Empire State Realty Trust, Inc. (NYSE: ESRT)

Sector: Real Estate Industry: REIT - Diversified CIK: 0001541401
Market Cap 908.27 Mn
P/B 0.79
P/E 16.82
P/S 1.33
ROIC (Qtr) 3.91
Div Yield % 7.12
Rev 1y % (Qtr) -0.94
Total Debt (Qtr) 2.06 Bn
Debt/Equity (Qtr) 1.97
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About

Empire State Realty Trust, Inc. (ESRT) is a real estate investment trust (REIT) specializing in owning and operating a diverse portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets in New York City. The company's flagship property, the iconic Empire State Building, is one of the world's most recognizable landmarks. ESRT's primary source of revenue is rent from its commercial and residential properties. It offers various products and services, including office and retail space and residential units. The customer...

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Investment thesis

Bull case

  • Operating cash flow of 265.19M provides strong 10.84x coverage of stock compensation 24.47M, indicating sustainable incentive practices.
  • Strong operating cash flow of 265.19M provides 3.67x coverage of SG&A expenses 72.24M, showing efficient operational cost management.
  • Tangible assets of 3.61B provide exceptional 56.31x coverage of deferred revenue 64.19M, showing strong service capability backing.
  • Operating cash flow of 265.19M provides strong 4.13x coverage of deferred revenue 64.19M, indicating service delivery capability.
  • Cash position of 197.75M provides strong 3.08x coverage of deferred revenue 64.19M, ensuring service delivery capability.

Bear case

  • Operating cash flow of 265.19M barely covers its investment activities of (266.75M), with a coverage ratio of -0.99, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 265.19M provides thin coverage of dividend payments of (23.59M) with a -11.24 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 79.78M provides weak coverage of capital expenditures of 185.41M, with a 0.43 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 148.95M show weak coverage of depreciation charges of 189.56M, with a 0.79 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 79.78M represents just -0.36x of debt issuance (224.07M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2021)

Peer comparison

Companies in the REIT - Diversified
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VICI Vici Properties Inc. 30.39 Bn 11.76 8.24 16.76 Bn
2 WPC W. P. Carey Inc. 16.39 Bn 35.15 9.55 8.72 Bn
3 BNL Broadstone Net Lease, Inc. 2.77 Bn 40.51 8.39 2.34 Bn
4 SAFE Safehold Inc. 1.15 Bn 10.07 2.99 4.59 Bn
5 AAT American Assets Trust, Inc. 1.13 Bn 20.37 2.60 1.69 Bn
6 ESRT Empire State Realty Trust, Inc. 0.91 Bn 16.82 1.33 2.06 Bn
7 CTO CTO Realty Growth, Inc. 0.60 Bn 6,383.33 35.13 0.60 Bn
8 GNL Global Net Lease, Inc. 0.57 Bn 11.86 2.57 2.93 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.46 0.68
EV to Cash from Ops. EV/CFO 8.81 -30.44
EV to Debt EV to Debt 0.93 1.31
EV to EBIT EV/EBIT 14.42 52.23
EV to EBITDA EV/EBITDA 5.55 6.51
EV to Free Cash Flow [EV/FCF] EV/FCF 119.88 21.01
EV to Market Cap EV to Market Cap 2.10 6.71
EV to Revenue EV/Rev 2.78 9.65
Price to Book Value [P/B] P/B 0.79 0.98
Price to Earnings [P/E] P/E 16.82 385.22
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.26 -1.16
Dividend Payout Ratio % Div Payout % (Qtr) 63.60 90.61
Dividend per Basic Share Div per Share (Qtr) 0.14 1.00
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 29.72 -0.65
Interest Coverage Int. cover (Qtr) 1.39 0.73
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.26 -246.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -57.92 49.26
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 2.40
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -6.22 -20.77
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.72 -2.00
EBIT Growth (1y) % EBIT 1y % (Qtr) -6.15 -20.80
EBT Growth (1y) % EBT 1y % (Qtr) -21.10 -13.26
EPS Growth (1y) % EPS 1y % (Qtr) -15.38 -38.39
FCF Growth (1y) % FCF 1y % (Qtr) 29.92 -62.73
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.20 -1.85
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.19 0.11
Cash Payout Ratio Cash Payout (Qtr) 0.05 0.34
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 1.97 0.82
Interest Cover Ratio Int Coverage (Qtr) 1.39 0.73
Times Interest Earned Times Interest Earned (Qtr) 1.39 0.73
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 44.20 38.58
EBIT Margin % EBIT Margin % (Qtr) 19.43 10.26
EBT Margin % EBT Margin % (Qtr) 5.45 -13.89
Gross Margin % Gross Margin % (Qtr) 52.80 59.91
Net Profit Margin % Net Margin % (Qtr) 4.60 -17.09