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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 161 added, 72 removed, 244 unchanged (49% of the section changed)

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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.

This Management’s Discussion and Analysis provides a comparison of our performance for the three and six month periods ended June 30, 2026 with the corresponding three and six month periods ended June 30, 2025 and reviews our financial position as of June 30, 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.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

We intend these forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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We undertake no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances, except as required by law.

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.

Highlights for the three months ended June 30, 2026

• Net loss attributable to the Company of $(40.6) million, which includes items that are excluded from Core Funds From Operations ("Core FFO"), including a non-cash goodwill impairment charge of $166.1 million related to our Observatory reporting unit, a $124.6 million gain on the disposition of 250 West 57 th Street, and $5.5 million of one-time severance costs included in general and administrative expenses.

• Core Funds From Operations of $57.1 million attributable to common unitholders.

• Signed a total of 381,799 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.

• In May 2026, we closed on the acquisition of land underlying the properties at 111 West 33 rd Street and 1400 Broadway for an aggregate purchase price of $110.0 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 discussion below relates to our results of operations for the three and six months ended June 30, 2026 and 2025, respectively.

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

The following table summarizes the historical results of operations:

Three Months Ended March 31,

Three Months Ended June 30,

2026 2025 Change %

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Observatory revenue — 24,225 24,225 — 33,899 33,899 (9,674) (28.5) %

Lease termination fees 1,356 — 1,356 — — — 1,356 N/A

Lease termination fees — — — 464 — 464 (464) (100.0) %

Third-party management and other fees 268 — 268 408 — 408 (140) (34.3) %

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Real estate taxes 32,912 — 32,912 32,607 — 32,607 (305) (0.9) %

Goodwill impairment charge — 166,113 166,113 — — — (166,113) N/A

Depreciation and amortization 50,333 56 50,389 47,760 42 47,802 (2,587) (5.4) %

Total operating expenses 157,648 177,964 335,612 146,264 9,864 156,128 (179,484) (115.0) %

Operating income 18,862 10,595 29,457 10,789 14,999 25,788 3,669 14.2 %

Operating income (loss) 15,026 (153,739) (138,713) 11,087 24,035 35,122 (173,835) (494.9) %

Intercompany rent revenue (expense) 14,771 (14,771) — 20,666 (20,666) — — — %

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Interest expense (27,805) — (27,805) (25,126) — (25,126) (2,679) (10.7) %

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) %

Gain on disposition of properties 124,622 — 124,622 — — — 124,622 N/A

Income (loss) before income taxes 128,033 (168,354) (40,321) 8,342 3,521 11,863 (52,184) (439.9) %

Income tax (expense) benefit (443) 1,210 767 (159) (319) (478) 1,245 260.5 %

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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.

The increase in rental revenue during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily attributable to higher base rent from new or renewed tenants, increases in tenant reimbursement income, and the net impact of acquisitions and dispositions made during 2025 and 2026 as disclosed in "Financial Statements - Note 3.

Acquisitions and Dispositions" in this Quarterly Report on Form 10-Q.

Other Revenues and Fees

The increase in other revenues and fees during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to receiving real estate tax abatement refunds related to 2024 and 2025.

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.

The increase in property operating expenses during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to higher repair and maintenance costs, operating payroll costs and utilities costs.

General and Administrative Expenses

The increase in general and administrative expenses during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to $5.5 million of severance costs.

Gain on Disposition of Properties

The gain on disposition activity for the three months ended June 30, 2026 relates to the disposition of 250 West 57 th Street in New York, New York.

See "Financial Statements - Note 3.

Acquisitions and Dispositions" for additional details.

Observatory Segment

Observatory Revenue

Observatory revenues were lower due to a continued decline in visitation during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 from a reduction in pass program performance and a continued decrease in international visitors.

Goodwill Impairment Charge

We recognized a non-cash goodwill impairment charge of $166.1 million during the three months ended June 30, 2026 as a result of a decline in projected performance and expected future cash flows due to a sustained decline in visitor volume from a reduction in pass program performance and a continued decrease in international visitors.

The $61.4 million goodwill remaining in the Observatory reporting unit remains at risk of future impairment if the fair value of the reporting unit decreases due to changes in the amount and timing of expected future cash flows, decreases in visitation in excess of expectations, an inability to execute management’s business strategies, or general market conditions.

See "Financial Statements - Note 4.

