What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-10-08 · 204 added, 170 removed, 720 unchanged (34% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(amounts in thousands, except per unit amounts)

June 30, 2024 December 31, 2023

(amounts in thousands, except per unit amounts) September 30, 2024 December 31, 2023

ASSETS (unaudited)

32 unchanged sentences

Private perpetual preferred units:

Private perpetual preferred units, $ 13.52 liquidation preference, 4,664 issued and outstanding in 2024 and 2023

Series 2019 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 2024 and 2023

Series 2014 Private perpetual preferred units, $ 16.62 liquidation preference, 1,560 issued and outstanding in 2024 and 2023

Series PR operating partnership units:

13 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands, except per unit amounts) 2024 2023 2024 2023

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

2024 2023 2024 2023

Rental revenue $ 153,117 $ 151,458 $ 459,469 $ 446,152

Observatory revenue 39,382 37,562 98,102 93,149

Lease termination fees 4,771 — 4,771 —

Third-party management and other fees 271 268 912 1,076

18 unchanged sentences

Income before income taxes 24,238 21,337 63,103 69,500

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

Income tax expense ( 1,442 ) ( 1,409 ) ( 1,537 ) ( 923 )

Net income 22,796 19,928 61,566 68,577

Private perpetual preferred unit distributions ( 1,050 ) ( 1,050 ) ( 3,151 ) ( 3,151 )

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

Net income attributable to non-controlling interests in other partnerships — ( 111 ) ( 4 ) ( 69 )

Net income attributable to common unitholders $ 21,746 $ 18,767 $ 58,411 $ 65,357

9 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2024 2023 2024 2023

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

2024 2023 2024 2023

Net income $ 22,796 $ 19,928 $ 61,566 $ 68,577

Other comprehensive income (loss):

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

Unrealized gain (loss) on valuation of interest rate swap agreements ( 9,341 ) 9,525 1,710 16,058

Amount reclassified into interest expense ( 2,457 ) ( 2,275 ) ( 5,448 ) ( 5,429 )

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

Other comprehensive income (loss) ( 11,798 ) 7,250 ( 3,738 ) 10,629

Comprehensive income 10,998 27,178 57,828 79,206

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

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

Net income attributable to non-controlling interests in other partnerships — ( 111 ) ( 4 ) ( 69 )

Other comprehensive income attributable to non-controlling interest in other partnerships — ( 480 ) — ( 384 )

Comprehensive income attributable to OP unitholders $ 10,998 $ 26,587 $ 57,824 $ 78,753

2 unchanged sentences

Condensed Consolidated Statements of Capital

For The Three Months Ended June 30, 2024 and 2023

For The Three Months Ended September 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

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

Conversion of operating partnership units to ESRT Partner's Capital — — 1,037 2,944 ( 315 ) ( 2,706 ) ( 509 ) ( 177 ) ( 137 ) ( 38 ) ( 76 ) ( 23 ) — —

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

Repurchases of common units — — — — — — — — — — — — — —

Equity compensation — — ( 14 ) 495 ( 11 ) 5,257 — — — — — — — 5,752

1 unchanged sentence

Net income — 1,050 — 13,541 — 6,046 — 1,529 — 413 — 217 — 22,796

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

Other comprehensive loss — — — ( 7,319 ) — ( 3,280 ) — ( 857 ) — ( 224 ) — ( 118 ) — ( 11,798 )

Balance at September 30, 2024 6,224 $ 29,940 166,488 $ 1,015,116 81,912 $ 704,382 18,539 $ 5,961 4,752 $ 1,220 2,461 $ 702 $ — $ 1,757,321

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

1 unchanged sentence

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

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

Conversion of operating partnership units to ESRT Partner's Capital — — 1,506 10,663 ( 1,244 ) ( 10,616 ) ( 183 ) ( 36 ) ( 55 ) ( 8 ) ( 24 ) ( 3 ) — —

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

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

Contributions to consolidated joint ventures — — — — — — — — — — — — 75 75

Repurchases of common units — — — — — — — — — — — — — —

Equity compensation — — ( 2 ) 449 36 4,540 — — — — — — — 4,989

2 unchanged sentences

Other comprehensive income — — — 4,144 — 1,893 — 524 — 142 — 67 480 7,250

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 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

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Six Months Ended June 30, 2024 and 2023

For The Nine Months Ended September 30, 2024 and 2023

(amounts in thousands)

9 unchanged sentences

Net income — 3,151 — 36,273 — 16,238 — 4,206 — 1,110 — 584 4 61,566

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

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

Other comprehensive loss — — — ( 2,231 ) — ( 1,106 ) — ( 286 ) — ( 75 ) — ( 40 ) — ( 3,738 )

Balance at September 30, 2024 6,224 $ 29,940 166,488 $ 1,015,116 81,912 $ 704,382 18,539 $ 5,961 4,752 $ 1,220 2,461 $ 702 $ — $ 1,757,321

7 unchanged sentences

Distributions — ( 3,151 ) — ( 16,980 ) — ( 7,660 ) — ( 2,150 ) — ( 569 ) — ( 281 ) — ( 30,791 )

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

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 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 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

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

(amounts in thousands) 2024 2023

Six Months Ended June 30,

Cash Flows From Operating Activities

12 unchanged sentences

Tenant and other receivables 4,243 ( 13,459 )

Deferred leasing costs ( 14,377 ) ( 9,316 )

Deferred costs ( 18,729 ) ( 11,838 )

Prepaid expenses and other assets 6,480 23,569

3 unchanged sentences

Cash Flows From Investing Activities

Additions to building and improvements ( 143,894 ) ( 101,379 )

Acquisition of real estate property ( 143,431 ) ( 26,910 )

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

Post-closing costs from a prior period sale of property ( 4,034 ) —

Development costs ( 9 ) —

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

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

Net proceeds from disposition of property — 88,910

Net cash used in investing activities ( 318,470 ) ( 39,379 )

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (continued)

Nine Months Ended September 30,

(amounts in thousands) 2024 2023

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 revolving credit facility 120,000 —

Proceeds from unsecured term loan 95,000 —

Repayment of unsecured term loan ( 215,000 ) —

Proceeds from unsecured revolving credit facility 120,000 —

Repayment of mortgage notes payable ( 10,513 ) ( 6,685 )

Deferred financing costs ( 12,070 ) —

3 unchanged sentences

Net cash provided by (used in) financing activities 170,573 ( 50,394 )

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

Net increase in cash and cash equivalents and restricted cash 62,963 106,275

Cash and cash equivalents and restricted cash—beginning of period 406,956 314,678

14 unchanged sentences

Derivative instruments at fair values included in prepaid expenses and other assets 5,673 25,578

Derivative instruments at fair values included in accounts payable and accrued expenses 2,143 —

Contract asset 168,687 —

15 unchanged sentences

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

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.

As of September 30, 2024, our portfolio was comprised of approximately 7.8 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 732 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.

The remaining office property 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.

2 unchanged sentences

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

As of September 30, 2024, ESRT owned approximately 60.7 % of our operating partnership units.

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, 2023 (the “Annual Report”).

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/A for the year ended December 31, 2023 (the “Annual Report”).

Basis of Quarterly Presentation and Principles of Consolidation

15 unchanged sentences

The primary beneficiary is required to consolidate the VIE.

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

As of September 30, 2024, we had a variable interest in and are deemed to be the primary beneficiary of the September 2024 acquisition of the North 6 th Street Collection.

We had no VIEs as of December 31, 2023.

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

11 unchanged sentences

Property Acquisitions

In September 2024, we closed on the acquisition of a portfolio of retail properties on North 6 th Street in Williamsburg, Brooklyn for a purchase price of $ 143.0 million.

Subsequent to quarter-end, in October 2024, we closed on the acquisition of additional retail properties on North 6 th Street in Williamsburg, Brooklyn for approximately $ 52.0 million.

In September 2024, we also entered into an additional purchase agreement relating to the acquisition of a separate retail property on North 6 th Street for approximately $ 30.0 million.

This acquisition is subject to customary closing conditions.

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 purchase price is the fair value at the date of acquisition.

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

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

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

The North 6 th Street Collection (1)

9/25/2024 $ 33,361 $ 106,392 $ 7,374 $ ( 3,696 ) $ 143,431

The North 6 th Street Collection (2)

9/14/2023 $ 4,851 $ 20,936 $ 1,573 $ ( 300 ) $ 27,060

(1) Includes total capitalized net transaction costs of $ 0.4 million.

(2) Includes total capitalized transaction costs of $ 0.7 million.

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 June 30, 2024, we own 100 % of the interests in these assets.

In March 2024, we executed a buyout of the 10 % non-controlling 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 debt.

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 six and twelve months ended June 30, 2024 and December 31, 2023, respectively (amounts in thousands):

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

Property Date of Disposal Sales Price Gain on Disposition

1 unchanged sentence

500 Mamaroneck Avenue, Harrison, New York (1)

4/5/2023 $ 53,000 $ 11,075

69-97 and 103-107 Main Street, Westport, Connecticut 2/1/2023 $ 40,000 $ 15,689

3 unchanged sentences

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.

In connection with this, we removed the related assets and liabilities from our condensed consolidated balance sheet and recognized a gain in the condensed consolidated statements of operations of $ 1.3 million and $ 12.1 million for the three and nine months ended September 30, 2024, respectively.

We also recorded a contract asset of $ 168.7 million that represents the amount of obligation we expect to be released upon the final resolution of the foreclosure process on First Stamford Place.

The gain recognized subsequent to the initial derecognition of the related assets and liabilities of First Stamford Place represents the additional obligation we expect to be released arising from the accrued interest expense associated with the First Stamford Place mortgage, net of certain closing costs.

The related debt of $ 177.7 million and accrued interest of $ 3.5 million are included in debt associated with property under receivership and accrued interest associated with property under receivership, respectively, in our condensed consolidated balance sheet as of September 30, 2024.

Deferred Costs, Acquired Lease Intangibles and Goodwill

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

Acquired in-place lease value and deferred leasing costs 145,627 158,267

Deferred costs, net, consisted of the following:

(amounts in thousands) September 30, 2024 December 31, 2023

Deferred leasing costs $ 222,978 $ 224,295

Acquired in-place lease value, acquired deferred leasing costs and deferred acquisition costs 140,975 158,267

Acquired above-market leases 22,584 23,918

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

Total deferred costs, excluding deferred financing costs 386,537 406,480

accumulated amortization ( 219,188 ) ( 236,900 )

Total deferred costs, net, excluding net deferred financing costs 167,349 169,580

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

Deferred financing costs associated with the unsecured revolving credit facility, net of accumulated amortization of $ 7,252 and $ 5,709 , respectively (Note 5)

Total deferred costs, net $ 176,720 $ 172,457

Acquired below-market ground leases, net, consisted of the following:

(amounts in thousands) September 30, 2024 December 31, 2023

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

1 unchanged sentence

Acquired below-market ground leases, net $ 315,368 $ 321,241

June 30, 2024 December 31, 2023

Acquired below-market leases, net, consisted of the following:

(amounts in thousands) September 30, 2024 December 31, 2023

Acquired below-market leases $ ( 53,148 ) $ ( 55,155 )

1 unchanged sentence

Acquired below-market leases, net $ ( 14,702 ) $ ( 13,750 )

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.

The total amortization related to deferred costs and acquired lease intangibles consisted of the following:

Three Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2024 2023 2024 2023

Rental revenue:

Amortization of below-market leases, net of above-market leases $ 476 $ 554 $ 1,503 $ 1,932

Depreciation and amortization:

Amortization of deferred leasing costs and acquired deferred leasing costs 5,930 5,850 16,948 17,747

Amortization related to acquired in-place lease value 1,144 1,489 3,663 6,114

As of September 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 June 30, 2024 and December 31, 2023 (amounts in thousands):

Principal Balance As of June 30, 2024

June 30, 2024 December 31, 2023 Stated

Debt consisted of the following:

Principal Balance As of September 30, 2024

(amounts in thousands)

September 30, 2024 December 31, 2023 Stated

Rate Effective

Fixed rate mortgage debt:

Metro Center (3)

First Stamford Place (3)

$ — $ 175,860 — — —

1 unchanged sentence

1542 Third Avenue 30,000 30,000 4.29 % 4.53 % 5/1/2027

First Stamford Place (4)

— 175,860 — — —

1010 Third Avenue and 77 West 55th Street 34,278 34,958 4.01 % 4.21 % 1/5/2028

Metro Center (4)

72,078 80,070 3.59 % 3.67 % 11/5/2029

250 West 57th Street 180,000 180,000 2.83 % 3.21 % 12/1/2030

35 unchanged sentences

______________

(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.

