Greetings and welcome to the Empire State Realty Trust Fourth Quarter and Full Year 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. 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’s fourth quarter 2015 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 website at www.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, 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. The company 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 contained 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, same-store results 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 website. This morning’s call is hosted by Empire State Realty Trust’s Chairman and Chief Executive Officer, Anthony Malkin; President and Chief Operating Officer, John Kessler; Director of Property Operations and Leasing, Thomas Durels; and Chief Financial Officer, David Karp. They will make introductory comments, after which we will open the call to your questions. Now, I will turn the call over to Tony Malkin.

Good morning. We are delighted to welcome you to our fourth quarter 2015 earnings conference call. During the quarter, we continued to execute on our strategy and again delivered strong results. Our business is simple: no development, no joint ventures, no bidding or buying at current cap rates, and no lending. We remain a pure-play Manhattan and Greater New York Metro office and retail business, with embedded, de-risked growth which we continue to unlock as we redevelop and re-lease our space. For the full year 2015, we generated spreads nearly 54% on new Manhattan office leases and we drove returns from 9% to 22% by our placement of below-market in-place rents as we vacate and redevelop space. Our low leverage on our balance sheet gives us a lot of comfort and flexibility. We believe we will continue to outperform regardless of market conditions. We like our performance and our outlook is positive. Our prepared comments will be fairly brief. John Kessler, our President and COO, will begin with an overview of overall results; Tom Durels, our Executive Vice President and Director of Leasing and Operations, will then provide an update on our portfolio; and David Karp, our Executive Vice President and Chief Financial Officer, will review financial results in more detail and discuss our balance sheet. After that, we will open up the call. Now, I will turn the call over to John Kessler. John?

Thank you, Tony, and good morning, everyone. As Tony mentioned, Empire State Realty Trust is a pure-play Manhattan and New York City Metro area office and retail real estate portfolio. We believe our portfolio offers a unique opportunity to grow income as we continue to redevelop and lease our properties at market rents and bring occupancies to market levels. Since inception, we’ve delivered and we expect to continue to deliver embedded, de-risked growth. In 2015, we made good progress. We leased over 1.2 million square feet of space, Observatory revenues remained steady and we lowered our cost of capital with a new $265 million unsecured term loan. Specifically on the leasing front, we are pleased with the demand we are seeing from prospective tenants for space in our well-located newly renovated pre-war trophy assets. Our fourth quarter leasing activity was robust with nearly 200,000 square feet of leases signed, including several [indiscernible] leases and we saw strong demand for our prebuild spaces. To put our leasing activity into perspective, the 1.2 million square feet of leases signed over the full year 2015 represents an increase of 54% over the prior year’s activity. Tom will provide more color on this during his comments. In 2015, revenues at the Empire State Building Observatory rose by 0.6% to approximately $112 million, despite headwinds from international travel. We continue to focus on the elements of this business that are in our control, including improving the experience, simplifying ticketing and enhancing our revenue stream. The Observatory remains an iconic must-see attraction in New York City. We continue to engage in active renewal negotiations for our TV and radio broadcast leases and licenses, which expire between 2016 and 2024. We previously disclosed that we have successfully renewed and extended our leases with Univision from their current…

Thank you, John, and good morning, everyone. On today’s call, I will review our overall leasing activity in the fourth quarter, provide a summary of our current space availabilities that we are actively marketing, and provide an outlook on space that we plan to vacate and redevelop in 2016 in order to re-lease at higher rents. Our fourth quarter results continued to reflect the progress we are making to execute on our four key growth drivers, which are upside from signed leases not commenced which equates to approximately $26.4 million as of December 31, 2015; the mark-to-market on our expiring Manhattan office leases; lease-up of developed vacant office space; and the mark-to-market and lease-up of our vacant retail space. In the fourth quarter, we signed 39 new and renewal leases totaling 198,000 square feet of office space. This included approximately 174,000 square feet in our Manhattan office properties and 24,000 square feet in our Greater New York Metropolitan properties. And as John mentioned, for the full year 2015, we signed 245 new and renewal leases for over 1.2 million square feet. At December 31, 2015, our total portfolio was 87.3% occupied and including signed leases that have not yet commenced, our portfolio was 89.1% leased. Our portfolio occupancy was down 10 basis points from the third quarter and including signed leases not commenced, our leased occupancy percentage was down 90 basis points. These changes are consistent with our announced plans and strategy to vacate and redevelop spaces so that they may be leased to larger, better credit tenants at higher rents. During the fourth quarter, we signed a number of significant leases at 250 West 57th Street. We signed a full-floor 18,000 square foot lease with COOKFOX Architects. At 1400 Broadway, we signed a 13,500 square foot lease for the…

