Empire State Realty Trust, Inc. (ESRT) Q1 2018 Earnings Report, Transcript and Summary

Greetings and welcome to the Empire State Realty Trust First Quarter Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Thomas Keltner, General Counsel for Empire State Realty Trust. Thank you, Mr. Keltner. You may begin.

Good morning. Thank you for joining us today for Empire State Realty Trust first quarter 2018 earnings conference call. In addition to the press release distributed last evening, a quarterly supplemental package with further detail on our results has been posted in the Investors section of the company's Web site at empirestaterealtytrust.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 and expense. 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. Finally, during today's call, we will discuss certain non-GAAP financial measures, such as FFO, modified and core FFO, NOI, cash NOI and 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 supplemental package, each available on the company's Web site. Now, I will turn the call over to John Kessler, President and Chief Operating Officer.

Good morning. Welcome to our first quarter 2018 earnings conference call. Empire State Realty Trust is differentiated from our peers. Our fully modernized assets are centrally located near mass transit and heavily [humanitized] [ph]. Our market position offers tenants a value price point between trophy, Class A and Class B properties and provides us with both upside opportunity and downside protection. We have a de-risk embedded growth strategy and generate market leading leasing spreads from the redevelopment of our office space. We have the lowest levered balance sheet among office REITs a significant cash position and no outstanding borrowings against our line. And we are an industry leader in sustainability and energy efficiency. Today Tom Durels will speak about the first quarter's approximately 260,000 square feet of leases, market demand for our properties and our peer and market leading leasing spreads. And then, David Karp will address our financial performance and our balance sheet for which we completed the second and final funding under our private placement of unsecured notes bringing our cash balance to $690 million at quarter end. David will also discuss new disclosures in our supplemental. Disclosures added to provide investors and analysts with more information with which to better understand our business and performance. After that our team is here to answer your questions. I'll now turn the call over to Tom Durels. Tom?

Thanks, John, and good morning everyone. Our first quarter numbers reflect further progress on our four drivers of top line de-risk and embedded growth over the next five to six years. The breakdown of our four revenue growth drivers which as of March 31, 2018, we estimate to be $97 million can be found in our investor presentation to be published on the Investor section of our Web site. For reference, this compares to $381 million in trailing 12 months cash NOI and a trailing 12 month cash rental revenue and tenant reimbursements of $533 million as of March 31, 2018. Just as a reminder the $97 million in revenue growth is revenue growth and not all of this will flow through to NOI. In the last quarterly call, we noted that scheduled growth vacates for all of 2018 could total 700,000 square feet. In order to address questions and give better clarity we included a new disclosure on Page 9 of our supplemental. This new chart, Total Portfolio Expirations and Vacate Summary shows tenants to be relocated within our portfolio or vacates to be replaced by new tenants with whom leases have been signed and defines our estimated net potential vacates for 2018 as 504,000 square feet. We also include our estimates for 2019. As a remainder, our occupancy can vary quarter-to-quarter as we continue with our strategy to deliver de-risk, embedded growth by vacating and consolidating spaces redeveloping them and releasing those spaces at higher rents to better tenants. There was a timing lag between the move out of existing tenants and when new leases commence which impacts revenue. There was also a timing lag between legal commencement and GAAP revenue recognition. In the first quarter, we signed 41 new and renewal leases totaling approximately 260,000 square feet. This included approximately 193,000 square feet in our Manhattan office properties; 61,000 square feet in our Greater New York Metropolitan office properties; and 6,000 square feet of retail. Significant new office lease signed during the quarter include a 42,000 square foot fourth floor lease with Nestle's Nespresso at 111 West 33rd Street. And the 35,000 square foot fourth floor lease with Uber at 1400 Broadway. During the first quarter, rental rates on new and renewal leases across our entire portfolio were 11.4% higher on a cash basis compared to prior escalated rents. At our Manhattan office properties, we signed new leases at positive rent spreads of 23.8%. Our leasing spreads which are market and peer leading were lowered by a number of factors this quarter. In Manhattan new office leasing, our lease with Uber involved the early recapture of a floor that had already been redeveloped and had experienced an earlier significant ramp-up. The Uber lease had 9% positive mark-to-market. We secured a termination payment by the prior tenant and avoided future downtime. Without the [indiscernible] lease, our reportedly leases spreads for new Manhattan office leasing would have been approximately 29.3%. Leasing spreads for our total portfolio this quarter were reduced by a 31,000 square foot lease in the Greater New York Metropolitan office portfolio with a negative spread of 19% from a market top lease from 2007 that have high fully escalated rent. The Greater New York Metropolitan area office market is soft and we compete with properties that have been redeveloped recently or have planned redevelopment. As such we plan to spend approximately $40 million over 2018 to 2020 on these well maintained and well located properties, common area and amenities to ensure competitiveness and protect our market position. Turning back to our Manhattan office portfolio so far in 2018, we have continued to see steady demand for available space. Now I'll turn the call over to David Karp. David?

