Empire State Realty OP(FISK) - 2020 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2020, the company incurred a net loss of $13.3 million and achieved Core Funds From Operations of $34.9 million[148]. - Total revenues for the three months ended September 30, 2020, were $146.575 million, a decrease of 24.0% compared to $192.873 million in the same period of 2019[179]. - Rental revenue decreased by 6.9% to $139.909 million in Q3 2020 from $150.225 million in Q3 2019[179]. - Operating income for Q3 2020 was $11.928 million, a decline of 73.7% from $45.279 million in Q3 2019[179]. - The company experienced a net loss of $12.269 million in Q3 2020, compared to a net income of $26.784 million in Q3 2019, representing a 145.8% decrease[179]. - Net income attributable to common unitholders decreased by 148.7% to a loss of $26.7 million from a profit of $54.9 million[1]. - The company's net income (loss) for the nine months ended September 30, 2020, was $(23.599) million, compared to $55.570 million in the same period of 2019[275]. - Funds from Operations (FFO) attributable to common stockholders for the nine months ended September 30, 2020, was $117.169 million, down from $187.085 million in the same period of 2019[275]. - Modified Funds From Operations (Modified FFO) attributable to common stockholders for the nine months ended September 30, 2020, was $123.042 million, compared to $192.958 million in the same period of 2019[275]. - Core Funds From Operations (Core FFO) attributable to common stockholders for the nine months ended September 30, 2020, was $128.106 million, down from $192.958 million in the same period of 2019[275]. Liquidity and Debt - The company reported a strong liquidity position of $1.5 billion as of September 30, 2020, consisting of $373.0 million in cash and $1.1 billion available under its revolving credit facility[148]. - As of September 30, 2020, the company had total debt outstanding of approximately $2.0 billion, with a weighted average interest rate of 4.0%[155]. - The company raised $300.0 million in net proceeds in two financings and drew down $550.0 million under its revolving credit facility in response to COVID-19[157]. - Total consolidated indebtedness was approximately $2.0 billion with a weighted average interest rate of 4.0%[222]. - As of September 30, 2020, the company maintained a maximum total leverage ratio of 33.2%, well below the 60% limit set by financial covenants[242]. - The company expects to incur approximately $130.1 million in additional costs for tenant improvements and leasing commissions under existing lease agreements[248]. Operational Metrics - Same-Store Property Cash NOI excluding lease termination fees increased by 9.3% compared to Q3 2019, primarily due to lower property operating expenses[148]. - The company collected 94% of total billings for Q3 2020, with 96% for office tenants and 84% for retail tenants[148]. - As of September 30, 2020, the total portfolio contained 10.1 million rentable square feet of office and retail space, including 14 office properties[149]. - The company signed 18 new, renewal, and expansion leases in Q3, representing 247,449 rentable square feet[148]. - The company signed 64 new leases, expansions, and renewals totaling 459,033 square feet during the nine months ended September 30, 2020, compared to 106 leases totaling 903,010 square feet in 2019[246]. - The company signed 0.5 million rentable square feet of new leases, expansions, and renewals during the nine months ended September 30, 2020, compared to 1.3 million square feet for the year ended December 31, 2019[279]. - As of September 30, 2020, approximately 1.0 million rentable square feet were available to lease, representing 10.3% of the net rentable square footage in the portfolio[281]. - Leases representing 2.6% and 6.2% of net rentable square footage will expire in 2020 and 2021, expected to account for approximately 2.7% and 6.6% of annualized rent, respectively[281]. Expense Management - The company reduced property operating expenses by $26 million year-to-date through September 30, 2020, compared to the prior year period[174]. - Total operating expenses decreased by 2.4% to $418.6 million from $428.8 million[1]. - Operating income fell by 63.5% to $39.2 million compared to $107.6 million[1]. - Interest income decreased by 74.5% to $2.5 million from $9.9 million[1]. - General and administrative expenses increased by 9.4% to $48.6 million from $44.4 million[1]. - Real estate taxes increased by 4.6% to $90.0 million from $86.1 million[1]. - The company implemented a 60% reduction in annualized operating expenses from $35 million in February 2020 to approximately $14 million in May 2020[168]. - The company plans to convert some fixed rents of smaller food and service retailers to a percentage rent structure to support them during the recovery[166]. Impairment and Valuation - Impairment charges of $6.2 million were recorded, reflecting a 100% increase from prior periods[1]. - The company experienced impairment charges of $5.360 million for the nine months ended September 30, 2020, compared to no impairment charges in the same period of 2019[275]. - Goodwill allocated to the Observatory reporting unit was $227.5 million as of September 30, 2020, with fair value exceeding carrying value by less than 5.0%[171]. - The fair value of outstanding debt was approximately $2.1 billion, which was about $118.4 million more than the historical book value[296]. Observatory Performance - Observatory revenue plummeted by 88.2% to $4.419 million in Q3 2020, down from $37.575 million in Q3 2019, due to COVID-19 related closures[179]. - Observatory revenues for the three months ended September 30, 2020 were $4.4 million, driven by low visitation levels and fewer days of operation[286]. - The Observatory hosted approximately 30,000 visitors in Q3 2020, a decrease of 97.1% compared to 1,042,000 visitors in Q3 2019[285]. Interest Rate and Hedging - The weighted average interest rate on $1.8 billion of fixed-rate indebtedness was 4.02% per annum as of September 30, 2020[295]. - An interest rate LIBOR swap agreement with a notional value of $265.0 million fixes the LIBOR interest rate at 2.1485% and matures on August 24, 2022[294]. - If short-term interest rates had been 1% higher, interest expense would have increased by approximately $1.3 million for the nine months ended September 30, 2020[295]. - The company may mitigate interest rate volatility through hedging instruments, but there are no assurances that these efforts will be successful[292].