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Empire State Realty (ESRT)
NYSE:ESRT

Empire State Realty (ESRT) AI Stock Analysis

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Empire State Realty

(NYSE:ESRT)

Rating:72Outperform
Price Target:
$9.00
▲(8.17%Upside)
Empire State Realty's overall stock score reflects its stable financial performance and positive earnings call insights, particularly strong leasing activity and a robust balance sheet. However, valuation concerns and cash flow management challenges slightly temper the outlook.
Positive Factors
Analyst Recommendation
The analyst's recommendation has upgraded ESRT to Outperform from Peer Perform, indicating a positive outlook.
Financial Performance
Observatory NOI increased 6.0% with a 1.0% increase in visitors - breaking its two-quarter visitor losing streak.
Leasing Activity
Commercial leasing activity was robust with 379k sf leases signed with +10.4% cash leasing spreads.
Negative Factors
Consumer and Market Risk
There are signs of potential risk due to government warnings about US travel, which may affect the Observatory's performance.
Sector Sensitivity
A lower multiple is being ascribed to the stock due to the office sector's sensitivity to economic uncertainty.
Stock Valuation
The target price for Empire State Realty Trust has been lowered from $10.00 to $7.50 due to a revised valuation approach.

Empire State Realty (ESRT) vs. SPDR S&P 500 ETF (SPY)

Empire State Realty Business Overview & Revenue Model

Company DescriptionEmpire State Realty Trust, Inc. (ESRT) is a 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 portfolio is highlighted by its ownership of the Empire State Building, one of the world's most famous office buildings and a major tourist attraction. ESRT focuses on providing high-quality office spaces and retail locations, catering to a diverse range of tenants and businesses.
How the Company Makes MoneyEmpire State Realty Trust generates revenue primarily through leasing office and retail spaces within its properties. The company's revenue model is based on long-term lease agreements with a variety of tenants, including corporate, professional, and retail clients. A significant portion of its income also comes from the Empire State Building's observatory operations, which attract millions of tourists annually, contributing to both ticket sales and related merchandise. Additionally, ESRT benefits from strategic partnerships and marketing initiatives that enhance its properties' visibility and attractiveness, helping drive occupancy rates and rental income.

Empire State Realty Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 20.06%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong leasing activity and positive rent spreads, along with a resilient Observatory performance despite weather challenges. The company maintains a robust balance sheet and continues to achieve success in its multifamily portfolio. However, there are concerns over a slight decline in office occupancy and potential macroeconomic headwinds affecting tourism.
Q1-2025 Updates
Positive Updates
Strong Leasing Activity
Leased approximately 230,000 square feet in the first quarter, including significant renewals and expansions with major tenants like Workday and Carolina Herrera. The Manhattan office portfolio is 93% leased.
Positive Rent Spreads
Achieved 15th consecutive quarter of positive New York City office mark-to-market rent spreads, with blended spreads increasing by over 10% in Q1.
Resilient Observatory Performance
Despite challenges, the Observatory produced NOI of $15 million, with revenue per cap increasing by 5.9% in the first quarter.
Multifamily Portfolio Success
The multifamily portfolio was 99% occupied with 8% year-over-year rent growth.
Strong Balance Sheet
Lowest leverage among all New York City focused REITs at 5.2 times net debt-to-EBITDA with no unaddressed debt maturities until December 2026.
Negative Updates
Occupancy Decline
Manhattan office portfolio leased rate decreased from 94.2% last quarter to 93% this quarter due to known move-outs.
Weather Impact on Observatory
Visitation down 4.6% year-over-year, affected by bad weather during peak holiday periods.
Potential Headwinds for Tourism
Geopolitical tensions and currency exchange rates may impact tourism and consumer confidence in the remainder of the year.
Company Guidance
During the Empire State Realty Trust first quarter 2025 earnings call, management reaffirmed their outlook for the year, citing strong leasing momentum and resilient performance of the Observatory. Key metrics highlighted included the Manhattan office portfolio being 93% leased, with expectations for leasing and occupancy gains by year-end. The company achieved positive mark-to-market rent spreads for the 15th consecutive year. The Observatory generated net operating income (NOI) of $15 million in the first quarter, despite a 4.6% year-over-year decrease in visitation due to seasonal factors. The multifamily portfolio boasted a 99% occupancy rate with 8% year-over-year rent growth, while the retail portfolio was over 94% leased. Empire State Realty Trust maintained core FFO guidance of $0.86 to $0.89 per diluted share for 2025 and kept the Observatory NOI guidance between $97 million and $102 million. The company also emphasized a strong balance sheet with no unaddressed debt maturities until December 2026 and net debt-to-EBITDA at 5.2 times as of quarter-end.

Empire State Realty Financial Statement Overview

Summary
Empire State Realty demonstrates a stable financial trajectory with consistent revenue growth and profitability. However, challenges in cash flow management and moderate leverage levels could impact financial flexibility. Balancing operational efficiency and debt management will be crucial for sustaining growth and enhancing shareholder value.
Income Statement
75
Positive
Empire State Realty's income statement exhibits stable revenue growth with a TTM revenue of $766.81M, which is a slight decrease from the previous annual figure. The gross profit margin is healthy at 47.76%, and the net profit margin stands at 7.20%, indicating profitability. However, the EBIT and EBITDA margins of 20.00% and 44.42%, respectively, suggest room for improvement in operational efficiency. The revenue growth rate from 2021 to TTM is positive, reflecting a steady upward trend in sales.
Balance Sheet
65
Positive
The balance sheet shows a moderate financial position with a debt-to-equity ratio of 1.17, reflecting a balanced use of leverage. The return on equity (ROE) is relatively low at 3.09%, indicating limited returns to shareholders. The equity ratio of 43.41% showcases a stable equity base but suggests a reliance on debt financing, which could pose risks if interest rates rise.
Cash Flow
60
Neutral
Cash flow analysis reveals challenges with a negative operating cash flow of -$20.89M in TTM. However, the company maintains a positive free cash flow of $32.11M, suggesting some capacity to fund operations and investments internally. The free cash flow to net income ratio is 0.58, indicating that a portion of earnings is being converted into cash, though operating cash flow issues warrant attention.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue766.81M767.92M739.57M727.04M624.09M609.23M
Gross Profit366.25M413.76M400.56M405.69M344.61M318.12M
EBITDA347.26M343.53M336.62M343.92M288.66M251.05M
Net Income55.20M51.64M53.24M40.64M-6.51M-12.52M
Balance Sheet
Total Assets4.11B4.51B4.22B4.16B4.28B4.15B
Cash, Cash Equivalents and Short-Term Investments187.82M385.46M346.62M264.43M423.69M526.71M
Total Debt2.09B2.48B2.27B2.27B2.34B2.17B
Total Liabilities2.33B2.73B2.49B2.48B2.60B2.42B
Stockholders Equity1.79B1.03B985.52M954.38M998.13M1.06B
Cash Flow
Free Cash Flow115.25M260.89M232.49M84.91M117.45M39.17M
Operating Cash Flow62.25M260.89M232.49M211.17M212.49M182.29M
Investing Cash Flow-367.92M-397.12M-77.34M-230.89M-212.74M-143.12M
Financing Cash Flow-53.09M158.58M-62.87M-140.24M-93.05M257.17M

Empire State Realty Technical Analysis

Technical Analysis Sentiment
Positive
Last Price8.32
Price Trends
50DMA
7.81
Positive
100DMA
7.94
Positive
200DMA
9.20
Negative
Market Momentum
MACD
0.09
Positive
RSI
55.44
Neutral
STOCH
61.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESRT, the sentiment is Positive. The current price of 8.32 is below the 20-day moving average (MA) of 8.33, above the 50-day MA of 7.81, and below the 200-day MA of 9.20, indicating a neutral trend. The MACD of 0.09 indicates Positive momentum. The RSI at 55.44 is Neutral, neither overbought nor oversold. The STOCH value of 61.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESRT.

Empire State Realty Risk Analysis

Empire State Realty disclosed 59 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 (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$1.40B27.435.44%1.68%1.41%3.11%
AAAAT
72
Outperform
$1.24B15.266.74%6.73%12.64%49.11%
69
Neutral
$1.32B21.366.47%4.95%4.31%39.56%
69
Neutral
$1.13B10.614.51%4.51%1.54%
AHAHH
68
Neutral
$724.63M125.443.05%7.83%-12.13%-14.54%
64
Neutral
$7.01B18.92-1.36%6.84%4.67%-25.39%
GNGNL
56
Neutral
$1.73B-13.01%9.79%16.69%39.04%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ESRT
Empire State Realty
8.32
-1.00
-10.73%
ALEX
Alexander & Baldwin
18.18
2.08
12.92%
SAFE
Safehold
15.69
-2.47
-13.60%
AHH
Armada Hoffler Properties
7.15
-3.07
-30.04%
AAT
American Assets
20.21
-0.55
-2.65%
GNL
Global Net Lease
7.76
1.17
17.75%

Empire State Realty Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Empire State Realty Holds Annual Shareholders Meeting
Neutral
May 19, 2025

On May 15, 2025, Empire State Realty Trust, Inc. held its annual shareholders meeting where Class A and Class B common stockholders elected the company’s nominees for director, approved executive compensation on a non-binding advisory basis, and ratified Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025. These decisions reflect the company’s continued commitment to its governance and operational strategies, potentially impacting its market positioning and stakeholder confidence.

The most recent analyst rating on (ESRT) stock is a Sell with a $7.00 price target. To see the full list of analyst forecasts on Empire State Realty stock, see the ESRT Stock Forecast page.

Financial Disclosures
Empire State Realty Reports Q1 2025 Financial Results
Neutral
Apr 29, 2025

Empire State Realty Trust announced its financial results for the first quarter of 2025, reporting a net income of $0.05 per share and core funds from operations of $0.19 per share, a slight decrease from the previous year. The company signed leases for approximately 231,000 rentable square feet and maintained a strong liquidity position with $0.8 billion available. The Manhattan office portfolio was 93.0% leased, and the total commercial portfolio was 92.5% leased as of March 31, 2025. Despite a decrease in same-store property cash net operating income due to increased expenses and taxes, the company remains optimistic about future occupancy and leasing percentages, expecting improvements by year-end.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 02, 2025