Empire State Realty Trust, Inc. (ESRT) | Investment Case

1. Company Snapshot

1.a. Company Description

Empire State Realty Trust, Inc.(NYSE: ESRT), a leading real estate investment trust (REIT), owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building, the World's Most Famous Building. Headquartered in New York, New York, the Company's office and retail portfolio covers 10.1 million rentable square feet, as of September 30, 2020, consisting of 9.4 million rentable square feet in 14 office properties, including nine in Manhattan, three in Fairfield County, Connecticut, and two in Westchester County, New York; and approximately 700,000 rentable square feet in the retail portfolio.Long the leader in energy efficiency retrofits and Indoor Environmental Quality, Empire State Realty Trust is the first commercial real estate portfolio in the U.S. to achieve the WELL Health-Safety Rating.

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1.b. Last Insights on ESRT

Empire State Realty Trust, Inc.'s recent performance was negatively impacted by a sell rating from one investment analyst and a hold rating from two analysts, with an average price target of $10.43. Nisa Investment Advisors LLC reduced its stake in the company by 25.5%. The company's Q3 2025 earnings call revealed a 10.3% decline in net operating income from its observatory due to decreased international visitors. Despite achieving a high GRESB management score, concerns about its valuation and dividend yield persist.

1.c. Company Highlights

Last Price	6.75
Change Percentage	-1.75%
Open	6.84
Previous Close	6.87
Market Cap ( Millions)	1142
Volume	1216778
Year High	11.43
Year Low	6.55
M A 50	7.31
M A 200	7.66

FCF Yield	5.47%
Dividend Yield	2.07%
ROE	4.53%
Debt / Equity	200.90%
Net Debt / EBIDTA	583.73%
Price To Book	1.1
Price Earnings Ratio	24.31
Price To FCF	18.29
Price To sales	1.49
EV / EBITDA	9.26

2. Empire State Realty Trust's Q3 2025 Earnings: A Strong Performance

Empire State Realty Trust reported core FFO of $0.23 per diluted share for the third quarter of 2025, with same-store property cash NOI, excluding lease termination fees, increasing 1.1% year-over-year. The company's actual EPS came out at $0.24, significantly beating estimates at $0.05. Adjusted for nonrecurring items, same-store cash revenue and operating expenses increased 1.3% and 1.5%, respectively, year-over-year. The strong financial performance was driven by the company's highly leased portfolio, with occupancy in the Manhattan office portfolio increasing 80 basis points sequentially to 90.3%.

Publication Date: Nov -16

                                    📋 Highlights
                                    FFO Outperformance & Guidance:
                                                Core FFO of $0.23/share exceeded consensus; 2025 guidance reaffirmed despite a lighter Q3 leasing quarter.
Leasing Momentum:
                                                88,000 sq ft of new/renewal leases signed in Q3, with 150,000 sq ft in negotiation; Manhattan office occupancy rose to 90.3%.
Noi Growth:
                                                Same-store property cash NOI grew 1.1% YoY, with cash revenue and operating expenses up 1.3% and 1.5% respectively.
Balance Sheet Strength:
                                                Liquidity and low leverage position ESRT as a top-tier tenant choice, with no unaddressed maturities until 2026.
Expansion & Capital Strategy:
                                                3.1M sq ft of tenant expansions since 2013; capital recycling and share buybacks prioritized amid attractive valuations.

                                

Leasing Activity and Pipeline

The company signed 88,000 square feet of new and renewal leases in the third quarter and has approximately 150,000 square feet of leases in negotiation. According to Ryan Kass, the company is focused on creating large blocks of space to meet market demand, stating that "we will create large contiguous blocks at several properties to accommodate demand." This strategic approach is expected to drive future growth and increase occupancy.

Valuation and Growth Prospects

With a P/E Ratio of 25.79 and an EV/EBITDA of 9.47, the company's valuation appears to be reasonable. Analysts estimate next year's revenue growth at 2.2%, indicating a stable outlook. The company's strong balance sheet, with ample liquidity and lower leverage versus sector peers, provides a solid foundation for future growth. As Christina Chiu noted, "our well-positioned and flexible balance sheet remains one of our key strengths."

Capital Allocation and Strategy

The company is actively evaluating capital allocation opportunities, including buying back stock, as Christina Chiu stated that "we think our share price is very attractive, provides a great entry point for those interested in our portfolio." The company's diversified portfolio, including office, retail, and multifamily assets, provides a solid foundation for long-term growth. With a focus on leasing space, growing Observatory revenue, and maintaining a strong balance sheet, Empire State Realty Trust is well-positioned for future success.

Dividend Yield and Return Metrics

The company's Dividend Yield stands at 1.96%, providing a relatively stable source of return for investors. Additionally, the company's ROE stands at 4.53%, indicating a reasonable return on equity. With an ROIC of 13.35%, the company is generating strong returns on invested capital, further supporting its attractive valuation.

