Empire State Realty Trust Inc Reports Mixed Results for Q4 and Full Year 2023
Net Income: $0.06 per fully diluted share in Q4 and $0.30 for full year 2023.
Core FFO: $0.25 per fully diluted share in Q4 and $0.93 for full year 2023.
Leasing: Signed 951,000 rentable square feet of leases in 2023.
Liquidity: $1.2 billion of liquidity with no floating rate debt exposure.
Occupancy: Total commercial portfolio at 86.3% occupied, with Manhattan office at 87.3%.
Observatory Revenue: $36.2 million in Q4, with a 13% increase year-over-year.
2024 Outlook: Core FFO per fully diluted share projected between $0.90 and $0.94.
On February 20, 2024, Empire State Realty Trust Inc (NYSE:ESRT) released its 8-K filing, detailing its financial performance for the fourth quarter and the full year of 2023. ESRT, a New York City-focused real estate investment trust (REIT), owns and operates a portfolio of office, retail, and multifamily assets, including the iconic Empire State Building.
Financial Performance Overview
Empire State Realty Trust Inc reported a net income per fully diluted share of $0.06 for the fourth quarter and $0.30 for the full year of 2023. The core funds from operations (Core FFO) per fully diluted share stood at $0.25 for the fourth quarter and $0.93 for the full year. The company's leasing activity remained robust, with 951,000 rentable square feet of leases signed throughout 2023.
The company's balance sheet reflects $1.2 billion in total liquidity, comprising $347 million in cash and $850 million available under its revolving credit facility. ESRT's total debt stood at approximately $2.2 billion, with a weighted average interest rate of 3.9% per annum and no exposure to floating rate debt.
Operational Highlights and Challenges
As of December 31, 2023, ESRT's total commercial portfolio was 86.3% occupied, with the Manhattan office space slightly higher at 87.3%. The retail space showed a strong occupancy rate of 90.4%. However, the company faces the ongoing challenge of adapting to the evolving demand for office space in a post-pandemic environment.
The Observatory, a significant revenue driver for ESRT, reported $36.2 million in revenue for the fourth quarter, marking a 13% increase year-over-year. The full year 2023 Observatory revenue reached $129.4 million, with net operating income (NOI) of $94.1 million, aligning with the full year 2019 NOI and indicating a strong recovery.
2024 Earnings Outlook
Looking ahead, ESRT provided guidance for 2024, with Core FFO per fully diluted share expected to range between $0.90 and $0.94. The company anticipates commercial occupancy to end the year between 87% and 89%, and Observatory NOI to be between $94 million and $102 million.
Empire State Realty Trust's performance in 2023 demonstrates resilience in its core operations, particularly with the Observatory's robust results. However, the company must navigate the challenges of a dynamic real estate market, especially concerning office space demand. Investors and stakeholders will be watching closely to see how ESRT adapts to these challenges and capitalizes on its strong liquidity position in the coming year.
For more detailed information, investors are encouraged to review the full earnings report and investor presentation available on the "Investors" section of ESRT's website.
Explore the complete 8-K earnings release (here) from Empire State Realty Trust Inc for further details.
This article first appeared on GuruFocus.