Thanks, Tom, and good morning, everyone. I’ll start with a review of our financial performance and follow with an update on our balance sheet. For the fourth quarter, we reported core FFO of $66.2 million or $0.25 per fully diluted share. Modified FFO, which is defined as FFO plus adjustments for any above or below-market ground lease amortization, was $66.2 million or $0.25 per fully diluted share for the fourth quarter 2015. For the full year ended December 31, 2015, core FFO was $257.7 million or $0.97 per fully diluted share. Modified FFO was $257.8 million or $0.97 per fully diluted share for the same period. Turning to our Observatory operations, for the full year 2015, the Observatory hosted approximately 4.1 million visitors compared to 4.3 million visitors in the comparable period of the prior year. Observatory revenue was $112.2 million, a 0.6% increase from $111.5 million for the prior year. For the fourth quarter of 2015 compared with the fourth quarter of 2014, there was a 4.8% decline in attendance at the Observatory. We believe this was primarily due to a decrease in international tourism and international tourism spend in New York City, which has been negatively impacted by weakness in the global economy. For the fourth quarter 2015, Observatory revenue was $27.6 million, a 1.8% decrease from the same quarter of the prior year. Observatory expenses increased 4.2% over the fourth quarter of 2014. Observatory net operating income for the quarter decreased by 4.2% year-over-year. Finally, as John noted, starting in January of this year, our revenue from one of our broadcast tenants, Univision, will be adjusted from $2.9 million annually to $1.9 million per year, pursuant to our renewal lease agreement. We will not incur any impact from CBS, NBC and WNET non-renewals until 2017 and 2018.…

[Operator Instructions] Our first question is from Craig Mailman of Keybanc.

Just curious if on the demand side, given the volatility this year, have you guys seen any change in attitude from some of your smaller tenants or any of your tenants in terms of hesitancy or pushback on rents?

We had a very good fourth quarter with 198,000 square feet of leasing completed and then, of course, with 1.2 million square feet of leasing in all of 2015 that exceeded our leasing projections at the start of the year. But we’re not seeing any pushback on our asking rents and we’re seeing a steady drumbeat of demand from the smaller to mid-sized tenants. We’re seeing this steady leasing momentum continuing based upon the number of showings, number of proposals being exchanged and leases in negotiation. Remember, we offer centrally located properties with great access to mass transit, right, renovated common areas, new building systems and newly built modern office space at an affordable price point. So we’re offering fantastic value and as such I think that our properties are always going to be in demand. We’re not seeing a change.

And just thoughts on inventory you guys have, you said, 650 of vacant developed and you have another 70 that you’re holding off and another 460 that gets redeveloped during 2016. How do you guys think about the inventory you want by the end of the year with your internal projections on the pace of absorption, given your pipeline of leasing prospects?

It’s a combination of factors, but basically we’re putting our game plan together on an annual basis and updating it on a quarterly basis. We’re targeting 460,000 square feet of space to be redeveloped in the coming year and really set the wheels in motion at the latter part of last year. And it’s a combination of spaces that are rolling, co-tenancies, co-terminations and the in-place escalated rents and the condition of those spaces. So right now, we’re happy with the inventory that we have and we’re staying on track with executing on our game plan for 2016.

And then just lastly, on retail spaces, Footlocker, it sounds like you guys are – is that a change in strategy you guys are going to white-box and demise, is that just because you guys – is the demand falling off for that space or do you just think that’s where the market is to cut up and you’ll get better pricing?

