Business Context and Reporting Period
This Form 8-K is a current report filed by Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. on April 24, 2019. The filing serves to disclose the Company's financial results for the first quarter of 2019. The report incorporates by reference a press release and supplemental information regarding these results, which are furnished but not deemed "filed" for purposes of Section 18 of the Exchange Act.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it defines the non-GAAP financial measures the Company uses to evaluate performance:
- Funds From Operations (FFO): Defined per NAREIT guidelines as net income excluding impairment writedowns, gains/losses from debt restructurings and sales, plus real estate depreciation and amortization.
- Modified FFO: Adds back adjustments for above or below-market ground lease amortization to traditional FFO.
- Core FFO: Adds back acquisition expenses, deferred tax asset write-offs, and losses on early extinguishment of debt to Modified FFO to exclude non-recurring items.
- Core Funds Available for Distribution (Core FAD): Adjusts Core FFO for non-real estate depreciation, financing costs, and capital expenditures to assess dividend funding ability.
- Net Operating Income (NOI): A measure of property performance excluding cost of funds, depreciation, and corporate expenses.
- EBITDA: Net income plus interest, taxes, depreciation, and amortization, used to indicate debt service ability.
Material Changes
The filing text does not contain specific data comparing the current period to the prior comparable period. It references a press release (Exhibit 99.1) and supplemental report (Exhibit 99.2) for detailed results, but the numerical comparisons are not included in the provided text.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, specific management commentary on future outlook, or a list of material risks. However, it includes significant disclosures regarding the limitations of the non-GAAP measures presented:
- Limitations of Non-GAAP Measures: The Company explicitly states that FFO, Modified FFO, Core FFO, Core FAD, NOI, and EBITDA do not represent cash generated from operating activities and should not be considered alternatives to GAAP net income or cash flow.
- Comparability: There is no assurance that these measures are comparable to similarly titled measures used by other REITs due to varying computation methods.
- Economic Reality: The Company notes that these measures exclude capital expenditures and leasing costs necessary to maintain operating performance, which have real economic effects.
Investor Verification Checklist
- Review the attached press release (Exhibit 99.1) and supplemental report (Exhibit 99.2) for specific Q1 2019 revenue, net income, and FFO figures, as they are not in the 8-K text.
- Verify the reconciliation between GAAP net income and the non-GAAP measures (FFO, Core FFO, Core FAD) to understand the magnitude of excluded items.
- Assess the impact of below-market ground lease amortization on Modified FFO, as noted as a material non-cash adjustment.
- Confirm the Company's ability to fund dividends by analyzing Core FAD against actual distribution requirements.
- Check for any updates on debt maturities or refinancing activities referenced in the supplemental information.