A third of Empire State Realty Trust tenants sought rent relief: Q1 report

So far just 3 of 170 requests from retail and office tenants have been granted; REIT also reported business at newly renovated Empire State Building Observatory plummeted

TRD New York /
Apr.April 23, 2020 07:55 PM
Empire State Realty Trust CEO Anthony Malkin and the Empire State Building (Photo by Roy Rochlin/Getty Images)

Empire State Realty Trust CEO Anthony Malkin and the Empire State Building (Photo by Roy Rochlin/Getty Images)

Empire State Realty Trust said nearly one third of its office and retail tenants have asked for rent deferrals because of the coronavirus pandemic.

The company, whose most prominent property is the Empire State Building, made the disclosure during its first quarter earnings call. 

Spread across its entire portfolio, 170 tenants are asking for an average of  three months to pay back their rent, said Thomas Durels, executive vice president of real estate, during Thursday’s call. So far, ESRT has granted just three of those requests.

For the quarter, the firm reported net income of $8.3 million, down from $9.9 million the same time last year. Its core funds from operations came in at $53.7 million, a drop from $56.7 million last year. The real estate investment trust also reported hiring a new chief financial officer, former Morgan Stanley executive Christina Chiu.

As of Monday, ESRT had collected 69 percent of its April rent, with 73 percent of office tenants and 46 percent of retail tenants paying up. But after tapping into some tenants’ security deposits, total rent collections rose to 87 percent, he said.

In order to be granted a rent deferral, tenants must provide a significant amount of financial information to prove they deserve a break. Durels said he was surprised by some tenants that asked for a reprieve but had strong balance sheets.

“We are not granting deferrals across the board,” he said.

Those who are approved will have a maximum of a year to pay back the owed rent.

ESRT saw requests from a range of tenants — from public companies to law firms — though he said smaller businesses, like those in the food industry, have been hit hardest.

“We want these service and food providers to re-open, so that they are there to provide services when our office tenants re-occupy” Durels said.

Another area of ESRT’s business that took a hit was its newly renovated Empire State Building Observatory, which was completed late last year. 

For the first two months of 2020, revenue had been up at the iconic property’s observatory by 13.2 percent year-over-year. But the pandemic and mandated government shutdowns — the observatory closed March 16 — halted that activity. The observatory brought in 30 percent fewer visitors compared to the same time last year, and revenue dropped 13 percent from the first quarter of 2019.

ESRT’s CEO Anthony Malkin said the firm does not expect the traffic at the observatory to resume to normal levels until January 2022.

The company’s stock closed Thursday at $7.87, down about 3 percent.

Write to Mary Diduch at [email protected]


Related Articles

arrow_forward_ios
The Manhattan office market’s overall vacancy rate rose to a 24-year high of 13.3% in the third quarter (iStock)

Cushman & Wakefield paints bleak picture for Manhattan office market

Cushman & Wakefield paints bleak picture for Manhattan office market
Centric Brands CEO Jason Rabin and the Empire State Building at 350 Fifth Avenue (Centric; Pixabay)

Centric Brands downsizes at the Empire State Building

Centric Brands downsizes at the Empire State Building
55 Water Street, 399 Park Avenue, and 113-133 West 18th Street in Midtown South have each had tenants put up more than 150,000 sq ft for sublease since the pandemic began. (Google Maps)

Manhattan now has 16M sf of available office sublease space

Manhattan now has 16M sf of available office sublease space
590 Madison Avenue and IBM CEO Arvind Krishna (Google Maps; Getty Images)

Here’s what tenants are paying at the IBM building

Here’s what tenants are paying at the IBM building
Brookfield's Ric Clark with 410 Tenth Avenue (Getty; Google Maps)

Brookfield weighs bid for SL Green’s Hudson Yards building

Brookfield weighs bid for SL Green’s Hudson Yards building
From left: 245 Park Avenue, 420 Fifth Avenue and 1271 Sixth Avenue (Google Maps)

Rockefeller Foundation signs sublease in MLB’s old Park Avenue office

Rockefeller Foundation signs sublease in MLB’s old Park Avenue office
Many NYC companies are not sending employees back to work in Manhattan offices (iStock)

Just 10% of Manhattan employees are back at the office

Just 10% of Manhattan employees are back at the office
Facebook CEO Mark Zuckerberg, a rendering of the Farley Post Office building redevelopment and Vornado's Steve Roth (Credit: Getty Images, VNO)

Facebook snagged $100M discount on Farley Post Office deal

Facebook snagged $100M discount on Farley Post Office deal
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...