Craig, on the space on 34th Street that’s currently leased by Footlocker and they are still in occupancy of that space. The lease expires at the end of April. Internally, we never forecasted to lease that space until Footlocker vacated and we demolish the space and white-box it and have a period of showing and marketing of a clean space. We’re very fortunate to have secured Sephora who was already on 34th Street, familiar with that marketplace and then certainly Footlocker knows that location very well, with this being the number one performing store. So we were very fortunate to have landed and secured those leases well in advance of Footlocker’s existing lease expiring at the end of April. But I think internally we expect to vacate the balance of that space, get it demised, white-boxed and have a better showing for that. And that’s generally been our experience in the past in marketing these large blocks of space.

Has your rent expectations changed at all for that remaining 8,000?

Not really. Keep in mind that the in-place fully escalated rents are roughly $26 a square foot, compared to ground floor rents where we’ve signed leases in excess of $900 a square foot on grade, regardless of whether there is movement in rent, we’re going to make significant money on that space when we lease that up. We’re very happy with the space. It will get filled. It’s going to show so much better once the space is demolished and white-boxed. It’s got fantastic ceiling heights 20 foot on ground to 40 foot on lower-level, sitting directly opposite Macy’s, get great co-tenancy in the area and improving national and international tenants, with huge foot traffic. So we’re very optimistic that will do very well.

The next question is from Brad Burke of Goldman Sachs.

With the positive comments on the office market, and it’s a more positive versus what we’re hearing from other Manhattan landlords. Is that just a difference of opinion on the strength of the overall market or do you think your portfolio is going to outperform the overall market?

I’d go back to the fundamentals of what we’re offering. We’ve said time and time again we’re up in centrally located properties with great access to mass transit, fully renovated common areas, Empire State Building with a full suite of new amenities, newly built modern office spaces ranging from prebuilds to full-floors. We have a variety of product and space size offering. And we’re at an affordable price point and we’re in a very active segment of the market with most of our space in the high-$50s to low-$70s per square foot. So all I’m going to say is we’re seeing steady demand coming to our door based upon showings, deals and negotiation and leases in negotiation. I feel very good about where we’re at in the first quarter. As I commented, following the close of the fourth quarter, we signed a full-floor deal with Shutterstock at Empire State Building and two other retail deals. So I would simply say that we’re seeing steady demand for our unique product and location.

I think we’ve always said that we feel we’re going to outperform the market, regardless of what the market environment is and I think if the market gets more interesting here, I think we still feel very comfortable with the product that we’re offering.

And last quarter, you said you had about $30 million of NOI projected to roll on from signed leases that haven’t commenced, I know number of those hit in the fourth quarter, so just hoping if we can get an update on that?

$46.4 million as of 12/31.

And then switching to the Observatory, David, I know that you said that a lot of the year over year decline was because of tourism, but do you have any sense of how much of the decline is attributable to tourism, is it the entirety of it, or did weather have an impact or do you sense there was any impact associated with new competition?

Brad, I think one of the things that we continue to see some headwinds from the tourism in New York, not only in the number of visitors, but as we mentioned the amount of money tourists are spending when they do come to New York. The last week of the year, we did have some tough weather. In January though, we picked up with some very good weather. So I think from a weather standpoint, we gave you the number of bad weather days quarter over quarter or year over year, so that does have somewhat of an impact in the performance for the quarter.

I would just add that, look, the important takeaway for us in 2015 was that the One World Trade was new. That newness has worn off the social media and other means people understand what their offering is. When we look at what impacted our performance and we try to trace it, but we disclosed our numbers on a quarterly basis, we actually get to see the One World Trade Center Observatory numbers anybody can on a daily basis they posted on their entrance as each one comes through as part of their installation there. We really enjoy what we’re seeing. We’re very comfortable with what we’re seeing and we come away with it thinking, Gosh, really we think it was the tourist trend. I do think it’s important to say that we’re very happy with our competitive position; we continue to be very happy with our competitive position. Without going too far, I might say we’re more happy with our competitive position in the first quarter and we’re quite happy with how we’re doing.

The next question is from Jamie Feldman of Bank of America.

Can you talk about the year over year increase in Observatory expenses or even sequential? And is there anything in that number that we might see go away in future quarters?

