NEW YORK CITY—Empire State Realty Trust has delivered good news to its share holders with the reporting of its operational and financial results for the second quarter.
“With our repayment of mortgage debt related to One Grand Central Place, we have enhanced our capital structure and balance sheet flexibility helping us to continue driving superior shareholder returns over the long term,” says John Kessler, Empire State Realty Trust president and COO. The firm repaid a $91 million loan on the property.
“Our pace of leasing in 2015 has been robust, with year-to-date total volume of approximately 672,000 square feet, representing 67% growth year-over-year. Additionally, we continue to create value with our redevelopment program, as evidenced by the spreads we achieved on new Manhattan office leases of 49.4% during the second quarter,” he continues. “We again grew revenue at our Observatory.”
The REIT achieved core funds from operations of $0.26 per fully diluted share and net income attributable to the company of $0.10 per fully diluted share. The total portfolio was 88% occupied; including signed leases not commenced, the total portfolio was 90.0% leased as of June 30.
The Manhattan office portfolio (excluding the retail component of ESRT's properties) was 86.2% occupied; including SLNC, the Manhattan office portfolio was 88.4% leased at June 30, 2015. The retail portfolio was 92.3% occupied while the Empire State Building was 85% full. ESRT executed 79 leases across the total portfolio, representing 254,360 rentable square feet and achieving a 46% increase in mark-to-market rent over previous fully escalated rents on new, renewal, and expansion leases.
The landlord signed 29 new leases representing 121,145 rentable square feet in its Manhattan office portfolio (excluding the retail component of these properties), achieving an increase of 49.4% in mark-to-market rent over previous fully escalated rents.
The Manhattan office portfolio (excluding the retail component of these properties), containing 7.5 million rentable square feet was 86.2% occupied at the end of the second quarter. On a same store basis, the Manhattan office portfolio was 86.4% occupied, down 20 basis points from the end of the first quarter 2015 and down 130 basis points from the end of the second quarter 2014.
The company's retail portfolio, containing approximately 720,000 rentable square feet, was 92.3% occupied at the end of the second quarter 2015. On a same store basis, the retail portfolio was 92.2% occupied, which compares to 90.9% at the end of the first quarter of 2015 and 92.5% at the end of the second quarter 2014. Including SLNC, the company's retail portfolio was 94.1% leased at June 30, 2015.
On a blended basis, the 79 new, renewal and expansion leases signed within the total portfolio during the quarter had an average starting rental rate of $64.67 per rentable square foot, representing an increase of 46% over the prior in-place rent on a fully escalated basis.
On a blended basis, the 74 new, renewal and expansion office leases signed within the total portfolio during the quarter had an average starting rental rate of $52.37 per rentable square foot, representing an increase of nearly 29% over the prior in-place rent on a fully escalated basis.
On a blended basis, the five new retail leases signed within the total portfolio during the quarter had an average starting rental rate of $207.71 per rentable square foot, representing an increase of over 128% over the prior in-place rent on a fully escalated basis.
During the second quarter, the company executed nine office leases at the Empire State Building, representing 41,445 rentable square feet in the aggregate. The Observatory revenue for the second quarter grew 0.7% to $30.6 million, from $30.4 million in the second quarter 2014. The increase in Observatory revenue was driven by higher admission prices.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
