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 28, 2015
Reporting Period: Third Quarter of 2015
This filing serves as a notification that the Company issued a press release announcing its financial results for the third quarter of 2015. The filing incorporates the press release and supplemental non-GAAP financial information by reference but explicitly states that this information is "furnished" and not "filed" for purposes of Section 18 of the Exchange Act.
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. These figures are contained within the attached Exhibits 99.1 (Press Release) and 99.2 (Supplemental Report), which are referenced but not included in the source 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-related depreciation and amortization.
- Modified FFO: FFO adjusted to add back amortization of above or below-market ground leases.
- Core FFO: Modified FFO adjusted to exclude IPO-related expenses, acquisition expenses, severance, and other non-recurring items.
- Core Funds Available for Distribution (Core FAD): Core FFO adjusted for non-real estate depreciation, financing costs, and capital expenditures to estimate ability to fund dividends.
- Net Operating Income (NOI): Operating performance of properties excluding cost of funds, depreciation, and general administrative 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 only confirms the announcement of Q3 2015 results. The text notes that the Company acquired two properties in July 2014 carrying significantly below-market ground leases, the amortization of which is material to overall results and is adjusted for in Modified FFO.
Guidance, Outlook, and Risks
Guidance and Outlook: The filing text does not contain forward-looking guidance or specific management commentary regarding future performance trends.
Risks and Contingencies: The filing includes standard disclaimers regarding the limitations of non-GAAP measures:
- FFO, Modified FFO, Core FFO, Core FAD, NOI, and EBITDA do not represent cash generated from operating activities.
- These measures should not be considered alternatives to GAAP net income or cash flow from operating activities.
- There is no assurance that these measures are comparable to similarly titled measures of other REITs.
- These measures do not indicate cash available to fund ongoing needs or distributions.
Investor Verification Checklist
- Verify specific Q3 2015 revenue, net income, and FFO figures in the attached Press Release (Exhibit 99.1).
- Review the reconciliation of GAAP net income to FFO, Modified FFO, Core FFO, and Core FAD in the Supplemental Report (Exhibit 99.2).
- Confirm the impact of the July 2014 property acquisitions on current period results, specifically regarding below-market ground lease amortization.
- Assess the Company's ability to fund dividends by reviewing the Core FAD calculation details.
- Check for any updates on the "Observatory" lawsuit settlement mentioned in the Core FFO definition.