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 29, 2015
Reporting Period: Second Quarter of 2015
This filing serves as a notification that the Company issued a press release announcing its financial results for the second quarter of 2015. The filing incorporates the press release and supplemental non-GAAP financial measures 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. The filing acts as a conduit to the press release (Exhibit 99.1) and supplemental data (Exhibit 99.2) where these figures are detailed.
Non-GAAP Measures Defined: The filing provides detailed definitions for the following supplemental measures used in the referenced reports:
- Funds From Operations (FFO): Net income excluding impairment writedowns, gains/losses from debt restructurings and sales, plus real estate depreciation/amortization, adjusted for non-controlling interests and unconsolidated partnerships.
- Modified FFO: FFO adjusted to add back amortization of above or below-market ground leases (specifically related to July 2014 acquisitions).
- Core FFO: Modified FFO adjusted to exclude IPO/formation transaction costs, acquisition expenses, severance, and specific litigation settlements.
- Core Funds Available for Distribution (Core FAD): Core FFO adjusted for non-real estate depreciation, financing costs, and deductions for capital expenditures, tenant improvements, and straight-line rent.
- Net Operating Income (NOI): Property-level performance measure excluding cost of funds, depreciation, and corporate G&A.
- EBITDA: Net income plus preferred distributions, interest, taxes, depreciation, amortization, and acquisition expenses.
Material Changes
The filing text does not explicitly state material changes in financial performance compared to the prior period. It references the July 2014 acquisition of two properties with below-market ground leases as a factor influencing the calculation of Modified FFO, noting that the amortization of these leases is material to overall results.
Guidance, Outlook, and Risks
Guidance and Outlook: The 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 used by other REITs.
- NOI excludes significant economic costs such as capital expenditures and leasing costs necessary to maintain property performance.
Investor Verification Checklist
- Verify specific Q2 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 ground lease amortization.
- Assess the Company's ability to fund dividends based on the Core FAD metric provided in the supplemental data.
- Compare the Company's non-GAAP definitions against industry peers to ensure comparability.