Empire State Realty OP, L.P. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context otherwise requires or indicates, references in this section to “we,” “our,” and “us” refer to the Empire State Realty OP, L.P. and its consolidated subsidiaries. This Management’s Discussion and Analysis provides a comparison of our performance for the three month periods ended March 31, 2026 with the corresponding three month periods ended March 31, 2025 and reviews our financial position as of March 31, 2026. The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. We intend these forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and can generally be identified by words such as “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “estimate,” “may,” “will,” “should,” “would,” and similar expressions. Forward-looking statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks and uncertainties include, among others: economic and market conditions (including the impact of catastrophic events, pandemics, extreme weather, terrorism, armed hostilities, cybersecurity threats and other technology disruptions); increased costs due to tariffs or other economic factors; changes in the New York City office, retail, multifamily and tourism markets (including changes in the use of office space and remote work); leasing activity, tenant defaults, early terminations and renewals, occupancy levels and rental rates; performance of the Observatory (including tourism levels, currency and geopolitical impacts, weather and competition); interest rate volatility and capital markets conditions, including our ability to refinance, restructure or extend indebtedness; real estate valuation declines and potential impairment charges; our ability to execute capital projects and complete acquisitions on acceptable terms; risks relating to governmental regulation, environmental and climate-related requirements (including Local Law 97), and our ability to achieve sustainability goals and metrics; risks relating to our ground leases; our ability to maintain our qualification as a REIT; potential taxable gain arising from transactions structured to qualify under Section 1031; legal proceedings; and risks relating to our disclosure controls and internal control over financial reporting. For a discussion of these and other factors, see the section entitled “Risk Factors” in the Company’s Annual Report for the year ended December 31, 2025, and any additional factors that may be contained in any filing the Company makes with the SEC. We undertake no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Overview Highlights for the three months ended March 31, 2026 • Net income attributable to the Company of $1.9 million. • Core Funds From Operations ("Core FFO") of $53.2 million attributable to common unitholders. • Signed a total of 113,484 rentable square feet of new, renewal, and expansion leases. • In March 2026, we closed on the acquisition of a retail property on North 6 th Street in Williamsburg, Brooklyn for a purchase price of $46.0 million. Results of Operations The discussion below relates to our results of operations for the three months ended March 31, 2026 and 2025, respectively. Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025 The following table summarizes the historical results of operations: 28 Three Months Ended March 31, 2026 2025 Change % (amounts in thousands) Real Estate Segment Observatory Segment Total Real Estate Segment Observatory Segment Total Revenues: Rental revenue $ 166,105 $ — $ 166,105 $ 154,542 $ — $ 154,542 $ 11,563 7.5 % Observatory revenue — 18,510 18,510 — 23,161 23,161 (4,651) (20.1) % Lease termination fees 1,356 — 1,356 — — — 1,356 N/A Third-party management and other fees 277 — 277 431 — 431 (154) (35.7) % Other revenues and fees 4,077 — 4,077 1,932 — 1,932 2,145 111.0 % Total revenues 171,815 18,510 190,325 156,905 23,161 180,066 10,259 5.7 % Operating expenses: Property operating expenses 47,744 — 47,744 45,060 — 45,060 (2,684) (6.0) % Ground rent expenses 2,331 — 2,331 2,331 — 2,331 — — % General and administrative expenses 18,093 — 18,093 16,940 — 16,940 (1,153) (6.8) % Observatory expenses — 7,868 7,868 — 8,118 8,118 250 3.1 % Real estate taxes 34,613 — 34,613 33,050 — 33,050 (1,563) (4.7) % Depreciation and amortization 50,172 47 50,219 48,735 44 48,779 (1,440) (3.0) % Total operating expenses 152,953 7,915 160,868 146,116 8,162 154,278 (6,590) (4.3) % Operating income 18,862 10,595 29,457 10,789 14,999 25,788 3,669 14.2 % Intercompany rent revenue (expense) 12,821 (12,821) — 15,160 (15,160) — — — % Other income (expense): Interest income 461 152 613 3,713 73 3,786 (3,173) (83.8) % Interest expense (28,137) — (28,137) (26,938) — (26,938) (1,199) (4.5) % Interest expense associated with property in receivership — — — (647) — (647) 647 100.0 % Gain on disposition of property — — — 13,170 — 13,170 (13,170) (100.0) % Income before income taxes 4,007 (2,074) 1,933 15,247 (88) 15,159 (13,226) (87.2) % Income tax (expense) benefit (142) 1,204 1,062 (206) 825 619 443 71.6 % Net income (loss) 3,865 (870) 2,995 15,041 737 15,778 (12,783) (81.0) % Private perpetual preferred unit distributions (1,050) — (1,050) (1,050) — (1,050) — — % Net income (loss) attributable to common unitholders $ 2,815 $ (870) $ 1,945 $ 13,991 $ 737 $ 14,728 $ (12,783) (86.8) % Real Estate Segment Rental Revenue The increase in rental revenue during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to the net impact of acquisitions and dispositions made during 2025 as disclosed in "Financial Statements - Note 3. Acquisitions and Dispositions" in this Quarterly Report on Form 10-Q, and increases in tenant reimbursement income. Property Operating Expenses The increase in property operating expenses during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to higher operating payroll costs and utilities costs. Real Estate Taxes The increase in real estate taxes during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to the net impact of acquisitions and dispositions made during 2025 as disclosed in "Financial Statements - Note 3. Acquisitions and Dispositions" in this Quarterly Report on Form 10-Q. Interest Income The decrease in interest income during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is primarily due to lower cash balances due to property acquisitions during 2025 and 2026, the paydown of the $120.0 million revolving credit facility and the $100.0 million Series A senior unsecured notes in March 2025. See "Financial Statements — Note 5. Debt" in this Quarterly Report on Form 10-Q. 29 Observatory Segment Observatory Revenue Observatory revenues were lower due to lower visitation during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to lower levels of international tourism in 2026 as compared to 2025. Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, including lease-up costs, fund our redevelopment and repositioning programs, acquire properties, make distributions to our securityholders and fulfill other general business needs. Based on the historical experience of our management and our business strategy, in the foreseeable future we anticipate we will generate positive cash flows from operations. In order for ESRT to qualify as a REIT, ESRT is required under the Internal Revenue Code of 1986 to distribute to its stockholders, on an annual basis, at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We expect to make quarterly distributions, as required, to our securityholders. While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial condition and results of operations. For example, we may be required to comply with new laws or regulations that cause us to incur unanticipated capital expenditures for our properties, thereby increasing our liquidity needs. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of cash on hand, cash generated from our operating activities, debt issuances, common and/or preferred equity issuances and unused borrowing capacity under our unsecured revolving credit facility. We expect to meet our short-term liquidity requirements, including distributions, operating expenses, working capital, debt service, and capital expenditures from cash flows from operations, cash on hand, debt issuances, common and/or preferred issuances and available borrowing capacity under our unsecured revolving credit facility. The availability of these borrowings is subject to the conditions set forth in the applicable loan agreements. We expect to meet our long-term capital requirements, including acquisitions, redevelopments, repositioning and capital expenditures through our cash flows from operations, cash on hand, our unsecured revolving credit facility, mortgage financings, debt issuances, common and/or preferred equity issuances and asset sales. Our properties require periodic investments of capital for individual lease related tenant improvement allowances, general capital improvements and costs associated with capital expenditures. Our overall leverage will depend on our mix of investments and the cost of leverage. ESRT's charter does not restrict the amount of leverage that we may use. At March 31, 2026, we had $68.8 million available in cash and cash equivalents and there was $530.0 million available under our unsecured revolving credit facility. At March 31, 2026, we had approximately $2.3 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 4.54% and a weighted average maturity of 4.8 years. Portfolio Transaction Activity In March 2026, we closed on the acquisition of a retail property on North 6 th Street in Williamsburg, Brooklyn for a purchase price of $46.0 million. In December 2025, we closed on the sale of an office property, Metro Center, in Stamford, Connecticut at a sale price of $64.0 million in addition to a release to us of approximately $6.2 million of restricted cash previously held in escrow. In connection with this sale we repaid the related $71.6 million mortgage. In December 2025, we closed on the acquisition of 130 Mercer Street (555-557 Broadway, "The Scholastic Building"), located in the SoHo submarket of Manhattan, for a purchase price of $386.0 million. In June 2025, we closed on the acquisition of two retail properties on North 6 th Street in Williamsburg, Brooklyn for a purchase price of $31.0 million. Unsecured Revolving Credit and Term Loan Facilities As of March 31, 2026 , unsecured term loan facilities, net, amounted to $337.0 million . We have no unsecured term loans maturing until March 2029. In the first quarter of 2026, we repaid $70.0 million of our previously drawn borrowings and drew $15.0 million on the Revolving Credit Facility. As of March 31, 2026, we had $90.0 million borrowings under the Revolving Credit Facility. 30 See "Financial Statements - Note 5. Debt" for more information on our unsecured revolving credit and term loan facilities. Financial Covenants As of March 31, 2026, we were in compliance with the following financial covenants related to our unsecured facilities: Financial Covenant Required March 31, 2026 In Compliance Maximum total leverage < 60% 36.3 % Yes Maximum secured leverage < 40% 10.1 % Yes Minimum fixed charge coverage > 1.50x 2.8x Yes Minimum unencumbered interest coverage > 1.75x 3.8x Yes Maximum unsecured leverage < 60% 35.0 % Yes Mortgage Debt As of March 31, 2026, mortgage notes payable, net, amounted to $621.4 million. Our next mortgage debt maturity is for $30.0 million in May 2027. In March 2026, we closed on a $53.5 million mortgage loan at 10 Union Square East. The 10-year interest-only loan has a fixed rate of 5.33%, which includes the effect of treasury locks executed in connection with the refinancing of the $50.0 million loan that matured on April 1, 2026. See "Financial Statements - Note 5. Debt" for more information on mortgage debt. Senior Unsecured Notes As of March 31, 2026, senior unsecured notes, net, amounted to $1.3 billion. We have no senior unsecured notes maturing until March 2027. Subsequent to quarter-end on April 15, 2026, we entered into a Note Purchase Agreement with the purchasers named therein (the "Purchase Agreement") in connection with a private placement of $130.0 million aggregate principal amount of the 5.99% Series M Senior Notes due July 15, 2032 (the "Series M Notes"). The sale and purchase of the Series M Notes is scheduled to fund on July 15, 2026, subject to customary closing conditions. See "Financial Statements - Note 5. Debt" for more information on senior unsecured notes. Leverage Policies We expect to employ leverage in our capital structure in amounts determined from time to time by ESRT's Board of Directors. In the evaluation of our level of indebtedness, ESRT's Board of Directors will consider a number of factors including the mix of recourse or non-recourse debt and cross-collateralized debt, mix of fixed or floating rate debt, and cost of leverage. ESRT's charter and bylaws do not limit the amount or percentage of indebtedness that we may incur nor do they restrict the form in which our indebtedness will be taken. ESRT's overall leverage will depend on our mix of investments and the cost of leverage. ESRT's Board of Directors may from time to time modify our leverage policies in light of the then-current economic conditions, access to and relative costs of debt and equity capital, market values of our properties, general market conditions for debt and equity securities, fluctuations in the market price of ESRT's common stock and our traded OP units, growth and acquisition opportunities and other factors. Capital Expenditures The following tables summarize our tenant improvement costs, leasing commission costs and our capital expenditures for each of the periods presented (dollars in thousands, except per square foot amounts). 31 Office Properties (1)(2) Three Months Ended March 31, Total New Leases, Expansions, and Renewals (3) 2026 2025 Number of leases signed (4) 9 19 Total square feet 90,687 229,367 Weighted average annualized cash rent per square foot for new and renewal leases executed during the year $ 59.46 $ 66.43 Weighted average annualized cash rent per square foot for previous leases 55.66 60.63 Percentage of new cash rent over previously escalated rents 6.8 % 9.6 % Leasing commission costs per square foot (5) $ 23.49 $ 22.18 Tenant improvement costs per square foot (5) 105.06 48.17 Total leasing commissions and tenant improvement costs per square foot (5) $ 128.55 $ 70.35 Retail Properties (1)(2) Three Months Ended March 31, Total New Leases, Expansions, and Renewals (3) 2026 2025 Number of leases signed (4) 2 1 Total square feet 22,797 1,181 Weighted average annualized cash rent per square foot for new and renewal leases executed during the year $ 135.49 $ 193.00 Weighted average annualized cash rent per square foot for previous leases 137.03 183.74 Percentage of new cash rent over previously escalated rents (1.1) % 5.0 % Leasing commission costs per square foot (5) $ 66.91 $ 63.04 Tenant improvement costs per square foot (5) 104.62 — Total leasing commissions and tenant improvement costs per square foot (5) $ 171.53 $ 63.04 _______________ (1) Office activity excludes an aggregate of 472,724 and 475,744 rentable square feet of retail space in our office properties in 2026 and 2025, respectively, that is included in the retail activity for the respective years. (2) The tables above include base retail in our multifamily properties. (3) The number of leases signed include "Early Renewals" which are leases signed over two years prior to the lease expiration. (4) Presents a renewed and expansion lease as one lease signed. (5) Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid. (amounts in thousands) Three Months Ended March 31, Total Commercial Portfolio 2026 2025 Capital expenditures (1) $ 10,639 $ 8,764 _______________ (1) Includes all capital expenditures, excluding tenant improvements and leasing commission costs. As of March 31, 2026, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $93.9 million for tenant improvements and leasing commissions. We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand and other borrowings. Capital expenditures are considered part of both our short-term and long-term liquidity requirements. We intend to fund capital improvements through a combination of operating cash flow, cash on hand and other borrowings. Distribution Policy We intend to distribute our net taxable income to our securityholders in a manner intended to satisfy REIT distribution requirements and to avoid U.S. federal income tax liability. Before we pay any distribution, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and obligations to make payments of principal and interest, if any. However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy REIT distribution requirements. 32 Distribution to Equity Holders Distributions amounting to $10.7 million and $10.8 million have been accrued or paid to equity holders for the three months ended March 31, 2026 and 2025, respectively. Stock and Publicly Traded Operating Partnership Unit Repurchase Program ESRT's Board of Directors authorized the repurchase of up to $500.0 million of ESRT's Class A common stock and our Series ES, Series 250 and Series 60 operating partnership units from January 1, 2026 through December 31, 2027. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate us to acquire any particular amount of securities, and the program may be suspended or discontinued at our discretion without prior notice. As of March 31, 2026, ESRT had $500.0 million remaining of the authorized repurchase amount. There were no repurchases of equity securities during the three months ended March 31, 2026. See "Financial Statements - Note 10. Capital." Cash Flows Comparison of Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025 Net cash . Cash and cash equivalents and restricted cash were $106.1 million and $237.4 million as of March 31, 2026 and 2025, respectively. The decrease was primarily the result of the following changes in cash flows: Operating activities . Net cash provided by operating activities decreased by $14.2 million to $68.9 million primarily due to changes in working capital. Investing activities . Net cash used in investing activities increased by $22.6 million to $64.7 million primarily due to the $46.5 million acquisition of a retail property on North 6 th Street in Williamsburg in March 2026, inclusive of transaction costs and closing credits, partially offset by a $23.9 million decrease in capital expenditures in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Financing activities . Net cash used in financing activities decreased by $168.4 million to $64.6 million primarily due to the net $55.0 million repayments of the unsecured revolving credit facility in the three months ended March 31, 2026 compared to $120.0 million repayments of the unsecured revolving credit facility in the three months ended March 31, 2025, in addition to the repayments of the $100.0 million Series A senior unsecured notes in the three months ended March 31, 2025. See "Financial Statements - Note 5. Debt." Net Operating Income Net Operating Income ("NOI") is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt, impairment charges and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from NOI because it is specific to the particular financing capabilities and constraints of the owner and is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our office, retail or multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness. 33 NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding the components of net income that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly titled measures and, accordingly, our NOI may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do. The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI: Three Months Ended March 31, (amounts in thousands) 2026 2025 (unaudited) Net income $ 2,995 $ 15,778 Add: General and administrative expenses 18,093 16,940 Depreciation and amortization 50,219 48,779 Interest expense 28,137 26,938 Interest expense associated with property in receivership — 647 Less: Income tax benefit (1,062) (619) Gain on disposition of property — (13,170) Third-party management and other fees (277) (431) Interest income (613) (3,786) Net operating income $ 97,492 $ 91,076 Other Net Operating Income Data Straight-line rental revenue $ 7,209 $ 5,283 Net increase in amortization of rental revenue from above-and-below-market leases $ 670 $ 798 Amortization of acquired below-market ground leases $ 1,958 $ 1,958 Funds From Operations We present below a discussion of Funds From Operations ("FFO"). We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-off of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures. FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another. Modified Funds From Operations Modified Funds From Operations ("Modified FFO") adds back an adjustment for any below-market ground lease amortization to traditionally defined FFO. We believe this is a useful supplemental measure in evaluating our operating performance due to the non-cash accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation 34 transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results. We