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Item 5. Market for Registrant’s Common Equity

2021-02-26 compared with 2020-02-28 · 51 added, 26 removed, 110 unchanged (41% of the section changed)

11 unchanged sentences

Certain shares of common stock and OP Units are held in "street" name and accordingly, the number of beneficial owners of such shares of common stock and OP Units is not known or included in the foregoing totals.

We intend to pay regular quarterly dividends to holders of our Class A common stock and Class B common stock.

Any distributions we pay in the future will depend upon our actual results of operations, economic conditions and other factors that could differ materially from our current expectations.

We intend to pay regular quarterly dividends to holders of our Class A common stock and Class B common stock, at least to the extent of our taxable income or as required to maintain our qualification as a REIT.

Any distributions we pay in the future will depend upon our taxable income, actual results of operations, economic conditions and other factors that could differ materially from our current expectations.

Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures.

Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefore and will be dependent upon a number of factors, including restrictions under applicable law, our capital requirements and the distribution requirements necessary to maintain our qualification as a REIT.

During August 2020, we announced the suspension of our third and fourth quarter 2020 dividends to holders of our Class A common stock and Class B common stock and to holders of Empire State Realty OP, L.P.’s Series ES, Series 250 and Series 60 operating partnership units and Series PR operating partnership units.

We had no taxable income in 2020, and therefore no requirement to pay any dividend on our common stock in either the third or fourth quarter of 2020.

During December 2020, we announced the continued dividend suspension for the first and second quarters of 2021.

We and our board believe that payment of a dividend is currently not the highest and best use of our balance sheet.

Our board regularly reviews our dividend policy.

Distributions declared by us will be authorized by our board in its sole discretion out of funds legally available therefore and will be dependent upon a number of factors, including restrictions under applicable law, our capital requirements and the distribution requirements necessary to maintain our qualification as a REIT.

See Item 1A, "Risk Factors," and Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations," of this Annual Report on Form 10-K, for information regarding the sources of funds used for dividends and for a discussion of factors, if any, which may adversely affect our ability to make distributions to our securityholders.

Earnings and profits, which determine the tax treatment of distributions to securityholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes, including, but not limited to, treatment of loss on extinguishment of debt, revenue recognition, compensation expense, and basis of depreciable assets and estimated useful lives used to compute depreciation.

The 2019 dividends of $0.42 per share are classified for income tax purposes 31.4% as taxable ordinary dividends eligible for the Section 199A deduction and 68.6% as a return of capital.

Dividends paid in the first quarter and second quarter of 2020 of $0.21 per share are classified for income tax purposes 100% as taxable ordinary dividends eligible for the Section 199A deduction.

Stockholder Return Performance

The following graph is a comparison of the cumulative total stockholder return on our Class A common stock, the Standard & Poor's 500 Index (the "S&P 500 Index"), the FTSE NAREIT All Equity Index (the "FTSE NAREIT All Equity Index") and the FTSE NAREIT Equity REIT Office Index ("FTSE NAREIT Equity REIT Office Index").

The graph assumes that $100.00 was invested on October 7, 2013 and dividends were reinvested without the payment of any commissions.

The graph assumes

that $100.00 was invested on December 31, 2015 and dividends were reinvested without the payment of any commissions.

There can be no assurance that the performance of our Class A common stock will continue in line with the same or similar trends depicted in the graph below.

December 31, 2014

December 31, 2015

December 31, 2016

December 31, 2017

December 31, 2018

December 31, 2019

December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020

Empire State Realty Trust, Inc.

$ 100.00 $ 116.77 $ 121.18 $ 86.14 $ 86.93 $ 59.54

S&P 500 Index $ 100.00 $ 113.53 $ 138.32 $ 132.25 $ 173.90 $ 205.89

5 unchanged sentences

Empire State Realty OP, L.P.

2019 Equity Incentive Plan (the “2019 Plan”) was approved by our shareholders.

2019 Equity Incentive Plan (the “2019 Plan”).

The 2019 Plan provides for grants to directors, employees and consultants of our company and operating partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards, including LTIP units.

3 unchanged sentences

2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, "the Plans"), which we adopted upon our IPO in 2013.

The shares of Class A common stock underlying any awards under the 2019 Plan and the 2013 Plan that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of Class A common stock available for issuance under the 2019 Plan.

For a further discussion of the Plans, see Note 9 to the consolidated financial statements included under Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

The following table presents certain information about our equity compensation plans as of December 31, 2020:

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table)

Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table)

Equity compensation plans approved by securityholders (1)

N/A N/A 8,545,088 (2)

Equity compensation plans not approved by securityholders — — —

Total N/A N/A 8,545,088

______________

11 unchanged sentences

2013 Equity Incentive Plan .

As of December 31, 2019 , we issued 346,115 shares of restricted stock and 8,496,980 LTIP units under the Plans.