Thanks, Tom, and good morning, everyone. For the first quarter, we reported core FFO of $59.3 million with $0.20 per diluted share. Cash NOI was $82.4 million essentially unchanged from the prior year period. Tom just walked us through our new disclosure on Page 9 of our supplemental. In addition, within the supplemental, we have included the weighted average free rent on leases signed in the quarter on Page 7. We've extended the quarterly break out on lease expirations on pages 11 to 13. We've provided a schedule on the anticipated timing of development of space to be vacated in 2018 on Page 15. We've broken out the 102 floor observatory revenue from total observatory revenue on Page 16. And we've broken out from other income and separately report lease these terminations fees on Page 18. We hope this added disclosure is helpful to you and we will continue to look to enhance our disclosure as we move forward. Turning to our observatory operations which are highlighted on Page 16 of our supplemental. In spite of loss views of the 102 floor for the first quarter, revenue for the first quarter of 2018 increased 1.5% to $21.2 million from the prior year period. NOI was $13.9 million up 1.7% from the first quarter of 2017 and our visitor count was up. A combination of higher visitor count previously announced price increases, dynamic pricing and mix improvement along with expense management drove the year-over-year improvement in NOI. The observatory hosted approximately 660,000 visitors in the first quarter 2018, an increase of 3.8% compared to the first quarter 2017. This year, the Easter holiday was split between the first and second quarters whereas in the prior year Easter holiday fell entirely within the second quarter. We estimate that this shift in the Easter holiday resulted in approximately 35,500 more visitors in the first quarter of 2018 as compared to the first quarter of 2017. While we had a lower number of bad weather days in the first quarter of 2018 than the prior year period. They fell on days of typically higher visitor count and had a more adverse impact. For the first quarter, we estimate that bad weather resulted in approximately 14,000 net fewer visitors than in the prior year period. We define a bad weather day as one in which top of the Empire State Building is obscured for more than 50% of the day. The 102 floor observatory is again opened following the planned replacement for the machinery and a new glass cap for the elevator which serves it. The glass cap is part of a component of the observatory experience upgrade which will be more fully developed in 2019. To produce a normalized comparison, one could remove the $1.9 million in revenue in the first quarter of 2017 related to the 102 observatory is identified on Page 16 of the supplemental. And on that basis revenues in the first quarter 2018 would have increased 11.4% overall and visitor per capita spend would have increased 6.1%. We're pleased with the work of our team in ensuring that the planned work was completed on time such that we were able to reopen the 102 floor prior to Easter. As noted previously, we have more work to do on the 102 floor component of our observatory upgrade program in 2019. We anticipate we will close 102 in early 2019 for as long as nine months. We will communicate final work plans as they become available. Moving to our balance sheet, our low leverage joint venture free and flexible balance sheet including significant cash on hand remains a differentiating and competitive advantage for us in any market environment. During the quarter, we issued and sold $335 million of senior unsecured notes, which were the final tranches of the $450 million private placement of unsecured notes announced in December 2017. Proceeds from the notes were used to repay the mortgage indebtedness on 111 west 3rd Street and 1350 Broadway and build our cash balances. As discussed during last quarter's call, we refinanced the maturing mortgage on 1333 Broadway and used a portion of the proceeds to remove the mortgage on 1400 Broadway. Unencumbered assets now represent 79% of our portfolio square footage versus less than 1% at the time of the IPO. We have transitioned to a more unsecured borrowing model and successfully demonstrated our ability to access a variety of capital sources. As a note, new debt financing and related hedging activities completed during 2017 and year-to-date 2018 will result in approximately $12 million or $0.04 per fully diluted share of incremental interest expense for our full year 2018 results as compared with 2017. As of March 31, 2018, the company had total debt outstanding of approximately $1.9 billion. The debt has a weighted average interest rate of 3.84% and weighted average term to maturity of 8.8 years. Our debt maturities are well-laddered with only a single $250 million issue maturing before 2022. None of our outstanding debt has variable rates. As of March 31, 2018, the company's consolidated net debt to total market capitalization was approximately 19.5% and consolidated net debt to EBITDA was 3.5x. And we had cash and cash equivalents of $690 million. With that, I would like to open the call for your questions. Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Rob Simone with Evercore. Please proceed with your question.

