Empire State Realty Trust, Inc. current report, 25 July 2018

Full document

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 25, 2018
Reporting Period: Second Quarter 2018

This filing serves to announce the Company's financial results for the second quarter of 2018. The report incorporates by reference a press release (Exhibit 99.1) and supplemental information (Exhibit 99.2) available on the Company's website. The information provided in this 8-K is furnished and not deemed "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 explicitly states that these results are detailed in the attached press release and supplemental report, which are not included in the input text.

Non-GAAP Measures Defined:
The filing provides detailed definitions for the following supplemental financial measures used by the Company:

  • 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 above or below-market ground lease amortization.
  • Core FFO: Modified FFO adjusted to add back acquisition expenses, deferred tax asset write-offs, and losses 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, and deductions for straight-line rent, leasing commissions, tenant improvements, and capital expenditures.
  • Net Operating Income (NOI): A measure of property performance excluding cost of funds, depreciation, amortization, and corporate-level expenses.
  • EBITDA: Net income plus interest expense, income taxes, and depreciation/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 second quarter of 2018.

Guidance, Outlook, and Risks

Management Commentary and Risks:
The filing includes extensive disclaimers regarding the limitations of the non-GAAP measures presented:

  • FFO Limitations: Does not represent cash generated from operating activities, captures neither changes in property value nor capital expenditures required to maintain performance, and is not indicative of cash available for distributions.
  • Modified FFO Limitations: Similar to FFO, it is not a substitute for GAAP net income or cash flow and may not be comparable to other REITs.
  • Core FFO Limitations: Excludes non-recurring items but does not represent cash available to fund ongoing needs.
  • Core FAD Limitations: Presented solely as supplemental disclosure regarding the ability to fund dividends; not indicative of cash available for ongoing needs.
  • NOI Limitations: Excludes significant economic costs such as G&A, interest, and capital expenditures; measures property performance but not the Company's performance as a whole.
  • EBITDA Limitations: Should not be considered an alternative to net income or a measure of liquidity.

Guidance/Outlook: No specific forward-looking guidance or outlook figures are provided in the text of this filing.

Investor Verification Checklist

  • Verify the specific numerical values for Q2 2018 revenue, net income, and FFO in the attached Press Release (Exhibit 99.1).
  • Review the Supplemental Report (Exhibit 99.2) for detailed reconciliations between GAAP net income and the non-GAAP measures (FFO, Modified FFO, Core FFO, Core FAD).
  • Confirm the Company's occupancy rates and rental rate trends, which are referenced as drivers of NOI but not quantified in this text.
  • Check the Company's website for the full text of the press release to understand the context of the "supplemental information" referenced.
  • Review the specific adjustments made to Core FAD to understand the Company's view on funds available for dividends.