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: October 31, 2017
Reporting Period: Third Quarter 2017
This filing serves as a notification that the Company issued a press release announcing its financial results for the third quarter of 2017. The filing incorporates the press release and supplemental non-GAAP financial information by reference as Exhibits 99.1 and 99.2.
Key Financial Metrics
Revenue, Profit, Cash Flow, Margins, Debt, and Liquidity: The provided text does not contain specific numerical values for revenue, net income, cash flow, margins, debt levels, or liquidity ratios. The filing explicitly states that the detailed financial results are contained in the attached press release (Exhibit 99.1) and supplemental report (Exhibit 99.2), which are not included in the input text.
Non-GAAP Measures Defined: The filing details the methodology for several supplemental 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 depreciation and amortization.
- Modified FFO: FFO adjusted for above or below-market ground lease amortization.
- Core FFO: Modified FFO adjusted for acquisition expenses, deferred financing costs write-offs, prepayment penalties, and acquisition break-up fees.
- 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 announcement of third-quarter 2017 results.
Guidance, Outlook, and Risks
Management Commentary: Management emphasizes that the non-GAAP measures (FFO, Modified FFO, Core FFO, Core FAD, NOI, EBITDA) are useful for evaluating operating performance and comparability among REITs but explicitly state they are not substitutes for GAAP net income or cash flow from operating activities.
Risks and Limitations:
- Non-GAAP measures exclude significant economic costs such as capital expenditures, leasing commissions, and depreciation.
- There is no assurance that the Company's calculation of these measures is comparable to those of other REITs.
- These measures do not represent cash available to fund ongoing needs or distributions.
Unusual Items: The filing notes that Modified FFO adjusts for below-market ground lease amortization stemming from the third quarter 2014 acquisition of two option properties.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific Q3 2017 revenue, net income, and FFO figures.
- Review Exhibit 99.2 for the detailed reconciliation of GAAP net income to non-GAAP measures (FFO, Core FFO, Core FAD).
- Verify the specific impact of the below-market ground lease amortization on Modified FFO.
- Confirm capital expenditure and leasing commission levels deducted in the Core FAD calculation.
- Check for any updates on debt maturities or liquidity positions not detailed in this summary text.