Jamie, in the fourth quarter, more than about 300 basis point of the decline which you see in the Observatory margin is attributable to two non-recurring expenses. First is the timing and expense related to union employee benefits and workers’ compensation and second is marketing expenses which were primarily for enhancements to our website, and specifically, enhancements to the mobile experience, which is to capitalize on the shift from desktop to mobile e-commerce. So again, these are non-recurring, so I would not expect to see these types of expenses going forward.

So what do see as a more normalized run rate?

As you know, Jamie, we don’t give guidance in terms of a normalized run rate that would really be an expectation of what we expect to see. But again, look at the year as a whole, and we don’t look at – with respect to the Observatory quarterly as closely because of the seasonality in the variations. But I think we’re comfortable with the level of expenses we incurred over the full year of 2015. We’re sitting today looking at going forward in 2016 what we may be doing with the Observatory and as part of our annual budgeting and planning, and when we have more clarity on what the year will look like, we’ll certainly share that with you.

But it looks like those two expenses were $500,000, $600,000?

Roughly about $300,000 related to the employee benefit and the marketing expenses over the third quarter were probably up about $600,000.

And then can you talk about tenant watch list in terms of credit, like have you seen any change in that over prior quarters?

We do maintain an internal watch list. As you know, Jamie, we take tenant credit very seriously. We have a full-time credit analyst who not only underwrites every prospective tenant who comes into one of our buildings, but on a regular basis performs credit analysis on our larger tenants. So we do monitor that. I don’t think there is anything of note that has been added to our watch list as we look at where it is today.

And then finally from me, if you could just talk a little bit more about the street retail business in New York, just where are you seeing, I know there has been – if you think of the different submarkets across New York City, we’ve certainly seen changes in terms of tenant demand and where stores are opening, where they are closing. Just latest thoughts on the submarkets you’re in and even within the submarkets, any shift you’re seeing in terms of where tenants want to be?

Notwithstanding prior discussion on some of the higher end markets, particularly 5th Avenue and Soho where we’re not located, we’re seeing activity in our submarkets; particularly in Times Square South on the Broadway Corridor we really like what’s happening with the changing neighborhood and the changing [indiscernible]. I think that’s evidenced by the recent signing of Papyrus, Rituals before that, the first international brand to come to that submarket. We’re excited that the Shake Shack will be open up by the end of the first quarter. It’s going to change the experience the streets gave. So we really like what’s happening there. We have two remaining spaces available on Broadway; the most significant one is 1359 Broadway. And up at 57th Street, as you know, as I commented, we signed a lease with Bank of America, so we’re fully leased there. Down at Union Square, which is a fantastic location with huge street traffic, we have one corner location that’s coming available later this year, but we already have activity on that. And then I talked about the 34th Street Corridor in availability. So despite comments that you may hear about changes in the upper end of the market, we’re in locations where retailers want to be. They sell their inventory; they do business; and there’s fantastic street traffic, pedestrian counts and co-tenancy.

Jamie, the one thing I would say, you’ve heard this for so many years from us and we’ll continue to say it because we believe it’s going to continue to be accurate. Based on our location and based upon our reinvestment and the price point that we offer, we really offer a unique product both on the office and on the retail side. They are irreplaceable locations and we’re improving those locations by virtue of the re-tenanting we’re doing upstairs in that changing neighborhood. And it’s going at all at a price point which allows us to show fantastic leasing spread, but still be very significantly below new construction costs, while at the same time, offering a product which is absolutely, measurably, definitively different from other pre-war asset. So we like our niche. We believe going back to the credit quality question, we lease to the right tenant with the right businesses. They have a high prospect of maintaining those tenants overtime because to move they are either going to have to move to another location in paying much, much higher rent or go to a much lesser building and the retail benefits from those same location and upgrade in tenant quality improvement.

The next question is from Blaine Heck of Wells Fargo Securities.

Just wanted to get a little more color on the broadcasting tenants, in the press release you guys put out about a week ago, you had Univision renewing which was great, but I think the rent roll down was in the 30% or so range. So is that just an indication of the competitive environment and we should expect similar roll downs with other tenants you’re able to retain? Or was there anything anomalous with that?

