Financial Performance - Net income attributable to common unitholders for Q3 2023 was $18.8 million, representing a 105.8% increase compared to Q3 2022[145]. - Core Funds From Operations (Core FFO) for Q3 2023 reached $65.9 million, attributable to common unitholders[145]. - Total revenues for Q3 2023 were $191.5 million, a 4.3% increase from $183.7 million in Q3 2022[149]. - Operating income for Q3 2023 was $42.3 million, an increase of 18.9% from $35.5 million in Q3 2022[149]. - Net income attributable to common unitholders was $65.36 million, representing a 68.8% increase from $38.71 million in the previous year[157]. - Operating income improved to $105.93 million, a 20.3% increase from $88.07 million year-over-year[157]. - Total revenues for the period reached $546.69 million, a slight increase of 0.2% compared to $545.77 million in the previous year[157]. Revenue Sources - Observatory revenue increased by 13.6% to $37.6 million in Q3 2023, driven by higher visitation and revenue per visitor[149][154]. - Observatory revenue rose to $93.15 million, reflecting a 26.5% increase from $73.66 million in the prior year, driven by higher visitation and revenue per visitor[165]. - The increase in rental revenue was primarily due to a $5.5 million rise in base rent from new or renewed tenants[153]. - Rental revenue increased by $7.1 million due to new or renewed tenants and higher rents, offset by a $6.1 million decrease from recent transaction activity[158]. - The observatory hosted 743,000 visitors in the three months ended September 30, 2023, compared to 687,000 visitors in the same period in 2022, an increase of approximately 8.2%[210]. Expenses and Costs - Total operating expenses for Q3 2023 were $149.3 million, slightly up from $148.2 million in Q3 2022[149]. - Total operating expenses increased to $440.76 million, up 3.7% from $426.82 million in the prior year[157]. - General and administrative expenses rose primarily due to higher payroll costs associated with year-over-year wage growth[159]. - Leasing commission costs per square foot decreased to $18.41 in 2023 from $19.14 in 2022, a decline of approximately 3.8%[185]. - Tenant improvement costs per square foot increased to $78.15 in 2023 from $59.20 in 2022, an increase of approximately 32.1%[185]. Cash Flow and Liquidity - As of September 30, 2023, the company had $354.0 million in cash and cash equivalents and $850 million available under its unsecured revolving credit facility[171]. - Net cash provided by operating activities increased by $22.0 million to $196.0 million due to increased observatory operating income and changes in working capital[193]. - Net cash used in investing activities decreased by $49.7 million to $39.4 million primarily due to net proceeds from property dispositions[193]. - Distributions to equity holders amounted to $30.8 million for the nine months ended September 30, 2023, compared to $32.2 million in 2022, a decrease of approximately 4.3%[190]. - As of September 30, 2023, cash and cash equivalents were $421.0 million, down from $439.8 million in 2022, a decrease of about 4.0%[192]. Leasing Activity - The commercial portfolio was 90.5% leased, while the Manhattan office portfolio was 91.9% leased[151]. - The company signed a total of 248,479 rentable square feet of new, renewal, and expansion leases during the quarter[145]. - Total new leases signed for the nine months ended September 30, 2023, decreased to 66 from 103 in 2022, representing a decline of approximately 35.9%[185]. - Total square feet leased in the same period decreased to 772,587 from 928,598, a reduction of about 16.8%[185]. Debt and Interest Rates - The weighted average interest rate on the $2.2 billion of fixed-rate indebtedness outstanding was 3.9% per annum, with maturities at various dates through March 17, 2035[218]. - The fair value of the company's outstanding debt was approximately $2.0 billion, which was approximately $250.8 million less than the book value as of September 30, 2023[219]. - As of September 30, 2023, the company has interest rate SOFR swap and cap agreements with an aggregate notional value of $573.6 million, maturing between October 1, 2024, and November 1, 2033[217]. Market Conditions and Strategy - The company has seen sustained demand for its properties in 2023, marked by solid leasing activity and observatory performance[212]. - The company is navigating an uncertain economic environment characterized by inflation, rising interest rates, and potential recession risks, which could impact visitor numbers and pricing power[213]. - The company maintains a well-positioned balance sheet with modest leverage and access to liquidity, providing security in a rising rate environment[214]. - The company has executed capital recycling, acquisitions, and buybacks to navigate uncertain times[214]. - The company’s observatory revenues and admissions are influenced by various factors, including tourist numbers, admission prices, seasonal trends, competition, and weather[211].
Empire State Realty OP(FISK) - 2023 Q3 - Quarterly Report