Empire State Earnings: Manhattan Office Fundamentals Hold Up Reasonably Well; Decent 2024 Guidance

No-moat-rated Empire State Realty Trust reported a good set of results for the fourth quarter. Core funds from operations came in at $0.25 per share, around 14% higher than the $0.22 in core FFO in the same quarter last year. Full-year 2024 guidance was also quite decent, especially given the challenging Manhattan office market environment. Management expects 2024 core FFO of $0.90-0.94 per share, up 2.2% at the midpoint compared with $0.90 in core FFO during 2023 after excluding nonrecurring items. The occupancy rate is expected to be 87%-89% by the end of 2024 compared with 86.3% in 2023. Same-store property cash net operating income is expected to be in the negative 1% to positive 2% range. The same-store cash NOI guidance assumes positive revenue growth and a 6%-8% increase in operating expenses and real estate taxes, partially offset by higher tenant expense reimbursements. We are maintaining our $9.60 fair value estimate after incorporating fourth-quarter results into our model.