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Empire State Realty (ESRT)
NYSE:ESRT
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Empire State Realty
(NYSE:ESRT)68Neutral
Positive Factors
Leasing Activity
Commercial leasing activity was robust with 379k sf leases signed (+53.4% vs. LTM average) with +10.4% cash leasing spreads.
Retail Portfolio Growth
ESRT's Williamsburg retail portfolio is seen as a potentially attractive driver of medium-term growth.
Negative Factors
Observatory Performance
The number of visitors to the company's observatory was lower than estimated, which could impact revenue.
Empire State Realty (ESRT) vs. S&P 500 (SPY)
Market Cap
$1.42B
Dividend Yield1.64%
Average Volume (3M)1.47M
Price to Earnings (P/E)30.0
Beta (1Y)1.03
Revenue Growth3.83%
EPS Growth-5.55%
CountryUS
Employees666
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)0.26
Shares Outstanding166,736,220
10 Day Avg. Volume1,811,320
30 Day Avg. Volume1,470,898
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.85
Price to Cash Flow (P/CF)7.10
P/FCF Ratio7.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.50Price Target Upside34.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Empire State Realty Business Overview & Revenue Model
Company DescriptionEmpire State Realty Trust, Inc. (ESRT) is a leading real estate investment trust (REIT) that owns, manages, operates, acquires, and repositions office and retail properties in Manhattan and the greater New York metropolitan area. The company's flagship asset is the Empire State Building, one of the most iconic landmarks in the world, which includes both office and retail components alongside its famous observatory. ESRT's portfolio is complemented by a range of other high-quality office and retail properties, making it a significant player in the commercial real estate sector.
How the Company Makes MoneyEmpire State Realty Trust generates revenue primarily through leasing office and retail space, with its properties strategically located in high-demand areas. A significant portion of its income comes from leasing office spaces to a diverse range of tenants, including corporations, startups, and other businesses, ensuring a steady stream of rental income. The company also earns substantial revenue from its retail spaces located at street level, which attract a variety of retailers looking to capitalize on high foot traffic areas. Additionally, the Empire State Building's observatory is a key revenue driver, attracting millions of tourists annually, contributing significantly to the company's earnings. ESRT's revenue model is further strengthened by its strategic management and repositioning efforts, which enhance property value and attract premium tenants. The company's financial performance is also supported by partnerships with brokers, marketing agencies, and tourism operators, which help maximize occupancy rates and visitor numbers.
Empire State Realty Financial Statement Overview
Summary
Empire State Realty demonstrates a stable financial position with strong operational efficiency and a healthy cash flow. The absence of debt is a significant strength, reducing financial risk. While profitability margins have room for enhancement, the company's revenue and cash flow growth provide a positive outlook.Income Statement
The company exhibits a strong gross profit margin of 83.2% for 2024, showing efficient cost management. However, the net profit margin stands at 6.2%, indicating room for improvement in profitability. Revenue growth has been steady with a 3.8% increase from 2023 to 2024, supporting a positive trend. EBITDA margin is healthy at 16.2%, reflecting good operational efficiency.75
Positive
Balance Sheet
Empire State Realty's balance sheet is robust with a notable equity ratio of 22.9%, indicating a strong equity base. The debt-to-equity ratio is 0, showing no reliance on debt, which is rare and positive for stability. However, the ROE is slightly low at 4.6%, suggesting moderate returns on equity investments.80
Positive
