What changed in this filing

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Item 1. Financial Statements

2024-10-08 compared with 2024-05-07 · 259 added, 155 removed, 631 unchanged (40% of the section changed)

3 unchanged sentences

(amounts in thousands, except per unit amounts)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

ASSETS (unaudited)

6 unchanged sentences

Commercial real estate properties, net 2,297,263 2,405,130

Contract asset 166,955 —

Cash and cash equivalents 535,533 346,620

13 unchanged sentences

Unsecured revolving credit facility 120,000 —

Debt associated with property in receivership 177,667 —

Accrued interest associated with property in receivership 1,589 —

Accounts payable and accrued expenses 90,908 99,756

25 unchanged sentences

(amounts in thousands, except per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Rental revenue $ 152,470 $ 154,603 $ 306,352 $ 294,694

16 unchanged sentences

Interest expense ( 25,323 ) ( 25,405 ) ( 50,451 ) ( 50,709 )

Interest expense associated with property in receivership ( 628 ) — ( 628 ) —

Loss on early extinguishment of debt — — ( 553 ) —

1 unchanged sentence

Income before income taxes 29,305 37,688 38,865 48,163

Income tax benefit 655 1,219

Income tax (expense) benefit ( 750 ) ( 733 ) ( 95 ) 486

Net income 28,555 36,955 38,770 48,649

13 unchanged sentences

(amounts in thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 28,555 $ 36,955 $ 38,770 $ 48,649

Other comprehensive income (loss):

Unrealized gain (loss) on valuation of interest rate swap agreements 8,198 ( 5,402 )

Unrealized gain on valuation of interest rate swap agreements 2,853 11,935 11,051 6,533

Amount reclassified into interest expense ( 667 ) ( 1,882 ) ( 2,991 ) ( 3,154 )

Other comprehensive income (loss) 5,874 ( 6,674 )

Other comprehensive income 2,186 10,053 8,060 3,379

Comprehensive income 30,741 47,008 46,830 52,028

Net (income) loss attributable to non-controlling interests in other partnerships — ( 1 ) ( 4 ) 42

Other comprehensive loss attributable to non-controlling interest in other partnerships — 381

Other comprehensive (income) loss attributable to non-controlling interest in other partnerships — ( 285 ) — 96

Comprehensive income attributable to OP unitholders $ 30,741 $ 46,722 $ 46,826 $ 52,166

2 unchanged sentences

Condensed Consolidated Statements of Capital

For The Three Months Ended March 31, 2024 and 2023

For The Three Months Ended June 30, 2024 and 2023

(amounts in thousands)

2 unchanged sentences

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 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

Conversion of operating partnership units to ESRT Partner's Capital — — 697 1,966 ( 220 ) ( 1,849 ) ( 339 ) ( 89 ) ( 102 ) ( 20 ) ( 36 ) ( 8 ) — —

Repurchases of common shares — — — — — — — — — — — — — —

Equity compensation — — ( 30 ) 541 192 5,847 — — — — — — — 6,388

Distributions — ( 1,051 ) — ( 5,787 ) — ( 2,878 ) — ( 670 ) — ( 172 ) — ( 89 ) — ( 10,647 )

Net income — 1,051 — 17,071 — 7,636 — 1,999 — 523 — 275 — 28,555

Other comprehensive income — — — 1,366 — 602 — 154 — 42 — 22 — 2,186

Balance at June 30, 2024 6,224 $ 29,940 165,465 $ 1,011,279 82,238 $ 701,933 19,048 $ 6,116 4,889 $ 1,236 2,537 $ 712 $ — $ 1,751,216

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

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

Conversion of operating partnership units to ESRT Partner's Capital — — 726 2,475 ( 297 ) ( 2,474 ) ( 258 ) ( 6 ) ( 123 ) 5 ( 48 ) — — —

Repurchases of common shares — — ( 1,218 ) ( 7,411 ) — — — — — — — — — ( 7,411 )

Contributions from consolidated joint ventures — — — — — — — — — — — — 94 94

Equity compensation — — ( 7 ) 448 196 4,921 — — — — — — — 5,369

Distributions — ( 1,051 ) — ( 5,622 ) — ( 2,840 ) — ( 718 ) — ( 189 ) — ( 94 ) — ( 10,514 )

