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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~March 3031, ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36106

EMPIRE STATE REALTY OP, L.P.

(Exact name of Registrant as specified in its charter)


Delaware						45-4685158
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

111 West 33rd Street, 12th Floor

New York, New York 10120

(Address of principal executive offices) (Zip Code)

(212) 687-8700

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Series ES operating partnership units	ESBA	NYSE Arca, Inc.
Series 60 operating partnership units	OGCP	NYSE Arca, Inc.
Series 250 operating partnership units	FISK	NYSE Arca, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 12, ~~2023~~2024, there were 2019,~~152~~312,~~827~~499 units of the Registrant Series ES operating partnership units outstanding, 54,~~274~~973,~~621~~023 units of the Series 60 operating partnership units outstanding, and 2,~~640~~560,~~947~~171 units of the Series 250 operating partnership units outstanding.

	EMPIRE STATE REALTY OP, L.P.
	FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
	FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2024
	TABLE OF CONTENTS	PAGE
PART 1.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	2
	Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	2
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Capital for the three and nine months ended September 30, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Capital for the three months ended March 31, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2023 and 2022 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	98
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2827
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	3936
ITEM 4.	CONTROLS AND PROCEDURES	3936
PART II.	OTHER INFORMATION	3936
ITEM 1.	LEGAL PROCEEDINGS	3936
ITEM 1A.	RISK FACTORS	4037
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4037
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	4037
ITEM 4.	MINE SAFETY DISCLOSURES	4037
ITEM 5.	OTHER INFORMATION	4037
ITEM 6.	EXHIBITS	4138
SIGNATURES		4239

ITEM 1. FINANCIAL STATEMENTS

Empire State Realty OP, L.P.

Condensed Consolidated Balance Sheets

(amounts in thousands, except per unit amounts)

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
ASSETS	(unaudited)
Commercial real estate properties, at cost:
Land	$	366,~~364~~357	$	~~365~~366,~~540~~357
Development costs	8,~~178~~187		8,~~166~~178
Building and improvements	3,~~245~~327,~~555~~773		3,~~177~~280,~~743~~657
	3,620,097		3,551,449
	3,702,317		3,655,192
Less: accumulated depreciation	(1,~~217~~288,~~967~~519)		(1,~~137~~250,~~267~~062)
Commercial real estate properties, net	2,~~402~~413,~~130~~798		2,~~414~~405,~~182~~130
Assets held for sale	—		35,538
Cash and cash equivalents	333,573		346,620
Cash and cash equivalents	353,999		264,434
Restricted cash	51,738		60,336
Restricted cash	66,954		50,244
Tenant and other receivables	40,137		39,836
Tenant and other receivables	37,651		24,102
Deferred rent receivables	257,266		255,628
Deferred rent receivables	254,233		240,188
Prepaid expenses and other assets	74,472		98,167
Prepaid expenses and other assets	82,918		98,114
Deferred costs, net	180,462		172,457
Deferred costs, net	175,488		187,570
Acquired below-market ground leases, net	319,284		321,241
Acquired below-market ground leases, net	323,199		329,073
Right of use assets	28,378		28,439
Right of use assets	28,496		28,670
Goodwill	491,479		491,479
Total assets	$	4,~~216~~190,~~547~~587	$	4,~~163~~219,~~594~~333
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net	$	~~878~~876,~~757~~497	$	~~883~~877,~~705~~388
Senior unsecured notes, net	973,~~819~~926		973,~~659~~872
Unsecured term loan facilities, net	~~389~~268,~~158~~503		~~388~~389,~~773~~286
Unsecured revolving credit facility	—120,000		—
Accounts payable and accrued expenses	8391,~~299~~005		8099,~~729~~756
Acquired below-market leases, net	1412,~~703~~798		1713,~~849~~750
Ground lease liabilities	28,~~496~~378		28,~~670~~439
Deferred revenue and other liabilities	7569,~~688~~289		7670,~~091~~298
Tenants’ security deposits	3925,~~307~~457		2535,~~084~~499
Liabilities related to assets held for sale	—		5,943
Total liabilities	2,465,853		2,488,288
Total liabilities	2,483,227		2,480,503
Commitments and contingencies
Capital:
Private perpetual preferred units:
Private perpetual preferred units, $13.52 liquidation preference, 4,664 issued and outstanding in 2023 and 2022	21,936		21,936
Private perpetual preferred units, $13.52 liquidation preference, 4,664 issued and outstanding in 2024 and 2023	21,936		21,936
Private perpetual preferred units, $16.62 liquidation preference, 1,560 issued and outstanding in 2023 and 2022	8,004		8,004
Private perpetual preferred units, $16.62 liquidation preference, 1,560 issued and outstanding in 2024 and 2023	8,004		8,004
Series PR operating partnership units:
ESRT partner's capital (2,710 and 2,710 general partner operating partnership units and 159,624 and 158,420 limited partner operating partnership units outstanding in 2023 and 2022, respectively)	987,083		954,375
ESRT partner's capital (2,740 and 2,709 general partner operating partnership units and 162,058 and 160,337 limited partner operating partnership units outstanding in 2024 and 2023, respectively)	996,122		985,518
Limited partners' interests (80,403 and 80,475 limited partner operating partnership units outstanding in 2023 and 2022, respectively)	693,627		681,827
Limited partners' interests (82,266 and 80,189 limited partner operating partnership units outstanding in 2024 and 2023, respectively)	692,575		694,512
Series ES operating partnership units (20,243 and 21,081 limited partner operating partnership units outstanding in 2023 and 2022, respectively)	5,007		1,391
Series ES operating partnership units (19,387 and 19,947 limited partner operating partnership units outstanding in 2024 and 2023, respectively)	4,722		4,427
Series 60 operating partnership units (5,325 and 5,558 limited partner operating partnership units outstanding in 2023 and 2023, respectively)	1,022		16
Series 60 operating partnership units (4,991 and 5,144 limited partner operating partnership units outstanding in 2024 and 2023, respectively)	863		779
Series 250 operating partnership units (2,645 and 2,789 limited partner operating partnership units outstanding in 2023 and 2022, respectively)	535		76
Series 250 operating partnership units (2,573 and 2,619 limited partner operating partnership units outstanding in 2024 and 2023, respectively)	512		462
Total Empire State Realty OP, L.P.'s capital	1,~~717~~724,~~214~~734		1,~~667~~715,~~625~~638
Non-controlling interest in other partnerships	~~16,106~~—		15,~~466~~407
Total capital	1,~~733~~724,~~320~~734		1,~~683~~731,~~091~~045
Total liabilities and capital	$	4,~~216~~190,~~547~~587	$	4,~~163~~219,~~594~~333

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Operations

(unaudited)

(amounts in thousands, except per unit amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
	2023		2022		2023		2022
					2024		2023
Revenues:
Rental revenue	$	~~151,458~~	$	~~148,290~~	$	~~446~~153,~~152~~882	$	~~445~~140,~~143~~091
Observatory revenue	~~37,562~~		~~33,051~~		9324,~~149~~596		7322,~~660~~154
Lease termination fees	—		—		—		20,032
Third-party management and other fees					265		427
Third-party management and other fees	268		389		1,076		1,025
Other revenue and fees					2,436		1,950
Other revenue and fees	2,238		1,982		6,313		5,908
Total revenues					181,179		164,622
Total revenues	191,526		183,712		546,690		545,768
Operating expenses:
Property operating expenses	~~42,817~~		~~42,798~~		~~124~~45,~~380~~060		~~118~~42,~~875~~044
Ground rent expenses	~~2,331~~		~~2,331~~		62,~~994~~331		62,~~994~~331
General and administrative expenses	~~16,012~~		~~15,725~~		4715,~~795~~972		4515,~~287~~708
Observatory expenses	~~9,471~~		~~8,516~~		258,~~983~~431		227,~~507~~855
Real estate taxes	~~32,014~~		~~31,831~~		9532,~~292~~241		9131,~~637~~788
Depreciation and amortization	~~46,624~~		~~46,984~~		~~140~~46,~~312~~081		~~172~~47,~~394~~408
Total operating expenses	~~149,269~~		~~148,185~~		~~440~~150,~~756~~116		~~457~~147,~~694~~134
Total operating income	~~42,257~~		~~35,527~~		~~105~~31,~~934~~063		8817,~~074~~488
Other income (expense):
Interest income	~~4,462~~		~~1,564~~		104,~~396~~178		2,~~144~~595
Interest expense	~~(25,382)~~		~~(25,516)~~		(7625,~~091~~128)		(7525,~~572~~304)
Gain on disposition of property	—		—		29,261		27,170
Loss on early extinguishment of debt					(553)		—
Income before income taxes	21,337		11,575		69,500		41,816
Gain on disposition of property					—		15,696
Income tax benefit (expense)	(1,409)		(1,457)		(923)		(224)
Income before income taxes					9,560		10,475
Net income	19,928		10,118		68,577		41,592
Income tax benefit					655		1,219
Private perpetual preferred unit distributions	(1,050)		(1,050)		(3,151)		(3,151)
Net income					10,215		11,694
Net (income) loss attributable to non-controlling interest in other partnerships	(111)		49		(69)		271
Private perpetual preferred unit distributions					(1,050)		(1,050)
Net income attributable to common unitholders	$	18,767	$	9,117	$	65,357	$	38,712
Net (income) loss attributable to non-controlling interests in other partnerships					(4)		43
Net income attributable to common unitholders					$	9,161	$	10,687
Total weighted average units:
Basic	~~262,756~~		~~266,035~~		~~263~~264,~~379~~562		~~269~~264,~~880~~493
Diluted	~~266,073~~		~~267,121~~		~~265~~267,~~269~~494		~~270~~265,~~966~~197
Earnings per unit attributable to common unitholders:
Basic	$	~~0.07~~	$	~~0.03~~	$	0.2503	$	0.1404
Diluted	$	~~0.07~~	$	~~0.03~~	$	0.2503	$	0.1404
Dividends per unit	$	~~0.035~~	$	~~0.035~~	$	0.~~105~~035	$	0.~~105~~035

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

(amounts in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
	2023		2022		2023		2022
					2024		2023
Net income	$	~~19,928~~	$	~~10,118~~	$	6810,~~577~~215	$	4111,~~592~~694
Other comprehensive income:
Other comprehensive income (loss):
Unrealized gain on valuation of interest rate swap agreements	9,525		19,588		16,058		39,407
Unrealized gain (loss) on valuation of interest rate swap agreements					8,198		(5,402)
Less: amount reclassified into interest expense	(2,275)		1,392		(5,429)		7,428
Amount reclassified into interest expense					(2,324)		(1,272)
Other comprehensive income	7,250		20,980		10,629		46,835
Other comprehensive income (loss)					5,874		(6,674)
Comprehensive income	~~27,178~~		~~31,098~~		7916,~~206~~089		885,~~427~~020
Net (income) loss attributable to non-controlling interest in other partnerships	(111)		49		(69)		271
Net (income) loss attributable to non-controlling interests in other partnerships					(4)		43
Other comprehensive income attributable to non-controlling interest in other partnerships	(480)		(670)		(384)		(2,297)
Other comprehensive loss attributable to non-controlling interest in other partnerships					—		381
Comprehensive income attributable to OP unitholders	$	~~26,587~~	$	~~30,477~~	$	7816,~~753~~085	$	865,~~401~~444

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Three Months Ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023

(unaudited)

(amounts in thousands)

				Series PR Operating Partnership Units						Series ES Operating Partnership Units Limited Partners			Series 60 Operating Partnership Units Limited Partners			Series 250 Operating Partnership Units Limited Partners
				General Partner			Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Non-controlling Interest in Other Partnerships		Total Capital
Balance at June 30, 2023	6,224	$	29,940	160,830	$	965,950	81,611	$	695,416	20,426	$	3,810	5,380	$	681	2,669	$	375	15,440		$	1,711,612
Balance at December 31, 2023	6,224	29,940		163,046	985,518		80,189	694,512		19,947	4,427		5,144	779		2,619	462		15,407		$	1,731,045
Conversion of operating partnership units to ESRT Partner's Capital	—	—		1,~~506~~566	107,~~663~~132		(~~1,244~~807)	(106,~~616~~981)		(~~183~~560)	(36121)		(55153)	(822)		(2446)	(38)		—		—
Contributions from consolidated joint ventures	—	—		—	—		—	—		—	—		—	—		—	—		75		75
Repurchases of common units	—	—		—	—		—	—		—	—		—	—		—	—		—		—
Repurchases of common shares	—	—		—	—		—	—		—	—		—	—		—	—		—		—
Acquisition of non-controlling interests in other partnerships	—	—		—	114		—	—		—	—		—	—		—	—		(15,411)		(15,297)
Equity compensation	—	—		~~(2)~~186	~~449~~(260)		362,884	43,~~540~~709		—	—		—	—		—	—		—		43,~~989~~449
Distributions	—	(1,050)		—	(5,~~683~~765)		—	(2,~~814~~793)		—	(~~708~~679)		—	(~~187~~175)		—	(9290)		—		(10,~~534~~552)
Net income	—	1,050		—	115,~~560~~661		—	52,~~208~~556		—	~~1,417~~678		—	~~394~~174		—	~~188~~92		~~111~~4		1910,~~928~~215
Other comprehensive income	—	—		—	43,~~144~~722		—	1,~~893~~572		—	~~524~~417		—	~~142~~107		—	6756		~~480~~—		75,~~250~~874
Balance at September 30, 2023	6,224	$	29,940	162,334	$	987,083	80,403	$	693,627	20,243	$	5,007	5,325	$	1,022	2,645	$	535	$	16,106	$	1,733,320
Balance at March 31, 2024	6,224	$	29,940	164,798	$	996,122	82,266	$	692,575	19,387	$	4,722	4,991	$	863	2,573	$	512	$	—	$	1,724,734

				Series PR Operating Partnership Units						Series ES Operating Partnership Units Limited Partners			Series 60 Operating Partnership Units Limited Partners			Series 250 Operating Partnership Units Limited Partners
				General Partner			Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Non-controlling Interest in Other Partnerships		Total Capital
Balance at June 30, 2022	6,224	$	29,940	163,684	$	957,803	81,073	$	665,520	21,746	$	(1,137)	5,738	$	(637)	2,862	$	(277)	$	14,881	$	1,666,093
Balance at December 31, 2022	6,224	$	29,940	161,129	$	954,375	80,475	$	681,827	21,081	$	1,391	5,558	$	16	2,789	$	76	$	15,466	$	1,683,091
Conversion of operating partnership units to ESRT Partner's Capital	—	—		~~461~~806	392,544		(39282)	(42,433)		(~~324~~397)	(2789)		(6055)	(59)		(3872)	(313)		—		—
Repurchases of common shares	—	—		(~~2,567~~933)	(185,~~105~~694)		—	—		—	—		—	—		—	—		—		(185,~~105~~694)
Equity compensation	—	—		(8)	317		—	5,057		—	—		—	—		—	—		—		5,374
Contributions from consolidated joint ventures	—	—		—	—		—	—		—	—		—	—		—	—		18		18
Distributions	—	(1,050)		—	(5,694)		—	(2,837)		—	(751)		—	(199)		—	(100)		—		(10,631)
Equity compensation	—	—		327	21		1,519	4,353		—	—		—	—		—	—		—		4,374
Net income	—	1,050		—	5,557		—	2,529		—	739		—	192		—	100		(49)		10,118
Distributions	—	(1,050)		—	(5,675)		—	(2,006)		—	(724)		—	(193)		—	(95)		—		(9,743)
Other comprehensive income (loss)	—	—		—	12,462		—	5,553		—	1,646		—	426		—	223		670		20,980
Net income	—	1,050		—	6,519		—	2,993		—	844		—	224		—	107		(43)		11,694
Balance at September 30, 2022	6,224	$	29,940	161,570	$	952,379	81,034	$	675,818	21,422	$	470	5,678	$	(223)	2,824	$	(57)	$	15,502	$	1,673,829
Other comprehensive income (loss)	—	—		—	(3,839)		—	(1,762)		—	(497)		—	(132)		—	(63)		(381)		(6,674)
Balance at March 31, 2023	6,224	$	29,940	161,329	$	948,251	81,712	$	682,972	20,684	$	925	5,503	$	(94)	2,717	$	12	$	15,060	$	1,677,066

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Nine Months Ended September 30, 2023 and 2022

(unaudited)

				Series PR Operating Partnership Units						Series ES Operating Partnership Units Limited Partners			Series 60 Operating Partnership Units Limited Partners			Series 250 Operating Partnership Units Limited Partners
				General Partner			Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Non-controlling Interest in Other Partnerships		Total Capital
Balance at December 31, 2022	6,224	$	29,940	161,129	$	954,375	80,475	$	681,827	21,081	$	1,391	5,558	$	16	2,789	$	76	$	15,466	$	1,683,091
Conversion of operating partnership units to ESRT Partner's Capital	—	—		3,038	15,682		(1,823)	(15,523)		(838)	(131)		(233)	(12)		(144)	(16)		—		—
Contributions from consolidated joint ventures	—	—		—	—		—	—		—	—		—	—		—	—		187		187
Repurchases of common units	—	—		(2,151)	(13,105)		—	—		—	—		—	—		—	—		—		(13,105)
Equity compensation	—	—		318	918		1,751	13,814		—	—		—	—		—	—		—		14,732
Distributions	—	(3,151)		—	(16,980)		—	(7,660)		—	(2,150)		—	(569)		—	(281)		—		(30,791)
Net income	—	3,151		—	39,933		—	18,300		—	5,098		—	1,372		—	654		69		68,577
Other comprehensive income	—	—		—	6,260		—	2,869		—	799		—	215		—	102		384		10,629
Balance at September 30, 2023	6,224	$	29,940	162,334	$	987,083	80,403	$	693,627	20,243	$	5,007	5,325	$	1,022	2,645	$	535	$	16,106	$	1,733,320

				Series PR Operating Partnership Units						Series ES Operating Partnership Units Limited Partners			Series 60 Operating Partnership Units Limited Partners			Series 250 Operating Partnership Units Limited Partners
				General Partner			Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Operating Partnership Units	Operating Partnership Unitholders		Non-controlling Interest in Other Partnerships		Total Capital
Balance at December 31, 2021	6,224	$	29,940	170,217	$	998,128	79,820	$	649,157	22,321	$	(4,058)	5,884	$	(1,395)	2,970	$	(692)	13,252		$	1,684,332
Conversion of operating partnership units to ESRT Partner's Capital	—	—		1,599	2,384		(348)	(2,503)		(899)	69		(206)	28		(146)	22		—		—
Contributions from consolidated joint ventures	—	—		—	—		—	—		—	—		—	—		—	—		224		224
Repurchases of common units	—	—		(10,433)	(82,545)		—	—		—	—		—	—		—	—		—		(82,545)
Equity compensation	—	—		187	574		1,562	15,025		—	—		—	—		—	—		—		15,599
Distributions	—	(3,151)		—	(17,444)		—	(8,421)		—	(2,285)		—	(604)		—	(303)		—		(32,208)
Net income (loss)	—	3,151		—	23,847		—	10,490		—	3,136		—	813		—	426		(271)		41,592
Other comprehensive income	—	—		—	27,435		—	12,070		—	3,608		—	935		—	490		2,297		46,835
Balance at September 30, 2022	6,224	$	29,940	161,570	$	952,379	81,034	$	675,818	21,422	$	470	5,678	$	(223)	2,824	$	(57)	$	15,502	$	1,673,829

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(amounts in thousands)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
Cash Flows From Operating Activities
Net income	$	6810,~~577~~215	$	4111,~~592~~694
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	~~140~~46,~~312~~081		~~172~~47,~~394~~408
Gain on disposition of property	~~(29,261)~~—		(2715,~~170~~696)
Amortization of non-cash items within interest expense	62,~~804~~076		72,~~514~~238
Amortization of acquired above- and below-market leases, net	(~~1,932~~514)		(~~4,136~~703)
Amortization of acquired below-market ground leases	51,~~873~~958		51,~~873~~958
Straight-lining of rental revenue	(173,~~430~~061)		(~~18,533~~556)
Equity based compensation	143,~~732~~449		154,~~599~~374
Loss on early extinguishment of debt	553		—
Increase (decrease) in cash flows due to changes in operating assets and liabilities:
Security deposits	14(10,~~293~~042)		(110,~~198)~~184
Tenant and other receivables	(131,~~459~~371)		~~(11,707)~~258
Deferred leasing costs	(118,~~838~~105)		(314,~~983~~498)
Prepaid expenses and other assets	2329,~~569~~132		2334,~~630~~915
Accounts payable and accrued expenses	~~(6,055)~~141		2(6,~~511~~804)
Deferred revenue and other liabilities	~~1,863~~414		~~(401)~~1,591
Net cash provided by operating activities	~~196~~70,~~048~~926		~~173~~86,~~985~~363
Cash Flows From Investing Activities
Acquisition of real estate property	(26,910)		—
Acquisition of non-controlling interests in other partnerships	(14,226)		—
Net proceeds from disposition of property	~~88,910~~—		—39,137
Development costs	—		(31)
Post-closing costs from a prior period sale of property	(4,034)		—
Additions to building and improvements	(101,379)		(89,085)
Development costs	(9)		(12)
Net cash used in investing activities	(39,379)		(89,116)
Additions to building and improvements	(53,000)		(41,756)
Net cash used in investing activities	(71,269)		(2,631)

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

(amounts in thousands)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
Cash Flows From Financing Activities
Repayment of mortgage notes payable	(61,~~685~~470)		(52,~~163~~142)
Contributions from consolidated joint ventures	187		224
Proceeds from unsecured term loan	95,000		—
Repurchases of common units	(13,105)		(82,545)
Repayment of unsecured term loan	(215,000)		—
Distributions	(30,791)		(32,208)
Proceeds from unsecured revolving credit facility	120,000		—
Net cash used in financing activities	(50,394)		(119,692)
Deferred financing costs	(9,280)		—
Net increase (decrease) in cash and cash equivalents and restricted cash	106,275		(34,823)
Repurchases of common units	—		(5,694)
Cash and cash equivalents and restricted cash—beginning of period	314,678		474,638
Distributions	(10,552)		(9,743)
Cash and cash equivalents and restricted cash—end of period	$	420,953	$	439,815
Net cash used in financing activities	(21,302)		(17,579)
Net increase (decrease) in cash and cash equivalents and restricted cash	(21,645)		66,153
Cash and cash equivalents and restricted cash—beginning of period	406,956		314,678
Cash and cash equivalents and restricted cash—end of period	$	385,311	$	380,831
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	~~264~~346,~~434~~620	$	~~423~~264,~~695~~434
Restricted cash at beginning of period	5060,~~244~~336		50,~~943~~244
Cash and cash equivalents and restricted cash at beginning of period	$	~~314~~406,~~678~~956	$	~~474~~314,~~638~~678
Cash and cash equivalents at end of period	$	~~353~~333,~~999~~573	$	~~387~~272,~~248~~648
Restricted cash at end of period	6651,~~954~~738		52108,~~567~~183
Cash and cash equivalents and restricted cash at end of period	$	~~420~~385,~~953~~311	$	~~439~~380,~~815~~831
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6921,~~739~~984	$	6723,~~673~~006
Cash paid for income taxes	$	~~578~~480	$	~~188~~283
Non-cash investing and financing activities:
Building and improvements included in accounts payable and accrued expenses	$	4448,~~099~~771	$	5539,~~320~~982
Write-off of fully depreciated assets	~~23,058~~551		~~55,585~~847
Derivative instruments at fair values included in prepaid expenses and other assets	2516,~~578~~726		1812,~~457~~446
Conversion of operating partnership units to ESRT partner's capital	15,682		2,384
Derivative instruments at fair values included in accounts payable and accrued expenses	—		2,171
Disposal of land in connection with foreclosure	—		1,680
Conversion of operating partnership units to ESRT partner's capital	7,132		2,544
Extinguishment of debt in connection with property disposition	—		30,000

The accompanying notes are an integral part of these consolidated financial statements

Empire State Realty OP, L.P.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Description of Business and Organization

As used in these condensed consolidated financial statements, unless the context otherwise requires, “we,” “us,” “our,” and the “Company,” mean Empire State Realty OP, L.P. and its consolidated subsidiaries.

Empire State Realty OP, L.P. (the "Operating Partnership") is the entity through which Empire State Realty Trust, Inc. (“NYSE: ESRT”), a ~~New York City~~NYC-focused ~~real estate investment trust ("~~REIT~~"),~~ ~~conducts~~that ~~all~~owns ~~of its business~~ and ~~owns~~operates ~~(either directly or through subsidiaries) substantially all of its assets. We have four revenue drivers:~~ a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets., and the Observatory deck attraction in ESRT’s flagship Empire State Building – the “World’s Most Famous Building”, –conducts ~~also~~all ~~includes~~of its ~~Observatory~~business ~~Experience,~~and ~~Tripadvisor’s~~owns #1(either ~~United~~directly ~~States~~or ~~destination~~through ~~attraction~~subsidiaries) insubstantially all of its ~~2023~~assets. ~~Travelers’~~The ~~Choice~~Company ~~Best~~is ofa ~~the~~recognized ~~Best~~leader ~~Awards~~in ~~for~~energy ~~two~~efficiency ~~consecutive~~and ~~years~~indoor environmental quality.

As of ~~September~~March 3031, ~~2023~~2024, ESRT’s portfolio iswas comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units. Our office portfolio included 11 properties (including three long-term ground leasehold interests) encompassing approximately 8.6 million rentable square feet. Nine of these office properties are located in midtown Manhattan and encompass approximately 7.6 million rentable square feet, including the Empire State Building. The remaining two office properties encompass approximately 1.1 million rentable square feet and are located in Stamford, Connecticut, with immediate access to mass transportation. Additionally, we have entitled land adjacent to one of the Stamford office properties, that can support the development of aneither ~~approximately 0.4 million rentable square foot~~ office ~~building~~or ~~and~~residential ~~garage.~~per ~~Our~~local ~~retail portfolio included approximately 0~~zoning.~~7 million~~ ~~rentable square feet of retail space, predominantly located in Manhattan.~~ Our multifamily portfolio included 727 residential units in New York City~~, 721 of which are located in Manhattan~~.

We were organized as a Delaware limited partnership on November 28, 2011, and commenced operations upon completion of the initial public offering of ESRT’s Class A common stock and related formation transactions on October 7, 2013 (the "IPO"). ESRT's Class A common stock, par value $0.01 per share, is listed on the New York Stock Exchange under the symbol "ESRT." ESRT, as the sole general partner in our Company, has responsibility and discretion in the management and control of our Company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities, of our Company. As of ~~September~~March 3031, ~~2023~~2024, ESRT owned approximately 5960.91% of our operating partnership units.

2. Summary of Significant Accounting Policies

There have been no material changes to the summary of significant accounting policies included in the "Summary of Significant Accounting Policies" section in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (the “Annual Report”).

Basis of Quarterly Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments and eliminations (including intercompany balances and transactions), consisting of normal recurring adjustments, considered necessary for the fair presentation of the financial statements have been included.

The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the corresponding full years. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the financial statements for the year ended December 31, ~~2022~~2023 contained in our Annual Report. Our ~~observatory~~Observatory business is subject to ~~seasonality based on~~ tourism trends and the weather, and therefore does experience some seasonality. ~~Pre-pandemic~~For the year ended December 31, 2023, approximately ~~16.0~~17% ~~to 18.0%~~ of our annual ~~observatory~~Observatory revenue was realized in the first quarter, 26.0% ~~to 28.0%~~ was realized in the second quarter, ~~31.0~~29% ~~to 33.0%~~ was realized in the third quarter, and ~~23.0~~28% ~~to 25.0%~~ was realized in the fourth quarter. Our multifamily business experiences some seasonality based on general market trends in New York City – the winter months (November through January) are slower in terms of ~~leasing~~lease activity. We seek to mitigate this by staggering lease terms such that

lease expirations are matched with seasonal demand. We do not consider the balance of our business to be subject to material seasonal fluctuations.

We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members. For variable interest entities ("VIE"), we consolidate the entity if we are deemed to have a variable interest in the entity and through that interest we are deemed the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. AtWe ~~December~~had ~~31,~~no ~~2022,~~VIEs weas ~~were the primary beneficiary~~ of a variable interest in the intermediary entity which held title to 298 Mulberry, the multifamily asset acquired in December 2022. The intermediary entity was utilized to execute a like-kind exchange and subsequent to March 31, ~~2023,~~2024 ~~the like-kind exchange was completed~~ and ~~we took title to 298 Mulberry. Therefore, we had no VIEs at September~~December 3031, 2023.

We will assess the accounting treatment for each investment we may have in the future. This assessment will include a review of each entity’s organizational agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit. In situations where we or our partner could approve, among other things, the annual budget, or leases that cover more than a nominal amount of space relative to the total rentable space at each property, we would not consolidate the investment as we consider these to be substantive participation rights that result in shared power of the activities that would most significantly impact the performance and benefit of such joint venture investment.

A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the condensed consolidated balance sheets and in the condensed consolidated statements of operations by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests.

Accounting Estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to use estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Significant items subject to such estimates and assumptions include allocation of the purchase price of acquired real estate properties among tangible and intangible assets, determination of the useful life of real estate properties and other long-lived assets, valuation and impairment analysis of commercial real estate properties, ~~right~~goodwill, right-of -use assets and other long-lived and indefinite-lived assets, estimate of tenant expense reimbursements, valuation of the allowance for doubtful accounts, and valuation of derivative instruments, ground lease liabilities, senior unsecured notes, mortgage notes payable, unsecured ~~term~~revolving ~~loan~~credit and ~~revolving~~term ~~credit~~loan facilities, and equity-based compensation. These estimates are prepared using management’s best judgment, after considering past, current, and expected events and economic conditions. Actual results could differ from those estimates.

3. Acquisitions and Dispositions

Property Acquisitions

OnIn September ~~14,~~ 2023, we closed on the acquisition of a retail property in Williamsburg, Brooklyn, located on the corner of North 6th Street and Wythe Avenue for a purchase price of $26.4 million. The property has three retail tenants and six residential units, and was fully leased as of ~~September 30~~March 31, ~~2023~~2024. The ~~transaction was executed in accordance with a "1031 Exchange" under Section 1031 of the Internal Revenue Code of 1986, as amended. The~~ purchase price is the fair value at the date of acquisition.

The following table summarizes properties acquired during the three and twelve months ended March 31, 2024 and December 31, 2023, respectively (amounts in thousands):


						Intangibles
Property	Date Acquired	Land		Building and Improvements		Assets		Liabilities		Total*
Williamsburg Retail, Brooklyn	9/14/2023	$	4,851	$	20,936	$	1,573	$	(300)	$	27,060
*Includes total capitalized transaction costs of $0.7 million.

						Intangibles
Property	Date Acquired	Land		Building and Improvements		Assets		Liabilities		Total*
Williamsburg Retail, Brooklyn	9/14/2023	$	4,851	$	20,936	$	1,573	$	(300)	$	27,060
298 Mulberry Street, Manhattan	12/20/2022	$	40,935	$	69,508	$	5,300	$	(150)	$	115,593

In March 2024, we executed a buyout of our partner's 10% interest in two of our multifamily properties located at 561 10th Avenue and 345 East 94th Street in Manhattan for $14.2 million in cash and the assumption of $18.0 million of in-place

*Includes total capitalized transaction costs of $1.4 million.9

debt. As of March 31, 2024, we own 100% of the interests in these assets. As there was no change in control, we accounted for this acquisition as an equity transaction in accordance with Accounting Standards Codification 810-10 and no gain or loss was recognized.

Property Dispositions

The following table summarizes properties disposed of during the ~~nine~~three and twelve months ended ~~September 30~~March 31, ~~2023~~2024 and December 31, ~~2022~~2023, respectively (amounts in thousands):

Property	Date of Disposal	Sales Price		~~Gain on Disposition~~		Gain on Disposition
500 Mamaroneck Avenue, Harrison, New York*	4/5/2023	$	53,000	$	~~13,572~~	$	11,075
69-97 and 103-107 Main Street, Westport, Connecticut	2/1/2023	$	40,000	$	~~15,689~~	$	15,689
10 Bank Street, White Plains, New York	12/7/2022	$	42,000	$	6,818
*The gain is net of approximately $4.5 million of post-closing costs we accrued related to our commitment to reimburse the buyer for a lease that did not occur. We funded the buyer for these costs and we have no further obligations or contingencies related to this property.
383 Main Avenue, Norwalk, Connecticut**	4/1/2022	$	30,000	$	27,170

*The gain is net of approximately $2.0 million of estimated post-closing obligations related to contaminated soil remediation costs and our commitment to reimburse the buyer for a delay in rent commencement from a tenant impacted by the soil remediation efforts. Should this rent commencement be delayed beyond our current estimate, our maximum exposure to reimburse the buyer for such a delay, as limited by amounts held in escrow, is an incremental post-closing obligation of $3.6 million.

**We transferred the property, which was encumbered by a $30.0 million mortgage, back to the lender in a consensual foreclosure and recognized a non-cash gain upon the disposition.

4. Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Leasing costs	$	~~222~~230,~~272~~108	$	~~218~~224,~~707~~295
Acquired in-place lease value and deferred leasing costs	~~158~~146,~~518~~533		~~160~~158,~~683~~267
Acquired above-market leases	2422,~~430~~064		2723,~~833~~918
	405,220		407,223
	398,705		406,480
Less: accumulated amortization	(~~233~~228,~~132~~482)		(~~223~~236,~~246~~900)
Total deferred costs, net, excluding net deferred financing costs	$	~~172~~170,~~088~~223	$	~~183~~169,~~977~~580

At ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, $310.42 million and $52.09 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $5.8 million and $175.78 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$5.6 million and $19.8 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively. Amortization expense related to acquired lease intangibles was $1.53 million and $62.14 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$2.2 million and $10.6 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Acquired below-market ground leases	$	396,916	$	396,916
Less: accumulated amortization	(77,632)		(75,675)
Acquired below-market ground leases, net	$	319,284	$	321,241

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Acquired below-market ground leases	$	396,916	$	396,916
Acquired below-market leases	$	(51,927)	$	(55,155)
Less: accumulated amortization	~~(73~~39,~~717)~~129		~~(67~~41,~~843)~~405
Acquired below-market ground leases, net	$	323,199	$	329,073
Acquired below-market leases, net	$	(12,798)	$	(13,750)

	September 30, 2023		December 31, 2022
Acquired below-market leases	$	(55,186)	$	(64,656)
Less: accumulated amortization	40,483		46,807
Acquired below-market leases, net	$	(14,703)	$	(17,849)

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $0.5 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively.

~~Rental~~As ~~revenue~~of ~~related~~March 31, to2024 ~~the~~and ~~amortization~~December 31, of2023, ~~below-market~~we ~~leases,~~had ~~net~~goodwill of ~~above-market leases, was~~ $0491.65 million. ~~and~~Goodwill was allocated $1227.95 million ~~for~~to the ~~three~~Observatory ~~and~~reportable ~~nine~~segment ~~months ended September 30, 2023, respectively,~~ and $0264.70 million ~~and~~to ~~$4.1 million for~~ the ~~three~~real ~~and~~estate ~~nine~~reportable ~~months ended September 30, 2022, respectively~~segment.

As of September 30, 2023 and December 31, 2022, we had goodwill of $491.5 million. Goodwill was allocated $227.5 million to the observatory reportable segment and $264.0 million to the real estate reportable segment. 10

~~From~~We ~~the~~performed ~~quarter ended June 30, 2020 through~~ our annual goodwill testing in October ~~2022~~2023, where we bypassed the optional qualitative goodwill impairment assessment and proceeded directly to a quantitative assessment of the ~~observatory~~Observatory reportable segment and engaged a third-party valuation consulting firm to perform the valuation process. This was done in response to the temporary closure of our observatory due to the COVID-19 pandemic and subsequent slow increase in visitors due to continued pandemic-related restrictions impacting tourism and international travel. The quantitative analysis used a combination of the discounted cash flow method (a form of the income approach) utilizing Level 3 unobservable inputs and the guideline company method (a form of the market approach). Significant assumptions under the former included revenue and cost projections, weighted average cost of capital, long-term growth rate and income tax considerations while the latter included guideline company enterprise values, revenue multiples, EBITDA multiples and control premium rates. Our methodology to review goodwill impairment, which included a significant amount of judgment and estimates, provided a reasonable basis to determine whether impairment had occurred. ~~Each~~The quantitative analysis performed concluded the fair value of the reporting unit exceeds its carrying value. ~~Subsequent~~We toalso ~~our~~perform ~~last annual goodwill impairment test, we have performed~~ quarterly qualitative assessments and have not identified any events which would indicate, on a more likely than not basis, that the goodwill allocated to the reporting unit was impaired. Many of the factors employed in determining whether or not goodwill is impaired are outside of our control, and it is reasonably likely that assumptions and estimates will change in future periods. We will continue to assess the impairment of the ~~observatory~~Observatory reporting unit goodwill going forward.

5. Debt

Debt consisted of the following as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):


	Principal Balance				As of March 31, 2024
	March 31, 2024		December 31, 2023		Stated Rate		Effective Rate(1)		Maturity Date(2)

Fixed rate mortgage debt
Metro Center	$	79,425	$	80,070	3.59	%	3.67	%	11/5/2024
10 Union Square	50,000		50,000		3.70	%	3.97	%	4/1/2026
1542 Third Avenue	30,000		30,000		4.29	%	4.53	%	5/1/2027
First Stamford Place(3)	175,860		175,860		4.28	%	4.73	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	34,734		34,958		4.01	%	4.21	%	1/5/2028
250 West 57th Street	180,000		180,000		2.83	%	3.21	%	12/1/2030
1333 Broadway	160,000		160,000		4.21	%	4.29	%	2/5/2033
345 East 94th Street - Series A	43,600		43,600		70% of SOFR plus 0.95%		3.56	%	11/1/2030
345 East 94th Street - Series B	7,035		7,209		SOFR plus 2.24%		3.56	%	11/1/2030
561 10th Avenue - Series A	114,500		114,500		70% of SOFR plus 1.07%		3.85	%	11/1/2033
561 10th Avenue - Series B	15,375		15,801		SOFR plus 2.45%		3.85	%	11/1/2033
Total mortgage debt	890,529		891,998
Senior unsecured notes:(4)
Series A	100,000		100,000		3.93	%	3.96	%	3/27/2025
Series B	125,000		125,000		4.09	%	4.12	%	3/27/2027
Series C	125,000		125,000		4.18	%	4.21	%	3/27/2030
Series D	115,000		115,000		4.08	%	4.11	%	1/22/2028
Series E	160,000		160,000		4.26	%	4.27	%	3/22/2030
Series F	175,000		175,000		4.44	%	4.45	%	3/22/2033
Series G	100,000		100,000		3.61	%	4.89	%	3/17/2032
Series H	75,000		75,000		3.73	%	5.00	%	3/17/2035
Unsecured term loan facility (4)	175,000		175,000		SOFR plus 1.50%		4.51	%	12/31/2026
Unsecured term loan facility (4)	95,000		215,000		SOFR plus 1.50%		4.47	%	3/8/2029
Unsecured revolving credit facility (4)	120,000		—		SOFR plus 1.30%		4.03	%	3/8/2029
Total principal	2,255,529		2,256,998
Deferred financing costs, net	(9,834)		(9,488)

	Principal Balance				As of September 30, 2023
	September 30, 2023		December 31, 2022		Stated Rate		Effective Rate(1)		Maturity Date(2)
Mortgage debt
Metro Center	$	80,710	$	82,596	3.59	%	3.67	%	11/5/2024
10 Union Square	50,000		50,000		3.70	%	3.97	%	4/1/2026
1542 Third Avenue	30,000		30,000		4.29	%	4.53	%	5/1/2027
First Stamford Place(3)	176,359		178,823		4.28	%	4.73	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	35,179		35,831		4.01	%	4.21	%	1/5/2028
250 West 57th Street	180,000		180,000		2.83	%	3.21	%	12/1/2030
1333 Broadway	160,000		160,000		4.21	%	4.29	%	2/5/2033
345 East 94th Street - Series A	43,600		43,600		70.0% of SOFR plus 0.95%		3.56	%	11/1/2030
345 East 94th Street - Series B	7,378		7,865		SOFR plus 2.24%		3.56	%	11/1/2030
561 10th Avenue - Series A	114,500		114,500		70.0% of SOFR plus 1.07%		3.85	%	11/1/2033
561 10th Avenue - Series B	16,219		17,415		SOFR plus 2.45%		3.85	%	11/1/2033
Total mortgage debt	893,945		900,630
Senior unsecured notes:(4)
Series A	100,000		100,000		3.93	%	3.96	%	3/27/2025
Series B	125,000		125,000		4.09	%	4.12	%	3/27/2027
Series C	125,000		125,000		4.18	%	4.21	%	3/27/2030
Series D	115,000		115,000		4.08	%	4.11	%	1/22/2028
Series E	160,000		160,000		4.26	%	4.27	%	3/22/2030
Series F	175,000		175,000		4.44	%	4.45	%	3/22/2033
Series G	100,000		100,000		3.61	%	4.89	%	3/17/2032
Series H	75,000		75,000		3.73	%	5.00	%	3/17/2035
Unsecured term loan facility (4)	215,000		215,000		SOFR plus 1.20%		4.22	%	3/19/2025
Unsecured revolving credit facility (4)	—		—		SOFR plus 1.30%		—		3/31/2025
Unsecured term loan facility (4)	175,000		175,000		SOFR plus 1.50%		4.51	%	12/31/2026
Total principal	2,258,945		2,265,630
Deferred financing costs, net	(10,052)		(11,748)
Unamortized debt discount	(7,159)		(7,745)
Total	$	2,241,734	$	2,246,137


Unamortized debt discount	(6,769)		(6,964)
Total	$	2,238,926	$	2,240,546

______________

(1)The effective rate is the yield as of ~~September~~March 3031, ~~2023~~2024 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2)Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.

(3)Represents a $164 million mortgage loan bearing interest at 4.09% and a $1211.49 million loan bearing interest at 6.25%. In April 2024, we worked with the First Stamford Place mortgage lender to structure a cooperative consensual foreclosure, which is anticipated to be completed by June 30, 2024. Upon completion, this transaction is expected to eliminate a $175.9 million liability that matures in July 2027 from the balance sheet.

(4)At ~~September~~March 3031, ~~2023~~2024, we were in compliance with all debt covenants.

Principal Payments

Aggregate required principal payments at ~~September~~March 3031, ~~2023~~2024 are as follows (amounts in thousands):


Year	Amortization		Maturities		Total
2024	$	7,392	$	77,675	$	85,067
2025	6,893		100,000		106,893
2026	7,330		225,000		232,330
2027	6,461		319,000		325,461
2028	3,556		146,092		149,648
Thereafter	18,523		1,337,607		1,356,130
Total	$	50,155	$	2,205,374	$	2,255,529

Year	Amortization		Maturities		Total
2023	$	1,947	$	—	$	1,947
2024	8,861		77,675		86,536
2025	6,893		315,000		321,893
2026	7,330		225,000		232,330
2027	6,461		319,000		325,461
Thereafter	22,079		1,268,699		1,290,778
Total	$	53,571	$	2,205,374	$	2,258,945

Deferred Financing Costs

Deferred financing costs, net, consisted of the following at ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Financing costs

4352,~~473~~200

43,473

Less: accumulated amortization

(3032,~~020~~128)

(2631,~~753~~108)

Total deferred financing costs, net

1320,~~453~~072

1612,~~720~~365

Amortization expense related to deferred financing costs was $1.10 million and $31.31 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$1.2 million and $3.8 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively.

Unsecured Revolving Credit and Term Loan Facilities

On ~~August~~March 298, ~~2022~~2024, through our Operating Partnership, we entered into a ~~third~~second ~~amendment to our~~ amended and restated credit agreement ~~dated August 29, 2017~~ with Bank of America, N.A., as administrative agent and the other lenders party thereto, that amends and restates the amended and restated credit agreement, dated August 29, 2017 which governs our senior unsecured revolving credit facility and term loan facility (collectively, the “BofA Credit ~~Facility~~Facilities”). The BofA Credit ~~Facility~~Facilities isare incomprised ~~the initial maximum principal amount~~ of upa to $~~1.065~~620 ~~billion,~~million ~~which~~senior ~~consists~~unsecured ~~of an $850.0 million~~ revolving credit facility ~~that~~(the ~~matures~~“Revolving onCredit ~~March~~Facility”) ~~31, 2025,~~ and a $~~215.0~~95 million term loan facility ~~that~~(the ~~matures~~“BofA onTerm ~~March~~Loan ~~19, 2025~~Facility”). ~~The~~ ~~third~~We ~~amendment~~may ~~revised~~request ~~the~~that ~~terms of~~ the BofA Credit ~~Facility~~Facilities tobe ~~(i)~~increased ~~replace~~through ~~LIBOR~~one ~~with~~or ~~SOFR~~more ~~given~~increases in the ~~phase-out~~Revolving ofCredit ~~LIBOR~~Facility ~~and~~or ~~(ii)~~one ~~permit~~or ~~the~~more ~~addition~~increases ofin ~~multifamily~~the ~~assets~~BofA asTerm ~~Unencumbered~~Loan ~~Eligible~~Facility ~~Property~~or ~~(as~~the ~~defined~~addition ~~therein)~~of ~~and~~new ~~add~~pari apassu ~~capitalization~~term ~~rate~~loan tranches, for ~~such~~a ~~assets.~~maximum Asaggregate ofprincipal ~~September 30,~~amount ~~2023,~~under wethe ~~had~~second noamended ~~borrowings~~and ~~under~~restated ~~the~~credit ~~revolving~~agreement ~~credit~~not ~~facility~~to ~~and~~exceed $~~215~~1.05 ~~million under the term loan facility~~billion.

OnThe ~~August~~new ~~29,~~Revolving ~~2022,~~Credit weFacility ~~entered~~matures ~~into~~on ~~a second amendment to our credit agreement dated~~ March 198, ~~2020 with Wells Fargo Bank~~2029, ~~National~~inclusive ~~Association,~~of astwo ~~administrative~~six-month ~~agent,~~extension periods and replaced the ~~other~~existing ~~lenders~~revolving ~~party~~credit ~~thereto,~~facility ~~which~~that ~~governs~~was adue ~~senior~~to ~~unsecured~~mature ~~term~~in ~~loan~~March ~~facility (the “Wells Term Loan Facility”)~~2025. The ~~Wells~~new BofA Term Loan Facility ismatures inon ~~the~~March ~~original~~8, ~~principal~~2029, ~~amount~~inclusive of ~~$175.0 million~~two twelve-month extension periods and ~~matures~~replaced onthe ~~December~~existing ~~31,~~term ~~2026.~~loan ~~The~~facility ~~second~~that ~~amendment~~was ~~revised~~due ~~the~~to ~~terms~~mature ofin ~~the~~March ~~Wells~~2025. ~~Term~~Initial ~~Loan~~interest ~~Facility~~rates toon ~~(i)~~the ~~replace~~new ~~LIBOR~~BofA ~~with~~Credit ~~SOFR~~Facilities, ~~given~~which ~~the~~may ~~phase-out~~change ofbased ~~LIBOR~~on ~~and~~our ~~(ii)~~leverage ~~permit~~levels, ~~the~~are ~~addition~~SOFR ofplus ~~multifamily~~a ~~assets~~benchmark asadjustment ~~Unencumbered~~of ~~Eligible~~10.0 ~~Property~~basis points (as"adjusted ~~defined therein~~SOFR") ~~and~~plus ~~add~~130 abasis ~~capitalization~~points ~~rate~~ for ~~such~~any ~~assets.~~drawn Weportion ~~may~~of ~~request~~ the ~~Wells~~Revolving ~~Term~~Credit ~~Loan~~ Facility beand ~~increased~~adjusted ~~through~~SOFR ~~one~~plus or150 ~~more~~basis ~~increases~~points orfor the ~~addition~~BofA ofTerm ~~new~~Loan ~~pari~~Facility. ~~passu~~In ~~term loan tranches~~addition, ~~for~~the aBofA ~~maximum~~Credit ~~aggregate~~Facilities ~~principal~~have ~~amount~~a ~~not~~sustainability-linked topricing ~~exceed~~mechanism ~~$225 million.~~that Asreduces ofthe ~~September 30,~~borrowing ~~2023,~~spread ~~our~~if ~~borrowings~~certain ~~amounted~~benchmarks toare ~~$175.0 million under the Wells Term Loan Facility.~~

The terms of both the BofA Credit Facility and the Wells Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. Both facilities also require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreements governing both facilities also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control. As of September 30, 2023, we were in compliance with these covenants.12

14achieved each year. As of March 31, 2024, we had $120.0 million borrowings drawn on the Revolving Credit Facility and $95.0 million under the BofA Term Loan Facility.

On March 13, 2024, through our Operating Partnership, we entered into a third amendment to our credit agreement dated March 19, 2020 with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which governs a senior unsecured term loan facility (the “Wells Term Loan Facility”). The Wells Term Loan Facility is in the original principal amount of $175.0 million and matures on December 31, 2026. The third amendment provides for, among other things, certain conforming changes to the BofA Credit Facilities agreement, including increases to the capitalization rate for certain of our properties. No other changes were made to the amount of the commitments, the maturity date of the outstanding loans or the covenants. We may request the Wells Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $225 million. As of March 31, 2024, our borrowings amounted to $175.0 million under the Wells Term Loan Facility.

The terms of both the BofA Credit Facilities and the Wells Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. Both facilities also require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreements governing both facilities also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control. As of March 31, 2024, we were in compliance with these covenants.

Senior Unsecured Notes

The terms of the senior unsecured notes include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. ItThe terms also ~~requires~~require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreements also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification. As of ~~September~~March 3031, ~~2023~~2024, we were in compliance with these covenants.

On April 10, 2024, we entered into a Note Purchase Agreement with the purchasers named therein (the “Purchase Agreement”) in connection with a private placement of our Series I-K green guaranteed senior unsecured notes (the “Notes”). Under the Purchase Agreement, we will issue and sell $225 million aggregate principal amount of Notes, consisting of (a) $155 million aggregate principal amount of 7.20% Series I Green Guaranteed Senior Notes due June 17, 2029, (b) $45 million aggregate principal amount of 7.32% Series J Green Guaranteed Senior Notes due June 17, 2031 and (c) $25 million aggregate principal amount of 7.41% Series K Green Guaranteed Senior Notes due June 17, 2034. The sale and purchase of the Notes is scheduled to be held on June 17, 2024, subject to customary closing conditions. The issue price for the Notes is 100% of the aggregate principal amount thereof. Pursuant to the terms of the Purchase Agreement, we may prepay all or a portion of the Notes upon notice to the holders at a price equal to 100% of the principal amount so prepaid plus a make-whole premium as set forth in the Purchase Agreement. The Purchase Agreement contains customary covenants and customary events of default similar to those in our Series A-H senior unsecured notes.

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):

	September 30, 2023		December 31, 2022
Accrued capital expenditures	$	44,099	$	44,293
Accounts payable and accrued expenses	36,249		32,927
Accrued interest payable	2,951		3,509
Total accounts payable and accrued expenses	$	83,299	$	80,729


	March 31, 2024		December 31, 2023
Accrued capital expenditures	$	48,771	$	51,815
Accounts payable and accrued expenses	37,674		44,169
Interest rate swap agreements liability	—		85
Accrued interest payable	4,560		3,687
Total accounts payable and accrued expenses	$	91,005	$	99,756

7. Financial Instruments and Fair Values

Derivative Financial Instruments

We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements, and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations.

We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of ~~September~~March 3031, ~~2023~~2024, we did not have derivatives in a net liability position.

As of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, we had interest rate swaps and caps with an aggregate notional value of $~~573~~586.63 million and $~~574~~573.82 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of ~~September~~March ~~30, 2023 and December~~ 31, ~~2022~~2024, the fair value of our derivative instruments in an asset position amounted to $2516.67 million, which is included in prepaid expenses and ~~$17~~other assets on the condensed consolidated balance sheet.9 As of December ~~million~~31, ~~respectively~~2023, the fair value of our derivative instruments amounted to $11.8 million which is included in prepaid expenses and other assets, and ($0.1 million) which is included in accounts payable and accrued expenses on the condensed consolidated balance ~~sheets~~sheet. These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities. Interest rate caps not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements.

As of ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $75.39 million and $~~10.~~(6.7) million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~a net unrealized gain of $21.0 million and $46.8 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $86.8 million net gain of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months.

1514

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of March 31, 2024 and December 31, 2023 (amounts in thousands):

							September 30, 2023				December 31, 2022
							March 31, 2024				December 31, 2023
Derivative	Notional Amount		Receive Rate	Pay Rate	Effective Date	Expiration Date	Asset		Liability		Asset		Liability
Interest rate swap	$	36,820	70% of 1 Month SOFR	2.5000%	December 1, 2021	November 1, 2030	$	~~1,281~~659	$	—	$	~~256~~64	$	—
Interest rate swap	103,790		70% of 1 Month SOFR	2.5000%	December 1, 2021	November 1, 2033	41,~~279~~898		—		~~365~~—		—(85)
Interest rate swap	10,710		70% of 1 Month SOFR	1.7570%	December 1, 2021	November 1, 2033	~~941~~716		—		~~643~~546		—
Interest rate swap	1615,~~356~~518		1 Month SOFR	2.2540%	December 1, 2021	November 1, 2030	~~1,261~~951		—		~~1,070~~782		—
Interest rate cap	6,780		70% of 1 Month SOFR	4.5000%	December 1, 2021	October 1, 2024	—		—		8—		—
Interest rate cap	9,188		1 Month SOFR	5.5000%	December 1, 2021	October 1, 2024	222		—		264		—
Interest rate swap	175,000		SOFR Compound	2.5620%	August 31, 2022	December 31, 2026	107,~~216~~633		—		85,~~040~~637		—
Interest rate swap	107,500		SOFR Compound	2.6260%	August 19, 2022	March 19, 2025	32,~~799~~364		—		32,~~766~~384		—
Interest rate swap	107,500		SOFR OIS Compound	2.6280%	August 19, 2022	March 19, 2025	32,~~801~~363		—		32,~~762~~383		—
							$	25,600	$	—	$	17,936	$	—
Interest rate cap	6,780		70% of 1 Month SOFR	4.5000%	October 1, 2024	November 1, 2030	44		—		—		—
Interest rate cap	6,676		1 Month SOFR	5.5000%	October 1, 2024	November 1, 2030	96		—		—		—
							$	16,726	$	—	$	11,800	$	(85)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 (amounts in thousands):

	~~Three Months Ended~~		Three Months Ended		~~Nine Months Ended~~
Effects of Cash Flow Hedges	~~September 30, 2023~~		~~September 30, 2022~~		~~September~~March 3031, ~~2023~~2024		~~September~~March 3031, ~~2022~~2023
Amount of gain recognized in other comprehensive income (loss)	$	9,525	$	19,588	$	16,058	$	39,407
Amount of gain (loss) recognized in other comprehensive income (loss)					$	8,198	$	(5,402)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	2,275		(1,392)		5,429		(7,428)
Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense					2,324		1,272

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 (amounts in thousands):

	~~Three Months Ended~~		Three Months Ended		~~Nine Months Ended~~
Effects of Cash Flow Hedges	~~September 30, 2023~~		~~September 30, 2022~~		~~September~~March 3031, ~~2023~~2024		~~September~~March 3031, ~~2022~~2023
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	~~(25,382)~~	$	~~(25,516)~~	$	(7625,~~091~~128)	$	(7525,~~572~~304)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	2,275		(1,392)		5,429		(7,428)
Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense					2,324		1,272

Fair Valuation

The estimated fair values at ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value

1615

our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all our derivatives were classified as Level 2 of the fair value hierarchy.

The fair values of our mortgage notes payable, senior unsecured notes (Series A, B, C, D, E, F, G and H), unsecured term loan facilities and unsecured revolving credit facility which are determined using Level 3 inputs are estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.

The following tables summarize the carrying and estimated fair values of our financial instruments as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023 (amounts in thousands):

	September 30, 2023
	March 31, 2024
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in prepaid expenses and other assets	$	25,578	$	25,578	$	—	$	25,578	$	—
Interest rate swaps and caps included in prepaid expenses and other assets	$	16,726	$	16,726	$	—	$	16,726	$	—
Mortgage notes payable	~~878~~876,~~757~~497		~~752~~765,~~874~~660		—		—		~~752~~765,~~874~~660
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,~~819~~926		~~848~~872,~~074~~714		—		—		~~848~~872,~~074~~714
Unsecured term loan facilities	~~389~~268,~~158~~503		~~390~~270,000		—		—		~~390~~270,000
Unsecured revolving credit facility	120,000		120,000		—		—		120,000

	December 31, 2022
	December 31, 2023
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in prepaid expenses and other assets	$	17,936	$	17,936	$	—	$	17,936	$	—
Interest rate swaps and caps included in prepaid expenses and other assets	$	11,800	$	11,800	$	—	$	11,800	$	—
Mortgage notes payable	883,705		783,648		—		—		783,648
Interest rate swaps included in accounts payable and accrued expenses	85		85		—		85		—
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,659		865,292		—		—		865,292
Mortgage notes payable	877,388		774,280		—		—		774,280
Unsecured term loan facilities	388,773		390,000		—		—		390,000
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,872		882,242		—		—		882,242
Unsecured term loan facilities	389,286		390,000		—		—		390,000

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

8. Leases

Lessor

We lease various spaces to tenants over terms ranging from one to 2231 years. Certain leases have renewal options for additional terms. The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation. Operating expense reimbursements are reflected in our ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 condensed consolidated statements of operations as rental revenue.

Rental revenue includes fixed and variable payments. Fixed payments primarily relate to base rent and variable payments primarily relate to tenant expense reimbursements for certain property operating costs. The components of rental revenue for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 are as follows (amounts in thousands):

	Three Months Ended				Nine Months Ended
Rental revenue	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Fixed payments	$	132,862	$	131,800	$	395,744	$	399,995
Variable payments	18,596		16,490		50,408		45,148
Total rental revenue	$	151,458	$	148,290	$	446,152	$	445,143


	Three Months Ended
Rental revenue		March 31, 2024		March 31, 2023
Fixed payments		$	136,353	$	124,564
Variable payments		17,529		15,527
Total rental revenue		$	153,882	$	140,091

As of ~~September~~March 3031, ~~2023~~2024, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2040 (amounts in thousands):

Remainder of 2023	$	124,805
Remainder of 2024	$	387,079
2024	510,232
2025	520,046
2025	492,160
2026	473,910
2026	446,677
2027	452,849
2027	426,876
2028	413,440
Thereafter	1,~~997~~893,~~898~~377
	$	34,~~998~~140,~~648~~701

The above future minimum lease payments exclude tenant recoveries and the net accretion of above-market leases and below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised.

Refer to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 in the section "Financial Statements - Note 8. Leases" for prior disclosures related to the Signature Bank and First Republic Bank leases.

Lessee

We determine if an arrangement is a lease at inception. Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $28.54 million and lease liabilities of $28.54 million in our condensed consolidated balance sheets as of ~~September~~March 3031, ~~2023~~2024. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

The ground leases are due to expire between the years 2050 and 2077, inclusive of extension options, and have no variable payments or residual value guarantees. As our leases do not provide an implicit rate, we determined our incremental borrowing rate based on information available at the date of adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), in determining the present value of lease payments. The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of ~~September~~March 3031, ~~2023~~2024 was 4.5%. Rent expense for lease payments related to our operating leases is recognized on a straight-line basis over the non-cancellable term of the leases. The weighted average remaining lease term as of ~~September~~March 3031, ~~2023~~2024 was 46.72 years.

As of ~~September~~March 3031, ~~2023~~2024, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2023	$	380
Remainder of 2024	$	1,139
2024	1,518
2025	1,518
2026	1,503
2027	1,482
Thereafter	62,277
2028	1,482
Total undiscounted cash flows	68,678
Thereafter	60,794
Present value discount	(40,182)
Total undiscounted cash flows	67,918
Ground lease liabilities	$	28,496
Present value discount	(39,540)
Ground lease liabilities	$	28,378

9. Commitments and Contingencies

Legal Proceedings

18Except as described below, as of March 31, 2024, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants. We believe that the costs and related liabilities, if any, which may result from such actions will not materially affect our condensed consolidated financial position, operating results or liquidity.

~~Except~~As aspreviously ~~described below~~disclosed, asin ofOctober ~~September 30~~2014, ~~2023,~~12 weformer ~~were~~investors ~~not~~(the ~~involved~~"Claimants") in ~~any~~Empire ~~material~~State ~~litigation~~Building Associates L.L.C. (“ESBA”), ~~nor~~which, prior to ~~our~~the ~~knowledge~~IPO, ~~was~~owned ~~any~~the ~~material~~fee ~~litigation~~title ~~threatened~~to the Empire State Building, filed an arbitration with the American Arbitration Association against usPeter orL. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our ~~properties~~subsidiary ESRT MH Holdings LLC, ~~other~~the ~~than~~former ~~routine~~supervisor ~~litigation~~of ~~arising~~ESBA, (the "Respondents"). The statement of claim (also filed later in federal court in New York for the ~~ordinary~~expressed ~~course~~purpose of ~~business~~tolling ~~such~~the asstatute ~~disputes~~of limitations) alleged breach of fiduciary duty and related claims in connection with ~~tenants~~the IPO and formation transactions and sought monetary damages and declaratory relief. WeClaimants ~~believe~~had opted out of a prior class action bringing similar claims that were settled with court approval. Respondents filed an answer and counterclaims. In March 2015, the ~~costs~~federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings started in May 2016 and ~~related~~concluded ~~liabilities~~in August 2018. On August 26, if2020, ~~any~~the arbitration panel issued an award that denied all Claimants’ claims with one exception, on which ~~may~~it ~~result~~awarded ~~from~~the ~~such~~Claimants ~~actions~~approximately ~~will~~$1.2 ~~not~~million, ~~materially~~inclusive ~~affect~~of ~~our~~seven ~~condensed~~years ~~consolidated~~of ~~financial~~interest ~~position~~through October 2, ~~operating~~2020. ~~results~~This oramount ~~liquidity~~was recorded as an IPO litigation expense in the consolidated statements of operations for the year ended December 31, 2020.

As previously disclosed, in October 2014, 12 former investors (the "Claimants") in Empire State Building Associates L.L.C. (“ESBA”), which, prior to the IPO, owned the fee title to the Empire State Building, filed an arbitration claim with the American Arbitration Association against Peter L. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our subsidiary ESRT MH Holdings LLC, the former supervisor of ESBA (the "Respondents~~").~~ The Statement of Claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleged breach of fiduciary duty and related claims in connection with the IPO and formation transactions and sought monetary damages and declaratory relief. The Claimants had opted out of a prior class action bringing similar claims that were settled with court approval. The Respondents filed an answer and counterclaims. In March 2015, the federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings started in May 2016 and concluded in August 2018. On August 26, 2020, the arbitration panel issued an award that denied all Claimants’ claims with one exception, on which it awarded the Claimants approximately $1.2 million, inclusive of seven years of interest through October 2, 2020. This amount was recorded as an IPO litigation expense in the consolidated statements of operations for the year ended December 31, 2020. The Respondents believe that such award in favor of the Claimants is entirely without merit and, ~~in an action filed in the United States District Court for the Southern District of New York,~~ sought to vacate that portion of the award. On ~~September~~July 2731, ~~2021~~2023, the New York State court denied the Respondents'’ ~~motion~~petition to vacate ~~and~~in ~~entered~~part ~~judgement~~and inconfirmed the ~~aforementioned amount, inclusive of accumulated interest~~award. ~~The Respondents appealed that ruling.~~ On ~~May~~January 1022, ~~2022~~2024, ~~the~~that ~~Respondents~~court ~~moved~~entered ~~to dismiss the appeal and~~ judgment onin ~~the~~favor ~~grounds that a recent decision~~ of the ~~United States Supreme Court held that the federal courts have no subject matter jurisdiction over the case. The~~ Claimants ~~opposed~~(save ~~the~~for ~~motion.~~one ~~On April 20~~Claimant, ~~2023,~~whose ~~the federal appeals court granted the motion and the federal court action challenging the award was dismissed. On April 21, 2023, the Respondents filed a~~ petition to ~~vacate~~confirm inis ~~part~~still ~~and~~pending ~~otherwise confirm~~ in New York ~~State~~state court.) Onin ~~April~~an ~~28,~~amount ~~2023, all but one~~ of ~~the~~approximately ~~Claimants filed a motion to confirm in that same court~~$1. ~~On July 31~~26 million, ~~2023,~~inclusive ~~the~~of ~~New York State court denied the Respondents’ petition to vacate in part and confirmed the award~~interest. The Respondents believe ~~that~~those ~~ruling~~rulings isare incorrect and have ~~filed~~appealed ~~an appeal, which is pending~~them. OnIn ~~August 4~~addition, ~~2023,~~certain ~~one~~of ~~final~~the ~~Claimant~~Claimants ~~who had not filed a petition to confirm~~ in ~~New~~the ~~York~~federal ~~State~~ court ~~did~~action ~~so.~~brought Onto ~~September~~toll ~~14, 2023,~~ the ~~Respondents~~statute ~~filed an opposition to that petition, which is pending. In addition, certain~~ of ~~the~~limitations ~~Claimants~~and ~~in the federal court action~~ sought to pursue claims in that case against the Respondents. ~~The~~ Respondents believe that any such claims are meritless. The magistrate judge assigned to the action has issued a Report and Recommendation rejecting the Claimants’ claims; the district judge will decide whether to adopt the Report and Recommendation.

Pursuant to indemnification agreements which were made with our directors, executive officers and chairman emeritus as part of our formation transactions, Anthony E. Malkin, Peter L. Malkin and Thomas N. Keltner, Jr., ~~our former general counsel,~~ have defense and indemnity rights from us with respect to this arbitration.

Unfunded Capital Expenditures

At ~~September~~March 3031, ~~2023~~2024, we estimate that we will incur approximately $~~139~~125.32 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements. We expect to fund these capital expenditures with operating cash flow, ~~additional property level mortgage financings, our unsecured credit facility,~~ cash on hand and other borrowings. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion.

Concentration of Credit Risk

Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, tenant and other receivables and deferred rent receivables. At ~~September~~March 3031, ~~2023~~2024, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the ~~FDIC~~Federal Deposit Insurance Corporation.

Asset Retirement Obligations

We are required to accrue costs that we are legally obligated to incur on retirement of our properties which result from acquisition, construction, development and/or normal operation of such properties. Retirement includes sale, abandonment or disposal of a property. Under that standard, a conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control and a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties. As of September 30, 2023, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and

1918

containing building materials in certain of our properties. As of March 31, 2024, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates. As such, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation. However, ongoing asbestos abatement, maintenance programs and other required documentation are carried out as required and related costs are expensed as incurred.

Other Environmental Matters

~~Certain~~Under ofvarious ~~our~~federal, ~~properties~~state ~~have~~and/or ~~been~~local ~~inspected~~laws, ~~for~~ordinances ~~soil~~and ~~contamination~~regulations, ~~due~~as toa ~~pollutants~~current or former owner or operator of real property, ~~which~~we may ~~have~~be ~~occurred~~liable ~~prior~~for tocosts ~~our~~and ~~ownership~~damages ofresulting ~~these~~from ~~properties~~the presence or ~~subsequently~~release inof ~~connection~~hazardous ~~with~~substances, ~~its~~waste, ~~development and/~~or ~~its~~petroleum ~~use.~~products ~~Required~~at, ~~remediation~~on, toin, under or from such ~~properties~~property, ~~has~~including ~~been~~costs ~~completed~~for investigation or remediation, ~~other~~natural ~~than~~resource ~~our~~damages, ~~post~~or third-~~closing~~party ~~obligations~~liability for ~~remediation~~personal atinjury ~~our~~or ~~previously~~property ~~owned~~damage. ~~Westport~~These ~~retail~~laws ~~assets,~~often asimpose ~~discussed~~liability inwithout ~~more~~regard ~~detail~~to inwhether ~~our~~the ~~Annual~~owner ~~Report~~or operator knew of, ~~and~~or atwas ~~our~~responsible ~~previously~~for, ~~owned~~the ~~500~~presence ~~Mamaroneck~~or ~~property~~release asof ~~discussed~~such inmaterials, ~~“Financial~~and ~~Statements~~the -liability ~~Note~~may 3.be ~~Acquisitions~~joint and ~~Dispositions~~several.” AsSome of ~~September 30,~~our ~~2023,~~properties ~~with~~have ~~the~~been ~~exception~~or ofmay ~~these~~be ~~three~~impacted ~~assets,~~by ~~management~~contamination ~~believes~~arising ~~that~~from ~~there~~current ~~are~~or noprior ~~obligations~~uses ~~related~~of tothe ~~environmental~~property ~~remediation~~or ~~other~~adjacent ~~than~~properties ~~maintaining~~for ~~the~~commercial, ~~affected~~industrial ~~sites~~or inother ~~conformity~~purposes. ~~with~~Such ~~the~~contamination ~~relevant~~may ~~authority’s~~arise ~~mandates~~from ~~and~~spills ~~filing~~of ~~the~~petroleum ~~required~~or ~~documents. All~~hazardous ~~such~~substances ~~maintenance~~or ~~costs~~releases ~~are~~from ~~expensed~~tanks asused ~~incurred~~to store such materials. We ~~expect~~also ~~that~~may ~~resolution~~be ofliable for the ~~environmental~~costs ~~matters~~of ~~relating~~remediating tocontamination ~~the~~at ~~above~~off-site ~~will~~disposal ~~not~~or ~~have~~treatment afacilities ~~material~~when ~~impact~~we onarrange ~~our~~for ~~business,~~disposal ~~assets,~~or ~~consolidated~~treatment ~~financial~~of ~~condition~~hazardous substances at such facilities, ~~results~~regardless of ~~operations~~whether orwe ~~liquidity.~~comply ~~However,~~with weenvironmental ~~cannot~~laws bein ~~certain~~doing ~~that~~so. weThe ~~have~~presence ~~identified~~of ~~all~~contamination ~~environmental~~or ~~liabilities~~the atfailure to remediate contamination on our properties, ~~that~~may ~~all~~adversely ~~necessary~~affect ~~remediation~~our ~~actions~~ability ~~have~~to ~~been~~attract and/or ~~will~~retain betenants, ~~undertaken~~and at our ~~properties~~ability to develop or ~~that~~sell weor ~~will~~borrow beagainst ~~indemnified~~those properties. In addition to potential liability for cleanup costs, inprivate ~~full~~plaintiffs ormay atbring ~~all~~claims for personal injury, property damage or for similar reasons. Environmental laws also may create liens on contaminated sites in favor of the ~~event~~government ~~that~~for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental ~~liabilities~~laws ~~arise~~may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property.

Some of our properties are adjacent to or near other properties which are used for industrial or commercial purposes or have contained or currently contain underground storage tanks used to store petroleum products or other hazardous or toxic substances. Releases from these properties could impact our properties. In addition, some of our properties have previously been used by former owners or tenants for commercial or industrial activities, e.g., gas stations and dry cleaners, and a portion of the Metro Tower site is currently used for automobile parking and was formerly leased to a fueling facility that may release petroleum products or other hazardous or toxic substances at such properties or to surrounding properties. While certain properties contain or contained uses that could have or have impacted our properties, we are not aware of any liabilities related to environmental contamination that we believe will have a material adverse effect on our operations.

We have post-closing obligations related to the 69-97 and 103-107 Main Street, Westport, Connecticut properties that we sold in February 2023 to (i) close out a voluntary remediation program at 69-97 Main Street to address residual impacts of prior presence of underground storage tanks and (ii) comply with a consent order issued by the Connecticut Department of Environmental Protection to investigate soil conditions at 103-107 Main Street. We believe any expenses incurred to close out and comply with the remediation program and consent order, respectively, will be immaterial to the results of our operations.

In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations. Noncompliance with these laws and regulations could subject us or our tenants to liability. These liabilities could affect a tenant’s ability to make rental payments to us. Moreover, changes in laws could increase the potential costs of compliance with such laws and regulations or increase liability for noncompliance. This may result in significant unanticipated expenditures. We sometimes require our tenants to comply with environmental and health and safety laws and regulations and to indemnify us for any related liabilities in our leases with them. But in the event of the bankruptcy or inability of any of our tenants to satisfy such obligations, we may be required to satisfy such obligations. We are not presently aware of any instances of material non-compliance with environmental or health and safety laws or regulations at our properties, and we believe that we and/or our tenants have all material permits and approvals necessary under current laws and regulations to operate our properties.

In addition, we may become subject to new compliance requirements and/or new costs or taxes associated with natural resource or energy usage and related emissions (such as a carbon tax), which could increase our operating costs. In particular, as the owner of large commercial buildings in New York City, we are subject to Local Law 97 passed by the New York City Council in April 2019, which for each such building establishes annual limits for greenhouse gas emissions, requires yearly emissions reports beginning in May 2025, and imposes penalties for emissions above such limits. Based upon our present understanding of the law and calculations related thereto, we expect to pay no fine on any building in our commercial portfolio in the 2024-2029 first period of enforcement.

As the owner or operator of real property, we may also incur liability based on various building conditions. For example, environmental site assessments and investigations have identified asbestos or asbestos-containing material ("ACM") in certain of our properties, and it is possible that other properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained ACM. Environmental and health and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with those requirements. These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be disturbed during maintenance, redevelopment or demolition of a building, potentially resulting in substantial costs. In addition, we may be subject to liability for personal injury or property damage sustained as a result of releases of ACM into the environment. We are not presently aware of any material liabilities related to building conditions, including any instances of material non-compliance with asbestos requirements or any material liabilities related to asbestos.

Our properties may contain or develop harmful mold or suffer from other indoor air quality issues, which could lead to liability for adverse health effects or property damage or costs for remediation. When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at our properties.

As of March 31, 2024, with the exception of the Westport assets, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents. All such maintenance costs are expensed as incurred. However, we cannot be certain that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that such environmental liabilities arise.

Insurance Coverage

We carry insurance coverage on our properties of types and in amounts with deductibles that we believe are in line with coverage customarily obtained by owners of similar properties.

10. Capital

As of ~~September~~March 3031, ~~2023~~2024, there were ~~161~~163,~~346~~815,~~829~~629 shares of Class A common stock, ~~986~~982,~~884~~689 shares of Class B common stock and ~~108~~109,~~617~~217,~~764~~835 operating partnership units outstanding. The controlling interest of 5960.91% is owned by ESRT. The other 4039.19% ~~noncontrolling~~non-controlling interest in the OP is diversified among various limited partners, some of whom include Company directors, senior management and employees. ESRT has two classes of common stock as a means to give its OP Unit holders voting rights in the public company that correspond to their economic interest in the combined entity. A one-time option was created at our formation transactions for any pre-IPO OP Unit holder to exchange one OP Unit out of every 50 OP Units they owned for one ESRT Class B share, and such ESRT Class B share carries 50 votes per share.

On May 16, 2019, our shareholders approved the Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan (the “2019 Plan”) and replaced the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, the "Plans"). The 2019 Plan provides for grants to directors, employees and consultants of ESRT and the Operating Partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards. An aggregate of approximately 11.0 million shares of ESRT common stock are authorized for issuance under awards granted pursuant to the 2019 Plan. We will not issue any new equity awards under the 2013 Plan. The shares of ESRT Class A common stock underlying any awards under the Plans that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. Shares tendered or held back upon exercise of a stock option or settlement of an award under the Plans to cover the exercise price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. In addition, shares of ESRT Class A common stock repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.

Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Plans, reducing the availability for other equity awards on a one-for-one basis.

The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified capital events, and any increase in valuation from the time of one such event to the next such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into Series PR operating partnership units on a one-for-one basis.

LTIP units subject to time-based vesting, whether vested or not, receive per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock. Market and performance-based LTIPs receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors authorized the repurchase of up to $500 million of ESRT Class A common stock and our Series ES, Series 250 and Series 60 operating partnership units from January 1, 2024 through December 31, 2025. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT's and our discretion without prior notice. As of March 31, 2024, we had $500.0 million remaining of the authorized repurchase amount. There were no repurchases of equity securities during the three months ended March 31, 2024.

ESRT's Board of Directors authorized the repurchase of up to $500 million of ESRT Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units from January 1, 2022 through December 31, 2023. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice. 20

Private Perpetual Preferred Units

As of ~~September~~March 3031, ~~2023~~2024, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding. The Series 2019 Preferred Units have a liquidation preference of $13.52 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.70 per unit payable in arrears on a quarterly basis. The Series 2014 Preferred Units which have a liquidation preference of $16.62 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.60 per unit payable in arrears on a quarterly basis. Both series are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events.

Distributions

Total distributions paid to OP unitholders were $9.5 million and $278.67 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$9.6 million and $29.1 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively. Total distributions paid to preferred unitholders were $1.1 million and $31.21 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$1.1 million and $3.2 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively.

Incentive and Share-Based Compensation

On May 16, 2019, the Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan (the “2019 Plan”) was approved by our shareholders. The ~~Plans~~2019 ~~provide~~Plan provides for grants to directors, employees and consultants ~~consisting~~ of ~~stock~~ESRT and the Operating Partnership, including options, restricted stock, ~~dividend~~restricted ~~equivalents~~stock units, stock ~~payments~~appreciation rights, performance ~~shares~~awards, ~~LTIP~~dividend ~~units,~~equivalents ~~stock~~and ~~appreciation~~other ~~rights~~equity-based awards and ~~other~~replaced ~~incentive~~the ~~awards~~First Amended and Restated Empire State Realty Trust, Inc. An ~~aggregate~~and ofEmpire 11State Realty OP, L.0P. ~~million~~2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, the "Plans"). The shares of ESRT Class A common stock isunderlying ~~authorized~~any awards under the Plans that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under ~~awards~~the ~~granted~~2019 ~~pursuant~~Plan. Shares tendered or held back upon exercise of a stock option or settlement of an award under the Plans to cover the ~~2019~~exercise ~~Plan,~~price or tax withholding and asshares subject to a stock appreciation right that are not issued in connection with the stock settlement of ~~September 30,~~the ~~2023~~stock appreciation right upon exercise thereof, 4will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.2 ~~million~~In addition, shares of ESRT Class A common stock ~~remain~~repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for ~~future~~ issuance. under the 2019 Plan.

An ~~During~~aggregate ~~July~~of ~~2023,~~approximately we11.0 million ~~granted~~shares ~~our~~of ~~two~~ESRT ~~new~~common ~~directors,~~stock ~~Christina~~was ~~Van~~authorized ~~Tassell~~for ~~and~~issuance ~~Hannah~~under ~~Yang,~~awards agranted ~~total~~pursuant ~~of 27,000 LTIP units which are subject~~ to ~~time-based~~the ~~vesting~~2019 ~~with~~Plan, aand ~~combined~~as ~~fair market value~~ of ~~$0.2~~March ~~million. One-fourth of the units will vest on May 12~~31, 2024, ~~and~~1.0 ~~the~~million ~~remainder~~shares ~~shall~~of ~~vest~~common instock ~~substantially~~remain ~~equal~~available ~~installments on each subsequent anniversary~~ for afuture ~~period of three years thereafter~~issuance.

~~Share~~Long-~~based~~term ~~compensation~~incentive ~~for~~plan ~~time-based~~("LTIP") ~~equity~~units ~~awards~~are isa ~~measured~~special atclass ~~the fair value~~ of ~~the~~partnership ~~award~~interests. onEach ~~the~~LTIP ~~date~~unit ofawarded ~~grant~~will ~~and~~be ~~recognized~~deemed asequivalent to an ~~expense~~award ~~on a straight-line basis over the shorter~~ of ~~(i)~~one ~~the~~share ~~stated vesting period, which is generally three, four or five years, or (ii) the period from the date~~ of ~~grant~~ESRT tostock ~~the~~under ~~date~~ the ~~employee becomes retirement eligible~~Plans, ~~which~~reducing ~~may occur upon grant. An employee is retirement eligible when~~ the ~~employee~~availability ~~attains~~for ~~the~~other ~~(i)~~equity ~~age~~awards ofon 65a one-for-one ~~awards~~basis. ~~granted~~The investing ~~2020~~period ~~and after and age of 60~~ for ~~awards~~LTIP ~~granted~~units, ~~before~~if ~~2020~~any, ~~and~~will ~~(ii)~~be ~~the~~determined ~~date~~at ~~on which~~ the ~~employee~~time ~~has~~of ~~first~~issuance. ~~completed~~Under ~~ten~~the ~~years~~terms of ~~continuous~~the ~~service~~LTIP ~~with~~units, uswe orwill ~~our~~revalue ~~affiliates. Share-based compensation~~ for ~~market-based~~tax ~~equity~~purposes ~~awards~~its ~~and~~assets ~~performance-based~~upon ~~equity~~the ~~awards~~occurrence isof ~~measured~~certain atspecified ~~the~~events, ~~fair~~and ~~value~~any ofincrease ~~the~~in ~~award~~valuation onfrom the ~~date~~time of ~~grant~~one ~~and~~such ~~recognized~~event asto anthe ~~expense~~next onsuch aevent ~~straight-line~~will ~~basis~~be ~~over~~allocated ~~three~~first orto ~~four years. Additionally, for~~ the ~~performance-based~~holders ~~equity~~of ~~awards,~~LTIP weunits ~~assess,~~to atequalize ~~each~~the ~~reporting~~capital ~~period,~~accounts ~~whether~~of itsuch isholders ~~probable~~with ~~that~~ the ~~performance~~capital ~~conditions~~accounts ~~will~~of ~~be satisfied~~unitholders. WeSubject ~~recognize expense respective~~ to ~~the~~any ~~number~~agreed ofupon ~~awards~~exceptions, weonce ~~expect~~vested toand ~~vest~~having atachieved ~~the~~parity ~~conclusion~~with ofunitholders, ~~the~~LTIP ~~measurement~~units ~~period. Changes in estimate~~ are ~~accounted~~convertible ~~for~~into inSeries ~~the~~PR ~~period~~operating ofpartnership ~~change~~units ~~through~~on a ~~cumulative catch~~one-upfor-one ~~adjustment~~basis.

LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock. Market and performance-based LTIPs receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter.

In March 2024, we made grants of LTIP units to executive officers under the 2019 Plan, including a total of 1,191,241 LTIP units that are subject to time-based vesting, 891,213 LTIP units that are subject to market-based vesting and 689,500 units that are subject to performance-based vesting with fair market values of $9.7 million, $5.4 million and $5.4 million, respectively. In March 2024, we made grants of LTIP units and restricted stock to certain other employees under the 2019 Plan, including a total of 130,016 LTIP units and 259,927 shares of restricted stock that are subject to time-based vesting, 118,919 LTIP units that are subject to market-based vesting and 91,901 LTIP units that are subject to performance-based vesting, with fair market values of $1.2 million and $2.6 million, respectively, for the time-based vesting awards, $0.9 million for the market-based vesting awards and $0.9 million for the performance-based vesting awards. The awards subject to time-based vesting vest ratably over a period of years, subject generally to the grantee's continued employment. The vesting of the LTIP units subject to

market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period. The vesting of the LTIP units subject to performance-based vesting is based on the achievement of (i) operational metrics over a one-year performance period, subject to a three-year absolute TSR modifier, and (ii) environmental, social and governance ("ESG") metrics over a three-year performance period.

Share-based compensation for time-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the shorter of (i) the stated vesting period, which is generally three, four or five years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant. An employee is retirement eligible when the employee attains the (i) age of 65 for awards granted in 2020 and after and age of 60 for awards granted before 2020 and (ii) the date on which the employee has first completed the requisite years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards and performance-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over three or four years. Additionally, for the performance-based equity awards, we assess, at each reporting period, whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment. Any forfeitures of share-based compensation awards are recognized as they occur.

For the market-based LTIP units, the fair value of the awards was estimated using a Monte Carlo Simulation model and discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process. Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using an appropriate look-back period. The expected growth rate of the stock prices over the performance period is determined with consideration of the risk-free rate as of the grant date. For LTIP unit awards that are time or performance based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. For restricted stock awards, the fair value of the awards is based on the market price of ESRT stock at the grant date.

LTIP units and ESRT restricted stock issued during the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 were valued at $2126.71 million. The weighted average per unit or share fair value was $57.6774 for grants issued for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The fair value per unit or share granted in ~~2023~~2024 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.3 years, a dividend rate of 1.76%, a risk-free interest rate from 4.4% to 5.01%, and an expected price volatility from 3537.0% to 4648.0%. No other stock options, dividend equivalents, or stock appreciation rights were issued orduring ~~outstanding~~the asthree ofmonths ~~September~~ended March 3031, ~~2023~~2024.

The following is a summary of ESRT restricted stock and LTIP unit activity for the three months ended March 31, 2024:

	Restricted Stock	Time-based LTIPs	Market-based LTIPs	Performance-based LTIPs	Weighted Average Grant Fair Value
Unvested balance at December 31, 2022	359,293	2,713,522	4,070,537	510,989	$	6.69
Unvested balance at December 31, 2023	598,289	3,297,550	2,738,812	1,276,363	$	6.60
Vested	(~~111~~184,~~178~~914)	(1994,~~148,987~~308)	(~~316~~422,~~412~~430)	~~(2,011)~~—	7.6653
Granted	~~370~~259,~~465~~927	1,~~733~~321,~~015~~257	~~946~~1,~~398~~010,132	~~771~~781,~~180~~401	57.6774
Forfeited or unearned	(~~8,917~~180)	—	(1228,~~695,323~~660)	~~(3,795)~~—	46.3098
Unvested balance at September 30, 2023	609,663	3,297,550	3,005,200	1,276,363	$	6.53
Unvested balance at March 31, 2024	673,122	3,624,499	3,097,854	2,057,764	$	6.84

The time-based LTIPs and ESRT restricted stock awards are treated for accounting purposes as immediately vested upon the later of (i) the date the grantee attains the age of 60 or 65, as applicable, and (ii) the date on which grantee has first completed the requisite years of continuous service with our Company or its affiliates. For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $0.57 million and $20.27 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$0.4 million and $2.0 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively. Unrecognized compensation expense was $316.56 million at ~~September~~March 3031, ~~2023~~2024, which will be recognized over a weighted average period of 2.58 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $4.5 million and $12.6 million for the three and nine months ended September 30, 2023, respectively, and $4.8 million and $13.7 million for the three and nine months ended September 30, 2022, respectively. Unrecognized compensation expense was $28.1 million at September 30, 2023, which will be recognized over a weighted average period of 2.5 years. 22

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognized noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $2.7 million and $3.7 million for the three months ended March 31, 2024 and 2023, respectively. Unrecognized compensation expense was $31.2 million at March 31, 2024, which will be recognized over a weighted average period of 2.6 years.

Earnings Per Unit

Earnings per unit is calculated by dividing the net income attributable to common unitholders by the weighted average number of units outstanding during the respective period. Unvested share-based payment awards that contain non-forfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Share-based payment awards are included in the calculation of diluted income using the treasury stock method if dilutive.

For the three months ended March 31, 2024 and 2023, earnings per unit is computed as follows (amounts in thousands, except per share amounts):


	Three Months Ended
		March 31, 2024		March 31, 2023
Numerator:
Net income		$	10,215	$	11,694
Private perpetual preferred unit distributions		(1,050)		(1,050)
Net (income) loss attributable to non-controlling interests in other partnerships		(4)		43

Net income attributable to common unitholders – basic and diluted		$	9,161	$	10,687

Denominator:
Weighted average units outstanding – basic		264,562		264,493
Effect of dilutive securities:
Stock-based compensation plans		2,932		704
Weighted average units outstanding –- diluted		267,494		265,197

Earnings per unit:
Basic		$	0.03	$	0.04
Diluted		$	0.03	$	0.04

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Numerator:
Net income	$	19,928	$	10,118	$	68,577	$	41,592
Private perpetual preferred unit distributions	(1,050)		(1,050)		(3,151)		(3,151)
Net (income) loss attributable to non-controlling interests in other partnerships	(111)		49		(69)		271
Earnings allocated to unvested units	—		—		—		—
Net income attributable to common unitholders – basic and diluted	$	18,767	$	9,117	$	65,357	$	38,712
Denominator:
Weighted average units outstanding – basic	262,756		266,035		263,379		269,880
Effect of dilutive securities:
Stock-based compensation plans	3,317		1,086		1,890		1,086
Weighted average units outstanding –- diluted	266,073		267,121		265,269		270,966
Earnings per unit:
Basic	$	0.07	$	0.03	$	0.25	$	0.14
Diluted	$	0.07	$	0.03	$	0.25	$	0.14

There were zero antidilutive shares and LTIP units for the three months ended March 31, 2024 and 2023, respectively.

There were zero antidilutive shares and LTIP units for the three and nine months ended September 30, 2023, respectively, and zero antidilutive shares and LTIP units for the three and nine months ended September 30, 2022, respectively.

11. Related Party Transactions

Supervisory Fee Revenue

Since we became a public company, we have earned supervisory fees from entities affiliated with Anthony E. Malkin, our Chairman, ~~President~~ and Chief Executive Officer. These fees were $0.2 million and $0.72 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$0.2 million and $0.8 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively. These fees are included within third-party management and other fees.

Property Management Fee Revenue

Since we became a public company, we have earned property management fees from entities affiliated with Anthony E. Malkin. These fees were $0.1 million and $0.21 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ and ~~$0.1 million and $0.2 million for the three and nine months ended September 30~~2023, ~~2022,~~ respectively. These fees are included within third-party management and other fees.

Other

We receive rent generally at the market rental rate for 5,447 square feet of leased space from an entity affiliated with Anthony E. Malkin at one of our properties. Under the lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We also have a shared use agreement with such tenant, to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus and employee, utilizing approximately 15% of the space, for which we pay to such tenant an allocable pro rata share of the cost. We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support services. Total aggregate revenue was $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, respectively.

As disclosed in greater detail in our Annual Report, in connection with the sale of our Westport retail assets in February 2023, we advanced a loan to the buyer to facilitate closing with a principal amount of $0.6 million, which bears interest at SOFR plus 3.5% and requires repayment of principal to the extent of available cash flow of the property. As of September 30, 2023, the loan has been fully paid.Other

We receive rent generally at the market rental rate for 5,447 square feet of leased space from an entity affiliated with Anthony E. Malkin at one of our properties. Under the lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We also have a shared use agreement with such tenant, to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus, utilizing approximately 15% of the space, for which we pay to such tenant an allocable pro rata share of the cost. We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support services. Total aggregate revenue was $0.1 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

One of our directors, Hannah Yang, is sister to Heela Yang, who is Founder and Chief Executive Officer of Sol de Janerio USA, a tenant at One Grand Central Place — the lease is projected to commence on January 1, 2025 with a starting annualized rent of $3.5 million. Sol de Janerio is a subsidiary of L’Occitane, a tenant at 111 W. 33rd Street.

12. Segment Reporting

We have identified two reportable segments: (1) real estate and (2) ~~observatory~~Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, redevelopment, repositioning and disposition of our traditional real estate assets. Our ~~observatory~~Observatory segment ~~includes~~operates the ~~operation of the~~ 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and marketing strategies. We account for intersegment sales and rents as if the sales or rents were to third parties, that is, at current market prices.

The following tables provide components of segment net income for each segment for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 (amounts in thousands):

	Three Months Ended September 30, 2023
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	151,458	$	—	$	—	$	151,458
Intercompany rental revenue	22,113		—		(22,113)		—
Observatory revenue	—		37,562		—		37,562
Third-party management and other fees	268		—		—		268
Other revenue and fees	2,238		—		—		2,238
Total revenues	176,077		37,562		(22,113)		191,526
Operating expenses:
Property operating expenses	42,817		—		—		42,817
Intercompany rent expense	—		22,113		(22,113)		—
Ground rent expenses	2,331		—		—		2,331
General and administrative expenses	16,012		—		—		16,012
Observatory expenses	—		9,471		—		9,471
Real estate taxes	32,014		—		—		32,014
Depreciation and amortization	46,593		31		—		46,624
Total operating expenses	139,767		31,615		(22,113)		149,269
Total operating income	36,310		5,947		—		42,257
Other income (expense):
Interest income	4,410		52		—		4,462
Interest expense	(25,382)		—		—		(25,382)
Income before income taxes	15,338		5,999		—		21,337
Income tax expense	(146)		(1,263)		—		(1,409)
Net income	$	15,192	$	4,736	$	—	$	19,928
Segment assets	$	3,959,249	$	257,298	$	—	$	4,216,547
Expenditures for segment assets	$	56,227	$	—	$	—	$	56,227

	Three Months Ended September 30, 2022
	Three Months Ended March 31, 2024
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	~~148~~153,~~290~~882	$	—	$	—	$	~~148~~153,~~290~~882
Intercompany rental revenue	1916,~~072~~067		—		(1916,~~072~~067)		—
Observatory revenue	—		3324,~~051~~596		—		3324,~~051~~596
Third-party management and other fees	~~389~~265		—		—		~~389~~265
Other revenue and fees	12,~~982~~436		—		—		12,~~982~~436
Total revenues	~~169~~172,~~733~~650		3324,~~051~~596		(1916,~~072~~067)		~~183~~181,~~712~~179
Operating expenses:
Property operating expenses	4245,~~798~~060		—		—		4245,~~798~~060
Intercompany rent expense	—		1916,~~072~~067		(1916,~~072~~067)		—
Ground rent expenses	2,331		—		—		2,331
General and administrative expenses	15,~~725~~972		—		—		15,~~725~~972
Observatory expenses	—		8,~~516~~431		—		8,~~516~~431
Real estate taxes	3132,~~831~~241		—		—		3132,~~831~~241
Depreciation and amortization	46,~~933~~044		5137		—		46,~~984~~081
Total operating expenses	~~139~~141,~~618~~648		2724,~~639~~535		(1916,~~072~~067)		~~148~~150,~~185~~116
Total operating income	3031,~~115~~002		~~5,412~~61		—		3531,~~527~~063
Other income (expense):
Interest income	14,~~530~~140		3438		—		14,~~564~~178
Interest expense	(25,~~516~~128)		—		—		(25,~~516~~128)
Income before income taxes	6,129		5,446		—		11,575
Loss on early extinguishment of debt	(553)		—		—		(553)
Income tax expense	(359)		(1,098)		—		(1,457)
Income before income taxes	9,461		99		—		9,560
Net income	$	5,770	$	4,348	$	—	$	10,118
Income tax (expense) benefit	(113)		768		—		655
Segment assets	$	3,950,883	$	250,257	$	—	$	4,201,140
Net income	$	9,348	$	867	$	—	$	10,215
Expenditures for segment assets	$	18,686	$	24	$	—	$	18,710
Segment assets	$	3,931,685	$	258,902	$	—	$	4,190,587
Expenditures for segment assets	$	47,645	$	39	$	—	$	47,684

	Nine Months Ended September 30, 2023
	Three Months Ended March 31, 2023
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	~~446~~140,~~152~~091	$	—	$	—	$	~~446~~140,~~152~~091
Intercompany rental revenue	5815,~~969~~914		—		(5815,~~969~~914)		—
Observatory revenue	—		9322,~~149~~154		—		9322,~~149~~154
Third-party management and other fees	~~1,076~~427		—		—		~~1,076~~427
Other revenue and fees	61,~~313~~950		—		—		61,~~313~~950
Total revenues	~~512~~158,~~510~~382		9322,~~149~~154		(5815,~~969~~914)		~~546~~164,~~690~~622
Operating expenses:
Property operating expenses	~~124~~42,~~380~~044		—		—		~~124~~42,~~380~~044
Intercompany rent expense	—		5815,~~969~~914		(5815,~~969~~914)		—
Ground rent expenses	62,~~994~~331		—		—		62,~~994~~331
General and administrative expenses	4715,~~795~~708		—		—		4715,~~795~~708
Observatory expenses	—		257,~~983~~855		—		257,~~983~~855
Real estate taxes	9531,~~292~~788		—		—		9531,~~292~~788
Depreciation and amortization	~~140~~47,~~194~~364		~~118~~44		—		~~140~~47,~~312~~408
Total operating expenses	~~414~~139,~~655~~235		8523,~~070~~813		(5815,~~969~~914)		~~440~~147,~~756~~134
Total operating income	97,855		8,079		—		105,934
Total operating income (loss)	19,147		(1,659)		—		17,488
Other income (expense):
Interest income	102,~~257~~558		~~139~~37		—		102,~~396~~595
Interest expense	(7625,~~091~~304)		—		—		(7625,~~091~~304)
Gain on disposition of property	29,261		—		—		29,261
Gain on sale of property	15,696		—		—		15,696
Income before income taxes	61,282		8,218		—		69,500
Income (loss) before income taxes	12,097		(1,622)		—		10,475
Income tax expense	(541)		(382)		—		(923)
Income tax (expense) benefit	(198)		1,417		—		1,219
Net income	$	60,741	$	7,836	$	—	$	68,577
Net income (loss)	$	11,899	$	(205)	$	—	$	11,694
Expenditures for segment assets	$	123,671	$	58	$	—	$	123,729
Segment assets	$	3,903,661	$	253,702	$	—	$	4,157,363
Expenditures for segment assets	$	34,536	$	58	$	—	$	34,594

	Nine Months Ended September 30, 2022
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	445,143	$	—	$	—	$	445,143
Intercompany rental revenue	46,801		—		(46,801)		—
Observatory revenue	—		73,660		—		73,660
Lease termination fees	20,032		—		—		20,032
Third-party management and other fees	1,025		—		—		1,025
Other revenue and fees	5,908		—		—		5,908
Total revenues	518,909		73,660		(46,801)		545,768
Operating expenses:
Property operating expenses	118,875		—		—		118,875
Intercompany rent expense	—		46,801		(46,801)		—
Ground rent expenses	6,994		—		—		6,994
General and administrative expenses	45,287		—		—		45,287
Observatory expenses	—		22,507		—		22,507
Real estate taxes	91,637		—		—		91,637
Depreciation and amortization	172,258		136		—		172,394
Total operating expenses	435,051		69,444		(46,801)		457,694
Total operating income (loss)	83,858		4,216		—		88,074
Other income (expense):
Interest income	2,105		39		—		2,144
Interest expense	(75,572)		—		—		(75,572)
Gain on disposition of property	27,170		—		—		27,170
Income (loss) before income taxes	37,561		4,255		—		41,816
Income tax (expense) benefit	(541)		317		—		(224)
Net income	$	37,020	$	4,572	$	—	$	41,592
Expenditures for segment assets	$	70,795	$	315	$	—	$	71,110

13. Subsequent Events

None.

2726

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires or indicates, references in this section to “we,” “our,” and “us” refer to the ~~Operating~~Empire ~~Partnership~~State Realty OP, L.P. and ~~our~~its consolidated subsidiaries. This Management’s Discussion and Analysis provides a comparison of our performance for the three-month periods ended March 31, or2024 with the ~~Operating~~corresponding ~~Partnership~~three-month ~~and~~periods ~~ESRT~~ended March 31, 2023 and reviews our financial position as ~~the~~of ~~context~~March 31, ~~requires~~2024. ~~This~~The ~~Management’s~~following ~~Discussion~~discussion related to our consolidated financial statements should be read in conjunction with the financial statements and ~~Analysis~~the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

provides a comparison of our performance for the three- and nine-month periods ended September 30, 2023 with the corresponding three- and nine-month periods ended September 30, 2022 and reviews our financial position as of September 30, 2023. The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. You can identify forward-looking statements by the use of forward-looking terminology such as “aims," "anticipates," "approximately," "believes," "contemplates," "continues," "estimates," "expects," "forecasts," "hope," "intends," "may," "plans," "seeks," "should," "thinks," "will," "would" or the negative of these words and phrases or similar words or phrases ~~with the intention of identifying statements about the future~~. In particular, statements pertaining to ESRT's capital resources, portfolio performance, dividend policy and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our portfolio from operations, acquisitions and anticipated market conditions, demographics and results of operations are forward-looking statements.

Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

~~The~~Many ~~following~~important factors, ~~among others,~~ could cause actual results, performance, achievements, and future events to differ materially from those set forth, implied, anticipated, expected, projected, assumed or contemplated in the forward-looking statements, including, among other things: (i) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats and technology disruptions; (ii) a failure of conditions or performance regarding any event or transaction described herein; (iii) resolution of legal proceedings involving usthe ~~and/or ESRT~~Company; (iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work; (v) changes in our business strategy; (vi) ~~changes~~a decline in ~~technology~~Observatory ~~and~~visitors ~~market~~due ~~competition~~to ~~that affect utilization of our office, retail, observatory, broadcast or other facilities; (vii)~~ changes in domestic or international tourism, including due to health crises ~~and pandemics~~, geopolitical events, ~~including global hostilities,~~ currency exchange rates, and/or competition from other observatories ~~in New York City, any or all of which may cause a decline in Observatory visitors~~; (~~viii~~vii) defaults on, early terminations of, or non-renewal of, leases by tenants; (ixviii) increases in the Company'’s borrowing costs as a result of changes in interest rates and other factors; (xix) declining real estate valuations and impairment charges; (xix) termination of our ground leases; (~~xii~~xi) ~~changes~~limitations inon our ability to pay down, refinance, restructure or extend our indebtedness asor ~~it becomes due and potential limitations on our ability to~~ borrow additional funds ~~in compliance with drawdown conditions and financial covenants~~; (~~xiii~~xii) decreased rental rates or increased vacancy rates; (~~xiv~~xiii) ~~our~~difficulties ~~failure~~in toexecuting ~~execute~~capital ~~any~~projects ~~newly~~or ~~planned~~development ~~capital~~projects ~~project~~ successfully or on the anticipated timeline or budget; (xvxiv) difficulties in identifying and completing acquisitions; (~~xvi~~xv) ~~risks related to any development project (including our Metro Tower potential development site); (xvii)~~ impact of changes in governmental regulations, tax laws and rates and similar matters; (~~xviii~~xvi) our failure to qualify as a REIT; (~~xix~~xvii) ~~environmental uncertainties and risks related to climate change, adverse weather conditions, rising sea levels and natural disasters; (xx)~~ incurrence of taxable capital gain on disposition of an asset due to failure of ~~use or~~ compliance with a 1031 exchange program; and (~~xxi~~xviii) ~~accuracy~~failure ofto ~~our~~achieve ~~methodologies~~sustainability ~~and estimates regarding ESG~~ metrics and goals, ~~tenant~~including ~~willingness~~as ~~and~~a ~~ability~~result toof ~~collaborate~~tenant ~~in reporting ESG metrics and meeting ESG goals~~collaboration, and impact of governmental regulation on our ~~ESG~~sustainability efforts. For a further discussion of these and other factors that could impact the ~~Operating Partnership’~~Company's future results, performance, or transactions, see the section entitled “Risk Factors” in ~~our~~the Company’s Annual Report, and other risks described in documents subsequently filed by usthe Company from time to time with the ~~Securities and Exchange Commission (the "~~SEC").

While forward-looking statements reflect the Company's good faith beliefs, they do not guarantee future performance. Any forward-looking statement speaks only as of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).

Overview

Highlights for the three months ended ~~September 30~~March 31, ~~2023~~2024

•Net income attributable to common unitholders of $189.82 million.

•Core Funds From Operations ("Core FFO") of $6556.95 million attributable to common unitholders.

~~•Signed a total of 248,479 rentable square feet of new, renewal, and expansion leases.~~ 27

•~~Commercial~~Signed ~~portfolio~~a ~~90.5%~~total ~~leased~~of 248,108 ~~Manhattan~~rentable ~~office~~square ~~portfolio~~feet ~~91.9%~~of ~~leased~~new, renewal, and expansion leases.

•~~Empire~~Commercial ~~State~~portfolio ~~Building Observatory generated $28~~91.1% ~~million~~leased, ofManhattan ~~net~~office ~~operating~~portfolio ~~income~~92.7% leased.

•Empire State Building Observatory generated $16.2 million of net operating income.

Results of Operations

The discussion below relates to our results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, respectively.

Three Months Ended ~~September~~March 3031, ~~2023~~2024 Compared to the Three Months Ended ~~September~~March 3031, ~~2022~~ 2023

The following table summarizes our historical results of operations for the three months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, respectively (amounts in thousands):

	Three Months Ended September 30,
	Three Months Ended March 31,
	2023						2022						Change		%
	2024						2023						Change		%
Revenues:	Real Estate Segment		Observatory Segment		Total		Real Estate Segment		Observatory Segment		Total
	Real Estate Segment		Observatory Segment		Total		Real Estate Segment		Observatory Segment		Total
Rental revenue	$	151,458	$	—	$	151,458	$	148,290	$	—	$	148,290	$	3,168	2.1	%
Revenues:
Observatory revenue	—		37,562		37,562		—		33,051		33,051		4,511		13.6
Rental revenue	$	153,882	$	—	$	153,882	$	140,091	$	—	$	140,091	$	13,791	9.8	%
Lease termination fees	—		—		—		—		—		—		—		—
Observatory revenue	—		24,596		24,596		—		22,154		22,154		2,442		11.0	%
Third-party management and other fees	~~268~~265		—		~~268~~265		~~389~~427		—		~~389~~427		(~~121~~162)		(3137.19)	%
Other revenues and fees	2,~~238~~436		—		2,~~238~~436		1,~~982~~950		—		1,~~982~~950		~~256~~486		1224.9	%
Total revenues	~~153~~156,~~964~~583		3724,~~562~~596		~~191~~181,~~526~~179		~~150~~142,~~661~~468		3322,~~051~~154		~~183~~164,~~712~~622		716,~~814~~557		410.31	%
Operating expenses:
Property operating expenses	4245,~~817~~060		—		4245,~~817~~060		42,~~798~~044		—		42,~~798~~044		(193,016)		—(7.2)	%
Ground rent expenses	2,331		—		2,331		2,331		—		2,331		—		—	%
General and administrative expenses	1615,~~012~~972		—		1615,~~012~~972		15,~~725~~708		—		15,~~725~~708		(~~287~~264)		(1.87)	%
Observatory expenses	—		98,~~471~~431		98,~~471~~431		—		87,~~516~~855		87,~~516~~855		(~~955~~576)		(117.23)	%
Real estate taxes	32,~~014~~241		—		32,~~014~~241		31,~~831~~788		—		31,~~831~~788		(~~183~~453)		(01.64)	%
Depreciation and amortization	46,~~593~~044		3137		46,~~624~~081		4647,~~933~~364		5144		4647,~~984~~408		~~360~~1,327		02.8	%
Total operating expenses	~~139~~141,~~767~~648		98,~~502~~468		~~149~~150,~~269~~116		139,~~618~~235		87,~~567~~899		~~148~~147,~~185~~134		(12,~~084~~982)		(02.70)	%
Operating income	14,~~197~~935		2816,~~060~~128		4231,~~257~~063		113,~~043~~233		2414,~~484~~255		3517,~~527~~488		613,~~730~~575		1877.96	%
Intercompany rent revenue (expense)	2216,~~113~~067		(2216,~~113~~067)		—		1915,~~072~~914		(1915,~~072~~914)		—		—		—	%
Other income (expense):
Interest income	4,~~410~~140		5238		4,~~462~~178		12,~~530~~558		3437		12,~~564~~595		21,~~898~~583		~~185~~61.30	%
Interest expense	(25,~~382~~128)		—		(25,~~382~~128)		(25,~~516~~304)		—		(25,~~516~~304)		~~134~~176		0.57	%
Income before income taxes	15,338		5,999		21,337		6,129		5,446		11,575		9,762		84.3
Loss on early extinguishment of debt	(553)		—		(553)		—		—		—		(553)		N/A
Income tax expense	(146)		(1,263)		(1,409)		(359)		(1,098)		(1,457)		48		3.3
Gain on disposition of property	—		—		—		15,696		—		15,696		(15,696)		(100.0)	%
Net income	15,192		4,736		19,928		5,770		4,348		10,118		9,810		97.0
Income before income taxes	9,461		99		9,560		12,097		(1,622)		10,475		(915)		(8.7)	%
Private perpetual preferred unit distributions	(1,050)		—		(1,050)		(1,050)		—		(1,050)		—		—
Income tax (expense) benefit	(113)		768		655		(198)		1,417		1,219		(564)		(46.3)	%
Net (income) loss attributable to non-controlling interests in other partnerships	(111)		—		(111)		49		—		49		160		326.5
Net income (loss)	9,348		867		10,215		11,899		(205)		11,694		(1,479)		(12.6)	%
Net income attributable to common unitholders	$	14,031	$	4,736	$	18,767	$	4,769	$	4,348	$	9,117	$	9,650	105.8	%
Private perpetual preferred unit distributions	(1,050)		—		(1,050)		(1,050)		—		(1,050)		—		—	%
Net (income) loss attributable to non-controlling interests in other partnerships	(4)		—		(4)		43		—		43		(47)		(109.3)	%
Net income (loss) attributable to common unitholders	$	8,294	$	867	$	9,161	$	10,892	$	(205)	$	10,687	$	(1,526)	(14.3)	%

Real Estate Segment

Rental Revenue

The increase in rental revenue was primarily attributable to ahigher ~~$5.5~~write-offs ~~million~~of ~~increase~~straight-line inreceivables ~~base~~and uncollectible tenant receivables and higher rent ~~from~~concessions ~~new~~during orthe ~~renewed~~three ~~tenants~~months ~~and~~period ~~higher~~March ~~rents~~31, ~~and~~2023 ~~higher~~compared ~~tenant~~to ~~escalations~~the ~~and~~three amonths ~~net~~period ~~$2.3~~March ~~million~~31, ~~decrease~~2024. inHigher ~~revenue~~tenant ~~from~~escalations ~~our~~and ~~recent~~real ~~transaction~~estate ~~activity~~tax asescalations ~~disclosed~~during inthe ~~"Financial~~period ~~Statements~~March -31, ~~Note~~2024 3.also ~~Acquisitions~~contributed ~~and~~to ~~Dispositions~~the increase."

~~Interest Income~~28

The increase in interest income in the three months ended September 30, 2023 reflects higher interest rates compared to the three months ended September 30, 2022.

Observatory Segment

Observatory Revenue

Observatory revenues were higher driven by increased visitation and revenue per visitor during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as marketing, labor and maintenance costs compared to the three months ended September 30, 2022.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table summarizes our historical results of operations for the nine months ended September 30, 2023 and 2022 (amounts in thousands):

	Nine Months Ended September 30,
	2023						2022						Change		%
Revenues:	Real Estate Segment		Observatory Segment		Total		Real Estate Segment		Observatory Segment		Total
Rental revenue	$	446,152	$	—	$	446,152	$	445,143	$	—	$	445,143	$	1,009	0.2	%
Observatory revenue	—		93,149		93,149		—		73,660		73,660		19,489		26.5
Lease termination fees	—		—		—		20,032		—		20,032		(20,032)		(100.0)
Third-party management and other fees	1,076		—		1,076		1,025		—		1,025		51		5.0
Other revenues and fees	6,313		—		6,313		5,908		—		5,908		405		6.9
Total revenues	453,541		93,149		546,690		472,108		73,660		545,768		922		0.2
Operating expenses:
Property operating expenses	124,380		—		124,380		118,875		—		118,875		(5,505)		(4.6)
Ground rent expenses	6,994		—		6,994		6,994		—		6,994		—		—
General and administrative expenses	47,795		—		47,795		45,287		—		45,287		(2,508)		(5.5)
Observatory expenses	—		25,983		25,983		—		22,507		22,507		(3,476)		(15.4)
Real estate taxes	95,292		—		95,292		91,637		—		91,637		(3,655)		(4.0)
Depreciation and amortization	140,194		118		140,312		172,258		136		172,394		32,082		18.6
Total operating expenses	414,655		26,101		440,756		435,051		22,643		457,694		16,938		3.7
Operating income	38,886		67,048		105,934		37,057		51,017		88,074		17,860		20.3
Intercompany rent revenue (expense)	58,969		(58,969)		—		46,801		(46,801)		—
Other income (expense):
Interest income	10,257		139		10,396		2,105		39		2,144		8,252		384.9
Interest expense	(76,091)		—		(76,091)		(75,572)		—		(75,572)		(519)		(0.7)
Gain on disposition of property	29,261		—		29,261		27,170		—		27,170		2,091		7.7
Income before income taxes	61,282		8,218		69,500		37,561		4,255		41,816		27,684		66.2
Income tax (expense) benefit	(541)		(382)		(923)		(541)		317		(224)		(699)		(312.1)
Net income	60,741		7,836		68,577		37,020		4,572		41,592		26,985		64.9
Private perpetual preferred unit distributions	(3,151)		—		(3,151)		(3,151)		—		(3,151)		—		—
Net (income) loss attributable to non-controlling interests in other partnerships	(69)		—		(69)		271		—		271		340		125.5
Net income attributable to common unitholders	$	57,521	$	7,836	$	65,357	$	34,140	$	4,572	$	38,712	$	26,645	68.8	%

Real Estate Segment

Rental Revenue

The increase in rental revenue was primarily attributable to a $7.1 million increase in base rent from new or renewed tenants and higher rents and higher tenant escalations, and a net $6.1 million decrease in revenue from our recent transaction activity as disclosed in "Financial Statements - Note 3. Acquisitions and Dispositions."

Property Operating Expenses

The increase in property operating expenses iswas primarily due to higher repair and maintenance costs, higher ~~cleaning~~utilities costs, and higher payroll costs induring ~~2023~~the ~~relating~~three months period March 31, 2024 compared to ~~increased~~the ~~building~~three ~~utilization.~~months period March 31, 2023.

General and Administrative Expenses

The increase in general and administrative expenses primarily reflects higher payroll due to year-over-year wage growth.

Real Estate Taxes

The increase in real estate taxes was primarily attributable to a $4.1 million increase in real estate tax expense due to higher assessed values for multiple properties, partially offset by a net $0.4 million decrease from our recent transaction activity as disclosed in "Financial Statements - Note 3. Acquisitions and Dispositions."

Depreciation and Amortization

The decrease in depreciation and amortization reflects accelerated depreciation during the nine months ended September 30, 2022 relating to the transfer of 383 Main Avenue back to the lender in a consensual foreclosure and depreciation expense in the nine months ended September 30, 2022 on properties that were sold prior to September 30, 2023.

Interest Income

The increase ~~reflects~~in ~~higher~~ interest ~~rates~~income in the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 reflects higher interest rates and cash balances compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023.

Gain on Sale/Disposition of Property

The gain on disposition activity for the ~~nine~~three months ended ~~September~~March 3031, 2023 ~~reflects~~relates to the ~~gain on~~ disposition of ~~500 Mamaroneck in Harrison, New York in April 2023 and~~ 69-97 and 103-107 Main Street in Westport, Connecticut in February 2023 ~~while the gain for the nine months ended September 30, 2022 represents a gain on the disposition of 383 Main Avenue in Norwalk, Connecticut in April 2022~~.

Observatory Segment

Observatory Revenue

Observatory revenues were higher driven by increased visitation and revenue per visitor during the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, and helped by the shift in the timing of the Easter holiday that fell in March during 2024 as compared to April in 2023.

Liquidity and Capital Resources

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as marketing, labor and maintenance costs.

Income Taxes

The increase in income tax expense was attributable to a $3.9 million increase in income before taxes for the observatory segment for the nine months ended September 30, 2023.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, including lease-up costs, fund our redevelopment and repositioning programs, acquire properties, make distributions to our securityholders and fulfill other general business needs. Based on the historical experience of our management and our business strategy, in the foreseeable future we anticipate we will generate positive cash flows from operations. In order for ESRT to qualify as a REIT, ESRT is required under the Internal Revenue Code of 1986 to distribute to its stockholders, on an annual basis, at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We expect to make quarterly distributions, as required, to our securityholders.

While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial condition and results of operations. For example, we may be required to comply with new laws or regulations that cause us to incur unanticipated capital expenditures for our properties, thereby increasing our liquidity needs. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of cash on hand, ~~and~~ cash generated from our operating activities, debt issuances and unused borrowing capacity under our unsecured revolving credit facility. We expect to meet our short-term liquidity requirements, including distributions, operating expenses, working capital, debt service, and capital expenditures from cash flows from operations, cash on hand, debt issuances, and available borrowing capacity under our unsecured revolving credit facility. The availability of these borrowings is subject to the conditions set forth in the applicable loan agreements. We expect to meet our long-term capital requirements, including acquisitions, redevelopments and capital expenditures through our cash flows from operations, cash on hand, our unsecured revolving credit facility, mortgage financings, debt issuances, common and/or preferred equity issuances and asset sales. Our properties require periodic investments of capital for individual lease related tenant improvement allowances, general capital improvements and costs associated with capital expenditures. Our overall leverage will depend on our mix of investments and the cost of leverage. ESRT's charter does not restrict the amount of leverage that we may use.

32At March 31, 2024, we had $333.6 million available in cash and cash equivalents, and $500.0 million available under our unsecured revolving credit facility.

AtAs ~~September~~of March 3031, ~~2023~~2024, we had approximately $~~354~~2.02 ~~million~~billion ~~available~~of intotal ~~cash~~consolidated ~~and~~indebtedness ~~cash equivalents~~outstanding, ~~and~~with ~~$850~~a ~~million~~weighted ~~available~~average ~~under~~interest ~~our~~rate ~~unsecured~~of ~~revolving~~3.97% ~~credit~~and ~~facility~~a weighted average maturity of 5.4 years.

As of September 30, 2023, we had approximately $2.2 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 5.7 years. As of September 30, 2023, excluding principal amortization, we have no outstanding debt maturing until November 2024.

Portfolio Transaction Activity

On February 1, 2023, we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million.

On April 5, 2023, we closed on the sale of 500 Mamaroneck Avenue in Harrison, New York at a gross asset valuation of $53.0 million.

On September 14, 2023, we closed on the acquisition of a Williamsburg retail property located on the corner of North 6th Street and Wythe Avenue in Brooklyn, New York, for a purchase price of $26.4 million.

On March 28, 2024, we executed a buyout of our partner's 10% interest in two of our multifamily properties located at 561 10th Avenue and 345 East 94th Street in Manhattan for $14.2 million in cash and the assumption of $18.0 million of in-place debt and now own 100% of the ownership interests in these assets.

Unsecured Revolving Credit and Term Loan Facilities

During March 2024, we closed on the BofA Credit Facilities, a $715 million, five-year unsecured credit agreement which consists of the $620.0 million Revolving Credit Facility and the $95.0 million BofA Term Loan Facility. The Revolving Credit Facility matures on March 8, 2029, inclusive of two six-month extension periods and replaced the existing revolving credit facility that was due to mature in March 2025. The BofA Term Loan Facility matures on March 8, 2029, inclusive of two twelve-month extension periods and replaced the existing term loan facility that matures in March 2025. Initial interest rates on the new facility, which may change based on our leverage levels, are adjusted SOFR plus 130 basis points for any drawn portion of the Revolving Credit Facility and adjusted SOFR plus 150 basis points for the BofA Term Loan Facility. In addition, the BofA Credit Facilities have a sustainability-linked pricing mechanism that reduces the borrowing spread if certain benchmarks are achieved each year. See "Financial Statements - Note 5. Debt" for a summary of our unsecured revolving credit and term loan facilities.

Financial Covenants

As of March 31, 2024, we were in compliance with the following financial covenants:


Financial Covenant	Required	March 31, 2024	In Compliance
Maximum total leverage	< 60%	34.7%	Yes
Maximum secured leverage	< 40%	14.6%	Yes
Minimum fixed charge coverage	> 1.50x	3.2x	Yes
Minimum unencumbered interest coverage	> 1.75x	5.7x	Yes
Maximum unsecured leverage	< 60%	24.3%	Yes

Mortgage Debt

As of ~~September~~March 3031, ~~2023~~2024, ~~our consolidated~~ mortgage notes payable, net, amounted to $~~893~~876.95 million. WeThe ~~have~~next nomortgage debt maturity ~~until~~is November 2024. ~~See "Financial Statements - Note 5. Debt" for more information on mortgage debt.~~

In April 2024, we worked with the First Stamford Place mortgage lender to structure a cooperative consensual foreclosure, which is anticipated to be completed by June 30, 2024. Upon completion, this transaction is expected to eliminate a $175.9 million liability that matures in July 2027 from the balance sheet.

See "Financial Statements - Note 5 Debt" for more information on mortgage debt.

Senior Unsecured Notes

The terms of the senior unsecured notes include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. The terms also require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreements also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification. As of ~~September~~March 3031, ~~2023~~2024, we were in compliance with ~~the~~these covenants ~~under the outstanding senior unsecured notes~~.

On April 10, 2024, we entered into the Purchase Agreement in connection with a private placement of the Notes. Under the Purchase Agreement, we will issue and sell an aggregate $225 million principal amount of its Notes, consisting of (a) $155 million aggregate principal amount of 7.20% Series I Green Guaranteed Senior Notes due June 17, 2029, (b) $45 million aggregate principal amount of 7.32% Series J Green Guaranteed Senior Notes due June 17, 2031 and (c) $25 million aggregate principal amount of 7.41% Series K Green Guaranteed Senior Notes due June 17, 2034. The sale and purchase of the Notes is scheduled to be held on June 17, 2024, subject to customary closing conditions. The issue price for the Notes is 100% of the aggregate principal amount thereof. Pursuant to the terms of the Purchase Agreement, we may prepay all or a portion of the Notes upon notice to the holders at a price equal to 100% of the principal amount so prepaid plus a make-whole premium as set forth in the Purchase Agreement. The Purchase Agreement contains customary covenants and customary events of default similar to those in our Series A-H senior unsecured notes. See "Financial ~~Covenants~~Statements - Note 5 Debt" for more information on senior unsecured notes.

~~As of September~~ 30~~, 2023, we were in compliance with the following financial covenants:~~

Financial covenant	Required	September 30, 2023		In Compliance
Maximum total leverage	< 60%	33.2	%	Yes
Maximum secured leverage	< 40%	13.0	%	Yes
Minimum fixed charge coverage	> 1.50x	3.0x		Yes
Minimum unencumbered interest coverage	> 1.75x	5.3x		Yes
Maximum unsecured leverage	< 60%	24.8	%	Yes

Leverage Policies

We expect to employ leverage in our capital structure in amounts determined from time to time by ESRT's Board of Directors. Although ESRT's Board of Directors has not adopted a policy that limits the total amount of indebtedness that we may incur, we anticipate that ESRT's Board of Directors will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed or floating rate. ESRT's charter and bylaws do not limit the amount or percentage of indebtedness that we may incur nor do they restrict the form in which our indebtedness will be taken (including, but not limited to, recourse or non-recourse debt and cross-collateralized debt). Our overall leverage will depend on our mix of investments and the cost of leverage. ESRT's Board of Directors may from time to time modify our leverage policies in light of the then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general market conditions for debt and equity securities, fluctuations in the market price of ESRT's common stock and our traded OP units, growth and acquisition opportunities and other factors.

Capital Expenditures

The following tables summarize our ~~leasing~~tenant ~~commission~~improvement costs, ~~tenant~~leasing ~~improvement~~commission costs and our capital expenditures for each of the periods presented (dollars in thousands, except per square foot amounts).

Office Properties (1)(5)

	Nine Months Ended September 30,
	Three Months Ended March 31,
Total New Leases, Expansions, and Renewals	~~2023~~2024		~~2022~~2023
Number of leases signed(1)	66		103
Number of leases signed(2)	22		18
Total square feet	~~772~~245,~~587~~650		~~928~~201,~~598~~145
Leasing commission costs per square foot(2)	$	18.41	$	19.14
Leasing commission costs per square foot(3)	$	22.96	$	20.99
Tenant improvement costs per square foot(2)	78.15		59.20
Tenant improvement costs per square foot(3)	87.98		83.39
Total leasing commissions and tenant improvement costs per square foot(2)	$	96.56	$	78.34
Total leasing commissions and tenant improvement costs per square foot(3)	$	110.94	$	104.38

Retail Properties(4)(5)

	Nine Months Ended September 30,
	Three Months Ended March 31,
Total New Leases, Expansions, and Renewals	~~2023~~2024		~~2022~~2023
Number of leases signed(1)	5		12
Number of leases signed(2)	1		1
Total square feet	142,~~263~~458		~~45,655~~912
Leasing commission costs per square foot(2)	$	47.80	$	59.85
Leasing commission costs per square foot(3)	$	193.06	$	—
Tenant improvement costs per square foot(2)	48.17		53.97
Tenant improvement costs per square foot(3)	50.00		—
Total leasing commissions and tenant improvement costs per square foot(2)	$	95.97	$	113.82
Total leasing commissions and tenant improvement costs per square foot(3)	$	243.06	$	—

_______________

(1)Excludes an aggregate of 488,569 and 498,196 rentable square feet of retail space in our Manhattan office in 2024 and 2023, respectively. Includes the Empire State Building broadcasting licenses and Observatory operations.

(12)Presents a renewed and expansion lease as one lease signed.

(23)Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid.

	Nine Months Ended September 30,
	2023		2022
Total Portfolio
Capital expenditures (1)	$	38,736	$	28,823

(4)Includes an aggregate of 488,569 and 498,196 rentable square feet of retail space in our Manhattan office in 2024 and 2023, respectively. Excludes the Empire State Building broadcasting licenses and Observatory operations.

(5)The tables above exclude our multifamily properties.


	Three Months Ended March 31,
Total Commercial Portfolio	2024		2023
Capital expenditures (1)	$	20,144	$	12,945

_______________

(1)~~Excludes~~Includes all capital expenditures, excluding tenant improvements and leasing commission costs.