Cash Flow
The company has shown a solid 12.2% growth in free cash flow from 2023 to 2024, indicating improving cash generation. The operating cash flow to net income ratio is 5.5, reflecting strong cash conversion from earnings. However, the free cash flow to net income ratio is high at 5.5, suggesting a strong cash position relative to earnings.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 763.20M | 767.92M | 739.57M | 727.04M | 624.09M | 609.23M | Gross Profit |
| 272.52M | 639.10M | 400.56M | 405.69M | 344.61M | 318.12M | EBIT |
| 156.54M | 158.71M | 146.71M | 127.03M | 79.13M | 58.66M | EBITDA |
| 345.59M | 124.33M | 336.62M | 343.92M | 288.66M | 251.05M | Net Income Common Stockholders |
| 49.59M | 47.44M | 53.24M | 63.21M | -13.04M | -22.89M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 385.31M | 385.46M | 346.62M | 264.43M | 423.69M | 526.71M | Total Assets |
| 4.19B | 4.51B | 4.22B | 4.16B | 4.28B | 4.15B | Total Debt |
| 2.28B | 0.00 | 2.27B | 2.27B | 2.34B | 2.17B | Net Debt |
| 1.89B | -385.46M | 1.92B | 2.01B | 1.92B | 1.64B | Total Liabilities |
| 2.47B | 2.73B | 2.49B | 2.48B | 2.60B | 2.42B | Stockholders Equity |
| 996.12M | 1.03B | 985.52M | 1.68B | 1.68B | 1.73B |
| Cash Flow | Free Cash Flow | ||||
| -1.51M | 260.89M | 232.49M | 84.91M | 117.45M | 39.17M | Operating Cash Flow |
| 36.44M | 260.89M | 232.49M | 211.17M | 212.49M | 182.29M | Investing Cash Flow |
| -37.96M | -397.12M | -77.34M | -230.89M | -212.74M | -143.12M | Financing Cash Flow |
| 158.09M | 0.00 | -62.87M | -140.24M | -93.05M | 257.17M |
Empire State Realty Technical Analysis
Negative
8.54
Price Trends
9.44
Negative
10.16
Negative
10.11
Negative
Market Momentum
-0.25
Positive
36.19
Neutral
16.02
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESRT, the sentiment is Negative. The current price of 8.54 is below the 20-day moving average (MA) of 8.96, below the 50-day MA of 9.44, and below the 200-day MA of 10.11, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 36.19 is Neutral, neither overbought nor oversold. The STOCH value of 16.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ESRT.
Empire State Realty Risk Analysis
Empire State Realty disclosed 62 risk factors in its most recent earnings report. Empire State Realty reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Empire State Realty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.42B | 29.99 | 5.12% | 1.64% | 3.83% | -5.55% | |
64 Neutral | $14.58B | 907.36 | 1.32% | 1.94% | -1.30% | -80.81% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
60 Neutral | $11.60B | 737.50 | 0.23% | 5.88% | 4.10% | -92.47% | |
60 Neutral | $2.18B | ― | -1.46% | 3.26% | 1.97% | 82.20% | |
54 Neutral | $4.52B | 760.94 | 0.71% | 4.85% | 5.12% | ― | |
52 Neutral | $438.35M | ― | -11.53% | 3.31% | -11.47% | -89.12% |
* Real Estate Sector Average
Performance Comparison
ESRT
Empire State Realty
8.54
-1.14
-11.78%
BXP
Boston Properties
69.00
8.76
14.54%
HPP
Hudson Pacific Properties
3.15
-3.41
-51.98%
SLG
SL Green Realty
61.96
13.98
29.14%
VNO
Vornado Realty
39.75
14.48
57.30%
PGRE
Paramount Group
4.28
-0.35
-7.56%
Empire State Realty Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -5.22% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
Empire State Realty Trust showcased strong leasing momentum, significant growth in the observatory business, and strategic diversification into multifamily and retail assets. However, challenges include a decline in same-store property cash NOI and a relatively flat projection for the observatory business in 2025. The core FFO guidance for 2025 also indicates a slight decrease. Overall, the highlights, particularly the strong leasing performance and financial stability, outweigh the lowlights.Highlights
Strong Leasing Performance
In 2024, Empire State Realty Trust leased over 1.3 million square feet, the highest annual volume since 2019, with a Manhattan office portfolio that is over 94% leased. The company achieved 12 consecutive quarters of higher leased percentages and positive absorption.