Net income — 1,051 — 21,854 — 10,099 — 2,837 — 754 — 359 1 36,955

Other comprehensive income — — — 5,955 — 2,738 — 772 — 205 — 98 285 10,053

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

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Six Months Ended June 30, 2024 and 2023

(amounts in thousands)

General Partner Limited Partners

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

6 unchanged sentences

Other comprehensive income — — — 5,088 — 2,174 — 571 — 149 — 78 — 8,060

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

Balance at June 30, 2024 6,224 $ 29,940 165,465 $ 1,011,279 82,238 $ 701,933 19,048 $ 6,116 4,889 $ 1,236 2,537 $ 712 $ — $ 1,751,216

3 unchanged sentences

Conversion of operating partnership units to ESRT Partner's Capital — — 1,532 5,019 ( 579 ) ( 4,907 ) ( 655 ) ( 95 ) ( 178 ) ( 4 ) ( 120 ) ( 13 ) — —

— — 806 2,544 ( 282 ) ( 2,433 ) ( 397 ) ( 89 ) ( 55 ) ( 9 ) ( 72 ) ( 13 ) — —

Repurchases of common shares — — ( 933 ) ( 5,694 ) — — — — — — — — — ( 5,694 )

Contributions from consolidated joint ventures — — — — — — — — — — — — 112 112

Repurchases of common units — — ( 2,151 ) ( 13,105 ) — — — — — — — — — ( 13,105 )

Equity compensation — — 320 469 1,715 9,274 — — — — — — — 9,743

Distributions — ( 2,101 ) — ( 11,297 ) — ( 4,846 ) — ( 1,442 ) — ( 382 ) — ( 189 ) — ( 20,257 )

Net income — 1,050 — 6,519 — 2,993 — 844 — 224 — 107 ( 43 ) 11,694

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

Net income (loss) — 2,101 — 28,373 — 13,092 — 3,681 — 978 — 466 ( 42 ) 48,649

Other comprehensive income — — — 2,116 — 976 — 275 — 73 — 35 ( 96 ) 3,379

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

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

2 unchanged sentences

(amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows From Operating Activities

19 unchanged sentences

Acquisition of non-controlling interests in other partnerships ( 14,226 ) —

Reduction of cash from derecognition of assets ( 12,876 ) —

Net proceeds from disposition of property — 88,910

2 unchanged sentences

Additions to building and improvements ( 96,517 ) ( 76,166 )

Net cash used in investing activities ( 71,269 ) ( 2,631 )

Net cash (used in) provided by investing activities ( 127,662 ) 12,744

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

2 unchanged sentences

(amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows From Financing Activities

Repayment of mortgage notes payable ( 2,961 ) ( 4,270 )

Proceeds from unsecured senior notes 225,000 —

Proceeds from unsecured term loan 95,000 —

2 unchanged sentences

Deferred financing costs ( 11,636 ) —

Contributions from consolidated joint ventures — 112

Repurchases of common units — ( 13,105 )

Distributions ( 21,199 ) ( 20,257 )

Net cash used in financing activities ( 21,302 ) ( 17,579 )

Net cash provided by (used in) financing activities 189,204 ( 37,520 )

Net increase (decrease) in cash and cash equivalents and restricted cash 169,592 81,130

15 unchanged sentences

Derivative instruments at fair values included in prepaid expenses and other assets 16,239 19,329

Derivative instruments at fair values included in accounts payable and accrued expenses — 2,171

Contract asset 166,955 —

Debt associated with property in receivership 177,667 —

Accrued interest associated with property in receivership 1,589 —

Conversion of operating partnership units to ESRT partner's capital 9,098 5,019

7 unchanged sentences

(the "Operating Partnership") is the entity through which Empire State Realty Trust, Inc.

ESRT), a NYC-focused REIT that owns and operates 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 all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

ESRT), a NYC-focused real estate investment trust ("REIT") that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets, conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

ESRT’s flagship Empire State Building, the “World's Most Famous Building,” features its iconic Observatory that was declared the #1 Attraction in the World - and the #1 Attraction in the U.S.

for the third consecutive year – in Tripadvisor’s 2024 Travelers’ Choice Awards:

Best of the Best Things to Do.