As of December 31, 2020, we have issued 503,223 shares of restricted stock and 11,313,387 LTIP units under the Plans since 2013.

Recent Sales of Unregistered Securities Use of Proceeds from Registered Securities;

Repurchases of Equity Securities

Not applicable.

Repurchases of Equity Securities Stock and Publicly Traded Operating Partnership Unit Repurchase Program

On December 13, 2019, our board authorized the repurchase of up to $500 million of our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units from January 1, 2020 through December 31, 2020 ("the 2020 Repurchase Program").

On December 11, 2020, our board approved a new authorization for the repurchase of up to $500 million of such securities from January 1, 2021 through December 31, 2021.

Under the repurchase program, we may purchase our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions.

The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to stock price, availability, trading volume and general market conditions.

The authorization does not obligate us to acquire any particular amount of securities, and the program may be suspended or discontinued at our discretion without prior notice.

The following table summarizes our purchases of equity securities in each of the three months of the fourth quarter 2020 under the 2020 Repurchase Program:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value Available for Future Purchase (in thousands)

October 2020 1,952,013 $ 6.21 1,952,013 $ 365,934

November 2020 747,074 $ 8.08 747,074 $ 359,900

December 2020 375,615 $ 9.62 375,615 $ 356,287

SELECTED FINANCIAL DATA.

9 unchanged sentences

Observatory expenses 23,723 33,767 32,767 30,275 29,833

Construction expenses

Real estate taxes 121,923 115,916 110,000 102,466 96,061

Acquisition expenses — — — — 98

Impairment charges (4)

6,204 — — — —

Depreciation and amortization 191,006 181,588 168,508 160,710 155,211

1 unchanged sentence

Operating income (loss)

58,661 154,706 190,857 192,903 183,896

Other income (expense):

2 unchanged sentences

Loss on early extinguishment of debt (86) — — (2,157) (552)

IPO litigation expense (5)

(1,165) — — — —

Loss from derivative financial instruments — — — (289) —

Income before income taxes

Income tax expense

Income (loss) before income taxes (29,860) 86,719 121,895 124,926 113,396

Income tax benefit (expense) 6,971 (2,429) (4,642) (6,673) (6,146)

Net income (loss) (22,889) 84,290 117,253 118,253 107,250

Private perpetual preferred unit distributions (4,197) (1,743) (936) (936) (936)

Net income attributable to non-controlling interests

Net income attributable to common stockholders

Net (income) loss attributable to non-controlling interests 10,374 (33,102) (50,714) (54,670) (54,858)

Net income (loss) attributable to common stockholders $ (16,712) $ 49,445 $ 65,603 $ 62,647 $ 51,456

Dividends and distributions declared and paid per share $ 0.21 $ 0.42 $ 0.42 $ 0.42 $ 0.40

Net income per share attributable to common stockholders - basic

Net income per share attributable to common stockholders - diluted

Net income (loss) per share attributable to common stockholders - basic $ (0.10) $ 0.28 $ 0.39 $ 0.40 $ 0.38

Net income (loss) per share attributable to common stockholders - diluted $ (0.10) $ 0.28 $ 0.39 $ 0.39 $ 0.38

Total weighted average shares - basic 175,169 178,340 167,571 158,380 133,881

2 unchanged sentences

Commercial real estate properties, at cost $ 3,133,966 $ 3,109,433 $ 2,884,486 $ 2,667,655 $ 2,458,629

Total assets $ 4,150,695 $ 3,931,834 $ 4,195,780 $ 3,931,347 $ 3,890,953

Debt $ 2,136,649 $ 1,668,574 $ 1,918,933 $ 1,688,721 $ 1,612,331

Equity $ 1,731,307 $ 1,947,913 $ 1,991,109 $ 1,977,737 $ 1,982,863

Funds from operations attributable to common stockholders and non-controlling interests (1)

$ 162,519 $ 260,062 $ 282,609 $ 276,491 $ 260,519

Modified funds from operations attributable to common stockholders and non-controlling interests (2)

$ 170,350 $ 267,893 $ 290,440 $ 284,322 $ 268,350

Core funds from operations attributable to common stockholders and non-controlling interests (3)

$ 175,414 $ 267,893 $ 290,440 $ 286,925 $ 269,000

Net cash provided by operating activities $ 182,293 $ 232,591 $ 279,022 $ 194,202 $ 214,755

28 unchanged sentences

Management's Discussion and Analysis of Financial Condition and Results of Operations - Core Funds from Operations."

(4) Reflects a $4.1 million write-off of prior expenditures on a potential energy efficiency project that is not economically feasible in today's regulatory environment and a $2.1 million write-off of prior expenditures on a development project that is unlikely to continue.

(5) Represents an accrued expense which reflects an estimated liability associated with the Initial Public Offering-related litigation.

Refer to “Financial Statements-Note 8-Commitments and Contingencies” in this Annual Report on Form 10-K for a description of relevant legal proceedings.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity