Business Context and Reporting Period
This Form 8-K filing by Empire State Realty OP, L.P. and Empire State Realty Trust, Inc. reports the announcement of financial results for the first quarter of 2016. The report was issued on April 27, 2016, and incorporates by reference a press release and supplemental non-GAAP financial measures.
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 methodology for several non-GAAP financial measures used to evaluate performance:
- Funds From Operations (FFO): Defined per NAREIT guidelines as net income excluding impairment writedowns, gains/losses from debt restructurings and property sales, plus real estate depreciation and amortization.
- Modified FFO: Adds back adjustments for above or below-market ground lease amortization, specifically related to properties acquired in July 2014.
- Core FFO: Adds back non-recurring items to Modified FFO, including acquisition expenses, lawsuit settlement gains, deferred financing cost write-offs, and prepayment penalties.
- Core Funds Available for Distribution (Core FAD): Adjusts Core FFO for non-real estate depreciation, straight-line rent, capital expenditures, and leasing commissions to assess dividend funding ability.
- Net Operating Income (NOI): Measures property performance excluding cost of funds, depreciation, and corporate-level expenses.
- EBITDA: Calculated as net income plus preferred distributions, interest, taxes, depreciation, amortization, and acquisition expenses.
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, which are not included in the provided text.
Guidance, Outlook, and Risks
The document does not provide forward-looking guidance or specific management commentary on future outlook. It includes standard disclosures regarding the limitations of non-GAAP measures:
- FFO, Modified FFO, Core FFO, Core FAD, NOI, and EBITDA are not substitutes for GAAP net income or cash flow from operating activities.
- These measures do not represent cash available to fund ongoing needs or distributions.
- Comparability with other REITs is not assured due to varying calculation methods.
Investor Verification Checklist
- Review the attached Press Release (Exhibit 99.1) for specific Q1 2016 revenue, net income, and FFO figures.
- Examine the Supplemental Report (Exhibit 99.2) for detailed reconciliations between GAAP net income and non-GAAP measures.
- Verify the impact of the July 2014 property acquisitions on Modified FFO due to below-market ground lease amortization.
- Confirm the specific amounts of non-recurring items excluded from Core FFO, such as the Observatory lawsuit settlement and acquisition break-up fees.
- Assess the company's ability to fund dividends by analyzing the Core FAD calculation components.