3. NewsRoom

Empire State Realty Trust Announces Acquisition of the Scholastic Building

Dec -02

Source: businesswire.com

Scholastic Unlocks Significant Value Through Sale-Leasebacks of Owned Real Estate Assets

Dec -02

Source: prnewswire.com

Empire State Realty Trust Signs HOKA and Tecovas on N. Sixth Street in Williamsburg, Brooklyn

Dec -01

Source: businesswire.com

Gerson Lehrman Group, Inc. to Expand 18,230 Square Feet at One Grand Central Place for a Total 95,612 Square Foot Space

Nov -12

Source: businesswire.com

The Empire State Building Holiday Celebrations Include: Radio City Rockettes 100th Anniversary Exhibits, Visits from Santa, Holiday Décor, Movie Screenings, Pop-ups, Lightings, and More

Nov -10

Source: businesswire.com

Empire State Realty Trust Might Be Overly Discounted

Nov -05

Source: seekingalpha.com

Nisa Investment Advisors LLC Sells 9,674 Shares of Empire State Realty Trust, Inc. $ESRT

Nov -04

Source: defenseworld.net

The Empire State Building Ushers in Autumn with an Iconic NYC Pop-Up, Festive Photo Corner, Special Tower Lighting, Exclusive Ticket Offer, and Visit from Halloween Queen Heidi Klum

Oct -31

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.13%)

6. Segments

Real Estate

Expected Growth: 1.2%

Empire State Realty Trust, Inc.'s 1.2% growth in Real Estate is driven by increasing demand for office and retail spaces in prime locations, steady rent growth, and strategic acquisitions. Additionally, the company's focus on sustainability and energy-efficient practices enhances its appeal to tenants, contributing to its growth.

Observatory

Expected Growth: 0.8%

The Observatory's 0.8% growth is driven by increasing tourism in NYC, fueled by a strong US economy and low unemployment. Additionally, the Observatory's unique experience, including its 360-degree views and interactive exhibits, continues to attract visitors. Furthermore, Empire State Realty Trust's effective marketing strategies and partnerships with travel companies also contribute to the growth.

7. Detailed Products

Office Space Leasing

Empire State Realty Trust, Inc. offers premium office spaces for lease in iconic buildings such as the Empire State Building, providing tenants with modern amenities and unparalleled views.

Retail Space Leasing

The company provides retail spaces for lease in high-traffic areas, ideal for restaurants, cafes, and shops, with flexible lease terms and dedicated property management.

Observation Deck Tickets

Empire State Realty Trust, Inc. operates the iconic Empire State Building's observation decks, offering breathtaking 360-degree views of the city to visitors from around the world.

Broadcasting and Telecommunications

The company provides premier broadcasting and telecommunications infrastructure, including antenna and transmission services, to major media and telecommunications companies.

Property Management Services

Empire State Realty Trust, Inc. offers comprehensive property management services, including maintenance, repairs, and customer support, to ensure seamless operations for tenants.

8. Empire State Realty Trust, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Empire State Realty Trust, Inc. is medium due to the availability of alternative properties and investment options for tenants and investors.

Bargaining Power Of Customers

The bargaining power of customers for Empire State Realty Trust, Inc. is low due to the company's strong brand and limited alternatives for tenants.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Empire State Realty Trust, Inc. is medium due to the company's dependence on a few large contractors and suppliers.

Threat Of New Entrants

The threat of new entrants for Empire State Realty Trust, Inc. is low due to the high barriers to entry in the real estate industry and the company's established market position.

Intensity Of Rivalry

The intensity of rivalry for Empire State Realty Trust, Inc. is high due to the competitive nature of the real estate industry and the presence of several large competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	69.45%
Debt Cost	4.97%
Equity Weight	30.55%
Equity Cost	10.60%
WACC	6.69%
Leverage	227.35%

11. Quality Control: Empire State Realty Trust, Inc. passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Alexander & Baldwin

A-Score: 6.2/10

Value: 4.3

Growth: 3.7

Quality: 6.3

Yield: 8.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

Global Net Lease

A-Score: 6.1/10

Value: 6.9

Growth: 3.3

Quality: 3.6

Yield: 10.0

Momentum: 5.0

Volatility: 8.0

1-Year Total Return ->

Armada Hoffler Properties

A-Score: 6.0/10

Value: 6.5

Growth: 5.7

Quality: 4.7

Yield: 10.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

Peakstone Realty Trust

A-Score: 5.5/10

Value: 7.0

Growth: 5.1

Quality: 3.6

Yield: 9.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

Generation Income Properties

A-Score: 4.3/10

Value: 7.0

Growth: 5.4

Quality: 3.9

Yield: 3.0

Momentum: 5.0

Volatility: 1.3

1-Year Total Return ->

Empire State Realty Trust

A-Score: 4.2/10

Value: 5.7

Growth: 4.4

Quality: 4.4

Yield: 3.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-3.40%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.69%

Empire State Realty Trust, Inc. - US2921041065

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ESRT

1.c. Company Highlights

Strong Momentum

Lower Yield

Average Quality

Earnings Miss

Revenues Beats

Earnings Beats

Fairly Valued

Stable Momentum

Average Growth

Average Yield

Medium Volatility

Revenues Miss

Weak Momentum

2. Empire State Realty Trust's Q3 2025 Earnings: A Strong Performance

Leasing Activity and Pipeline

Valuation and Growth Prospects

Capital Allocation and Strategy

Dividend Yield and Return Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.13%)

6. Segments

Real Estate

Expected Growth: 1.2%

Observatory

Expected Growth: 0.8%

7. Detailed Products

Office Space Leasing

Retail Space Leasing

Observation Deck Tickets

Broadcasting and Telecommunications

Property Management Services

8. Empire State Realty Trust, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Empire State Realty Trust, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.75$

Current Price

6.75$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA