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REAL ESTATE | PROPERTY REPORT

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Two Big New York City Landlords Highlight Rent-Collection Woes

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Reports by SL Green and Empire State provide clear signs that the coronavirus is slamming the U.S.’s largest commercial-office market

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Empire State Realty Trust, owner of the Empire State Building (center), collected only 73% of its office rents and 46% of its
retail rents due in April.
PHOTO: VANESSA CARVALHO/ZUMA PRESS

By Peter Grant
Updated April 28, 2020 7:51 pm ET

SAVE PRINT TEXT 5

New York City’s office landlords are struggling with rent defaults, a wafer-thin sales market
and the evaporation of financing in the state hardest-hit by the Covid-19 pandemic.

Empire State Realty Trust, the owner of the Empire State Building and 13 other commercial
properties in the New York region, said last week in its first-quarter earnings presentation
that it collected only 73% of its April office rents and 46% of its retail rents due in April.
Those collections, which didn’t include portions of security deposits that Empire applied to
rents, are the lowest reported for the first quarter in any real-estate investment trust’s
results so far.

Meanwhile, SL Green Realty Corp., New York’s largest office-building landlord by amount of
office space owned, is moving to shore up its balance sheet after a deal to sell the former
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New York Daily News headquarters for $815 million fell through in late March. The
company, which also makes loans, is considering sales of noncore properties and has put
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SL Green on Monday closed the sale of a $30 million loan backed by a Brooklyn apartment
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SL Green’s shares have fallen 46% since Feb. 21, the most for any U.S. office real-estate 4. Should You Wear a
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Daniel Ismail, an analyst with Green Street Advisors. Mr. Ismail said SL Green has one of
the highest debt levels of any U.S. office-building REIT relative to earnings. 5. Some School Districts
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Executives at SL Green—who have long defended the REIT’s debt as appropriate for New
York office companies—said it was making up for the failed sale of the Daily News building
in part by selling $100 million to $150 million of loans in its debt portfolio. SL Green also WSJ MEMBER MESSAGE

plans to borrow money against the Daily News building, draw down from its credit lines What Happens When
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“There’s obviously a lot of uncertainty surrounding rental payments over the next few
months,” he said.

Both Empire State and SL Green said they are hoping to have enough cash on hand to take
advantage of distressed prices, though few buildings are changing hands right now. Empire
State’s chief executive, Anthony Malkin, said the company already has $1 billion in cash.
“This is life during wartime,” he said.

SL Green executives say that once they have raised about $1 billion to shore up the balance
sheet, they too will start looking for bargains. “We’ve made some of our best purchases
through distressed trades,” Mr. Mathias said.

—Keiko Morris contributed to this article.

Corrections & Amplifications

Boston Properties Inc. is expected to report its quarterly earnings this week. An earlier
version of this article incorrectly said it was scheduled to report earnings in the first week
in May. (Corrected on April 28)

Write to Peter Grant at peter.grant@wsj.com

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