What changed in this filing

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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-28 · 115 added, 149 removed, 356 unchanged (43% of the section changed)

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Risks Relating to Portfolio Concentration

Our properties are geographically concentrated in New York and Connecticut, and adverse state or local economic or regulatory developments could have a material adverse effect on our business, results of operations, cash flow and financial condition.

Our commercial portfolio is comprised of properties primarily in New York City as well as in Stamford, Connecticut.

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The current federal tax limits on the deductibility of state and local taxes as well as higher individual tax rate proposals may negatively impact demographic trends in high tax states like New York and Connecticut.

The threat or occurrence of a terrorist event, particularly in New York City, may materially and adversely affect the value of our properties and our ability to generate cash flow.

The threat or occurrence of a terrorist event may cause people to relocate from New York City and Stamford, Connecticut to less populated, lower-profile areas.

This could trigger a decrease in the demand, occupancy and rental rates for, and materially affect the value of, our properties and our cash flow.

Such negative consequences may be even more likely in a high-profile property like the Empire State Building and its Observatory.

Additionally, a terrorist event could cause insurance premiums at certain of our properties to increase significantly.

We rely on three properties, in particular the Empire State Building and its Observatory, for a significant portion of our revenue.

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Upon tenant default, we may experience delays and substantial costs in enforcing our rights and protecting our investment.

Our business, results of operations, cash flow and financial condition could be materially adversely affected if any of our significant tenants were to suffer a downturn in their business, become insolvent, default under their leases, and/or fail to renew on favorable terms or at all.

Our business and financial condition could be materially adversely affected if any of our significant tenants were to suffer a downturn in their business, become insolvent, default under their leases, and/or fail to renew on favorable terms or at all.

The threat or occurrence of a terrorist event, particularly in New York City, may materially and adversely affect the value of our properties and our ability to generate cash flow.

A terrorist event could cause insurance premiums at certain of our properties to increase significantly.

Additionally, the threat or occurrence of a terrorist event may cause people to relocate from New York City and Stamford, Connecticut to less populated, lower-profile areas.

This could trigger a decrease in the demand, occupancy and rental rates for, and materially affect the value of, our properties and our cash flow.

Such negative consequences may be even more likely in a high-profile property like the Empire State Building and its Observatory.

Risks Relating to the Real Estate Market

A sustained shift away from in-person work environments to remote work could have an adverse effect on the overall demand for our office and multifamily apartment units.

Adverse economic and geopolitical conditions impacting the industries of our tenants could cause reduced demand, rental rates and occupancy for our office, multifamily, and retail space.

Downturn in global, national and/or local economies that decreases prospects, demand, occupancy and rental rates for our office, multifamily and retail space can have an adverse impact on the value or price of our assets.

For example, the COVID-19 pandemic impacted the entire U.S., including New York and Connecticut where our properties are located.

Any future public health crisis or economic downturn could have significant impacts on how people live, work, and travel in ways that have affected and may in the future affect our properties.

Such events can also cause delays, cost increases and/or cancellations of planned capital projects.

Certain remote work practices implemented in reaction to the pandemic are still in place and have shifted employers and employees away from fully in-person work environments, and a more permanent shift of this type could have an adverse effect on the overall demand for our office space.

Additionally, with increased employer flexibility to work from home, current and prospective residents may be less likely to live in dense urban centers or multifamily housing like the properties we own.

These trends have impacted our results of operations since the pandemic.

If these trends continue, it could impair demand and value at our properties.

Adverse economic and geopolitical conditions impacting the industries of our tenants, in particular the retail industry, could cause reduced demand, rental rates and occupancy for our retail and office space.

As of December 31, 2024, approximately 19.4% of our commercial portfolio’s annualized rent was comprised of retail tenants.

In recent years, the retail industry has faced reductions in sales revenues and increase in bankruptcies throughout the United States, due to a consumer shift to online shopping.

This has reduced demand for physical retail space especially at street level, which typically commanded the highest rental rates per square foot in office properties.

In the past, the retail industry has faced reductions in sales revenues and increase in bankruptcies throughout the United States, due to changes in consumer behavior and shift to online shopping.

This has reduced rents and demand for physical retail space at street level, which typically commanded the highest rental rates per square foot in office properties.

This has also reduced rents and demand for physical retail space located above or below street level.

Continued reduced demand, rental rates and occupancy rates for our retail space could have a material adverse effect on our business and financial condition.

The bankruptcy or insolvency of any tenant could result in the termination of such tenant’s lease and material losses to us.

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We are exposed to risks associated with property development.

We have engaged, continue to engage, and may in the future engage in development activities with respect to our properties (including our Metro Tower potential development site).

We have engaged, continue to engage, and may in the future engage in development activities with respect to our properties.

See Part I, ITEM 1, “Business — Overview” for more information.

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occupancy rates and rents;

construction costs and delays, whether due to weather, labor conditions, material shortages or otherwise, and timely lease-up.

construction costs and delays, whether due to weather, labor conditions, material shortages, tariffs or otherwise, and timely lease-up.

We will fail to recover expenses and management time already incurred if we abandon any then pending development.

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In a highly inflationary environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins.

In addition, our cost of labor and materials has and may in the future further increase.

While increases in most operating expenses at our properties can be passed on to our office and retail tenants, the terms of some of our leases may limit our ability to charge our tenants for all or a portion of such increased expenses.

In addition, our cost of labor and materials has and may in the future increase.

The terms of some of our leases may limit our ability to charge our tenants for all or a portion of such increased expenses.

Our inability to pass on such increased operating expenses may reduce cash flow available to service our debt and make distributions.