The Company is a recognized leader in energy efficiency and indoor environmental quality.

As of March 31, 2024, ESRT’s portfolio was 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 either office or residential per local zoning.

As of June 30, 2024, our portfolio was comprised of approximately 7.9 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units.

Our office portfolio included 10 properties (including three long-term ground leasehold interests).

Nine of these office properties are located in midtown Manhattan and encompass approximately 7.6 million rentable square feet of office space and 0.5 million rentable square feet of retail space, including the Empire State Building.

The remaining office property encompasses approximately 0.3 million rentable square feet and is located in Stamford, Connecticut, with immediate access to mass transportation.

Additionally, we have entitled land adjacent to the Stamford office property that can support the development of either office or residential per local zoning.

Our multifamily portfolio included 727 residential units in New York City.

1 unchanged sentence

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 March 31, 2024, ESRT owned approximately 60.1 % of our operating partnership units.

As of June 30, 2024, ESRT owned approximately 60.3 % of our operating partnership units.

Summary of Significant Accounting Policies

17 unchanged sentences

The primary beneficiary is required to consolidate the VIE.

We had no VIEs as of March 31, 2024 and December 31, 2023.

We had no VIEs as of June 30, 2024 and December 31, 2023.

We will assess the accounting treatment for each investment we may have in the future.

12 unchanged sentences

In September 2023, we closed on the acquisition of a retail property in Williamsburg, Brooklyn, located on the corner of North 6 th 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 March 31, 2024.

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):

The following table summarizes properties acquired during the six and twelve months ended June 30, 2024 and December 31, 2023, respectively (amounts in thousands):

Property Date Acquired Land Building and Improvements Assets Liabilities Total*

2 unchanged sentences

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

As of March 31, 2024, we own 100 % of the interests in these assets.

As of June 30, 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.

Subsequent to quarter-end, in July 2024, we entered into two purchase agreements, each relating to the acquisition of separate prime retail portfolios located on North 6 th Street in the Williamsburg neighborhood of Brooklyn, New York for $ 103 million and $ 92 million, respectively.

These acquisitions are subject to customary closing conditions and are anticipated to close in the third quarter of 2024.

Property Dispositions

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

The following table summarizes properties disposed of during the six and twelve months ended June 30, 2024 and December 31, 2023, respectively (amounts in thousands):

Property Date of Disposal Sales Price Gain on Disposition

First Stamford Place, Stamford, Connecticut 5/22/2024 N/A $ 10,803

500 Mamaroneck Avenue, Harrison, New York* 4/5/2023 $ 53,000 $ 11,075

2 unchanged sentences

We funded the buyer for these costs and we have no further obligations or contingencies related to this property.

In April 2024, we worked with the First Stamford Place mortgage lender to structure a consensual foreclosure.

On May 22, 2024, a receiver was appointed and we ended our management of the property.

In connection with this, we removed the related assets and liabilities from our condensed consolidated balance sheet as of June 30, 2024 and recognized a gain of $ 10.8 million that is reflected in the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

We also recorded a contract asset of $ 167.0 million and the related debt associated with property under receivership and accrued interest associated with property under receivership of $ 177.7 million and $ 1.6 million, respectively, are included in our condensed consolidated balance sheet as of June 30, 2024.

This contract asset represents our right to debt extinguishment once the foreclosure process on the First Stamford Place property is completed.

Deferred Costs, Acquired Lease Intangibles and Goodwill

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

March 31, 2024 December 31, 2023

Deferred costs, net, consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Leasing costs $ 220,917 $ 224,295

1 unchanged sentence

Acquired above-market leases 21,565 23,918

398,705 406,480

Total deferred costs, excluding net deferred financing costs 388,109 406,480

accumulated amortization ( 225,683 ) ( 236,900 )

Total deferred costs, net, excluding net deferred financing costs $ 162,426 $ 169,580

At March 31, 2024 and December 31, 2023, $ 10.2 million and $ 2.9 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 $ 5.8 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense related to acquired lease intangibles was $ 1.3 million and $ 2.4 million for the three months ended March 31, 2024 and 2023, respectively.

