Empire State Earnings: Manhattan Office Fundamentals Continue to Improve; Valuation Intact

No-moat-rated Empire State Realty reported a middling set of numbers in the second-quarter results as core funds from operations, or FFO, was reported at $0.24 per share in the current quarter, around 8% lower than the $0.26 in core FFO during the same quarter last year. Management reaffirmed its 2024 core FFO guidance 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 in the 87%-89% range by the end of 2024 compared with 88.5% as of the end of the second quarter. We are maintaining our fair value estimate of $9.60 per share for Empire State Realty after incorporating the second-quarter results.