In general, the over-the-air broadcast is in a state of flux. We disclosed what we’re prepared to disclose at this point about that business. We put out an update last week we wanted to timely and we wanted to avoid distraction with respect to this business, which we don’t think is material. And the impacts of these updates are far-off with respect to our business. We also gave some additional disclosure in the supplement, which I encourage you to look at. And when we have additional information, we’re going to share.

Maybe just one more on that and I’ll leave alone. How much in CapEx do you think you guys are anticipating on spending on that space maybe in the next few years to replace that lost revenue or keep the tenants in place?

Again, the same answer. This business is not material to our overall results and encourage you to just think about our core leasing business, our office and retail leasing business.

Maybe one quick one for Tom, it looks like rent spreads on the renewal side in the fourth quarter were lower than previous, [1.8%] was there anything one-time in nature there or maybe just a mix issue?

Rent spreads were very good, with 57% positive spreads on our all-new office leasing in Manhattan for the fourth quarter; 34% across the entire office and retail portfolio. Of course, the spreads in any given quarter is going to depend on the prior fully escalated rent that expired. But given the fact that with our fully escalated rents expiring in Manhattan office in the coming year, somewhere around $44 a square foot and those spaces we’re targeting for vacating and redevelopment lower than that, we’re going to achieve very healthy and significant positive rent spreads.

The next question is from Aaron Aslakson of Stifel.

Steve Durels, you have a wonderful, wonderful daughters. I really enjoyed meeting them. Thank you. And they told me you’re very ethical and honest and would answer any question we asked. Hey, question, when is the mark-to-market all done? When you’re 90% done with all the white-boxing et cetera, et cetera, is that 2018, 2019, 2020, 2021, when is that story complete?

First, I think we’ve already clarified that. Steve Durels isn’t here; this is Tom Durels. And just for the record, [indiscernible] Empire State Building. With regard to your question, on the positive rent spreads, if you look over at our fully expiring rents on the upside over the next four to five years, we’re still in the $40s per square foot and that compares to where we’re doing deals in the high $50s to $70 a square foot. So we see in the next four to five years, as we’ve laid out in our prior investor presentations at the investor presentation and updated investor books that we’ve given as well as on our website, you can see that we’re projecting significant mark-to-market on our office leasing over the next four to five years. Bear in mind that some of the leasing that we did with early in the cycle, early in the cycle of the market as well as early in the cycle of our property redevelopment are also now well below current market rents. So we feel very good about our opportunity to achieve positive mark-to-market in the years ahead, certainly in the next four to five years and beyond.

[Operator Instructions] And the next question is from Tom Lesnick of Capital One Securities.

Obviously rent spreads have been [indiscernible] for you guys in Manhattan, but in some of the [indiscernible] of New York City, rent spreads have been substantially weaker, I think they were slightly negative this quarter. Just wondered if you can comment at all on leasing environment out there and what we should expect to see?

First, we only did a modest amount of leasing in the fourth quarter in our Greater New York Metropolitan properties of about 17,000 square feet. Bear in mind that we’re 94% leased, with very little rollover of only 65,000 square feet in 2016. So our mark-to-markets are going to depend on what the prior fully escalated rent is in place on any lease that expires and – but with the very modest leasing that can be done due to the March rollover and very little available space, it’s really not going to have a significant impact on our business. Rents in general for our properties have been flat to up 2% over the past two quarters. But our properties show very well. They are fully renovated, fully amenitized, and in great locations next to mass transit.

Just statistically, I think as Tom alluded, we only did one lease in the Greater New York Metropolitan area – two leases, one of which was a renewal. So when you look at that mark-to-market, it really does not provide meaningful information regarding what’s going on in our portfolio.

And then just one housekeeping question. I know you’ve elaborated quite a bit on the broadcasting business thus far. But with regards to the known lease expirations for 2017 and 2018, are you able to comment a little bit more specifically on the timing within the year for those?

No, Tom, this is John. As you know, we’ve given very detailed year by year disclosure in the supplement and hopefully that gives you a good sense of how that revenue expires overtime and that’s as much details we’re going to provide at this point.

The next question is from John Kim of BMO Capital Markets.

In looking at your inventory of vacant space, it looks like over the last couple of quarters, you’ve had an increase in the amount of vacant developed space. Can you just elaborate on this?