Observatory Business Growth
The observatory achieved year-over-year growth in net operating income exceeding 2019 levels, with over 485 billion global media impressions and generating $950 million in advertising value equivalency.
Financial Performance and Stability
Empire State Realty Trust reported core FFO of $0.95 per diluted share for 2024, with the lowest leverage among New York City-focused REITs at 5.3 times net debt to EBITDA. The company maintains strong liquidity and a well-laddered debt maturity schedule.
Expansion and Strategic Acquisitions
Continued diversification into attractive multifamily assets and prime retail assets in Williamsburg, Brooklyn, with $221 million in acquisitions and another $30 million acquisition expected in 2025.
Positive Market Demand
Strong demand for high-quality office space in New York City, allowing for increased rents and reduced concessions. The company achieved a 13% year-over-year increase in net effective rent per square foot.
Lowlights
Same-Store Property Cash NOI Decline
Same-store property cash NOI was down 2.9% in the fourth quarter year-over-year, primarily due to less benefit from positive nonrecurring items recognized in 2023 and increased operating expenses.
Observatory Business Projections
The 2025 observatory NOI is projected to be relatively flat compared to 2024, with concerns over macro factors such as dollar strength and reduced airline seat capacity between China and New York City.
Core FFO Guidance Reduction
2025 core FFO guidance is lower at $0.86 to $0.89 compared to 2024 adjusted core FFO of $0.91, impacted by lower interest income and higher G&A expenses.
Company Guidance
During the Empire State Realty Trust's fourth-quarter 2024 earnings call, the company reported strong financial metrics and provided optimistic guidance for 2025. They achieved a record annual leasing volume of 1.3 million square feet, with their Manhattan office portfolio reaching over 94% leased. The company expects to see commercial occupancy rates between 89% and 91% by the end of 2025, driven by positive absorption and reduced inventory. Financially, they reported a core FFO of $0.24 per diluted share for the fourth quarter and $0.95 for the full year, with an adjusted core FFO of $0.91 after accounting for nonrecurring items. For 2025, they forecast core FFO to range from $0.86 to $0.89. The observatory business performed strongly, with a fourth-quarter net operating income of approximately $29 million and a full-year NOI of $100 million, with future growth expected due to a new dynamic pricing model. Additionally, Empire State Realty Trust maintained a robust balance sheet with a net debt to EBITDA ratio of 5.3 times, and they plan to continue capital recycling into high-growth assets like multifamily and prime retail. Overall, the company remains committed to its five priorities: leasing space, selling observatory tickets, managing the balance sheet, identifying growth opportunities, and achieving sustainability goals.Empire State Realty Corporate Events
Financial Disclosures
Empire State Realty Reports Strong 2024 Financial Results
Positive
Feb 19, 2025
Empire State Realty Trust announced its financial results for the fourth quarter and full year of 2024, reporting a net income of $0.07 per share for the fourth quarter and $0.28 for the full year. The company’s core funds from operations (FFO) per share were $0.24 in the fourth quarter and $0.95 for the year. Leasing activity was strong, with 1.325 million rentable square feet of leases signed in 2024, contributing to a 160 basis points increase in the Manhattan office leased rate to 94.2% by year-end. The Empire State Building Observatory experienced a 6.0% increase in net operating income (NOI) in the fourth quarter and a 5.8% increase for the full year. The company maintained $0.9 billion of liquidity with no floating rate debt exposure as of December 31, 2024.
Executive/Board Changes
Empire State Realty Strengthens Leadership with Executive Amendments
Positive
Dec 12, 2024
Empire State Realty Trust, Inc. announced amendments to employment agreements for top executives. The amendment extends Anthony Malkin’s non-competition clause to one year, while Christina Chiu’s new agreement secures her role as President with a comprehensive compensation package, including bonuses and severance benefits, enhancing the company’s leadership stability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.