Business Context and Reporting Period
Company: Empire State Realty Trust, Inc. and Empire State Realty OP, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: July 27, 2016
Reporting Period: Second Quarter of 2016
This filing serves as a notification that the Company issued a press release announcing its financial results for the second quarter of 2016. The specific financial data is contained in the attached press release (Exhibit 99.1) and supplemental information (Exhibit 99.2), which are incorporated by reference but not deemed "filed" under Section 18 of the Exchange Act.
Key Financial Metrics
The filing text provided does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are located in the referenced Exhibits 99.1 and 99.2, which are not included in the input text.
The filing defines the following non-GAAP financial measures used by the Company:
- Funds From Operations (FFO): Net income excluding impairment writedowns, gains/losses from debt restructurings and sales of properties, plus real estate-related depreciation and amortization.
- Modified FFO: FFO adjusted for above or below-market ground lease amortization.
- Core FFO: Modified FFO excluding non-recurring items such as acquisition expenses, lawsuit settlement gains, and prepayment penalties.
- Core Funds Available for Distribution (Core FAD): Core FFO adjusted for non-cash items and capital expenditures to assess dividend funding ability.
- Net Operating Income (NOI): Property-level performance measure excluding cost of funds, depreciation, and corporate expenses.
- EBITDA: Net income plus preferred distributions, interest, taxes, depreciation, amortization, and acquisition expenses.
Material Changes
The filing text does not provide specific data regarding material changes in financial performance compared to the prior comparable period. It references the existence of a press release containing these results but does not detail the variances within the body of this 8-K.
Guidance, Outlook, and Risks
Management Commentary: Management emphasizes that the defined non-GAAP measures (FFO, Modified FFO, Core FFO, Core FAD, NOI, EBITDA) are useful for evaluating operating performance and comparability among REITs. However, the filing explicitly states that these measures have limitations:
- They do not represent cash generated from operating activities.
- They should not be considered alternatives to GAAP net income or cash flow from operating activities.
- They are not indicative of cash available to fund ongoing needs or distributions.
- Comparability with other REITs is not assured due to varying computation methods.
Risks and Contingencies: The filing notes that the supplemental information is furnished and not "filed" for liability purposes under Section 18 of the Exchange Act. It warns that non-GAAP measures exclude significant economic costs such as capital expenditures and leasing commissions necessary to maintain property performance.
Investor Verification Checklist
- Verify the specific Q2 2016 revenue, net income, and FFO figures in the attached Press Release (Exhibit 99.1).
- Review the Supplemental Report (Exhibit 99.2) for detailed reconciliations between GAAP net income and non-GAAP measures (FFO, Core FFO, Core FAD).
- Confirm occupancy rates and rental rate trends mentioned in the supplemental data.
- Assess the impact of the "below-market ground lease amortization" adjustment on Modified FFO.
- Check for any updates on the "lawsuit related to the Observatory" mentioned in the Core FFO definition.