present Modified FFO because we believe it is an important supplemental measure of our operating performance in that it adds back the non-cash amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs. Modified FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Modified FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Core Funds From Operations Core FFO adds back to Modified FFO the following items: loss on early extinguishment of debt, acquisition expenses, severance expenses, IPO litigation expense and interest expense associated with property in receivership. The Company believes Core FFO is an important supplemental measure of its operating performance because it excludes non-recurring items. There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results. The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO: Three Months Ended March 31, (amounts in thousands) 2026 2025 (unaudited) Net income $ 2,995 $ 15,778 Private perpetual preferred unit distributions (1,050) (1,050) Real estate depreciation and amortization 49,292 47,871 Gain on disposition of property — (13,170) FFO attributable to common unitholders 51,237 49,429 Amortization of below-market ground leases 1,958 1,958 Modified FFO attributable to common unitholders 53,195 51,387 Interest expense associated with property in receivership — 647 Core FFO attributable to common unitholders $ 53,195 $ 52,034 Weighted average Operating Partnership units Basic 268,792 267,073 Diluted 269,348 269,529 Factors That May Influence Future Results of Operations Leasing Due to the relatively small number of leases that are signed in any particular quarter, one or more larger leases may have a disproportionately positive or negative impact on average rent, tenant improvement and leasing commission costs for that period. As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years. Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant. Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter. As of March 31, 2026, there were approximately 1.2 million rentable square feet of space in our portfolio available to lease (including leases signed but not yet commenced) representing 13.2% of the net rentable square footage of the properties in our commercial portfolio. In addition, leases representing 4.2% and 7.0% of net rentable square footage of the properties in our commercial portfolio will expire in 2026 and in 2027, respectively. These leases are expected to represent approximately 3.9% and 6.7%, respectively, of our annualized rent for such periods. Our revenues and results of operations can be impacted by expiring leases that are not renewed or re-leased or that are renewed or re-leased at base rental rates equal to, above or below the current average base rental rates. Further, our revenues and results of operations can also be affected by downtime after space is vacated and the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant. 35 Observatory Operations For the three months ended March 31, 2026, the Observatory hosted 350,000 visitors, compared to 428,000 visitors for the three months ended March 31, 2025, a decrease of 18.2%. Observatory revenue for the three months ended March 31, 2026 was $18.5 million, a 20.1% decrease from $23.2 million for the three months ended March 31, 2025. Observatory revenues were lower primarily due to lower levels of international visitors in 2026 as compared to 2025. Observatory revenues and admissions are dependent upon the following: (i) the number of tourists (domestic and international) who come to New York City and visit the Observatory, as well as any related tourism trends; (ii) the prices per admission that can be charged; (iii) seasonal trends affecting the number of visitors to the Observatory; (iv) competition, in particular from other new and existing observatories; and (v) weather trends. Outlook We believe the global economy, including the real estate sector, currently navigates an environment of uncertainty around inflation, interest rates, tariffs, economic growth, geopolitical unrest, and volatile oil prices. There have been concerns about the challenges of refinancing existing low interest rate loans at higher rates. Additionally, the risk of slower global economic growth could impact the number of visitors to the Empire State Building Observatory, as well as our pricing power. Despite this global economic backdrop, we believe that ESRT is in a good competitive position with diversified drivers of income across office, retail, multifamily and the Empire State Building Observatory. ESRT’s New York City-focused portfolio is modernized, amenitized, well-located and energy efficient, with high indoor environmental quality, competitive rental rates and strong leased percentages. In addition to our diversified portfolio, our business is supported by a well-positioned balance sheet, modest leverage and good access to liquidity as set forth herein. The absence of unaddressed near term debt maturities provides an added degree of security. This provides us optionality in capital allocation decisions. Critical Accounting Estimates Refer to our Annual Report for a discussion of our critical accounting estimates. There were no material changes to our critical accounting estimates disclosed in our Annual Report. 36