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 26, 2017
Reporting Period: Second Quarter 2017
This filing serves as a notification that the Company issued a press release announcing its financial results for the second quarter of 2017. 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. The filing acts as a conduit for the press release (Exhibit 99.1) and supplemental data (Exhibit 99.2), which are 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 property sales, plus real estate 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 acquisition expenses, deferred financing costs write-offs, prepayment penalties, and acquisition break-up fees.
- Core Funds Available for Distribution (Core FAD): Core FFO adjusted for non-real estate depreciation, 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 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 regarding material changes in financial performance compared to the prior comparable period. It references the existence of a press release containing these results but does not reproduce the comparative figures.
Guidance, Outlook, and Risks
Management Commentary: Management emphasizes that the defined non-GAAP measures (FFO, Modified FFO, Core FFO, Core FAD, NOI, EBITDA) are useful for evaluating operating performance and comparability among REITs. However, the filing includes extensive disclaimers stating that these measures:
- Do not represent cash generated from operating activities.
- Should not be considered alternatives to GAAP net income or cash flow from operating activities.
- Are not indicative of cash available to fund ongoing needs or distributions.
- May not be comparable to similarly titled measures used by other companies.
Risks and Contingencies: The text highlights limitations in using these metrics, noting they exclude significant economic costs such as capital expenditures, leasing commissions, and interest expenses. No specific new risks or contingencies are detailed in this excerpt beyond the standard limitations of non-GAAP reporting.
Investor Verification Checklist
- Verify the specific Q2 2017 revenue, net income, and FFO figures in the attached Press Release (Exhibit 99.1).
- Review the reconciliation tables in the Supplemental Report (Exhibit 99.2) to understand the adjustments made to reach Core FFO and 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 and supplemental information referenced in Item 2.02 and Item 7.01.
- Assess the impact of below-market ground lease amortization on Modified FFO as described in the methodology section.