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: April 24, 2019
Reporting Period: First Quarter 2019
This filing announces the Company's financial results for the first quarter of 2019. 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 serves as a notification of the results and a definition of non-GAAP measures rather than a presentation of the raw financial data itself.
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 for above or below-market ground lease amortization.
- Core FFO: Modified FFO adjusted for acquisition expenses, deferred tax asset write-offs, and loss 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, 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 points to compare the first quarter of 2019 against prior periods. It references a press release for the actual results but does not summarize the magnitude of changes in revenue, occupancy, or earnings within the body of this 8-K.
Guidance, Outlook, and Risks
Management Commentary:
Management emphasizes that these non-GAAP measures are useful for evaluating operating performance and comparing results among REITs. However, the filing explicitly states limitations for each measure:
- FFO, Modified FFO, Core FFO, and Core FAD do not represent cash generated from operating activities and should not be considered alternatives to GAAP net income or cash flow.
- These measures are not indicative of cash available to fund ongoing needs or make distributions.
- NOI excludes significant economic costs such as capital expenditures and leasing costs necessary to maintain property performance.
- EBITDA is not a substitute for net income or a measure of liquidity.
Risks and Contingencies:
The filing notes that there can be no assurance that the Company's non-GAAP measures are comparable to those of other REITs due to varying computation methods. It also highlights that these measures fail to capture changes in property value resulting from market conditions or the level of capital expenditures required.
Investor Verification Checklist
- Verify the specific numerical values for Q1 2019 revenue, FFO, and Core FAD in the attached press release (Exhibit 99.1) and supplemental report (Exhibit 99.2), as they are not listed in this 8-K text.
- Review the reconciliation tables in the supplemental information to understand the adjustments made from GAAP Net Income to Core FAD.
- Confirm the Company's occupancy rates and rental rate trends, which are referenced as key drivers of NOI but not quantified here.
- Check for any updates on debt maturities or refinancing activities mentioned in the full press release.
- Assess the impact of the "below-market ground lease amortization" adjustment on Modified FFO, as this is a material non-cash item specific to the Company's 2014 acquisitions.