Hey guys, good morning. Thanks for taking the question. Just a quick question on the schedule of expirations that you guys provided. Is there, I guess I'm just trying to understand, is there a possibility for some of the vacate activity that you guys list. I think it's about 470,000 plus or minus square feet for the year. Is it possible for some of that to transition into the other buckets namely the relocation bucket, which would again kind of like shift around people's views of how much of that 700,000 would actually be taken back?

Rob, this is Tom. The answer is no. We have provided a detailed schedule as we currently see our activity shaping up for the year 2018 and into 2019. Those spaces that are being intentionally vacated are for the most part a combination of spaces that are being redeveloped, some spaces that are -- have already been developed that may make sense to vacate in connection with [indiscernible]. And the spaces that we have -- that we think are going to be renewed or will be taken by tenants relocating or spaces that are have been leased to new tenants. We've already defined in that schedule. So the bottom line is that those spaces which we label as tenant vacates and intentional vacates we're going to -- that we need the lease up.

Got it. Okay. And just a quick follow-up Tom. I think on the prior call you mentioned that of that 700,000 square feet plus or minus that could be gross vacates, CEs. I think you highlighted an average rent number like the $49 range or so. Of the tenant vacates and intentional vacates now -- that you have now listed for the year is there any difference between the in-place rents for that square footage versus that kind of all in gross number or how is that number moved?

The space that's being vacated in Manhattan has a fully escalated rent just over $49, I'm sorry, which is over $47 per square foot on our vacant space and its over $49 on space that's been vacated. So the point is that, we are asking rents in the range of high 50s to low 70s per square foot depending on the building and the floor location that represents a opportunity for significant healthy mark-to-market lease spreads.

Right. Got it. All right. Thanks Tom. Appreciate it.

You bet.

Thank you. Our next question comes from the line of Craig Mailman with KeyBanc Capital Markets. Please proceed with your question.

Hi, everyone. This is Laura Dixon, here is Craig. So you continue to have ample capacity on your balance sheet and greater cash position. I was wondering if you could give an update on when you're seeing in terms of external growth opportunities.

Good morning, Laura. Its John here. Yes, we are well positioned with the balance sheet and as you know we're continuing to invest in our own portfolio because we're getting very attractive returns which we estimate at about 9% and we still have a ways to go from an external -- from an additional redevelopment perspective in terms of remaining square footage. And if we see an opportunity externally that compares well with that type of return opportunity of the long-term we're going to pursue it [indiscernible] but for now this is the best allocation of our capital.

Okay. Thank you. And then, I appreciate the added disclosure regarding portfolio expirations and vacates and wanted to follow up on a prior question. If I'm looking at Page 9 of the supplement, it looks like 504,000 net vacates are in the 2 vacate buckets intentional and tenant. And then, the holdover unknown, and then just want to know if you can reconcile that with the gross 700,000, if I'm looking at supplement.

Sure. This is Tom. The balance is predominantly in relocations within our portfolio. And that's a point of clarification that tenants that vacate one space that move within our portfolio and we define that as a relocation and so that would have made up the difference reconciling the 700,000 to roughly 504,000 square foot that I mentioned on the prior call.

Got it. Okay. Appreciate the color. Thank you.

You bet.

Thank you. [Operator Instructions] Our next question comes from the line of Jamie Feldman with Bank of America Merrill Lynch. Please proceed with your question.

Great. Thank you and good morning. I guess you are sticking with the schedule which we definitely appreciate here. Can we just talk about the criteria to be in the holdover unknown bucket like what's the likelihood of does there end up being renewal versus fallout end up being vacancy?

Sure. Jamie, its Tom. Well, first of all, the amount of unknown or undefined for 2017 is a relatively small amount -- I'm sorry for 2018 is relatively a small amount of about 30 -- just under 37,000 square feet. We'll expect that the unknown category to decrease over time as we progress through the year and we gain greater certainty and certainly we will continue to provide an update to the schedule on a quarterly basis. I just would point out that obviously we maintain regular contact with all of our tenants. We typically reach out -- typically reach out to a tenant two years in advance of their lease expiration specifically to speak to them about their intention. But and then, with increasing frequency as we get closer to the expiration day, but with such a small amount of unknown for 2018 that represents relatively small tenants in this -- we find a small tenants generally delayed their or put off their decision making on leasing and so just partial or lease expiration date.

I was actually focusing on '19. I get that it will -- that number will shrink over time? Its okay

Yes. We will give updates quarterly as we go forward, definitely.

Okay. And then as you think about '19, I mean how does this schedule, we haven't seen a schedule like this in the past. I know '18 had abnormally large number of unintended vacates. But if you compare it to '17 and '16, like how does '19 shape up versus what you've seen in the past based on the different buckets? It's about half of your…

Jamie, I would point out that our 2018 vacates are expected to be greater than they were in 2017. That said, this is the first time we've provided this level of detail and I can't say that I'm in a position to comment on the prior vacates in past years in the same way we have reported here. So I would just maybe again point out that 2018 is going to expect -- we expect way to vacates in '18 and then in 2017. And then as you see 2019 we have fewer lease expirations so naturally that will be a less active year than 2018.

And then switching to the -- I know you had mentioned there was a suburban lease that brought down your renewal lease spread. Can you talk generally what you're seeing on renewal leasing spread, like if you were to back that lease out how things would look?

We're happy to have done that -- done at lease because it wasn't [indiscernible] deal, no TI, no free rent; the prior tenant has signed its lease turning -- absolute higher than market in 2007 and with escalations had escalated well above market. So we're delighted to backfill that space. I like that generally what you're going to see is that that was a more significant markdown in rent than what we'd expect going forward. And you see where we've been trending in the Greater New York Metropolitan portfolio over the last couple of years; it bumps around a little bit. But generally, it can be slightly negative to currently in plus rents.

Okay. And then, can you talk about the leasing pipeline for your largest retail and even office vacancies. How does the market feel?

Well, starting with office and the overall market feels pretty healthy. Talking about the market in general, I forgot about our portfolio and our activity, our products locations and price points still remains in demand. And we have absolute conviction in our strategy to consolidate and redevelop space. We continue to execute and deliver value for our shareholders and we're delivering results. I think that coming off the heels of a very strong year in 2017. And you see the results in the first quarter in the [New York] [ph] City office. That was it. I'm pleased with the leases with Nestle's Nespresso at 111, delighted to have Uber at 1400 Broadway. I think there's a prospect for progress there. But overall, I'd say that the office market in Manhattan feels healthy and steady. On retail, certainly the overall retail market has slowed, but that's why I'm pleased with the execution and results we've delivered this past year and even this first quarter. We are early in our redevelopment process at Empire State Building. And we have early discussions with a variety of tenants saying that space will take time. And then, other side street space in Times Square South and that will get leased up to some service or food user over time. And one of the large vacancy is that One Grand Central Place. That space is about 14,000 square feet only about 2100 square feet is our grade. It's a unique space. Most of that space is on second floor with access to 41 Street. And that might lease to non-traditional retail tenant. It could go to anywhere from medical daycare, some service, some showroom could go office.

Okay, great. Thank you for the color.

Thank you. Our next question comes from the line of Blaine Heck of Wells Fargo. Please proceed with your question.

Thanks. Good morning. Maybe for Tony or John just to get back to the investment picture. There are a few significant properties on the market and a few that have recently traded. Can you guys give any color on whether you've been involved in the pursuit of acquisitions recently and you've previously talked about wanting to look at kind of complicated deals. Are those specific opportunities still on the table today?

Well, just to hit the second question first. Absolutely. I think as we've said consistently Blaine, we're more interested in trying to find something that's not a marketed situation something more complex maybe a portfolio opportunity. And we do continue to pursue those types of opportunities. And with respect to some of the larger single asset transactions, we certainly -- we follow the market very closely. We do look at opportunities. But in general we have not found anything that was attractive to us relative to the returns we are getting on our own portfolio redevelopment.

I would add to that if I may that -- Tony here, the way in which I look at this is transaction volumes are down particularly if you take the Chelsea Market out which is a unique transaction which both added volume and price to the market. You see a pretty soft first quarter and you've got a lot of people who have left the market, Chinese particularly which would be out-of-left-field comping bed. But the reality of today's market remains pretty high prices and with a lot of uncertainty as far as interest rates and other factors. I don't know how much supporters for the current level of pricing. We are looking but we are very happy with where we are with our line that and just don't see a reason to do anything now based on what the offerings are and the pricing out there.

Got it. Okay. That's helpful. I guess on the flip side and related to that you guys created a pretty significant discount to any of the -- and have plenty of capital available as we've discussed, when does it make sense if at all to look into Hispanic repurchases?

Blaine, its David here. This is something that we've look at and we discussed with our Board on a regular basis. And it's not something that we are inclined to pursue at this time. We think that our cash position is a strategic asset and it's not our intention to reduce it. Additionally, we're more interested in growing our balance sheet rather than shrinking it. Our focus is to create value for shareholders that want to own us as we continue execute on our strategic plan to deliver embedded de-risk growth and shareholder value.

Okay. That's helpful. And then, switching gears maybe we can look at a different schedule in the supplemental. The free rent burn off and signed leases not commenced. Certainly I think paint those pretty solid picture for you guys for the cash, NOI commencements going forward in 2019 and 2020. But I think the timing of free run burn off in each year's is probably going to be important. Is there any color you can give us around whether the burn off is front end or back end weighted in 2019 or should we assume that's pretty ratable throughout the year/

Yes. The schedule that we provide clearly on an annual basis, we had not broken it down on a quarterly basis or on a monthly basis. And that would require us to go back and we could take a look at whether that's something we could easily provide and consider breaking that out in our next supplemental if it's a value.

Okay. Thanks guys.

Thank you. Our next question comes from the line of John Guinee with Stifel. Please proceed with your question.

David $690 million of cash on the balance sheet, looks to me or maybe you can just give us the numbers in the next three years -- two or three year budget. How much is allocated towards redevelopment -- the well publicized redevelopment of primarily Manhattan office? How much is left to be spent on the observatory? The third category I think is The Bourbon Office and I think you mentioned $40 million of CapEx there. And then, maybe a fourth category if you were to take your ground leases to a fee position. Like can you give us just some round numbers on uses of capital?

Yes, John. So -- this is a reminder from 2002 to March of 2018; we've invested a total of $864 million in the Manhattan office properties including $48 million to-date on the observatory capital project. Some of the major repositioning activities that remain at our existing Manhattan office properties include the completion of the final stages of the elevator modernization project at the Empire State Building and the completion of new elevator caps 250 West 57th and 111 West 33rd. So with respect to the common area, those are really the major remaining items. For tenant spaces, we have about 890,000 square feet remaining to be redeveloped. If you use an average cost per square foot of roughly $200, which is a midpoint between what it's costing us on our white oxygen or pre-belts. That would imply roughly $177 million in total spend until the entire portfolio has been redeveloped and that's as we show in our investor presentation, the time period which extends roughly 6 plus years. And as Tom mentioned, we anticipate spending approximately $40 million over the next 30 months in the Greater New York Metropolitan area portfolio. So that gives you the Manhattan, observatory we said was roughly $150 million over a three year period and again I mention, we spent to-date roughly $48 million of that. The suburban as I mentioned the $40 million that Tom mentioned. Respect to the ground leases to feet position that's not something I can really give clarity on right now. Those [units] [ph] of the leaseholds expire in a good 30 years -- 30 plus years from now. And it's certainly too early for us to have started any negotiations on those and can't give any visibility on that. Yes. The important thing to notice, we have ample liquidity as you point out to fund these capital improvements through a combination of operating cash flow. The cash on the balance sheet and availability under $1.1 billion revolver on which nothing is currently drawn.

Okay, great. And then, just looking at this wonderful Page 9 at the bottom, retail about in 2018 24,000 square feet of tenant vacancies or intentional vacancies. And then in 2019 another 23,000 square feet that's about 47,000 square feet is up --can you talk a little bit about the big spaces and also whether as they roll up or roll down in net rent and the capital budgeted to release those?

John, this is Tom. It's primarily in two locations, one Empire State Building we've spoken about the redevelopment of our 34th Street retail space. It will extend all the way from the -- new observatory entrance and all the way to the corner -- the corner space expiring in 2019. We believe there's opportunity for a healthy mark-to-market positive run spreads regardless of the softness in the retail market or coming off some leases at our below market there. And the balance is a corner space down at Union Square where again we have an opportunity to achieve some healthy mark-to-market rent spreads. As far as capital cost and redeveloping those spaces it's the typical white box space, use pretty modest in Empire State Building, the base building cost will be small, we've seen on the off side. The only added cost would be store fronts combine with our building standards and any bit of the transportation as part of a lease negotiation similarly what we've done in the past to 112 or 34th Street.

