Empire State Realty Trust, Inc.

Greetings and welcome to the Empire State Realty Trust second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Heather Houston, Senior Vice President, Chief Counsel, Corporate and Secretary. Thank you. You may begin.

Good afternoon. Thank you for joining us today for Empire State Realty Trust's second quarter 2023 earnings conference call. In addition to the press release distributed yesterday, a quarterly supplemental package with further detail on our results and our latest investor presentation were posted in the investor section of the company's website at esrtreit.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in applicable securities laws, including those related to market conditions, property operations, capital expenditures, income, expense, financial results, and proposed transactions and events. As a reminder, forward-looking statements represent management's current estimates. They are subject to risks and uncertainties, which may cause actual results to differ from those discussed today. Empire State Realty Trust assumes no obligation to update any forward-looking statement in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements in the company's filings with the SEC. During today's call, we will discuss certain non-GAAP financial measures, such as FFO, modified and core FFO, NOI, same-store property cash NOI, EBITDA, and adjusted EBITDA. which we believe are meaningful in evaluating the company's performance. The definitions and reconciliations of these measures to the most directly comparable GAAP measures are included in the earnings release and the supplemental package, each available on the company's website. Now, I will turn the call over to Tony Malkin, our Chairman, President, and Chief Executive Officer.

Thanks, Heather, and good afternoon to everyone. We're pleased to report another solid quarter and first half of the year. We put points on the board with strong leasing and observatory performance. Our balance sheet positioning remains best in class. We have a positive outlook for the second half of 2023. Our focus on modernization, amenities, energy efficiency, indoor environmental quality, and an industry-leading balance sheet make us a destination in the flight to quality. ESRT is a New York City-focused landlord with four diverse drivers of value. When you walk the busy streets of New York now, it is clear how resilient this city really is, and we are primed to take advantage of New York City's continued recovery. People want to live here, people want to visit here, and people want to work here. This is a city that draws a regular migration of young, highly educated, hungry, and diverse talent to work in person and learn. New York is a top three city for return to office post-pandemic, according to Placer AI. Top companies offer talent a place to gather in person, to plan, mentor, learn, build, execute together, and move forward through uncertain times. And they want to be in office buildings like ours, which serve as talent attraction and retention tools. We leased more than 336,000 square feet in this quarter, and those leases were at double-digit positive leasing spreads. Our Manhattan leased office percentage is up to 91.6% and reflects an increase of 90 basis points sequentially and 330 basis points year over year. ESRT offers a trophy experience in pre-war assets. ESRT properties are fully modernized and amenitized. More than 95% of our office space has been stripped of the studs and redeveloped. Flight to quality is not as simple as new versus old. ESRT's properties perform consistently as measured on an occupancy percentage, lease percentage, and total leasing volume basis because we have made the investment to make our assets future ready. Our leasing progress meets the performance of newly built Class A office properties. We offer compelling value propositions and well-located, fully modernized, energy efficient, and monetized healthy buildings at our attractive price points. Importantly, we are also a landlord who has the balance sheet to stand behind its commitments and obligations with an economically accessible winning portfolio. This makes a big difference in today's environment and helps set us apart as a landlord. We have always said that our goal is to get the best deals in good times, get the deals in challenged times, and draw consistent leasing volumes through cycles. and we are absolutely focused. The observatory continues to perform well. For the second year in a row, our observatory experience was ranked the number one attraction in the United States by TripAdvisor. In the first half of the year, Observatory NOI exceeded comparable 2019 levels by 4%, with 71% of the admissions relative to 2019 levels. We continue to manage expenses, drive top-line growth, and provide visitors with unmatched customer experience. The Empire State Building Observatory is the authentic New York City experience. Our observatory's cash flows are reliable, as demonstrated on slide 17 of our investor presentation. ESRT's balance sheet is clean and the capital structure is simple. We have the lowest leverage amongst all New York City office REITs and have neither near-term debt maturities nor floating rate debt exposure. ESRT owns 100% of our office assets with no complex joint venture structures, and that allows for great flexibility and optionality for future financing and capitalization. Tenants look to partner with a financially stable landlord who will maintain high quality standards at their assets. We can allocate capital as we think best, be it capital recycling, new acquisitions, or share repurchases. Our industry in environmental stewardship and healthy building performance matters more and more each year to tenants, landlords, and shareholders. For our tenants, this was put to the test this quarter. when the Canadian wildfires greatly impacted the air quality in New York City. IEQ testing during the Canadian wildfire event in early June met Empire State Realty Trust's rigorous indoor environmental standards, which are aligned with LEED version 4.1 and WELL version 2 standards. Our sustainability work at ESRT isn't an add-on to our platform. It is integrated within every decision we make. We uphold our values and adhere to the highest standards in reporting. I encourage you all to read our 2022 sustainability report that was released in the second quarter during Earth Day week, which contains full details on our recent accomplishments, new investments, and return-based goals. As we look ahead, We see opportunities created through the market and credit disruptions, and we will manage through them. ESRT is prepared to act on opportunities which arise from the disruption. Our priorities are unchanged. Lease space, sell tickets to the observatory, manage the balance sheet, and achieve sustainability goals. In short, put points on the board. These actions together enhance our shareholder value. We believe in New York City and we offer four ways to play it. Office, the Empire State Building Observatory, retail, and multifamily. New York City is resilient and Empire State Realty Trust is future ready and well positioned to drive value for our shareholders in 2023. Tom and Christina will provide more detail on our progress and how we plan to accomplish these goals in the balance of the year. Tom?