Well

  • “Manhattan office leased rate increased by 160bps year-over-year to 94.2%. The total commercial portfolio is 93.5% leased as of December 31, 2024. This is the 12th consecutive quarter of positive commercial leased rate absorption.”
  • “In our Manhattan office portfolio, blended leasing spreads were +10.8%, the 14th consecutive quarter of positive leasing spreads.”
  • “Empire State Building Observatory generated year-over-year NOI growth of 6.0% to $28.5 million in the fourth quarter and 5.8% NOI growth to $99.5 million for the full year.”

What Went Wrong

  • Same-Store Property Cash NOI declined 2.9% YoY in Q4 (ex-termination fees), primarily due to ~$1.9M decrease in positive non-recurring items vs. prior period and higher operating expenses; adjusted for non-recurring items, SS Property Cash NOI was flat .
  • Interest expense increased to $27.4M in Q4 vs. $25.4M in Q4 2023; property-in-receivership interest expense was $1.9M in Q4, adding to total financing costs .
  • Core FFO per fully diluted share was $0.24 vs. $0.25 in Q4 2023, reflecting higher OpEx/real-estate taxes and financing costs despite leasing momentum .

Financial Results

Income Statement and Per-Share Metrics

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($USD Thousands)$192,882 $199,599 $197,602
Total Operating Income ($USD Thousands)$40,772 $45,346 $42,940
Net Income ($USD Thousands)$15,830 $22,796 $18,793
Net Income Attributable to Common ($USD Thousands)$9,111 $13,541 $11,168
Diluted EPS ($USD)$0.06 $0.08 $0.07

Segment Revenue Breakdown

Revenue Component ($USD Thousands)Q4 2023Q3 2024Q4 2024
Rental Revenue$151,167 $153,117 $155,127
Observatory Revenue$36,217 $39,382 $38,275
Other Revenue and Fees$5,223 $2,058 $3,942

FFO Metrics (Per Fully Diluted Share)

MetricQ4 2023Q3 2024Q4 2024
FFO per Diluted Share ($USD)$0.25 $0.25 $0.23
Core FFO per Diluted Share ($USD)$0.25 $0.24 $0.24

KPIs and Operating Indicators

KPIQ4 2023Q3 2024Q4 2024
Total Commercial Portfolio Leased (%)91.0% 93.4% 93.5%
Total Commercial Portfolio Occupied (%)86.6% 89.1% 88.6%
Manhattan Office Leased (%)92.6% 94.1% 94.2%
Manhattan Office Occupied (%)87.7% 89.6% 89.0%
Manhattan Office Blended Leasing Spreads (%)——+10.8%
Leases Executed (Total Portfolio, Sq Ft)——378,913
Liquidity ($USD Millions)——$900 (Cash $385 + Revolver $500)
Total Debt Outstanding ($USD Billions)——~$2.3
Weighted Avg Interest Rate (%)——4.27%
Net Debt / Adjusted EBITDA (x)——5.3x
Quarterly Dividend per Share ($USD)$0.035 $0.035 $0.035
Observatory NOI ($USD Millions)——$28.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO per Fully Diluted ShareFY 2024 (Prev) vs FY 2025 (Current)$0.90–$0.94 (FY24 guidance reaffirmed Jul-2024) $0.86–$0.89 (FY25) Lowered
Commercial Occupancy (Year-End)FY 2024 (Prev) vs FY 2025 (Current)87%–89% (FY24) 89%–91% (FY25) Raised
Same-Store Property Cash NOI Growth (ex-term fees)FY 2024 (Prev) vs FY 2025 (Current)0%–3% (FY24) -2.0% to +1.5% (FY25) Lowered
Observatory NOI ($USD Millions)FY 2024 (Prev) vs FY 2025 (Current)$94M–$102M (FY24) $97M–$102M (FY25) Maintained to higher low end
Dividend (Quarterly)Ongoing$0.035 paid Q2/Q4 2024 $0.035 paid Q4 2024 Maintained
Key Assumptions (Narrative)FY 2025FY24 included ~$0.04 from multifamily assets FY25 includes ~$0.05 from multifamily; net $0.04 YoY decline from changes in interest income, G&A, interest expense, transaction income, and non-cash adjustments; Observatory quarterly expenses ~$9–10M Mixed drivers

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Current Period (Q4 2024)Trend
Leasing Absorption10th consecutive quarter of positive leased absorption; total commercial portfolio 92.6% leased 12th consecutive quarter; total commercial portfolio 93.5% leased Improving
Leasing Spreads12th consecutive quarter of positive spreads; Manhattan blended +2.0% 14th consecutive quarter; Manhattan blended +10.8% Strengthening
OccupancyTotal commercial occupied 88.5% (Q2); Manhattan office 88.8% Year-end total commercial occupied 88.6%; Manhattan office 89.0% Stable–Up
Observatory PerformanceYTD Observatory NOI +5.8%; Q2 Observatory NOI +1.6% YoY Q4 Observatory NOI +6.0% YoY; FY +5.8% Consistently positive
Balance Sheet>$1.0B liquidity; no floating-rate debt; net debt/Adj. EBITDA 5.1x $0.9B liquidity; no floating-rate debt; net debt/Adj. EBITDA 5.3x Strong, slightly higher leverage
Capital AllocationAgreements to acquire Williamsburg North 6th St retail ($195M total post-quarter) Same-store excludes North Sixth Street Collection; ongoing Brooklyn expansion Continuing NYC shift
Same-Store NOI+7.4% YoY (ex-term fees) -2.9% YoY (ex-term fees) due to non-recurring items; flat adjusted Mixed; normalization

Management Commentary

  • “Same-Store Property Cash NOI… decreased 2.9% for the fourth quarter and increased 5.2% for the full year… primarily attributed to a decrease in positive non-recurring items by approximately $1.9 million… and increases in operating expenses. Adjusted for non-recurring items, fourth quarter… was flat.”
  • “Manhattan office leased rate increased by 160bps year-over-year to 94.2%… This is the 12th consecutive quarter of positive commercial leased rate absorption.”
  • “Signed approximately 379 thousand rentable square feet of office leases in the fourth quarter… Manhattan office… blended leasing spreads were +10.8%, the 14th consecutive quarter of positive leasing spreads.”
  • “The Company had $0.9 billion of total liquidity… $385 million of cash, plus $500 million… revolving credit facility… total debt… approximately $2.3 billion, no floating rate debt… weighted average interest rate of 4.27%… net debt to adjusted EBITDA was 5.3x.”
  • 2025 guidance framework includes Core FFO of $0.86–$0.89, occupancy 89–91%, SS Property Cash NOI -2.0% to +1.5%, Observatory NOI $97–$102M; commentary notes ~$0.05 from multifamily and a net ~$0.04 YoY decline from changes in interest income, G&A, interest expense, transaction income, and non-cash adjustments .

Q&A Highlights

  • Q4 2024 earnings call transcript was not available in the document corpus; the company hosted its call on Feb 20, 2025 and posted materials to its website, but a full transcript could not be retrieved here . As a result, specific Q&A themes and guidance clarifications from live discussion are unavailable.

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 could not be retrieved due to API daily request limits; thus, an explicit beat/miss vs. consensus cannot be shown at this time. We will update estimate comparisons when S&P Global data access is restored. (S&P Global consensus unavailable)

Where estimates may need to adjust:

  • The FY 2025 Core FFO guide ($0.86–$0.89) is below FY 2024 actual ($0.95; $0.91 ex non-recurring), implying potential downward revisions to forward EPS/FFO and NOI expectations despite improving occupancy/leasing metrics .

Key Takeaways for Investors

  • Leasing momentum and pricing power are durable: 12 straight quarters of positive absorption and 14 straight quarters of positive Manhattan spreads (+10.8%) should underpin rent roll-ups and occupancy gains in 2025 .
  • Near-term earnings headwind: FY 2025 Core FFO guidance ($0.86–$0.89) below FY 2024 ($0.95; $0.91 ex one-offs) reflects higher operating costs/taxes and non-cash items despite occupancy gains; expect consensus resets .
  • Balance sheet strength mitigates macro risk: $0.9B liquidity, no floating-rate debt, 4.27% WAI, and 5.3x net debt/Adj. EBITDA provide flexibility amid office market normalization .
  • Observatory cash flow remains a stabilizer: Q4 NOI +6.0% YoY and FY $99.5M; FY 2025 guided to $97–$102M with clear expense assumptions (~$9–$10M/qtr) .
  • Same-store NOI: headline Q4 decline (-2.9%) was driven by lap of non-recurring positives; adjusted, SS Property Cash NOI was flat—watch expense discipline and tax trajectory in 2025 .
  • Continued NYC capital rotation: Brooklyn retail expansion and same-store exclusions indicate sustained focus on prime NYC assets with longer WALT and tenant quality .
  • Trading lens: Without consensus print, reaction likely ties to 2025 FFO guide vs. investor expectations; positive leasing/occupancy prints may offset earnings headwinds if absorption continues and expenses are contained .