Great. Thank you very much.

You bet.

Thank you. We've follow-up question coming from Rob Simone from Evercore. Please proceed with your question.

Hey, guys. Thanks again. Just a quick question on the $40 million of CapEx for the Greater New York portfolio. I was just wondering if you guys would be able to share kind of your views internally on what type of returns you're going to get on that capital versus the investment and redevelopment in New York?

Well, this is Tom. The money that we're spending there is only about $21 a square foot for the whole portfolio and it's going to be spent on commoner's bathroom, corridors, update of gyms and dining and a conference facility willing to stay competitive within that marketplace. We are competing against some newly redeveloped properties and some properties that are planned to redevelopment and the way we look at this is -- this is a necessary spend in order to remain competitive and to give us the best opportunity for tenant retention and to keep all occupancy up as high as possible. So it's -- we view this as -- if we do not spend this money we will lose competitive position.

Is there any measure of you guys being proactive ahead some of your competitors doing something similar? Are you seeing some of your most direct competitors investing in their as well and this is more like a reaction to that?

No. It's again, it's just -- it's exactly what I said is where we're spending the money is to remain competitive.

Got it. Thanks Tom.

You bet.

Thank you. We have another follow-up question from Craig Mailman with KeyBanc. Please proceed with your question.

Everyone, Laura Dixon here. Just a quick follow-up on the observatory. It sounded -- apologize if I missed this but -- for the 102 floor coming offline in 2019 for nine months. Can you give an estimate or a sense of how what the revenue impact will be?

Yes, Laura. As we mentioned, the 102 floor observatory could be closed for as long as nine months during 2019 in connection with the capital investment program. Our plan is to time the work so as to minimize the costs including lost revenues. What we provided in supplemental on Page 16 is the historical revenue figures for the 102 floor so that you can get an idea of the possible range and the revenue impact.

Okay. Appreciate that. Thank you.

Thank you. Our next question comes from the line of Jamie Feldman with Bank of America Merrill Lynch. Please proceed with your question.

Great. Thank you. Just sticking with the observatory, are there any other portions of it that we should be thinking about that will be out of service over the next 24 months or so?

Tony here. Entrance ticketing and flow to get up to observatory decks will be reorganized to mitigate any construction impact, the access to the iconic opening our experience that is the 86th floor may not observation deck will be maintained throughout the entire project. And that in addition of course, you'll see what things look like as different aspects open up in August. But long story short, the 86th floor is open the entire time.

Okay. And then, any -- I know you gave a lot of data on how the first quarter turned out but just any reads on the type of visitors coming through like foreign versus domestic and seemed like it was a pretty good quarter for the observatory any changes here. Is that kind of what you're seeing?

No, nothing we will call out. Just I think that -- it's interesting to note that our performance was up -- significantly up if you discount 102 and other attractions frankly in New York did not do so well. Lot of new offerings, the NFL experienced not doing so well -- actually doing poorly, the Nat Geo doing so, so, One World doing very poorly and discounting tremendously. And so, again, we're pleased with our competitive position.

Okay, great. Thank you.

Thank you. This does conclude our question-and-answer session for today. I would like to turn the floor back to Mr. Malkin for closing comments.

So thank you all very much. Our goal was to get in and get out need the guys' time to do work. So we're glad we did. I'd like to point out that we've got Tom Durels is not out late drinking, he has got a wicked cold. So he is held up here. And I'd also like to point out that John Kessler performed very well even though he's three weeks into his new hip. John is walking around the office with a large Lord of The Rings staff that illuminates and using that mightily to help deliver the results in the second quarter already. With that in mind, thank you all for attending today's call. We have made meaningful additional to our disclosures this quarter in response to your thoughts. What makes it easier for you guys and ladies and we want to be responsive, so if you have other questions let us know. Very happy with our competitive position overall and the teams execution. Happy with our competitive position at the observatory and pleased with the ongoing work on the upgrade. We have several property, tours and events for investors and analysts' calendar for this spring and summer. So don't forget that our door is always open, don't be bash, look us up. Thank you for your time. And we look forward to reporting second quarter results in three months. Until then all the best.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.