Business Context and Reporting Period
Company: Empire State Realty Trust, Inc. (ESRT) and Empire State Realty OP, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: October 23, 2019
Reporting Period: Third Quarter 2019
This filing serves as a notification that the Company issued a press release announcing its financial results for the third quarter of 2019. The actual 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" for liability purposes under Section 18 of the Exchange Act.
Key Financial Metrics
The provided text does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. The filing focuses on defining the non-GAAP financial measures used to evaluate performance rather than reporting the results themselves.
Defined Non-GAAP Measures:
- Funds From Operations (FFO): Net income excluding impairment writedowns, gains/losses from debt restructurings and sales, plus real estate-related depreciation and amortization.
- Modified FFO: FFO adjusted for above or below-market ground lease amortization.
- Core FFO: Modified FFO adjusted for acquisition expenses, deferred tax asset write-offs, and loss on early extinguishment of debt.
- Core Funds Available for Distribution (Core FAD): Core FFO adjusted for non-real estate depreciation, financing costs, non-cash compensation, straight-line rent, leasing commissions, tenant improvements, and capital expenditures.
- Net Operating Income (NOI): Operating performance measure excluding cost of funds, depreciation, amortization, and general administrative expenses.
- EBITDA: Net income plus interest expense, income taxes, and depreciation and amortization.
Material Changes
The filing text does not provide specific data regarding material changes in financial performance compared to the prior comparable period. It only confirms the issuance of results for the third quarter of 2019.
Guidance, Outlook, and Risks
Management Commentary: Management emphasizes that these non-GAAP measures are useful for understanding operating performance and comparing results among REITs. However, the filing explicitly states limitations for each measure:
- FFO, Modified FFO, Core FFO, and Core FAD do not represent cash generated from operating activities and are not alternatives to GAAP net income or cash flow.
- These measures are not indicative of cash available to fund ongoing needs or make distributions.
- NOI excludes significant economic costs such as capital expenditures and leasing costs necessary to maintain property performance.
- EBITDA should not be considered an alternative to net income or a measure of liquidity.
Risks and Contingencies: The filing notes that there can be no assurance that the Company's non-GAAP measures are comparable to similarly titled measures of other REITs due to variations in computation methods.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) and Exhibit 99.2 (Supplemental Report) for the actual numerical values of FFO, Core FFO, NOI, and GAAP net income for Q3 2019.
- Verify the specific adjustments made to calculate Core FAD, particularly regarding capital expenditures and leasing commissions.
- Compare the reported non-GAAP metrics against the Company's historical performance and peer group data, noting the disclaimer regarding comparability.
- Confirm the Company's liquidity position and debt service capabilities by reviewing the cash flow statement in the supplemental materials, as EBITDA and FFO are explicitly stated not to be measures of liquidity.