(1) The effective rate is the yield as of September 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) 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.

(3) 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 %.

In May 2024, the First Stamford Place property was placed in receivership and accordingly, we reclassified the related debt to debt associated with property under receivership in our condensed consolidated balance sheet.

As of September 30, 2024, this debt consists of $ 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.

(4) 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.

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

Principal Payments

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

Aggregate required principal payments at September 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 June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Financing costs $ 52,498 $ 43,473

Deferred financing costs, net, consisted of the following:

(amounts in thousands)

September 30, 2024 December 31, 2023

Deferred financing costs, included as a component of net debt $ 36,309 $ 34,887

Deferred financings costs, included as a component of net deferred costs (Note 4) 16,623 8,586

Total deferred financing costs $ 52,932 $ 43,473

accumulated amortization ( 32,871 ) ( 31,108 )

Total deferred financing costs, net $ 20,061 $ 12,365

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.

Amortization expense related to deferred financing costs was $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2024, respectively, and $ 1.1 million and $ 3.3 million for the three and nine months ended September 30, 2023, respectively.

Unsecured Revolving Credit and Term Loan Facilities

6 unchanged sentences

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.

As of September 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 June 30, 2024 , our borrowings amounted to $ 175.0 million under the Wells Term Loan Facility.

As of September 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.

1 unchanged sentence

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.

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

Senior Unsecured Notes

6 unchanged sentences

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 REIT qualification.

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

As of September 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 June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

Accounts payable and accrued expenses consisted of the following:

(amounts in thousands)

September 30, 2024 December 31, 2023

Capital expenditures included in accounts payable and accrued expenses $ 29,499 $ 51,815

11 unchanged sentences

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 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.

As of September 30, 2024, the fair value of derivatives in a net liability position, that includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 2.1 million.

If we had breached any of these

provisions at September 30, 2024, we could have been required to settle our obligations under the agreements at their termination value of $ 2.1 million.

As of September 30, 2024 and December 31, 2023, we had interest rate swaps and caps with an aggregate notional value of $ 680.4 million and $ 573.2 million, respectively.

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

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 September 30, 2024, the fair value of our derivative instruments in an asset position amounted to $ 5.7 million, which is included in prepaid expenses and other assets, and the fair value of our derivative instruments in a liability position amounted to $ 2.1 million, that is included in accounts payable and accrued expenses on the consolidated balance sheet 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 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.

As of September 30, 2024 and 2023, our cash flow hedges are deemed highly effective and a net unrealized loss of $( 11.8 ) million and $( 3.7 ) million for the three and nine months ended September 30, 2024, respectively, and a net unrealized gain of $ 7.3 million and $ 10.6 million for the three and nine months ended September 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 $ 1.0 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 June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024 December 31, 2023

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments:

(amounts in thousands, except percentages)

September 30, 2024 December 31, 2023

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

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Interest rate cap 6,676 1 Month SOFR 5.5000 % October 1, 2024 November 1, 2030 56 — — —

Interest rate swap 47,500 1 Month SOFR 3.3090 % March 19, 2025 March 8, 2029 — ( 404 ) — —

Interest rate swap 47,500 1 Month SOFR 3.3030 % March 19, 2025 March 8, 2029 — ( 395 ) — —

$ 680,386 $ 5,673 $ ( 2,143 ) $ 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 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

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss):

Three Months Ended Nine Months Ended

(amounts in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Amount of gain (loss) recognized in other comprehensive income (loss) $ ( 9,341 ) $ 9,525 $ 1,710 $ 16,058

Amount of (gain) reclassified from accumulated other comprehensive income (loss) into interest expense ( 2,457 ) ( 2,275 ) ( 5,448 ) ( 5,429 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations:

Three Months Ended Nine Months Ended

(amounts in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded $ ( 27,408 ) $ ( 25,382 ) $ ( 77,859 ) $ ( 76,091 )

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

Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense 2,457 2,275 5,448 5,429

Fair Valuation

The estimated fair values at June 30, 2024 and December 31, 2023 were determined by management, using available market information and appropriate valuation methodologies.

The estimated fair values at September 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 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

The following tables summarize the carrying and estimated fair values of our financial instruments:

September 30, 2024

Estimated Fair Value

(amounts in thousands) Carrying

Value Total Level 1 Level 2 Level 3

Interest rate swaps and caps included in prepaid expenses and other assets $ 5,673 $ 5,673 $ — $ 5,673 $ —

Interest rate swaps included in accounts payable and accrued expenses 2,143 2,143 — 2,143 —

Mortgage notes payable 692,989 623,788 — — 623,788

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

Senior unsecured notes - Series A-K 1,196,911 1,147,018 — — 1,147,018

Unsecured term loan facilities 268,655 270,000 — — 270,000

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Estimated Fair Value

(amounts in thousands) Carrying

Value Total Level 1 Level 2 Level 3

2 unchanged sentences

Mortgage notes payable 877,388 774,280 — — 774,280

Senior unsecured notes - Series A, B, C, D, E, F, G and H 973,872 882,242 — — 882,242

Senior unsecured notes - Series A-H 973,872 882,242 — — 882,242

Unsecured term loan facilities 389,286 390,000 — — 390,000

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.

The fair value of debt associated with property in receivership, which has a carrying value of $ 177.7 million as of September 30, 2024, and categorized as Level 3 of the fair value hierarchy, was $ 159.8 million as of September 30, 2024.

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of September 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.

We lease various spaces to tenants over terms ranging from one to 30 years.

Certain leases have renewal options for additional terms.

Certain leases have termination options for a fee and/or renewal options.

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 June 30, 2024 and 2023 condensed consolidated statements of operations as rental revenue.

Operating expense reimbursements are reflected in our September 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 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

The components of rental revenue consisted of the following:

Three Months Ended Nine Months Ended

(amounts in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Fixed payments 132,266 132,862 404,854 395,744

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Total rental revenue $ 153,117 $ 151,458 $ 459,469 $ 446,152

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):

As of September 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 $ 122,543

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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 $ 28.3 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 June 30, 2024 was 4.5 %.

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of September 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 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):

The weighted average remaining lease term as of September 30, 2024 was 45.7 years.

As of September 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 $ 380

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Legal Proceedings

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.

Except as described below, as of September 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 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.

At September 30, 2024, we estimate that we will incur approximately $ 126.5 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 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.

At September 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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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 of September 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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In addition to potential liability for cleanup costs, private plaintiffs may bring claims for personal injury, property damage or for similar reasons.

Environmental laws also may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.

Environmental laws also

may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.

Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property.

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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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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.

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 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.

As of September 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 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.

As of September 30, 2024, there were 165,506,874 shares of Class A common stock, 980,707 shares of Class B common stock and 107,664,445 operating partnership units outstanding.

The controlling interest of 60.7 % 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 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.

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

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

Private Perpetual Preferred Units

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.

As of September 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 $ 9.6 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.

The following is a summary of distribution activity:

Three Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2024 2023 2024 2023

Distributions paid to OP unitholders $ ( 9,595 ) $ ( 9,484 ) $ ( 28,693 ) $ ( 27,640 )

Distributions paid to preferred unitholders ( 1,050 ) ( 1,050 ) ( 3,151 ) ( 3,151 )

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 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.

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 September 30, 2024 , 10.9 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.

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.

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 third quarter of 2024, we did no t make any grants of LTIP units to employees or non-employee directors that are subject to performance-based vesting or time-based vesting.

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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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 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 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.

LTIP units and ESRT restricted stock issued during the nine months ended September 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 nine months ended September 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 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:

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

The following is a summary of ESRT restricted stock and LTIP unit activity for the nine months ended September 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 ( 36,494 ) — ( 234,780 ) ( 4,930 ) 7.29

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

Unvested balance at September 30, 2024 614,585 3,615,771 3,051,434 2,078,099 $ 6.87

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 $ 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.

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 $ 1.6 million and $ 4.0 million for the three and nine months ended September 30, 2024, respectively, and $ 0.5 million and $ 2.2 million for the three and nine months ended September 30, 2023, respectively.

Unrecognized compensation expense was $ 13.3 million at September 30, 2024, which will be recognized over a weighted average period of 2.3 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 $ 4.2 million and $ 12.4 million for the three and nine months ended September 30, 2024, respectively, and $ 4.5 million and $ 12.6 million for the three and nine months ended September 30, 2023, respectively.

Unrecognized compensation expense was $ 23.6 million at September 30, 2024, which will be recognized over a weighted average period of 2.3 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 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

Earnings per unit is computed as follows:

Three Months Ended Nine Months Ended

(amounts in thousands, except per unit amounts)

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Net income $ 22,796 $ 19,928 $ 61,566 $ 68,577

Private perpetual preferred unit distributions ( 1,050 ) ( 1,050 ) ( 3,151 ) ( 3,151 )

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

Net income attributable to non-controlling interests in other partnerships — ( 111 ) ( 4 ) ( 69 )

Net income attributable to common unitholders – basic and diluted $ 21,746 $ 18,767 $ 58,411 $ 65,357

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Diluted $ 0.08 $ 0.07 $ 0.22 $ 0.25

There were zero antidilutive shares and LTIP units for the three and six months ended June 30, 2024 and 2023, respectively.

There were zero antidilutive shares and LTIP units for the three and nine months ended September 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 $ 0.4 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 were $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2024, respectively, and $ 0.2 million and $ 0.7 million for the three and nine months ended September 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 $ 0.2 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 were $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2024, respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended September 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 $ 0.2 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.

Total aggregate revenue was $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2024, respectively, and $ 0.1 million and $ 0.3 million for the three and nine months ended September 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 Janeiro 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 Janeiro is a subsidiary of L’Occitane, a tenant at 111 W.

33 rd Street.

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

Three Months Ended June 30, 2024

The following tables provide components of segment net income for each segment:

Three Months Ended September 30, 2024

(amounts in thousands)

Real Estate Observatory Intersegment Elimination Total

2 unchanged sentences

Observatory revenue — 39,382 — 39,382

Lease termination fees 4,771 — — 4,771

Third-party management and other fees 271 — — 271

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Interest expense associated with property in receivership ( 1,922 ) — — ( 1,922 )

Loss on early extinguishment of debt — — — —

Gain on disposition of property 1,262 — — 1,262

4 unchanged sentences

Expenditures for segment assets $ 167,865 $ 94 $ — $ 167,959

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(amounts in thousands)

Real Estate Observatory Intersegment Elimination Total

18 unchanged sentences

Interest expense ( 25,382 ) — — ( 25,382 )

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

Income before income taxes 15,338 5,999 — 21,337

3 unchanged sentences

Expenditures for segment assets $ 56,227 $ — $ — $ 56,227

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

(amounts in thousands)

Real Estate Observatory Intersegment Elimination Total

2 unchanged sentences

Observatory revenue — 98,102 — 98,102

Lease termination fees 4,771 — — 4,771

Third-party management and other fees 912 — — 912

18 unchanged sentences

Income before income taxes 52,512 10,591 — 63,103

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

Income tax expense ( 537 ) ( 1,000 ) — ( 1,537 )

Net income $ 51,975 $ 9,591 $ — $ 61,566

Expenditures for segment assets $ 259,617 $ 238 $ — $ 259,855

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(amounts in thousands)

Real Estate Observatory Intersegment Elimination Total

20 unchanged sentences

Income before income taxes 61,282 8,218 — 69,500

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

Income tax expense ( 541 ) ( 382 ) — ( 923 )

Net income $ 60,741 $ 7,836 $ — $ 68,577

2 unchanged sentences

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