Empire State Realty Trust lost $20M in Q2

CEO Tony Malkin said rent collections and Observation Deck revenue are on the up

New York /
Jul.July 30, 2020 06:35 PM
Tony Malkin (Getty)

Tony Malkin (Getty)

After four months without tourists paying a small fortune to peek over the edge of the Empire State Building, it should be no surprise that its owner is out $20 million.

Empire State Realty Trust reported a net loss of $19.6 million during the second quarter of 2020, down from $18.9 million in net income a year earlier. The real estate investment trust also announced a series of cost-cutting measures, including executive salary cuts and a 12 percent cut in general and administrative expenses to improve its balance sheet.

“It takes a moment to grasp the magnitude of the dynamic situation we all have confronted and continue to confront since we last reported the results,” Tony Malkin, the company’s CEO and president, said during an earnings call Thursday. ESRT’s 10.1 million-square-foot portfolio spans New York City, Westchester County and Connecticut.

The landlord’s total revenue for the second quarter was $141 million, down 20 percent from $176 million a year ago. During the first quarter, the company brought in $8.3 million in net income and $170 million in revenue.

The dismal figures follow a big management shakeup in June, when Malkin took over John Kessler’s post as president. Those changes also included the appointment of Chief Financial Officer Christina Chiu and Chief Investment Officer Aaron Ratner. Chiu replaced David Karp, who announced his resignation in May.

“We have made hard choices that have resulted in a great deal of change in our organization, and reduction in force costs, and positioned us on our front feet to preserve and create value for our shareholders,” Malkin said.

The company is set to impose a base salary cut for Malkin and Executive Vice President Thomas Durels by 33 percent and 25 percent, respectively, effective Aug. 1 through the rest of the year. Malkin took base salary reduction to $1 for the second quarter of 2020.

It’s not all bad news for the property owner, though. Executives on the call emphasized that office and retail rent collections and admissions from the Empire State Building’s observation deck have started to improve as the New York region gradually reopened.

The firm collected 84 percent of rent in the second quarter, representing 86 percent of office tenants and 75 percent of retail tenants, according to the company. As of July 24, monthly collection reached 90 percent, representing 93 percent of office tenants and 75 percent of retailers. A third of ESRT’s tenants sought rent relief during the first quarter.

The Empire State Building’s observatory, which remained shut for the entire second quarter, reopened July 20 at limited capacity, after conducting several days of staff training to master safety and health protocols.

Malkin noted that he has been encouraged by positive reviews on social media, which praised the facility’s safety protocol first and then the spectacular view.

“The week two was stronger than the week one. Our first weekend was stronger than our week prior,” he said. “So we look forward to this weekend coming.”

Contact Akiko Matsuda at [email protected]


Related Articles

arrow_forward_ios
Convene CEO Ryan Simonetti (Convene)

Convene closes Manhattan locations as corporate events fail to return

Convene closes Manhattan locations as corporate events fail to return
(iStock)

What doom-and-gloom forecasts miss about the office market

What doom-and-gloom forecasts miss about the office market
The Grand Hyatt Hotel at 109 East 42nd Street and and  RXR’s Scott Rechler (Wikipedia Commons; Getty)

Grand Hyatt redevelopment could be 1,600-foot supertall

Grand Hyatt redevelopment could be 1,600-foot supertall
From left: 555 California Street in San Francisco, Vornado CEO Steven Roth and 1290 Sixth Avenue in Manhattan (Photos via Wikipedia Commons; Getty; Trump Org)

Vornado halts sale of office towers co-owned with Trump

Vornado halts sale of office towers co-owned with Trump
Ares Management CEO Michael Arougheti (Getty)

Ares, Regis gather $1B to join ground lease race

Ares, Regis gather $1B to join ground lease race
CBRE CEO Bob Sulentic and 70 West Red Oak Lane in White Plains (Photos via CBRE; USTA)

CBRE to shutter White Plains office, lay off 35 employees

CBRE to shutter White Plains office, lay off 35 employees
One Madison Avenue and Marc Holliday (Photos via SL Green)

SL Green snags $1.25B construction loan for One Madison Avenue

SL Green snags $1.25B construction loan for One Madison Avenue
WeWork CEO Sandeep Mathrani (Getty)

WeWork losses continue but firm sees glimmer of hope

WeWork losses continue but firm sees glimmer of hope
arrow_forward_ios

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

Loading...