As of ~~September~~March 3031, ~~2023~~2024, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $~~139~~125.32 million for tenant improvements and leasing commissions. We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand, ~~additional property level mortgage financings~~ and borrowings ~~under the unsecured revolving credit facility~~.

Capital expenditures are considered part of both our short-term and long-term liquidity requirements. We intend to fund capital improvements through a combination of operating cash flow, cash on hand and borrowings ~~under the unsecured revolving credit facility~~.

Off-Balance Sheet Arrangements

As of ~~September~~March 3031, ~~2023~~2024, we did not have any off-balance sheet arrangements.

Distribution Policy

We intend to distribute our net taxable income to our ~~security~~securityholders ~~holders~~ in a manner intended to satisfy REIT distribution requirements and to avoid U.S. federal income tax liability.

Before we pay any distribution, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and obligations to make payments of principal and interest, if any. However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy REIT distribution requirements.

use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy REIT distribution requirements.

Distribution to Equity Holders

Distributions and dividends amounting to $3010.8 6 million and $329.27 million have been made to equity holders for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, respectively.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors authorized the repurchase of up to $500 million of ESRT Class A common stock and ~~the~~our ~~Operating Partnership’s~~ Series ES, Series 250 and Series 60 operating partnership units from January 1, ~~2022~~2024 through December 31, ~~2023~~2025. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT's and our discretion without prior notice. As of March 31, 2024, we had $500 million remaining of the authorized repurchase amount. There were no ~~purchases~~repurchases of equity securities induring the three months ended ~~September~~March 3031, ~~2023~~2024. See "Financial Statements - Note 10. Capital."

Cash Flows

Comparison of ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2023~~2024 to the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2022~~2023

Net cash. Cash and cash equivalents and restricted cash were $~~421~~385.03 million and $~~439~~380.8 million, respectively, as of ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023. The ~~decrease~~increase was primarily ~~due to~~ the ~~acquisition~~result of ~~real estate property in December 2022 and September 2023 and increased spending for capital expenditures, partially offset by net proceeds from~~ the ~~disposition~~following ofchanges ~~properties~~ in ~~December~~cash ~~2022 and February and April 2023 and lower repurchases of common shares.~~flows:

Operating activities. Net cash provided by operating activities ~~increased~~decreased by $2215.05 million to $~~196~~70.09 million due to ~~increased~~changes ~~observatory~~in ~~operating~~working ~~income~~capital, ~~and~~particularly ~~changes~~a reduction in ~~working~~security ~~capital~~deposits as more tenants replaced cash deposits with letters of credit in the current period.

Investing activities. Net cash used in investing activities ~~decreased~~increased by $4968.7 million to $3971.43 million primarily due to ~~net~~the acquisition of non-controlling interests in other partnerships (see "Financial Statements - Note 3. Acquisitions and Dispositions") as well as there being no proceeds from the disposition of ~~69-97~~property ~~and~~in ~~103-107~~the ~~Main~~current ~~Street~~period. inAlso ~~Westport~~during the current period, ~~Connecticut~~we inpaid ~~February~~post-closing ~~2023,~~costs ~~and~~on ~~500~~a ~~Mamaroneck~~prior inperiod ~~Harrison,~~sale ~~New~~of ~~York~~property inand ~~April~~spent ~~2023~~more on capital expenditures.

Financing activities. Net cash used in financing activities ~~decreased~~increased by $~~69.~~3.7 million to $5021.43 million primarily due to ~~lower~~financing ~~repurchases~~costs in connection with the recast of ~~common~~our ~~shares~~revolving credit and term loan facilities in the current period.

Net Operating Income ~~("NOI")~~

~~Our~~Net ~~financial reports include a discussion of property net~~ operating income, or ("NOI.") ~~NOI~~ is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt, impairment charges and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from NOI because it is specific to the particular financing capabilities and constraints of the owner. ~~and~~The cost of funds is eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our office or retail properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue, generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

3532

changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding the components of net income that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly titled measures and, accordingly, our NOI may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do.

The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI for the periods presented (amounts in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2023

2022

2023

2022

2024

2023

~~(unaudited)~~

(unaudited)

~~(unaudited)~~

Net income

~~19,928~~

~~10,118~~

6810,~~577~~215

4111,~~592~~694

Add:

General and administrative expenses

~~16,012~~

~~15,725~~

4715,~~795~~972

4515,~~287~~708

Depreciation and amortization

~~46,624~~

~~46,984~~

~~140~~46,~~312~~081

~~172~~47,~~394~~408

Interest expense

~~25,382~~

~~25,516~~

7625,~~091~~128

7525,~~572~~304

Income tax expense (benefit)

1,409

1,457

923

224

Loss on early extinguishment of debt

553

—

Income tax benefit

(655)

(1,219)

Less:

Gain on disposition of property

—

(29,261)

(27,170)

Gain on sale/disposition of property

—

(15,696)

Third-party management and other fees

~~(268)~~

~~(389)~~

(~~1,076~~265)

(~~1,025~~427)

Interest income

~~(4,462)~~

~~(1,564)~~

(104,~~396~~178)

(2,~~144~~595)

Net operating income

~~104,625~~

~~97,847~~

~~292~~92,~~965~~851

~~304~~80,~~730~~177

Other Net Operating Income Data

Straight-line rental revenue

~~5,015~~

~~7,341~~

173,~~430~~061

~~18,533~~556

Net increase in rental revenue from the amortization of above-and below-market lease assets and liabilities

~~554~~

~~677~~

~~1,932~~514

~~4,136~~703

Amortization of acquired below-market ground leases

~~1,957~~

51,~~873~~958

Funds from Operations ("FFO")

We present below a discussion of FFO. We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-off of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures. FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income

3633

much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.

Modified Funds From Operations ("Modified FFO")

Modified FFO adds back an adjustment for any above or below-market ground lease amortization to traditionally defined FFO. We believe this a useful supplemental measure in evaluating our operating performance due to the non-cash accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results. We present Modified FFO because we believe it is an important supplemental measure of our operating performance in that it adds back the non-cash amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs. Modified FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Modified FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.

Core Funds From Operations

Core FFO adds back to Modified FFO the following ~~items~~item: ~~IPO litigation expense, severance expenses and~~ loss on early extinguishment of debt. The Company believes Core FFO is an important supplemental measure of its operating performance because it excludes ~~items associated with its IPO and formation transactions and other~~ non-recurring items. There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2023

2022

2023

2022

2024

2023

~~(unaudited)~~

(unaudited)

~~(unaudited)~~

Net income

~~19,928~~

~~10,118~~

6810,~~577~~215

4111,~~592~~694

Noncontrolling interests in other partnerships

(111)

(69)

271

Non-controlling interests in other partnerships

(4)

Private perpetual preferred unit distributions

~~(1,050)~~

(31,~~151~~050)

Real estate depreciation and amortization

~~45,174~~

~~45,461~~

~~136~~44,~~085~~857

~~167~~46,~~446~~024

Gain on disposition of property

—

~~(29,261)~~—

(2715,~~170~~696)

FFO attributable to common unitholders

~~63,941~~

~~54,578~~

~~172~~54,~~181~~018

~~178~~41,~~988~~015

Amortization of below-market ground leases

~~1,957~~

51,~~873~~958

Modified FFO attributable to common unitholders

~~65,898~~

~~56,535~~

~~178~~55,~~054~~976

~~184~~42,~~861~~973

Core FFO attributable to common unitholders

65,898

56,535

178,054

184,861

Loss on early extinguishment of debt

553

—

Core FFO attributable to common unitholders

56,529

42,973

Weighted average Operating Partnership units

Basic

~~262,756~~

~~266,035~~

~~263~~264,~~379~~562

~~269~~264,~~880~~493

Diluted

~~266,073~~

~~267,121~~

~~265~~267,~~269~~494

~~270~~265,~~966~~197

Factors That May Influence Future Results of Operations

Leasing

Due to the relatively small number of leases that are signed in any particular quarter, one or more larger leases may have a disproportionately positive or negative impact on average rent, tenant improvement and leasing commission costs for that period. As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years. Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant. Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter.

37As of March 31, 2024, there were approximately 0.8 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 8.9% of the net rentable square footage of the properties in our commercial portfolio. In addition, leases representing 6.2% and 6.5% of net rentable square footage of the properties in our commercial portfolio will expire in 2024 and in 2025, respectively. These leases are expected to represent approximately 6.0% and 7.5%, respectively, of our annualized rent for such periods. Our revenues and results of operations can be impacted by expiring leases that are not renewed or re-leased or that are renewed or re-leased at base rental rates equal to, above or below the current average base rental rates. Further, our revenues and results of operations can also be affected by downtime after space is vacated and the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant.

activity over multiple quarters or years. Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant. Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter.

As of September 30, 2023, there were approximately 0.9 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 9.5% of the net rentable square footage of the properties in our portfolio. In addition, leases representing 2.9% and 5.3% of net rentable square footage of the properties in our portfolio will expire in 2023 and in 2024, respectively. These leases are expected to represent approximately 2.9% and 5.3%, respectively, of our annualized rent for such periods. Our revenues and results of operations can be impacted by expiring leases that are not renewed or re-leased or that are renewed or re-leased at base rental rates equal to, above or below the current average base rental rates. Further, our revenues and results of operations can also be affected by downtime after space is vacated and the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant.

Observatory Operations

For the three months ended ~~September~~March 3031, ~~2023~~2024, the ~~observatory~~Observatory hosted ~~743~~485,000 visitors, compared to ~~687~~443,000 visitors for the three months ended ~~September~~March 31, 302023, ~~2022. Our~~an ~~return~~increase of ~~attendance~~9%. toObservatory ~~pre-pandemic~~revenue ~~levels~~for isthe ~~closely~~three ~~tied~~months toended ~~domestic~~March 31, ~~and~~2024 ~~international~~was ~~travel~~$24.6 ~~trends~~million, ~~our~~an ~~new~~11% ~~reservations-only~~increase ~~model~~from of$22.2 ~~operation,~~million ~~and~~for ~~our~~the ~~desire~~three tomonths ~~provide~~ended aMarch 31, ~~better~~2023. ~~experience~~The ~~with~~Observatory ~~fewer~~revenue ~~crowds~~increase towas ~~visitors~~driven ~~from~~by ~~whom we receive~~ higher ~~revenues~~visitation ~~per~~levels ~~person~~in 2024.

Observatory ~~revenue~~revenues ~~for~~and ~~the~~admissions ~~three~~are ~~months~~dependent ~~ended~~upon ~~September~~the following: (i) ~~30,~~the ~~2023~~number ~~was~~of ~~$37.6~~tourists ~~million,~~(domestic ~~compared~~and international) who come to ~~$33.1~~New ~~million~~York ~~for~~City and visit the ~~three~~Observatory, ~~months~~as ~~ended~~well ~~September~~as ~~30,~~any ~~2022.~~related ~~The~~tourism ~~observatory~~trends; ~~revenue~~(ii) the ~~increase~~prices ~~was~~per ~~driven~~admission bythat ~~higher~~can ~~visitation~~be ~~levels~~charged; (iii) seasonal trends affecting the number of visitors to the Observatory; (iv) competition, in ~~2023~~particular from other new and existing observatories; and (v) weather trends.

Observatory revenues and admissions are dependent upon the following: (i) the number of tourists (domestic and international) who come to New York City and visit the observatory, as well as any related tourism trends; (ii) the prices per admission that can be charged; (iii) seasonal trends affecting the number of visitors to the observatory; (iv) competition, in particular from other new and existing observatories; and (v) weather trends.

Outlook

Year to date in ~~2023~~2024, ESRT has seen sustained demand for our properties, marked by solid leasing activity and ~~observatory~~Observatory performance.

We believe the global economy, including the real estate sector, currently navigates an environment of uncertainty around inflation, rising interest rates, reduced commercial real estate new loans, questions on the direction of capital markets, risk of recession and geopolitical unrest. In particular, there have been concerns about the softening of the commercial real estate market, and particularly the office real estate market, amidst refinancing challenges of existing low interest rate loans and associated reduced new loan availability and increased costs of loans and related increased expectations of equity returns, coupled with the gradual pace of return-to-office and its impact on the physical utilization of space and asset valuations. Additionally, the risk of a global economic recession could impact the number of visitors to the Empire State Building Observatory, as well as our pricing power.

Despite this global economic backdrop, we believe that ESRT is in a good competitive position with diversified drivers of income across office, retail, multifamily and the Empire State Building Observatory. ESRT’s New York City-focused portfolio is modernized, amenitized, well-located and energy efficient, with indoor environmental quality, competitive rental rates and strong leased percentages. We believe our business is further fortified by the continued performance of our Observatory, ~~which was ranked the #1~~ attraction ~~in the U~~.~~S. by Tripadvisor’s 2023 Travelers’ Choice Best of the Best Awards for a second consecutive year.~~

In addition to our diversified portfolio, our business is supported by a well-positioned balance sheet, modest leverage and good access to liquidity as set forth herein. The absence of near term debt maturities or floating rate debt exposure provides an added degree of security in a rising rate environment. We have been able to execute on capital recycling, acquisitions, and buybacks. As we navigate these uncertain times, we remain prepared for various challenges and situations.

Critical Accounting Estimates

Refer to our Annual Report for a discussion of our critical accounting estimates. There were no material changes to our critical accounting estimates disclosed in our Annual Report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. We are exposed to interest rate changes primarily on our unsecured revolving credit facility and debt refinancings. In order to mitigate our interest rate risk, we may borrow at fixed rates or may enter into derivative financial instruments such as interest rate swaps or caps on floating rate financial instruments. We are not subject to foreign currency risk and we do not enter into derivative or interest rate transactions for speculative purposes.

As of ~~September~~March 3031, ~~2023~~2024, we have interest rate SOFR swap and cap agreements with an aggregate notional value of $~~573~~586.63 million and which mature between October 1, 2024 and November 1, 2033. The "variable to fixed" interest rate swaps have been designated as cash flow hedges and are deemed highly effective with fair values in an asset position of $2516.67 million and are included in prepaid expenses and other assets on the condensed consolidated balance ~~sheets~~sheet as of ~~September~~March 3031, ~~2023~~2024.

As of ~~September~~March 3031, ~~2023~~2024, the weighted average interest rate on the $2.2 billion of fixed-rate indebtedness outstanding was 3.997% per annum, with maturities at various dates through March 17, 2035.

As of ~~September~~March 3031, ~~2023~~2024, the fair value of our outstanding debt was approximately $2.0 billion, which was approximately $~~250~~210.86 million less than the book value as of such date. Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including ESRT's Chief Executive Officer, its President, and its Executive Vice President, Chief ~~Operating~~Financial Officer ~~and~~& Chief ~~Financial~~Accounting Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of ~~September~~March 3031, ~~2023~~2024, the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of ESRT management, including ESRT's Chief Executive Officer, ~~and~~ its ~~Executive Vice~~ President, and its Chief ~~Operating~~Financial Officer ~~and~~& Chief ~~Financial~~Accounting Officer, regarding the effectiveness of our disclosure controls and procedures at the end of the period covered by this report. Based on the foregoing, ESRT's Chief Executive Officer, ~~and~~ its ~~Executive Vice~~ President, and its Chief ~~Operating~~Financial Officer ~~and~~& Chief ~~Financial~~Accounting Officer concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including ESRT's Chief Executive Officer, ~~and~~ its ~~Executive Vice~~ President, and its Chief ~~Operating~~Financial Officer ~~and~~& Chief ~~Financial~~Accounting Officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No changes to our internal control over financial reporting were identified in connection with the evaluation referenced above that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

39See “Financial Statements – Note 9 Commitments and Contingencies” for a description of legal proceedings.

~~See “Financial Statements – Note 9. Commitments and Contingencies” for a description of legal proceedings.~~36

ITEM 1A. RISK FACTORS

As of ~~September~~March 3031, ~~2023~~2024, there have been no material changes to the risk factors. See the section entitled "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 and any additional factors that may be contained in any filing we make with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Recent Purchases of Equity Securities

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors authorized the repurchase of up to $500 million of our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units during the period from January 1, 2022 through December 31, 2023. Under the program, ESRT may purchase our Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice. As of September 30, 2023, we had approximately $396.7 million remaining of the authorized repurchase amount.

There were no repurchases of equity securities in the three-month period ended September 30, 2023 under the repurchase program described above.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

(a) None.

(b) None.

(c) During the three months ended ~~September 30~~March 31, ~~2023~~2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS

Exhibit No.			Description
10.1*			Second Amended and Restated Credit Agreement, dated March 8, 2024, among Empire State Realty OP, L.P., as borrower, Empire State Realty Trust, Inc., Bank of America, N.A., as administrative agent and the lenders and letter of credit issuers party thereto.
10.2*			Third Amendment to Credit Agreement, dated March 13, 2024, among Empire State Realty OP, L.P., as borrower, Empire State Realty Trust, Inc., the subsidiary guarantors party thereto, Wells Fargo National Association, as administrative agent and the lenders party thereto.
10.3			Note Purchase Agreement, dated April 10, 2024, among Empire State Realty OP, L.P., Empire State Realty Trust, Inc. and the purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed April 11, 2024).
31.1*			Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*			XBRL Taxonomy Extension Schema Document
101.CAL*			XBRL Taxonomy Extension Calculation Document
101.DEF*			XBRL Taxonomy Extension Definitions Document
101.LAB*			XBRL Taxonomy Extension Labels Document
101.PRE*			XBRL Taxonomy Extension Presentation Document
104			Cover Page Interactive Data File (contained in Exhibit 101)
Notes:
* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EMPIRE STATE REALTY OP, L.P.

By: Empire State Realty Trust, Inc., its general partner

Date:	~~November~~May 87, ~~2023~~2024	By: /s/ ~~Christina~~Stephen ~~Chiu~~V. Horn
		Executive Vice President, Chief
		Stephen V. Horn
		Operating Officer and Chief
		Executive Vice President, Chief Financial Officer & Chief Accounting Officer
		Financial Officer
		(Principal Financial and Accounting Officer)
		(Principal Financial Officer)
Date:	November 8, 2023	By: /s/ Stephen V. Horn
		Senior Vice President,
		Chief Accounting Officer
		(Principal Accounting Officer)

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