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While we perform property management services for the majority of our properties, we use a third-party property management company to service our multifamily properties.

If such third-party property management company does not perform in accordance with our contractual agreements and desired standards, we could be exposed to additional risks, such as costs and reputational harm.

If such third-party property management company does not perform in accordance with our contractual agreements and desired standards, we could be exposed to risks such as costs and reputational harm.

Risks Related to Our Non-Real Estate Operations

The Observatory operations at the Empire State Building are not traditional real estate operations, and may be negatively impacted by competition, adverse weather, and changes in tourist trends.

For fiscal years ended December 31, 2021, 2022 and 2023, we derived revenues of approximately $41.5 million, $106.0 million and $129.4 million from our Observatory operations.

The Observatory operations at the Empire State Building may be negatively impacted by geopolitical factors, competition, adverse weather, and changes in tourist trends.

For fiscal years ended December 31, 2024, 2023 and 2022, we derived revenue of approximately $136.4 million, $129.4 million and $106.0 million, respectively, from the Observatory operations.

Our revenues declined significantly in 2020, 2021 and 2022, compared to 2019, as a result of the pandemic and government mandated closures and a slow ramp-up in visitor volume after reopening in July 2020, in large part due to travel restrictions.

Any future health or other economic crises, geopolitical events (including global hostilities) or currency exchange rate fluctuations could negatively impact tourist trends and visitor demand for our Observatory, which could have a material adverse effect on our business, results of operations, cash flow and

financial condition.

Our visitor volume has not yet fully returned to 2019 levels.

During 2020, 2021, 2022, 2023 and 2024, visitor volume was 0.5 million, 0.8 million, 2.2 million, 2.6 million, and 2.6 million, respectively, compared to 3.5 million in 2019.

Our change in operations of the Observatory to focus on capacity controls to maximize the customer experience, require reservations to control overcrowding and staffing costs, and our increase of per visitor pricing may cause our future Observatory results to differ from previous Observatory results.

We are also susceptible to reductions in visitor demand due to adverse weather.

We compete against existing observatories in New York City at the World Trade Center, Rockefeller Center, Hudson Yards, and One Vanderbilt, all of which may divert visitors and negatively impact our revenue.

We compete against other observatories in New York City at the World Trade Center, Rockefeller Center, Hudson Yards, and One Vanderbilt, all of which may divert visitors and negatively impact our revenue.

The broadcasting operations at the Empire State Building are not traditional real estate operations, and competition and changes in the broadcasting of signals over air may subject us to additional risks.

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During the year ended December 31, 2024, we derived approximately $15.2 million of revenue (excluding tenant reimbursement income) from such broadcasting licenses and related leases, as compared with about $21 million at its peak.

Competition from other broadcasting operations has had a negative impact on revenues from our broadcasting operations, and lease renewals have yielded reduced revenue, and higher operating expenses and capital expenditures.

Competition from other broadcasting operations has had a negative impact on revenues, and lease renewals have yielded reduced revenue, and higher operating expenses and capital expenditures.

Our broadcast licensees also face a range of competition from advances in technologies and alternative methods of content delivery in their respective industries, as well as changes in consumer behavior, which may reduce the demand for over-the-air broadcast licenses.

Recent government regulations may materially and adversely affect our broadcast revenue by reducing the demand for broadcast licenses through making more spectrum available for wireless broadband service providers.

Government regulations may materially and adversely affect our broadcast revenue by reducing the demand for broadcast licenses by making more spectrum available for wireless broadband service providers.

The impairment of a significant portion of goodwill could negatively affect our results of operations and financial condition.

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Risks Relating to Acquisitions and Dispositions

We may be unable to identify and successfully complete acquisitions, and even if acquisitions are identified and completed, they may expose us to additional risks.

We plan to acquire new properties as we are presented with attractive opportunities, but we may face significant competition from other investors, particularly private investors who can incur more leverage.

We may be unable to identify and successfully complete acquisitions, and completed acquisitions may expose us to additional risks.

We seek to acquire new properties as we are presented with attractive opportunities, but we may face significant competition from other investors, particularly private investors who can incur more leverage.

We may incur significant costs and divert management attention in connection with potential acquisitions, including ones that we are unable to complete.

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We may acquire properties through tax deferred contribution transactions, which could result in securityholder dilution and limit our ability to sell such assets.

In the future we may acquire properties through tax deferred contribution transactions in exchange for our partnership interests, which may result in dilution to securityholders, reduction of tax depreciation we could deduct over the tax life of the acquired properties (as compared with an acquisition paid in cash), and requirements to protect the contributors’ tax deferral through restrictions on our disposition of the acquired properties and/or maintenance and allocation of partnership debt to the contributors to maintain their tax bases.

In the future we may acquire properties through tax deferred contribution transactions in exchange for our partnership

interests, which may result in dilution to securityholders, reduction of tax depreciation we could deduct over the tax life of the acquired properties (as compared with an acquisition paid in cash), and requirements to protect the contributors’ tax deferral through restrictions on our disposition of the acquired properties and/or maintenance and allocation of partnership debt to the contributors to maintain their tax bases.

These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.

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We may be unable to realize our investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time.

We may incur taxable capital gain on the disposition of assets due to the failure of use or compliance with a Section 1031 exchange program.

From time to time we may dispose of properties in transactions that are intended to qualify as “like kind exchanges” under Section 1031 of the Code.

It is possible that the qualification of a transaction as a like-kind exchange could be

successfully challenged and determined to be currently taxable.

We may incur taxable capital gain on the disposition of assets due to the failure to comply with Section 1031 of the Code.

We may dispose of properties in transactions that are intended to qualify as “like kind exchanges” under Section 1031 of the Code.

It is possible that the qualification of a transaction as a like-kind exchange could be successfully challenged and determined to be currently taxable.

In such case, our taxable income and earnings and profits would increase.

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As a result, we may be required to borrow funds to pay additional dividends or taxes, and any payment of taxes could cause us to have less cash available to distribute to our shareholders.

In addition, if a like-kind exchange was later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders.

In addition, if a like-kind exchange was later determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders.

We could also be subject to significant indemnity obligations if the applicable property was subject to a tax protection agreement.

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Our debt, the cost of our debt and limitations in our loan documents could adversely affect us.

As of December 31, 2023, we had total debt outstanding of approximately $2.2 billion inclusive of total mortgages of approximately $877.4 million with no maturity before November 2024.

As of December 31, 2024, we had total debt outstanding of approximately $2.3 billion inclusive of total mortgages of approximately $704.3 million.

See “Financial Statements — Note 5 Debt” in this Annual Report on Form 10-K for further information.

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If such debt exceeds our tax basis in the property, we will recognize taxable income on foreclosure, but not receive any cash.

Foreclosures could also trigger our obligations under tax protection agreements with certain legacy investors to indemnify them for certain taxes upon sale of specific properties where they had embedded phantom taxable income (or the failure to maintain certain levels of indebtedness).

Foreclosures could also trigger our obligations under tax protection agreements with certain legacy investors to indemnify them

for certain taxes upon sale of specific properties where they had embedded phantom taxable income (or the failure to maintain certain levels of indebtedness).

See “Financial Statements — Note 11 Related Party Transactions — Tax Protection Agreements” in this Annual Report on Form 10-K for more information.

High mortgage rates and/or unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our net income and the amount of cash distributions we can make.

If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties.

If we place mortgage debt on properties, we may be unable to refinance the properties when the loans become due at comparable terms.

This may result in reduced cash flows and hinder our ability to make distributions, and to raise more capital by issuing more stock or by borrowing more money.

In addition, to the extent we are unable to refinance loans, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger our related indemnification obligation.

If we place mortgage debt on properties, we may be unable to refinance the properties when the loans become due at comparable terms, which may result in reduced cash flows and hinder our ability to make distributions, and to raise more capital by issuing stock or borrowing money.

Our growth depends on external sources of capital that are outside of our control.

Because of the distribution requirements to maintain our status as a REIT (See Part I, ITEM 1, “Business — Our Tax Status”), we may not be able to fund future capital needs, including any acquisition financing, from operating cash flow and may need to rely on third-party sources.

Our access to third-party sources of capital depends, in part, on general economic and

market conditions, including the cost and availability of credit, government action or inaction and its effect on the state of the capital markets, the market’s perception of our growth potential, as well as our then current financial condition.

Additionally, our access to third-party sources of capital depends, in part, on general economic and market conditions, including the cost and availability of credit, government action or inaction and its effect on the state of the capital markets, the market’s perception of our growth potential, as well as our then current financial condition.

Absent needed capital, we may not be able to acquire or develop properties when opportunities exist, satisfy our debt obligations or make cash distributions to our securityholders necessary to maintain our qualification as a REIT.

Risks Related to the COVID-19 Pandemic

The COVID-19 pandemic had, and any future public health crisis could have, serious adverse effects on our and our tenants’ businesses, results of operations, cash flows and financial condition, and on local, national, and global economic activity.

The COVID-19 pandemic impacted the entire U.S., including New York and Connecticut where our properties are located.

Any future public health crisis could have significant impacts on how people live, work, and travel in ways that have affected and may in the future affect our properties.

Recovery from pandemic travel impacts is not yet completed, our visitor volume at the Empire State Building Observatory has not yet fully returned, and we cannot predict when we may achieve visitor volume comparable to 2019 when approximately two-thirds of our visitors were international.

During 2020, 2021, 2022 and 2023, visitor volume was 0.5 million, 0.8 million, 2.2 million and 2.6 million, respectively, compared to 3.5 million in 2019.

Our change in operations of the Empire State Building Observatory to focus on capacity controls to maximize the customer experience, require reservations to control overcrowding and staffing costs, and our increase of per visitor pricing may cause our future Observatory results to differ from previous Observatory results.

Amongst the impacts the COVID-19 pandemic had, and any future public health crisis could have, is a material adverse effect on our business, results of operations, cash flows and financial condition due to, among other factors:

• downturn in national and/or local economies that decreases prospects, demand, occupancy and rental rates for our office, multifamily and retail space, all with an adverse impact on the value or price of our assets;

• delays, cost increases and/or cancellations of planned capital projects;

• potential impairment of our ability to comply with existing debt agreements, to pay down, refinance, or extend maturing debt, and to incur new debt;

• changes in the number of domestic and international tourists to our markets;

• volatility and downward pressure on the market price of our Class A common stock and publicly traded partnership units, which may also reduce our access to capital and/or our equity currency for new acquisitions;

• reduction of our cash flows and our ability to pay dividends, with potential impairment of REIT qualification, and business continuity.

Risks Relating to Disaster Recovery and Business Continuity

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Our properties are concentrated in the New York metropolitan area.

Natural disasters and physical climate risk including earthquakes, storms, storm surges, tornados, floods, extreme temperatures, and hurricanes, could cause significant damage or limit access to our properties and the surrounding area.

Physical climate risk, including rising sea levels, storm surges, and extreme temperature fluctuations, could adversely impact the coastal metropolitan areas in which we operate.

These conditions could result in declining demand for our commercial and multifamily properties, compromise our ability to operate the buildings, make insurance less affordable or available, and increase the cost of energy and utilities at our properties.

Natural disasters and physical climate risk including earthquakes, storms, storm surges, tornados, floods, extreme temperatures, hurricanes and rising sea levels, could cause significant damage or limit access to our properties and adversely impact the areas in which we operate.

These conditions could result in declining demand for our commercial and multifamily properties, compromise our ability to operate the buildings to the requirements and parameters set forth in our leases, make insurance less affordable or available, and increase the cost of energy and utilities at our properties.

Also, certain of our properties could not be rebuilt to their existing height or size under current land use laws.

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Under various federal, state and/or local laws, ordinances and regulations, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or release of hazardous substances, waste, or petroleum products at, on, in, under or from such property, including costs for investigation or remediation, natural resource damages, or third-party liability for personal injury or property damage.

These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such materials, and the liability may be joint and several.

Some of our properties have been or may be impacted by contamination arising from current or prior uses of the property or adjacent properties for commercial, industrial or other purposes.

We also may be liable for the costs of remediating contamination at off-site disposal or treatment facilities when we arrange for disposal or treatment of hazardous substances at such facilities, without regard to whether we comply with environmental laws in doing so.

Some of our properties have been or

may be impacted by contamination arising from current or prior uses of the property or adjacent properties for commercial, industrial or other purposes.

Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials.

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See Part I, ITEM 1, "Business — Environmental Matters" for further information.

The presence of contamination or the failure to remediate contamination on our properties may adversely affect our ability to attract and/or retain tenants, and our ability to develop or sell or borrow against those properties.

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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.

In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations.

Noncompliance with these laws and regulations could subject us or our tenants to liability.

In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations, and noncompliance could subject us or our tenants to liability.

These liabilities could affect a tenant’s ability to make rental payments to us.

Moreover, changes in laws could increase the potential costs of compliance with such laws and regulations or increase liability for noncompliance.

This may result in significant unanticipated expenditures.

Moreover, changes in laws could increase the potential costs of compliance or increase liability for noncompliance.

We sometimes require our tenants to comply with environmental and health and safety laws and regulations and to indemnify us for any related liabilities in our leases with them.

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As the owner or operator of real property, we may also incur liability based on various building conditions.

For example, environmental site assessments and investigations have identified asbestos or asbestos-containing material (“ACM”) in certain of our properties, and it is possible that other properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained, ACM.

For example, environmental site assessments have identified asbestos or asbestos-containing material (“ACM”) in certain of our properties, and it is possible that other properties that we currently own or operate or acquire in the future contain ACM.

See “Financial Statements — Note 9 Commitments and Contingencies – Asset Retirement Obligations” in this Annual Report on Form 10-K for more information.

Environmental and health and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with those requirements.

These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be disturbed during maintenance, redevelopment or demolition of a building, potentially resulting in substantial costs.

In addition, we may be subject to liability for personal injury or property damage sustained as a result of releases of ACM into the environment.

Additionally, our properties may contain or develop harmful mold or suffer from other indoor air quality issue, such as inadequate ventilation and contamination, which could lead to liability for adverse health effects or property damage or costs for remediation.

Additionally, our current properties, or properties we acquire in the future, may contain or develop harmful mold or suffer from other indoor air quality issues, such as inadequate ventilation and contamination, which could lead to liability for adverse health effects from our tenants, employees of our tenants or others, or property damage or costs for remediation.

Any liability or increased cost from the environmental risks mentioned in this section could materially and adversely affect our operations.

We acquire real estate from time to time, which carries the risk that a property we acquire may subject us to potential environmental liability as a result of the condition of the land or actions taken on the property before we acquired it.

This potential environmental liability may be unknown to us at the time we acquire the property and as a result can be impossible to predict.

We may incur significant costs to comply with environmental laws, in particular New York City’s Local Law 97.

We may incur significant costs to comply with environmental laws, for example New York City’s Local Law 97.

We may become subject to new compliance requirements and/or new costs or taxes associated with natural resource or energy or utility usage and related emissions (such as a “carbon tax”), which could increase our operating costs.

In particular, as the owner of large commercial and multifamily buildings in New York City, we are subject to Local Law 97 passed by the New York City Council in April 2019, which for each such building establishes annual limits for greenhouse gas emissions, requires

yearly emissions reports beginning in May 2025 for full calendar year 2024, and imposes penalties for emissions above such limits.

In particular, as the owner of large covered commercial and multifamily buildings in New York City, we are subject to Local Law 97 passed by the New York City Council in April 2019, which for each such covered building establishes annual limits for greenhouse gas emissions, requires yearly compliance reports beginning in May 2025 for calendar year 2024 performance, and imposes penalties for emissions above such limits.

While we are actively working to reduce our carbon emissions, there can be no assurance that we will be able to operate within the limits of Local Law 97, or that the costs of compliance and/or penalties will not be material.

Based upon our present understanding of the law and calculations related thereto, we expect to pay no fine on any building in our commercial portfolio in the 2024-2029 first period of enforcement.

Based upon our present understanding of the law and calculations related thereto, we expect to pay no Local Law 97 fine on any covered building in our portfolio in the 2024-2029 period of enforcement.

Risks Relating to Human Capital Management

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Risks Relating to Legal Compliance, Sustainability and Cybersecurity

Failure to maintain effective internal control over financial reporting could result in loss of investor confidence and adversely impact our stock price .

We are required under Section 404 of the Sarbanes-Oxley Act to maintain internal control over financial reporting that meets applicable standards.

As of December 31, 2024, we remediated the material weakness that was identified in our internal control over financial reporting for the periods ended December 31, 2023 and 2022 related to the design of certain of our information technology general controls for information systems and applications used in the preparation of our financial statements.

See Part II, ITEM 9A, “Controls and Procedures — Remediation of the Material Weakness in Internal Control Over Financial Reporting” for more information.

We may not be successful in maintaining our effective internal control over financial reporting or in developing other internal controls.

Any failure by us to maintain effective internal control over financial reporting could adversely affect our ability to record, process or report financial information accurately and to prepare financial statements in a timely manner, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

We face risks associated with our tenants being designated “Prohibited Persons” by OFAC and similar requirements.

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Increasing attention to sustainability matters may impact our business.

Increasing attention to sustainability matters, including those related to climate change, and increasing societal, investor and legislative pressure on companies to address sustainability matters may result in increased costs, greater litigation risks, negative impacts on our access to capital markets, and damage to our reputation.

Increasing societal, investor and legislative pressure on companies to address sustainability matters may result in increased costs, greater litigation risks, negative impacts on our access to capital markets, and damage to our reputation.

For example, policy and other responses to climate change, such as climate and energy legislation and carbon mandates, enhanced environmental reporting requirements, increasingly stringent building and energy codes, as well as technology and market changes from the transition to a low-carbon economy has and may continue to impact our business and results of operations.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to sustainability matters, including climate change and transitional and physical climate-related risks.

Such ratings are used by some investors to inform their investment and voting decisions.

In addition, certain organizations have developed ratings processes for evaluating companies on their approach to sustainability matters, and such ratings are used by some investors to inform their investment and voting decisions.

Unfavorable sustainability ratings may lead to negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.

We publicly announced our achievement of carbon neutrality in 2022 and our commitment to a 2030 net zero carbon emissions target for the Empire State Building and a 2035 net zero carbon emissions target for the balance of our portfolio, defined as the goal of 80% operational emissions reduction in partnership with the grid.

We have implemented numerous comprehensive sustainability-focused initiatives focused on energy, emissions, water, and waste reduction along with indoor environmental quality, well-being, and healthy buildings.

These aspirations, targets and objectives reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.

In addition, these efforts are impacted by our tenants’ willingness and ability to collaborate in reporting sustainability metrics and meeting sustainability goals.

We publicly announced certain energy, emissions, water and waste reduction targets.

These targets and objectives reflect our current plans and goals and are not guarantees that we will be able to achieve them.

In addition, these efforts are impacted by our tenants’ willingness and ability to collaborate in reporting sustainability metrics and integrating measures to achieve sustainability performance goals, the ability of the New York grid to meet emissions reduction targets and timing set forth in New York State's Climate Leadership & Community Protection Act legislation, and replacement of equipment at the end of its useful life cycle.

Our efforts to accomplish and accurately report on these goals and objectives present operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material negative impact on us, including on our reputation and stock price.

The standards for tracking, rating, and reporting on sustainability matters are relatively new, have not been harmonized and continue to evolve rapidly at a global scale.

The standards for tracking, rating, and reporting on sustainability matters have not been harmonized and continue to evolve.

Our selection of disclosure frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of comparative data from period to period.

In addition, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting sustainability metrics, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.

In addition, our processes and controls may not always align with evolving standards, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.

Our failure or perceived failure to pursue or fulfill our announced aspirations and targets or to satisfy various reporting standards within the timelines we announce, or at all, could have a negative impact on investor sentiment, ratings outcomes for evaluating our approach to sustainability matters, stock price, and cost of capital and expose us to government enforcement actions and private litigation, among other possible material adverse impacts.

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A cyberattack could compromise the confidential information of our employees, tenants, residents, customers, and vendors, and disrupt our business operations and relationships.

Such a security breach could require us to expend significant resources to remediate any damage that result.

Additionally, such a breach may subject us to litigation, damages, penalties, fines, governmental investigations and enforcement actions or termination of leases.

These consequences could damage our reputation with tenants, residents, customers, and investors, any of which could have a material adverse effect on our business.

Any compromise of our security could also result in a violation of applicable privacy laws (e.g., Observatory customer data, Company employee data, or residential data at multifamily properties), which could result in negative legal consequences as well as significant damage to our financial condition, reputation, business, records, and confidence of our business partners in our business relationships.

New laws and regulations related to data privacy and security pose increasingly complex compliance challenges and costs across multiple jurisdictions, which could negatively impact our business, financial condition and results of operations.

A security breach could require us to expend significant resources to remediate and may subject us to litigation, damages, penalties, fines, governmental investigations and enforcement actions or termination of leases.

Any compromise of our security could also result in a violation of applicable privacy laws (e.g., Observatory customer data, Company employee data, or residential data at multifamily properties).

These consequences could result in negative legal consequences as well as significant damage to our business and financial condition and reputation.

The adoption of or changes in rent control or rent stabilization regulations and eviction regulations in our markets could have an adverse effect on our operations and property values.

A growing number of state and local governments have enacted and may continue to consider enacting and/or expanding rent control or rent stabilization regulations, which have limited and could continue to limit in broadening ways our ability to raise rents or charge certain fees, either of which could have a retroactive effect.

We continue to see increases in governments considering or being urged by advocacy groups to consider rent forgiveness, rent control or rent stabilization regulations or expand coverage of existing regulations in our markets.

These regulations may also make changes to and/or expand eviction and other tenants’ rights regulations that may limit our ability to enforce residents’ or tenants’ contractual rental obligations (such as eviction moratoriums), pursue collections or charge certain fees, which could have an adverse impact on our operations and property values.

Government housing regulations may limit opportunities at the multifamily properties in which we invest, and failure to comply with resident qualification requirements may result in financial penalties or loss of benefits.