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

March 31, 2024 December 31, 2023

At June 30, 2024 and December 31, 2023, $ 9.9 million and $ 2.9 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 $ 5.2 million and $ 11.0 million for the three and six months ended June 30, 2024, respectively, and $ 6.1 million and $ 11.9 million for the three and six months ended June 30, 2023, respectively.

Amortization expense related to acquired lease intangibles was $ 1.2 million and $ 2.5 million for the three and six months ended June 30, 2024, respectively, and $ 2.3 million and $ 4.6 million for the three and six months ended June 30, 2023, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Acquired below-market ground leases $ 396,916 $ 396,916

1 unchanged sentence

Acquired below-market ground leases, net $ 317,326 $ 321,241

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Acquired below-market leases $ ( 51,883 ) $ ( 55,155 )

1 unchanged sentence

Acquired below-market leases, net $ ( 11,872 ) $ ( 13,750 )

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.

As of March 31, 2024 and December 31, 2023, we had goodwill of $ 491.5 million.

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $ 0.5 million and $ 1.0 million for the three and six months ended June 30, 2024, respectively, and $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and December 31, 2023, 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.

7 unchanged sentences

We will continue to assess the impairment of the Observatory reporting unit goodwill going forward.

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

Principal Balance As of March 31, 2024

March 31, 2024 December 31, 2023 Stated

Debt consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

Principal Balance As of June 30, 2024

June 30, 2024 December 31, 2023 Stated

Rate Effective

1 unchanged sentence

Metro Center (3)

$ 78,774 $ 80,070 3.59 % 3.67 % 11/5/2024

10 Union Square 50,000 50,000 3.70 % 3.97 % 4/1/2026

23 unchanged sentences

Series H 75,000 75,000 3.73 % 5.00 % 3/17/2035

Series I 155,000 — 7.20 % 7.39 % 6/17/2029

Series J 45,000 — 7.32 % 7.46 % 6/17/2031

Series K 25,000 — 7.41 % 7.52 % 6/17/2034

Unsecured term loan facility (5)

12 unchanged sentences

______________

(1) The effective rate is the yield as of March 31, 2024 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(1) The effective rate is the yield as of June 30, 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 $ 11.9 million loan bearing interest at 6.25 %.

In April 2024, we worked with the First Stamford P lace 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 March 31, 2024, we were in compliance with all debt covenants.

(3) In July 2024, this loan was refinanced and commencing in November 2024 the new principal balance of $ 71.6 million will be interest only at the same interest rate of 3.59 %, with a maturity of November 2029, inclusive of a one-year extension option.

(4) In April 2024, we worked with the First Stamford P lace mortgage lender to structure a consensual foreclosure.

In May 2024, the First Stamford Place property was placed in receivership and accordingly, we reclassified the related debt to be included in debt associated with property under receivership in our condensed consolidated balance sheet as of June 30, 2024, consisting of a $ 164 million mortgage loan bearing interest at 4.09 % and a $ 11.9 million loan bearing interest at 6.25 %.

See also Note 3 Acquisitions and Dispositions.

(5) At June 30, 2024, we were in compliance with all debt covenants.

Principal Payments

Aggregate required principal payments at March 31, 2024 are as follows (amounts in thousands):

Aggregate required principal payments at June 30, 2024 are as follows (amounts in thousands):

Year Amortization Maturities Total

7 unchanged sentences

Deferred Financing Costs

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

March 31, 2024 December 31, 2023

Deferred financing costs, net, consisted of the following at June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Financing costs $ 52,498 $ 43,473

1 unchanged sentence

Total deferred financing costs, net $ 20,737 $ 12,365

Amortization expense related to deferred financing costs was $ 1.0 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense related to deferred financing costs was $ 1.0 million and $ 2.1 million for the three and six months ended June 30, 2024, respectively, and $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2023, respectively.

Unsecured Revolving Credit and Term Loan Facilities

2 unchanged sentences

We may request that the BofA Credit Facilities be increased through one or more increases in the Revolving Credit Facility or one or more increases in the BofA Term Loan Facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount under the second amended and restated credit agreement not to exceed $ 1.5 billion.

