Empire State Realty Trust reports 97.5% drop in Q4 earnings
2020 ended with $23M net loss
Visitors have been slow to return to the Empire State Building’s observation deck after it reopened to the public last July. That hesitancy has led to a sharp decline in revenue from the tourist destination — and is just one of the factors leading to a dismal fourth quarter for Empire State Realty Trust, which operates the attraction.
The REIT reported a net income of $0.71 million during the fourth quarter of 2020, down by 97.5 percent compared to the same period a year ago.
That less-than-stellar result, however, is an improvement over the two previous quarters, when ESRT reported net losses.
“We are in a marathon, not a sprint,” said Tony Malkin, the company’s CEO and president during Thursday’s earnings call.
Revenue from the observation deck in the fourth quarter was $5 million, down 87 percent from a year ago. The company said the sharp decline was driven by low visitation levels that had persisted since the reopening of the facility last summer.
In fact, the facility cost more money to run than it took in: Observatory expenses were $5.6 million for the fourth quarter.
Fourth-quarter rent revenue from ESRT’s 10.1 million-square-foot portfolio in New York City, Westchester County and Connecticut — which consists of 9.4 million square feet of office space and just under 1 million square feet of retail space — was $137 million, down 10 percent from a year ago, and down 2 percent from the third quarter.
The rent collection rate was 96 percent for office tenants, down from 97 percent in the third quarter. The collection rate for retail tenants was 87 percent, the same level as the third quarter.
As of December 2020, its portfolio is 88.7 percent leased, down 2.5 percentage points from a year ago. One major lease signed in the fourth quarter was Transit Wireless’ 11-year, 32,500-square-foot deal at 1400 Broadway.
In August, the company said it expected to have no taxable income for 2020 and suspended its dividends since the third quarter. And indeed, it reported a $23 million net loss for 2020, down from a net income of $84.3 million in 2019.
In December, the REIT announced its decision to continue with the dividend suspension into the first and second quarters of 2021.