New York, where our properties are located, has enacted and may continue to enact and/or expand rent control and eviction regulations (such as Good Cause Eviction), which have limited and could continue to limit our ability to raise rents, enforce residents’ or tenants’ contractual rental obligations (such as eviction moratoriums), pursue collections or charge certain fees, all of which could have an adverse impact on our operations and property values.

Government housing regulations may limit opportunities at the multifamily properties in which we invest, and failure to comply with resident qualification requirements or to extend such programs upon expiration may result in financial penalties or loss of benefits.

We own, and may acquire additional equity interests in properties that benefit from governmental programs intended to provide housing to individuals with low or moderate incomes.

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We may not always receive such approval.

Upon expiration of such programs, we may choose not to seek an extension, which will result in loss of benefits and could result in negative financial impact, in particular if we cannot raise rents for such units due to other regulations related to rent control and eviction, among others.

Risks Related to ESRT's REIT Status, Our Organization and Structure

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federal income tax purposes unless we meet certain requirements, in particular, that at least 90% of our gross income be derived from qualifying sources income, which generally includes rental income, interest, dividends, and other income from passive sources.

We believe we satisfy this test, but the IRS could challenge us.

If the IRS were successful in treating us as a corporation, we would be subject to U.S.

We believe we satisfy this test, but the IRS could challenge us, and if successful, we would be subject to U.S.

federal, state and local corporate income tax, which would significantly reduce our cash available to pay debt service and distributions, could have adverse tax consequences on holders of OP units, and would disqualify ESRT from REIT status.

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These limitations may, among other things, prevent a holder from utilizing allocations of loss and deduction from us against income from other sources.

The passive activity loss rules are applied separately with respect to items of income and loss of each partnership held by a holder.

Furthermore, your ability to utilize certain specific items of deduction may be limited under certain provisions of the Code.

The application of these limitations depends on the exact nature of our current and future operations and the individual tax positions of such holders.

The application of these limitations depends on our current and future operations and the individual tax positions of such holders.

Holders of OP units should consult with their tax advisor regarding these provisions.

Participants may recognize taxable gain resulting from a reduction in their allocable share of our liabilities.

Participants may recognize taxable gain resulting from a reduction in their allocable share of our liabilities or specific transactions or tax elections by ESRT.

ESRT is not required to take into account tax consequences to the other holders of OP units other than ESRT in deciding whether to undertake specific transactions or make tax elections that result in additional taxable income allocations to you or reduce your share of our liabilities.

We may elect to pay down our secured debt or refinance such debt with unsecured debt, which may reduce the amount of our liabilities allocable to a holder of OP units.

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federal income tax basis in its OP units is treated as taxable gain from sale or exchange of such units.

Holders of our OP units should consult their tax advisors with regard to the foregoing.

Failure of ESRT to qualify as a REIT would have a material adverse effect on us.

We must rely on ESRT, as our general partner, to manage our affairs and business.

ESRT is subject to certain risks that may affect its financial and other conditions, including particularly adverse consequences if it fails to qualify as a REIT for U.S.

ESRT is subject to risks that may affect its financial and other conditions, including particularly adverse consequences if it fails to qualify as a REIT for U.S.

federal income tax purposes.

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federal income tax on its taxable income at regular corporate rates and thus reduce funds available for distribution and debt service, and ESRT would not be required to make distributions until it re-qualified as a REIT which would not be permitted for the four taxable years following its disqualification, unless it gained relief under relevant statutory provisions.

To enable ESRT to comply with REIT requirements, we may have to forego and/or liquidate attractive investments.

To enable ESRT to comply with REIT requirements, we may have to forego and/or liquidate attractive investments or borrow funds and we may be subject to tax.

To qualify as a REIT (and avoid certain taxes to which it would be subject notwithstanding its status as a REIT), ESRT must meet, on an ongoing basis, certain tests regarding the nature and diversification of its assets and its income.

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federal income tax purposes, we must meet certain annual tests relating to the sources of our gross income.

In order to meet these tests and to allow ESRT to meet these tests, we may be required to forego investments that we otherwise would make or to liquidate from our commercial portfolio otherwise attractive investments.

In addition, we may be required to make distributions to ESRT at disadvantageous times or when we do not have funds readily available for distribution.

These actions could have the effect of reducing our income and amounts available for

distribution to our securityholders.

To allow ESRT to comply with REIT distribution requirements, we may be required to borrow funds during unfavorable market conditions or may be subject to tax.

In order to meet these tests and to allow ESRT to meet these tests, we may be required to forego investments that we otherwise would make or to liquidate otherwise attractive investments.

ESRT intends to distribute its net income to securityholders in a manner intended to satisfy the REIT 90% distribution requirement (See Part I, ITEM 1, “Business — Our Tax Status”) and to avoid U.S.

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Our partnership agreement provides that we will make sufficient distributions to ESRT to enable it to satisfy these distribution requirements.

Any failure to do so will incur substantial entity level tax and/or disqualification as a REIT with the adverse tax consequences and limits on re-qualification described above in this Risk Factors section.

Any failure to do so will incur substantial entity level tax and/or disqualification as a REIT with the adverse tax consequences and limits on re-qualification described above in this section.

As a result, we may be required to make distributions to ESRT at disadvantageous times or when we do not have funds readily available for distribution.

These actions could have the effect of reducing our income and amounts available for distribution to our securityholders.

In addition, our taxable income may exceed our net income as determined by GAAP because, for example, realized capital losses will be deducted in determining our GAAP net income, but may not be deductible in computing our taxable income.

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As a result, we may generate less cash flow than taxable income in a particular year and be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable in order to allow ESRT to satisfy such REIT requirements and avoid such taxes.

S pecific transactions or tax elections may cause you to recognize gain or otherwise affect your investment.

