Empire State Realty Trust, Inc. (NYSE:ESRT) Q4 2022 Earnings Call Transcript

Tony Malkin: Look, we will always go for NOI over volume. That’s part one. Part two; we are very happy with the performance of the observatory. In 2022, we’re very happy with the month of January, which has been quite strong. When we look at our goals, we keep in mind the fact that we can always add hours to the observatory based on demand. Right now, because we’re all reservation, we know what hours we need to operate, whereas before we just stayed open in order to capture, provide the opportunity to capture visitors when they came through. So we feel very good. We have the best per caps we’ve had. When we look at the mix that we’ve added volume and that means more past programs than still on a comparable basis to at the same ratio.

Our per cap is dramatically higher. Our brand has never been stronger. We’re a true global brand. The branding opportunities, the co-branding, which we get now people come to us, we don’t pay for it, they come to us and that only builds our brand further and that builds more direct demand for the attraction. And as volume increases, we’ll add ours. What we won’t do, however, is diminish the customer experience and that’s what got us to number one attraction in the United States, number three in the world. We’ll maintain the customer experience. We are the only authentic play in New York City. Since 2013, I’ve heard, oh, it’s going to be One World Trade Center. Oh, it’s going to be the edge. Oh, it’s going to be the summit. We’ve continued to perform and continue to improve our game, and that’s what we’ll continue to do.

Steve Sakwa: Great. And then last question for me, I don’t know who wants to take this. I saw under the transaction activity that you guys sold this $40 million asset up in I guess Westport, Connecticut. And it sort of was described as a related party transaction, I just didn’t know what sort of details or information you could sort of provide on that deal and maybe how that was priced and sort of the mechanics behind that deal.

Heather Houston: Sure. This is Heather Houston. I can take that one and I’ll let Christina add to it. So the buyer was affiliated, it’s an entity affiliated with Tony Malkin. And the transaction was conducted in compliance with our related transaction protocol including that the company reviewed with outside counsel that’s practices for related party transactions and took additional precautions to ensure an arm’s length process. There were separate counsel and appraisals for both the buyer and the seller. The independent members of our Board conducted an independent review under the guidance of outside counsel and then approved the transaction. And full disclosure of the transaction will be made in our 10-K, which we plan to file next week.

Operator: Thank you. Our next questions come from the line of Camille Bonnel with Bank of America. Please proceed with your questions.

Camille Bonnel: Hello. Within your same-store NOI guidance of expecting modest revenue growth, can you please comment on your expectations around leasing spreads in particular for your Greater New York Metropolitan office and retail portfolios?