The new 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 new BofA Term Loan Facility matures on March 8, 2029, inclusive of two twelve-month extension periods and replaced the existing term loan facility that was due to mature in March 2025.

Initial interest rates on the new BofA Credit Facilities, which may change based on our leverage levels, are SOFR plus a benchmark adjustment of 10.0 basis points ("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.

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.

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 was due to mature in March 2025.

Initial interest rates on the BofA Credit Facilities, which may change based on our leverage levels, are SOFR plus a benchmark adjustment of 10.0 basis points ("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.

As of June 30, 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”).

3 unchanged sentences

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.

As of June 30, 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.

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 REIT qualification, and occurrence of a change of control.

As of June 30, 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.

On April 10, 2024, we entered into a Purchase Agreement pursuant to which we issued and sold an aggregate $ 225 million 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 of the Series I-K notes closed on June 17, 2024.

The issue price for the notes was 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 plus a make-whole premium as set forth in the Purchase Agreement.

The terms of our senior unsecured notes, including the Series I-K 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 March 31, 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.

As of June 30, 2024, we were in compliance with these covenants.

Accounts Payable and Accrued Expenses

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

March 31, 2024 December 31, 2023

Accrued capital expenditures $ 48,771 $ 51,815

Accounts payable and accrued expenses consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Capital expenditures included in accounts payable and accrued expenses $ 48,510 $ 51,815

Accounts payable and accrued expenses 38,050 44,169

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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 March 31, 2024, we did not have derivatives in a net liability position.

As of March 31, 2024 and December 31, 2023, we had interest rate swaps and caps with an aggregate notional value of $ 586.3 million and $ 573.2 million, respectively.

As of June 30, 2024, we did not have derivatives in a net liability position.

As of June 30, 2024 and December 31, 2023, we had interest rate swaps and caps with an aggregate notional value of $ 585.8 million and $ 573.2 million, respectively.

The notional value does not represent exposure to credit, interest rate or market risks.

As of March 31, 2024, the fair value of our derivative instruments in an asset position amounted to $ 16.7 million, which is included in prepaid expenses and other assets on the condensed consolidated balance sheet.

As of June 30, 2024, the fair value of our derivative instruments in an asset position amounted to $ 16.2 million, which is included in prepaid expenses and other assets on the condensed consolidated balance sheet.

As of December 31, 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 sheet.

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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 March 31, 2024 and 2023, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $ 5.9 million and $( 6.7 ) million for the three months ended March 31, 2024 and 2023, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income.

As of June 30, 2024 and 2023, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $ 2.2 million and $ 8.1 million for the three and six months ended June 30, 2024, respectively, and a net unrealized gain of $ 10.1

million and $ 3.4 million for the three and six months ended June 30, 2023, 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 $ 6.3 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.

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):

March 31, 2024 December 31, 2023

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Derivative Notional Amount Receive Rate Pay Rate Effective Date Expiration Date Asset Liability Asset Liability

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$ 16,239 $ — $ 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 months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended

Effects of Cash Flow Hedges March 31, 2024 March 31, 2023

Amount of gain (loss) recognized in other comprehensive income (loss) $ 8,198 $ ( 5,402 )

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 months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended

Effects of Cash Flow Hedges March 31, 2024 March 31, 2023

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 six months ended June 30, 2024 and 2023 (amounts in thousands):

Three Months Ended Six Months Ended

Effects of Cash Flow Hedges June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Amount of gain recognized in other comprehensive income (loss) $ 2,853 $ 11,935 $ 11,051 $ 6,533

Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense 667 1,882 2,991 3,154

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 six months ended June 30, 2024 and 2023 (amounts in thousands):

Three Months Ended Six Months Ended

Effects of Cash Flow Hedges June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded $ ( 25,323 ) $ ( 25,405 ) $ ( 50,451 ) $ ( 50,709 )

Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense 2,324 1,272

Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense 667 1,882 2,991 3,154

Fair Valuation

The estimated fair values at March 31, 2024 and December 31, 2023 were determined by management, using available market information and appropriate valuation methodologies.

The estimated fair values at June 30, 2024 and December 31, 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.

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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

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.

Although the majority of the inputs used to value 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 March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024

The fair values of our mortgage notes payable, senior unsecured notes (Series A, B, C, D, E, F, G, H, I, J, and K), 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 June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024

Estimated Fair Value

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Mortgage notes payable 700,348 609,545 — — 609,545

Senior unsecured notes - Series A, B, C, D, E, F, G and H 973,926 872,714 — — 872,714

Senior unsecured notes - Series A, B, C, D, E, F, G, H, I, J, and K 1,196,831 1,106,300 — — 1,106,300

Unsecured term loan facilities 268,580 270,000 — — 270,000

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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 March 31, 2024 and December 31, 2023.

The fair value of debt associated with property in receivership, which has a carrying value of $ 177.7 million as of June 30, 2024, and categorized as Level 3 of the fair value hierarchy, was $ 156.7 million as of June 30, 2024.

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of June 30, 2024 and December 31, 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.

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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 March 31, 2024 and 2023 condensed consolidated statements of operations as rental revenue.

Operating expense reimbursements are reflected in our June 30, 2024 and 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 months ended March 31, 2024 and 2023 are as follows (amounts in thousands):

Three Months Ended

Rental revenue March 31, 2024 March 31, 2023

The components of rental revenue for the three and six months ended June 30, 2024 and 2023 are as follows (amounts in thousands):

Three Months Ended Six Months Ended

Rental revenue June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Fixed payments 136,235 138,318 272,588 262,882

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Total rental revenue $ 152,470 $ 154,603 $ 306,352 $ 294,694

As of March 31, 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):

As of June 30, 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 2054 (amounts in thousands):

Remainder of 2024 $ 243,042

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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 $ 28.4 million and lease liabilities of $ 28.4 million in our condensed consolidated balance sheets as of March 31, 2024.

Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $ 28.3 million and lease liabilities of $ 28.3 million in our condensed consolidated balance sheets as of June 30, 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.

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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 March 31, 2024 was 4.5 %.

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of June 30, 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 March 31, 2024 was 46.2 years.

As of March 31, 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):

The weighted average remaining lease term as of June 30, 2024 was 46.0 years.

As of June 30, 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 2024 $ 760

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Legal Proceedings

Except 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.

Except as described below, as of June 30, 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.

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Unfunded Capital Expenditures

At March 31, 2024, we estimate that we will incur approximately $ 125.2 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements.

At June 30, 2024, we estimate that we will incur approximately $ 111.6 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, cash on hand and other borrowings.

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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 March 31, 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 Federal Deposit Insurance Corporation.

At June 30, 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 Federal Deposit Insurance Corporation.

Asset Retirement Obligations

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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 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.

Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties.

As of June 30, 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.

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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.

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.

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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.

As of June 30, 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.

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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.

As of March 31, 2024, there were 163,815,629 shares of Class A common stock, 982,689 shares of Class B common stock and 109,217,835 operating partnership units outstanding.

As of June 30, 2024, there were 164,483,385 shares of Class A common stock, 981,779 shares of Class B common stock and 108,713,642 operating partnership units outstanding.

The controlling interest of 60.3 % is owned by ESRT.

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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.

As of June 30, 2024, we had $ 500.0 million remaining of the authorized repurchase amount.

There were no repurchases of equity securities during the three and six months ended June 30, 2024.

Private Perpetual Preferred Units

As of March 31, 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.

As of June 30, 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.

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Distributions

Total distributions paid to OP unitholders were $ 9.5 million and $ 8.7 million for the three months ended March 31, 2024 and 2023, respectively.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

Total distributions paid to OP unitholders were $ 9.6 million and $ 19.1 million for the three and six months ended June 30, 2024, respectively, and $ 9.5 million and $ 18.2 million for the three and six months ended June 30, 2023, respectively.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2024, respectively, and $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2023, respectively.

Incentive and Share-Based Compensation

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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 2024 Plan.

An aggregate of approximately 11.0 million shares of ESRT common stock was authorized for issuance under awards granted pursuant to the 2019 Plan, and as of March 31, 2024, 1.0 million shares of common stock remain available for future issuance.

An aggregate of 11.0 million shares of ESRT common stock was authorized for issuance under awards granted pursuant to the 2024 Plan, and as of June 30, 2024 , 10.8 million shares of common stock remain available for future issuance.

Long-term incentive plan ("LTIP") units are a special class of partnership interests.

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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.

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.

During the second quarter of 2024, we made grants of 27,473 LTIP units to an employee that are subject to performance-based vesting with a fair market value of $ 0.3 million and 164,112 LTIP units to our non-employee directors that are subject to time-based vesting with fair market values of $ 1.5 million.

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.

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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 three months ended March 31, 2024 were valued at $ 26.1 million.

The weighted average per unit or share fair value was $ 7.74 for grants issued for the three months ended March 31, 2024.

LTIP units and ESRT restricted stock issued during the six months ended June 30, 2024 were valued at $ 27.8 million.

The weighted average per unit or share fair value was $ 7.81 for grants issued for the six months ended June 30, 2024.

The fair value per unit or share granted in 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 1.6 %, a risk-free interest rate from 4.4 % to 5.1 %, and an expected price volatility from 37.0 % to 48.0 %.

No other stock options, dividend equivalents, or stock appreciation rights were issued during the three months ended March 31, 2024.

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

No other stock options, dividend equivalents, or stock appreciation rights were issued during the six months ended June 30, 2024.

The following is a summary of ESRT restricted stock and LTIP unit activity for the six months ended June 30, 2024:

Restricted Stock Time-based LTIPs Market-based LTIPs Performance-based LTIPs Weighted Average Grant Fair Value

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Forfeited or unearned ( 25,076 ) — ( 228,660 ) — 7.21

Unvested balance at March 31, 2024 673,122 3,624,499 3,097,854 2,057,764 $ 6.84

Unvested balance at June 30, 2024 637,480 3,620,977 3,060,441 2,085,237 $ 6.88

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 $ 0.7 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

Unrecognized compensation expense was $ 16.6 million at March 31, 2024, which will be recognized over a weighted average period of 2.8 years.

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.

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 $ 1.7 million and $ 2.4 million for the three and six months ended June 30, 2024, respectively, and $ 1.0 million and $ 1.7 million for the three and six months ended June 30,

2023, respectively.

Unrecognized compensation expense was $ 14.9 million at June 30, 2024, which will be recognized over a weighted average period of 2.5 years.

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 $ 5.5 million and $ 8.2 million for the three and six months ended June 30, 2024, respectively, and $ 4.4 million and $ 8.1 million for the three and six months ended June 30, 2023, respectively.

Unrecognized compensation expense was $ 27.9 million at June 30, 2024, which will be recognized over a weighted average period of 2.5 years.

Earnings Per Unit

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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

For the three and six months ended June 30, 2024 and 2023, earnings per unit is computed as follows (amounts in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income $ 28,555 $ 36,955 $ 38,770 $ 48,649

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Diluted $ 0.10 $ 0.14 $ 0.14 $ 0.18

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 six months ended June 30, 2024 and 2023, respectively.

Related Party Transactions

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Malkin, our Chairman and Chief Executive Officer.

These fees were $ 0.2 million and $ 0.2 million for the three months ended March 31, 2024 and 2023, respectively.

These fees were $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2024, respectively, and $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2023, respectively.

These fees are included within third-party management and other fees.

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Since we became a public company, we have earned property management fees from entities affiliated with Anthony E.

These fees were $ 0.1 million and $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

These fees were $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2024, respectively, and $ 0.05 million and $ 0.2 million for the three and six months ended June 30, 2023, respectively.

These fees are included within third-party management and other fees.

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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.

Total aggregate revenue was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2024, respectively, and $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2023, respectively.

One of ESRT's 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.

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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 months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended March 31, 2024

The following tables provide components of segment net income for each segment for the three and six months ended June 30, 2024 and 2023 (amounts in thousands):

Three Months Ended June 30, 2024

Real Estate Observatory Intersegment Elimination Total

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Interest expense ( 25,323 ) — — ( 25,323 )

Interest expense associated with property in receivership ( 628 ) — — ( 628 )

Loss on early extinguishment of debt — — — —

Gain on disposition of property 10,803 — — 10,803

Income before income taxes 25,070 4,235 — 29,305

Income tax (expense) benefit ( 113 ) 768 — 655

Income tax expense ( 208 ) ( 542 ) — ( 750 )

Net income $ 24,862 $ 3,693 $ — $ 28,555

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Expenditures for segment assets $ 17,526 $ 105 $ — $ 17,631

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Real Estate Observatory Intersegment Elimination Total

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Total operating expenses 135,653 29,642 ( 20,942 ) 144,353

Total operating income (loss) 19,147 ( 1,659 ) — 17,488

Total operating income 42,398 3,791 — 46,189

Other income (expense):

1 unchanged sentence

Interest expense ( 25,405 ) — — ( 25,405 )

Gain on sale of property 15,696 — — 15,696

Income (loss) before income taxes 12,097 ( 1,622 ) — 10,475

Income tax (expense) benefit ( 198 ) 1,417 — 1,219

Net income (loss) $ 11,899 $ ( 205 ) $ — $ 11,694

Gain on disposition of property 13,565 — — 13,565

Income before income taxes 33,847 3,841 — 37,688

Income tax expense ( 197 ) ( 536 ) — ( 733 )

Net income $ 33,650 $ 3,305 $ — $ 36,955

Segment assets $ 3,928,943 $ 255,825 $ — $ 4,184,768

Expenditures for segment assets $ 32,908 $ — $ — $ 32,908

Six Months Ended June 30, 2024

Real Estate Observatory Intersegment Elimination Total

Rental revenue $ 306,352 $ — $ — $ 306,352

Intercompany rental revenue 37,047 — ( 37,047 ) —

Observatory revenue — 58,720 — 58,720

Third-party management and other fees 641 — — 641

Other revenue and fees 5,009 — — 5,009

Total revenues 349,049 58,720 ( 37,047 ) 370,722

Operating expenses:

Property operating expenses 86,576 — — 86,576

Intercompany rent expense — 37,047 ( 37,047 ) —

Ground rent expenses 4,663 — — 4,663

General and administrative expenses 33,992 — — 33,992

Observatory expenses — 17,389 — 17,389

Real estate taxes 64,124 — — 64,124

Depreciation and amortization 93,485 69 — 93,554

Total operating expenses 282,840 54,505 ( 37,047 ) 300,298

Total operating income 66,209 4,215 — 70,424

Other income (expense):

Interest income 9,151 119 — 9,270

Interest expense ( 50,451 ) — — ( 50,451 )

Interest expense associated with property in receivership ( 628 ) — — ( 628 )

Loss on early extinguishment of debt ( 553 ) — — ( 553 )

Gain on disposition of property 10,803 — — 10,803

Income before income taxes 34,531 4,334 — 38,865

Income tax (expense) benefit ( 321 ) 226 — ( 95 )

Net income $ 34,210 $ 4,560 $ — $ 38,770

Expenditures for segment assets $ 37,632 $ 144 $ — $ 37,776

Six Months Ended June 30, 2023

Real Estate Observatory Intersegment Elimination Total

Rental revenue $ 294,694 $ — $ — $ 294,694

Intercompany rental revenue 36,856 — ( 36,856 ) —

Observatory revenue — 55,587 — 55,587

Third-party management and other fees 808 — — 808

Other revenue and fees 4,075 — — 4,075

Total revenues 336,433 55,587 ( 36,856 ) 355,164

Operating expenses:

Property operating expenses 81,563 — — 81,563

Intercompany rent expense — 36,856 ( 36,856 ) —

Ground rent expenses 4,663 — — 4,663

General and administrative expenses 31,783 — — 31,783

Observatory expenses — 16,512 — 16,512

Real estate taxes 63,278 — — 63,278

Depreciation and amortization 93,601 87 — 93,688

Total operating expenses 274,888 53,455 ( 36,856 ) 291,487

Total operating income 61,545 2,132 — 63,677

Other income (expense):

Interest income 5,847 87 — 5,934

Interest expense ( 50,709 ) — — ( 50,709 )

Gain on disposition of property 29,261 — — 29,261

Income before income taxes 45,944 2,219 — 48,163

Income tax (expense) benefit ( 395 ) 881 — 486

Net income $ 45,549 $ 3,100 $ — $ 48,649

Expenditures for segment assets $ 35,576 $ 58 $ — $ 35,634

Subsequent Events

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements