Business Context and Reporting Period
This Form 8-K filing by Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. reports events occurring on December 6, 2019. The filing details the settlement of an exchange offer and the establishment of a new series of preferred units within the Operating Partnership.
Key Financial Metrics and Capital Structure
The filing does not provide standard financial performance metrics such as revenue, net income, cash flow, or debt levels. Instead, it focuses on capital structure adjustments:
- New Issuance: 4,610,383 Series 2019 Private Perpetual Preferred Units were issued.
- Distribution Rate: Cumulative preferential annual cash distributions of $0.70 per unit.
- Liquidation Preference: $13.52 per unit plus accrued unpaid distributions.
- Remaining OP Units: 110,220,974 Operating Partnership Units remain outstanding after the exchange.
Material Changes Versus Prior Period
The primary material change is the reduction of outstanding Operating Partnership Units (OP Units) and the creation of a new preferred equity class:
- Exchange Settlement: The Operating Partnership settled an exchange offer announced on November 25, 2019, exchanging 4,610,383 OP Units for the new Series 2019 Preferred Units.
- Unit Composition: The exchanged OP Units consisted of 1,632,667 Series ES, 186,799 Series 250, 302,608 Series 60, and 2,488,309 Series PR units.
- Retirement: The acquired OP Units were retired upon receipt.
- Re-designation: Existing Private Perpetual Preferred Units issued in 2014 were re-designated as "Series 2014 Private Perpetual Preferred Units."
Guidance, Outlook, and Material Terms
The filing outlines specific terms and risks associated with the new Series 2019 Preferred Units:
- Distribution Priority: Distributions rank junior to Series 2014 Preferred Units but senior to other OP Units. Distributions accrue regardless of earnings but are only payable if net cash income is sufficient.
- Redemption Rights: Generally non-redeemable except in specific circumstances (e.g., preservation of REIT status or a change of control). In a change of control, the redemption price is 200% of the liquidation preference plus accrued distributions.
- Voting Rights: Limited to amendments materially and adversely affecting the Series 2019 Preferred Units.
- Liquidity: No market currently exists for these units, and the Operating Partnership does not intend to list them on any exchange.
- Transferability: Generally freely transferable to family and affiliates; other transfers require general partner consent.
Investor Verification Checklist
- Verify the total number of Series 2019 Preferred Units issued (4,610,383) and the corresponding reduction in OP Units.
- Confirm the $0.70 annual distribution rate and the $13.52 liquidation preference per unit.
- Review the "change of control" redemption provision, specifically the 200% liquidation preference payout.
- Note the lack of a public trading market for the Series 2019 Preferred Units.
- Check the remaining outstanding count of 110,220,974 OP Units across all series (ES, 250, 60, PR).