First, bear in mind that we have to lineup our lease expiration dates and then vacate that space and then consolidate and redevelop. Out of the 950,000 square feet of vacant Manhattan office space, we have roughly 300,000 square feet of prebuilds, 310,000 square feet of white-boxed and some other redevelopment space. So it takes time for us to deliver that, which we’ve spoken on in the past, and that’s filling our inventory of space that we’re now marketing. So it’s a function of, I think, one of timing, when space is rolled, when we would line them up for intentional vacate and consolidation and redevelopment. But we’re happy with the inventory space that we have now. It was part of our plan. We fully intended to execute and develop that – vacate and develop that space in 2015 and we’re happy with the activity that we’re seeing today.

I think you answered to a prior question from Craig that tenants are now pushing back on rent. I’m just wondering on the developed space, is it taking longer for tenants to absorb or accept at a higher price point?

No, I wouldn’t say that. We’re not seeing any change in that whatsoever.

Can you provide an update on the sublease space in your portfolio and maybe compare it to the third quarter?

John, we haven’t really released the details on sublease space availabilities in our portfolio.

We referenced from time to time that global brands group was subleasing certain space and the reality that they are done with their subleasing program within the portfolio. And outside of that, we could – it’s an interesting question which we haven’t got before, we volunteered it with regard to global brands group in the past. But what we might do is take that under consideration, we’re going to track that going forward. But I think it’s safe to say that we don’t see anything awkward or hard or difficult times to come on the basis of tenants looking to share space.

As far as potential acquisitions that you’re looking out in the market, have you seen any cases of more attractive pricing for core-plus product. One of your competitors has suggested that’s the case. I’m just wondering if you’re seeing the same thing?

We’re always out there looking at opportunities. We’re going to continue to focus on off-market situations that we think are going to provide good value to our shareholders and we primarily focused on relationship-oriented situations. That being said, I think we continue to be primarily focused on executing on our redevelopment and core leasing strategy that Tom has been talking about. And I think we continue to think that the market is cyclical and we’re going to be patient. So I don’t think we’d have any further observations than that.

And then maybe a final question for Tom. Do you think you could disclose John Guinee’s time on the run up?

I don’t know we have to disclose yours. So we’re going to keep that confidential.

The next question is from Craig Mailman of Keybanc.

Hey, guys, just a few quick follow-ups here. David, I think you said $26 million backlog assigned but not yet commenced, what’s the spend of the TI and CapEx spend related to that that’s left to go?

$26.4 million of signed leases not commenced as of the end of the quarter. In terms of the spend on that, we haven’t broken that out, but I think if you take a look at some of the materials we provided in the past in terms of what we’re spending on TIs, what we’re spending on base building that will give you a sense of the total spend, understanding that some of that has already been spent in the quarter, particularly as it relates to leasing commissions because we pay those leasing commissions at the time of lease signing. And then depending upon the nature of the build out and the timing of when that commencement occurs, will tell us when we incur that over the ensuing quarters.

Then on the remaining Broadway retail spaces, Tom, could you run through – I know you have the restaurant space at 1359, but can you run through exactly what you have and what the sizes are?

Aside from the space at 1359 Broadway which is about 7,000 square feet on grade, we have another space of only like 1,900 square feet on Broadway. That’s it. So two availabilities.

And how are the prospects there? I know you guys have been working on a higher restaurant for a while, anything brewing?

On the smaller space, I think we have activity on that. We should expect to see that leased certainly in the coming couple of quarters. In the restaurant space, I would say that we have been selective. We’ve been down the road with a couple of name brand chefs, but those are not concluded. And we’re being careful as to who we lease to. We really are focused on getting the right tenant in there. We could have had this space leased to lesser of a tenant that we don’t think will be as meaningful to changing the neighborhood. So I’m confident we’ll get it leased and we’ll get it leased to the right tenant.

The only point I would add to that, it’s Tony Malkin here, is that the fact is that while this is a decent sized space, the rents which we’re targeting for it in comparison to let’s say what one might achieve on 34th Street and one across the Macy’s at 112 West 34, they are just not comparable. This is not going to be a material outcome for us as far as revenue that it will produce. So believe that the impact to the office up above is more meaningful.

And then lastly, Tony, for you, not to pry too much but it sounds like – maybe you can give a little bit more color what you mean by you’re more happy with your competitive position in the first quarter and does that have anything to do with Skyride not being there anymore?

Let’s put it this way. We had a major change in that we’re able to move out Skyride, a long time tenant, which operated in aged and unwanted virtual reality tour. We moved them out on December 31, 2015, six months early. In fact, they paid to get out, which was nice. That gave us the upper hand finally in controlling vendors on the street around the building as we now have no street seller of our ticket to whom we are obligated to sell our tickets. And this gives us a better control over the atmosphere around the building and enhances our ticket pricing mix because it allows our retail customer to reach our retail window, which is a significantly better outcome for us. And frankly it’s a slightly better outcome for the retail customer as well than what Skyride was selling with their hoards of red-jacketed vendors. I’d say in addition, the fact is that One World Trade is a known entity now. And we like our competitive position versus One World Trade. We like the fact that there has been, in our view, a reaffirmation of the iconic nature of a visit to the Empire State Building and the connection with New York City and with its history and with being in the center of New York. So in short, without saying anything further, we’re always eager to give you the results on a quarterly basis, with a very much forward to giving you the results for the first quarter, which is more than halfway through and we’re very content with our competitive position and how we’ve done in the quarter to date.

If you hit a ballpark in the fourth quarter, what percent of sales maybe Skyride would be and how that would stack up versus, I think, the average ticket price was like $29, or what the blended ticket price is. How much of an impact you think that had? How much percent of sales do you think that they actually did?

Let’s be clear. We know exactly how many sales they did and we know exactly what our margin was. But we haven’t given that kind of detailed breakdown. We actually view our relationships with our tour and travel partners, the remaining ones with whom we do business, with whom we have excellent relationships. We’re very, very happy with our relationships with our existing tour and travel partners. They work very well with us and they believe they provide a very healthy helping service to us, particularly selling tickets to tourists in areas of New York City which are distant from the Empire State Building. That being said, let’s just say that we do with our tour and travel partners, based upon our various agreements with them. We have different tiered pricing. No one has remembered it’s a disclosure we have given in the past that along with the ticket price increase that we did in 2015, we also announced in its public information to the tour and travel trade that effective April 2016, the tour and travel ticket pricing is going up. So that being said as an aside, we’re not giving detail on Skyride. Let’s just say that it’s a mosaic of different components of different sized pieces of business for our ticket sourcing. And this is a nice pop for us in our margin for those ticket sales which they are not any longer making.

Would you personally consider it a material piece of the business or just a nice little uplift that you guys may get?

I think it’s a nice uplift.

Okay. So I think we might go to a concluding few remarks. The first thing I would say is that personally I’m really happy with how everyone is performing at ESRT. I’m very, very happy with my continuing growing partnership with John Kessler, who just passed a year with us, which I know seems to many of us like he’s been here much, much longer, but it is just over a year from his beginning. We’re really happy with the way our properties are performing. We really love our competitive position. We like the offering that we have. And we like the fact that in many cases the market is still welcoming our properties for what they are rather than what we were going to make them and we see better and better looks from better and better tenants. We’re very pleased with that and we like the performance on the Observatory and the team is functioning very well. So with this in mind, I would just like to point out that, and this is all in alphabetical order, Brad Burke, John Guinee and John Kim did duke it out with Steve Durels’ niece, [Kelsey Durels] and my understanding is that Kelsey did UVA proud and that they did meet again at the top. Number one. Number two, it’s a very interesting thing, I’m carrying on a little bit because I wanted to get to 56 minutes of management comments in the call, but I think we may fall short. It’s a very interesting thing for us to listen to all of the market prognostication that is going on today in calls and in reports, we’re not seeking to add to that noise. We’re just sticking to our knitting, doing our work on our portfolio in our buildings, in our submarkets. We’re feeling good about it. And as far as the broader market, we don’t have a lot of comment to make, but we’re looking forward to speaking with you all when we have chances to see you and we look forward to reporting on the first quarter when we get chance to do that. Thanks very much for joining the call.

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.