As a general matter, per the terms of our partnership agreement, ESRT is not required to take into account tax consequences to the other holders of OP units other than ESRT in deciding whether to cause us to undertake specific transactions or make tax elections that could cause you to recognize gain.

Consequently, we could enter into transactions that result in additional taxable income allocations to you at any time, and your share of our liabilities could be reduced at any time.

We cannot match the transferor of particular Series 60, Series 250, or Series ES OP units with each transferee of such OP units, so we have adopted certain income tax accounting positions that could subject us to challenge by the IRS.

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See Part I, ITEM 1, “Business — Our Tax Status.” We are entitled to rely upon these private letter rulings only to the extent that we did not misstate or omit a material fact in the ruling request and that we continue to operate in accordance with the material facts described in such request, and no assurance can be given that we will always be able to do so.

If we were not able to treat the rent that our Company receives from Observatory TRS as qualifying income for purposes of the REIT gross income tests applicable to ESRT, we would be required to restructure the manner in which we operate the Observatory, which would likely require us to cede operating control of the Observatory by leasing the Observatory to an affiliate or third-party operator.

If we were not able to treat the license fees that our Company will receive from the license agreements described above as qualifying income for purposes of the REIT gross income tests, we would be required to enter into the license agreements described above through a TRS, which would cause the license fees to be subject to U.S.

If we were not able to treat the rent that our Company receives from Observatory TRS as qualifying income, we would be required to restructure how we operate the Observatory, which would likely require us to cede operating control of the Observatory by leasing the Observatory to an affiliate or third-party operator.

If we were not able to treat our broadcast license fees as qualifying income for purposes of the REIT gross income tests, we would be required to enter into the license agreements through a TRS, which would cause the license fees to be subject to U.S.

federal income tax and accordingly reduce the amount of our cash flow available to be distributed to our securityholders.

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We are required to pay state and local taxes on our properties.

From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability.

Changes in state and local tax laws may result in an increase in our tax liability.

A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes.

In particular, the federal government has recently limited the ability of individuals to deduct state and local taxes on their federal tax returns, potentially leading many high-tax states to make significant changes to their own state and local tax laws.

In addition, the pandemic has left many state and local governments with reduced tax revenue, which may lead such governments to increase taxes or otherwise make significant changes to their state and local tax laws.

In particular, the federal government has limited the ability of individuals to deduct state and local taxes on their federal tax returns, potentially leading many high-tax states to make significant changes to their own state and local tax laws.

If such changes occur, we may be required to pay additional taxes on our assets or income.

The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities.

Therefore, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past.

If the property taxes we pay increase, our financial condition could be materially and adversely affected.

Therefore, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past, which would materially and adversely affect our financial condition.

federal, state and local legislative, judicial or regulatory tax changes could have a material adverse effect on our shareholders and us.

The present U.S.

federal income tax treatment of REITs and their shareholders may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S.

federal income tax treatment of an investment in us.

federal income tax rules dealing with REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S.

Department of the Treasury, which results in statutory changes as well as frequent revisions to regulations and interpretations.

We cannot predict how changes in the tax laws might affect our investors or us.

Revisions in U.S.

federal income tax laws and interpretations thereof could significantly and negatively affect ESRT’s ability to qualify as a REIT and the tax considerations relevant to an investment in us, or could cause us to change our investments and commitments.

Our tax protection agreements could limit our ability either to sell certain properties or to engage in a strategic transaction, or to reduce our level of indebtedness, which could materially and adversely affect us.

Department of the Treasury, which results in statutory changes as well as frequent revisions to regulations and interpretations, which could significantly and negatively affect ESRT’s ability to qualify as a REIT and the tax considerations relevant to an investment in us, or could cause us to change our investments and commitments.

Tax consequences to holders of our operating partnership units and tax protection agreements triggered upon a sale or refinancing of our properties could limit our ability either to sell certain properties or engage in a strategic transaction.

As a result of the unrealized built-in gain attributable to a property at the time of contribution, some holders of operating partnership units, including our Chairman and Chief Executive Officer, Anthony E.

Malkin, and our Chairman Emeritus, Peter L.

Malkin, may suffer different and more adverse tax consequences than other holders of operating partnership units upon the sale or refinancing of the properties owned by us, including disproportionately greater allocations of items of

taxable income and gain upon a realization event.

As those holders will not receive a correspondingly greater distribution of cash proceeds, they may have different objectives regarding the appropriate pricing, timing, transaction structure and other material terms of any sale, exchange or refinancing of certain properties, or whether to sell, exchange or refinance such properties at all.

As a result, the effect of certain transactions on Messrs.

Malkin may influence their decisions affecting these properties and may cause such members of ESRT’s senior management team to attempt to delay, defer or prevent a transaction that might otherwise be in the best interests of our other securityholders, or to structure such transactions in ways that would mitigate the above tax consequences to Messrs.

In connection with the formation transactions, we and ESRT entered into a tax protection agreement with certain Malkin family members, including Anthony E.

Malkin and Peter L.

Malkin, pursuant to which we have agreed to indemnify the Malkin Group and one additional third-party investor in Metro Center, and in connection with our sale of a 9.9% fully diluted interest in ESRT to QIA in 2016, we agreed, subject to certain minimum thresholds and conditions, to indemnify QIA, in each case, against certain tax liabilities that may arise from certain property transactions.

Malkin, pursuant to which we and ESRT have agreed to indemnify the Malkin Group and one additional third-party investor in Metro Center, and in connection with our sale of a 9.9% fully diluted interest in ESRT to QIA in 2016, we agreed, subject to certain minimum thresholds and conditions, to indemnify QIA, in each case, against certain tax liabilities that may arise from certain property transactions.

See “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses” in this Annual Report on Form 10-K for further information.

If we were to trigger such tax indemnification obligations, we would be required to pay the resulting tax liability to the Malkin Group, the additional third-party investor in Metro Center and/or QIA, as applicable.

These obligations may restrict our ability to engage in a strategic transaction, require us to maintain more or different debt, and/or inhibit our disposing of a property that we might judge to be otherwise be in the best interest of the securityholders.

If we were to trigger such tax indemnification obligations, we and ESRT would be required to pay the resulting tax liability to the Malkin Group, the additional third-party investor in Metro Center and/or QIA, as applicable.

These obligations may restrict our ability to engage in a strategic transaction, require us and ESRT to maintain more or different debt, and/or inhibit our disposing of a property that we and ESRT might judge to otherwise be in the best interest of the securityholders.

Holders of ESRT’s Class B common stock have a significant vote in ESRT matters.

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This concentration of voting power might also have the effect of delaying or preventing a change of control that our securityholders may view as beneficial.

Tax consequences to holders of our operating partnership units upon a sale or refinancing of our properties may cause the interests of certain members of ESRT’s senior management team to differ from your own.

Malkin, and our Chairman Emeritus, Peter L.

As a result, the effect of certain transactions on Messrs.

Malkin may influence their decisions affecting these

properties and may cause such members of ESRT’s senior management team to attempt to delay, defer or prevent a transaction that might otherwise be in the best interests of our other securityholders, or to structure such transactions in ways that would mitigate the above tax consequences to Messrs.

Additionally, in connection with the formation transactions, we and ESRT entered into a tax protection agreement with Messrs.

Malkin pursuant to which we and ESRT have agreed to indemnify the Malkin Group and one additional third-party investor in Metro Center against certain tax liabilities if those tax liabilities arise from a transaction involving one of four properties.

Refer to “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses” in this Annual Report on Form 10-K for more information.

As a result of entering into the tax protection agreement, Messrs.

Malkin may have an incentive to cause us to enter into transactions from which they may personally benefit.

Conflicts of interest exist or could arise in the future between ESRT’s securityholders and OP unit holders.

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Limits on changes in control may discourage takeover attempts beneficial to securityholders.

Provisions in our partnership agreement and ESRT’s charter may delay or prevent a change of control over the Company or ESRT, or a tender offer, even if such action might be beneficial to our securityholders.

Provisions in our governance documents may delay or prevent a change of control over the Company or ESRT, or a tender offer, even if such action might be beneficial to our securityholders.

Certain provisions in our partnership agreement may delay or make more difficult unsolicited acquisitions of us or changes of control, including, among others:

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Our failure to meet the market’s expectations with regard to future earnings and cash distributions likely would adversely affect the market price of ESRT’s Class A common stock and our traded OP units.

Changes in market conditions could adversely affect the market price of ESRT's Class A Common Stock and our traded OP Units.

As with other publicly traded equity securities, the value of ESRT's Class A Common Stock and our traded OP units depends on various market conditions, which may change from time to time.

In addition to the current economic environment and future volatility in the securities and credit markets, the following market conditions may affect the value of ESRT's Class A Common Stock and our traded OP units:

• the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

Changes in market conditions could adversely affect the market price of ESRT's Common Stock and our traded OP Units.

The following market conditions may affect the value of ESRT's Class A Common Stock and our traded OP units:

the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities;

our financial performance;

• general stock market conditions.

and general stock market conditions due to the economic environment or otherwise.

The market value of our common stock is based on a number of factors, including, but not limited to, the market’s perception of the current and future value of our assets, our growth potential and our current and potential future earnings and distributions.

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Future issuances of debt or equity securities or preferred units may be dilutive to current securityholders and may materially adversely affect the market price of our traded securities.

In the future, we or ESRT may issue debt or equity securities or make other borrowings.

ESRT’s Board, without stockholder approval, has the power under its charter to cause ESRT to issue additional shares of capital stock or debt securities, and we may also issue additional operating partnership units without the consent of our securityholders.

Upon liquidation, holders of our debt securities, preferred units and other loans and preferred shares will receive a distribution of our available assets before holders of shares of ESRT’s common stock.

We or ESRT are not required to offer any such additional debt or equity securities to existing ESRT securityholders or our securityholders, as applicable, on a preemptive basis.

Therefore, additional shares of ESRT common stock issuances, directly or through convertible or exchangeable securities (including operating partnership units), warrants or options, will dilute the holdings of ESRT’s existing common securityholders and such issuances or the perception of such issuances may reduce the market price of shares of ESRT’s common stock or our traded OP units.

We or ESRT may issue debt or equity securities or make other borrowings.

Our governance documents permit ESRT to issue additional capital stock or debt securities and for us to issue additional operating partnership units, in each case without the consent of our securityholders.

Upon liquidation, holders of our debt securities and other loans and preferred equity holders will receive a distribution of our available assets before holders of ESRT’s common stock.

We or ESRT are not required to offer additional debt or equity securities to existing ESRT securityholders or our securityholders, as applicable, on a preemptive basis.

Therefore, additional ESRT common stock issuances, directly or through convertible or exchangeable securities (including operating partnership units), will dilute the holdings of ESRT’s existing common securityholders and such issuances or the perception of such issuances may reduce the market price of shares of ESRT’s common stock or our traded OP units.

Additionally, ESRT’s preferred units or shares, if issued, would likely have a preference on distribution payments, periodically or upon liquidation, which could limit ESRT’s ability to make distributions to holders of shares of its common stock.

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What changed 10-K

Item 1A. Risk Factors