Empire State Realty lands $715M credit, thanks to tourists

Loans could expand to $1.5B, in more “than a traditional real estate play”

Empire State Realty Trust Lands $715M Credit Facility

A photo illustration of Empire State Realty Trust chair Tony Malkin and the Empire State Building (Getty, Empire State Realty Trust)

While occupancy rates remain below pre-pandemic levels, Tony Malkin’s Empire State Realty Trust is still set up for the future with a $715 million credit facility.

The real estate investment trust recently landed the financing package, Crain’s reported. The senior unsecured revolving and term loans can expand to $1.5 billion if specific conditions are met.

The financing package is split between a $620 million revolving credit facility — which carries a 6.6 percent interest rate — and a $95 million term loan facility, according to Commercial Property Executive. The package will mature in five years and replaces a $1.1 billion credit facility set to mature next year.

Offices are ESRT’s core business, but the performance of its landmark Empire State Building helps its cause and extends beyond traditional office performance. Last year, net operating income at the tower’s observatory rose 26 percent year-over-year to $94 million. 

Tourism has largely recovered in the city, and the rising numbers of visitors has given lenders more confidence in their ability to lend to ESRT.

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“Lenders are probably looking at this as other than a traditional real estate play,” one industry professional told Crain’s.

As of the end of last year, ESRT’s total commercial portfolio was 86.3 percent occupied, a slight dip from occupancy at the end of the third quarter. Both its total commercial portfolio and its office portfolio were 90 percent leased at the end of the fourth quarter.

In the fourth quarter, ESRT signed 164,000 square feet of leases — including 135,000 square feet of Manhattan office deals — accounting for renewals, expansions and new deals. For the year, the REIT signed approximately 951,000 square feet of deals across its holdings.

Last month, luxury skincare company Sol de Janeiro USA signed an 11-year, 57,000-square-foot lease at ESRT’s 60 East 42nd Street, a Class A office tower in Midtown East.

In a statement, ESRT president Christina Chiu said the REIT was “pleased with the successful execution of our new credit facility that maintains our strong liquidity position.”

Holden Walter-Warner