Deferred Costs, Acquired Lease Intangibles and Goodwill" for additional details.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Six Months Ended June 30,

2026 2025 Change %

(amounts in thousands) Real Estate Segment Observatory Segment Total Real Estate Segment Observatory Segment Total

Rental revenue $ 331,271 $ — $ 331,271 $ 308,082 $ — $ 308,082 $ 23,189 7.5 %

Observatory revenue — 42,735 42,735 — 57,060 57,060 (14,325) (25.1) %

Lease termination fees 1,356 — 1,356 464 — 464 892 192.2 %

Third-party management and other fees 545 — 545 839 — 839 (294) (35.0) %

Other revenues and fees 11,317 — 11,317 4,871 — 4,871 6,446 132.3 %

Total revenues 344,489 42,735 387,224 314,256 57,060 371,316 15,908 4.3 %

Operating expenses:

Property operating expenses 95,518 — 95,518 89,940 — 89,940 (5,578) (6.2) %

Ground rent expenses 3,837 — 3,837 4,663 — 4,663 826 17.7 %

General and administrative expenses 43,216 — 43,216 35,625 — 35,625 (7,591) (21.3) %

Observatory expenses — 19,663 19,663 — 17,940 17,940 (1,723) (9.6) %

Real estate taxes 67,525 — 67,525 65,657 — 65,657 (1,868) (2.8) %

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.

Goodwill impairment charge — 166,113 166,113 — — — (166,113) N/A

Depreciation and amortization 100,505 103 100,608 96,495 86 96,581 (4,027) (4.2) %

Total operating expenses 310,601 185,879 496,480 292,380 18,026 310,406 (186,074) (59.9) %

Operating income (loss) 33,888 (143,144) (109,256) 21,876 39,034 60,910 (170,166) (279.4) %

Intercompany rent revenue (expense) 27,592 (27,592) — 35,826 (35,826) — — — %

Other income (expense):

Interest income 1,880 308 2,188 5,428 225 5,653 (3,465) (61.3) %

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.

Interest expense (55,942) — (55,942) (52,064) — (52,064) (3,878) (7.4) %

Interest expense associated with property in receivership — — — (647) — (647) 647 100.0 %

Gain on disposition of properties 124,622 — 124,622 13,170 — 13,170 111,452 846.3 %

Income (loss) before income taxes 132,040 (170,428) (38,388) 23,589 3,433 27,022 (65,410) (242.1) %

Income tax (expense) benefit (585) 2,414 1,829 (365) 506 141 1,688 1,197.2 %

Net income (loss) 131,455 (168,014) (36,559) 23,224 3,939 27,163 (63,722) (234.6) %

Private perpetual preferred unit distributions (2,101) — (2,101) (2,101) — (2,101) — — %

Net income (loss) attributable to common unitholders $ 129,354 $ (168,014) $ (38,660) $ 21,123 $ 3,939 $ 25,062 $ (63,722) (254.3) %

Real Estate Segment

Rental Revenue

The increase in rental revenue during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily attributable to the net impact of acquisitions and dispositions made during 2025 and 2026 as disclosed in "Financial Statements - Note 3.

Acquisitions and Dispositions" in this Quarterly Report on Form 10-Q, higher base rent from new and renewed tenants, and increases in tenant reimbursement income.

Other Revenues and Fees

The increase in other revenues and fees during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to receiving real estate tax abatement refunds related to 2024 and 2025.

Property Operating Expenses

The increase in property operating expenses during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to higher operating payroll costs and utilities costs.

General and Administrative Expenses

The increase in general and administrative expenses during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to $5.5 million of severance costs.

Interest Income

The decrease in interest income during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 is primarily due to lower cash balances due to property acquisitions during 2025 and 2026, the $120.0 million paydown of the 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.

Interest Expense

The increase in interest expense was attributable to the December 2025 issuance of Series L senior unsecured notes and the additional draws on the revolving credit facility during 2026, partially offset by the December 2025 repayment of the Metro Center mortgage.

Gain on Disposition of Properties

The gain on disposition activity for the six months ended June 30, 2026 relates to the disposition of 250 West 57 th Street in New York, New York.

The gain on disposition activity for the six months ended June 30, 2025 represents the deconsolidation of the mezzanine debt obligation in connection with the completion of the consensual foreclosure of First Stamford Place in Stamford, Connecticut in February 2025.

See "Financial Statements - Note 3.

Acquisitions and Dispositions" for additional details.

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.

Observatory revenues were lower due to a continued decline in visitation during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, from a reduction in pass program performance and a continued decrease in international visitors.

Goodwill Impairment Charge

We recognized a non-cash goodwill impairment charge of $166.1 million during the six months ended June 30, 2026 as a result of a decline in projected performance and expected future cash flows due to a sustained decline in visitor volume from a reduction in pass program performance and a continued decrease in international visitors.

See "Financial Statements - Note 4.

Deferred Costs, Acquired Lease Intangibles and Goodwill" for additional details.

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.

Based on the historical experience of our management and our business strategy, in the foreseeable future we anticipate we will continue to 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.

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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.

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.

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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.

At June 30, 2026, we had $85.6 million available in cash and cash equivalents and there was $445.0 million available under our unsecured revolving credit facility.

At June 30, 2026, we had approximately $2.2 billion of total indebtedness outstanding, with a weighted average interest rate of 4.70% and a weighted average maturity of 4.5 years.

Portfolio Transaction Activity

In June 2026, we closed on the sale of 250 West 57 th Street at a sale price of $275.0 million, which included the purchaser's assumption of the $180.0 million mortgage.

In May 2026, we completed the purchase of land underlying the properties at 111 West 33 rd Street and 1400 Broadway, which carried remaining ground lease terms of approximately 51 and 38 years, respectively, for an aggregate purchase price of $110.0 million.

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.

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Unsecured Revolving Credit and Term Loan Facilities

As of March 31, 2026 , unsecured term loan facilities, net, amounted to $337.0 million .

As of June 30, 2026 , unsecured term loan facilities, net, amounted to $337.1 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.

Subsequent to quarter-end, in July 2026, we entered into a first amendment to our amended and restated credit agreement, dated November 14, 2025, with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which governs our senior unsecured term loan credit facility (the “Wells Term Loan Facility”).

The Wells Term Loan Facility has a $490.0 million initial maximum principal amount, comprised of the existing $245.0 million term loan credit facility and an incremental $245.0 million delayed draw term loan facility.

The delayed draw term loan facility may be drawn in six months following the closing date.

The senior unsecured term loan credit facility matures on January 15, 2031 and the delayed draw term loan facility matures on January 12, 2032.

As of June 30, 2026, we had $175.0 million borrowings under the Revolving Credit Facility.

See "Financial Statements - Note 5.

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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

As of June 30, 2026, we were in compliance with the following financial covenants related to our unsecured facilities:

Financial Covenant Required June 30, 2026 In Compliance

Maximum total leverage < 60% 37.9 % Yes

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Mortgage Debt

As of March 31, 2026, mortgage notes payable, net, amounted to $621.4 million.

As of June 30, 2026, mortgage notes payable, net, amounted to $443.1 million.

Our next mortgage debt maturity is for $30.0 million in May 2027.

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Senior Unsecured Notes

As of March 31, 2026, senior unsecured notes, net, amounted to $1.3 billion.

As of June 30, 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.

Subsequent to quarter-end, in July 2026, we closed on the issuance and sale of $130.0 million aggregate principal amount of 5.99% Series M Senior Notes due July 15, 2032.

See "Financial Statements - Note 5.

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Office Properties (1)

Three Months Ended March 31,

Six Months Ended June 30,

Total New Leases, Expansions, and Renewals (3)

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$ 120.95 $ 94.05

Total leasing commissions and tenant improvement costs per square foot per year of weighted average lease term $ 12.24 $ 10.19

Retail Properties (1)(2)

Three Months Ended March 31,

Six Months Ended June 30,

Total New Leases, Expansions, and Renewals (3)

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$ 153.06 $ 110.99

Total leasing commissions and tenant improvement costs per square foot per year of weighted average lease term $ 10.51 $ 14.78

_______________

(1) Office activity excludes an aggregate of 409,281 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.

(2) Includes base retail in our multifamily properties.

(3) The number of leases signed includes "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,

(amounts in thousands) Six Months Ended June 30,

Total Commercial Portfolio 2026 2025

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(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.

As of June 30, 2026, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $107.3 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.

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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.

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.

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.

Distributions amounting to $21.5 million and $21.6 million have been accrued or paid to equity holders for the six months ended June 30, 2026 and 2025, respectively.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

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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.

As of June 30, 2026, ESRT had $500.0 million remaining of the authorized repurchase amount.

There were no repurchases of equity securities during the three months ended June 30, 2026.

See "Financial Statements - Note 10.

Comparison of Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025

Cash and cash equivalents and restricted cash were $106.1 million and $237.4 million as of March 31, 2026 and 2025, respectively.

Comparison of Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Cash and cash equivalents and restricted cash were $128.2 million and $136.7 million as of June 30, 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.

Net cash provided by operating activities decreased by $21.4 million to $88.5 million primarily due to increases in rent concessions from new and renewed tenants and 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.

Net cash used in investing activities decreased by $21.3 million to $134.3 million primarily due to the $75.7 million net proceeds from the disposition of 250 West 57 th Street in June 2026, and the $74.7 million decrease in capital expenditures in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

This was partially offset by our acquisition activities in 2026 which included the $114.3 million acquisition, inclusive of transactions costs, of land underlying the properties at 111 West 33 rd Street and 1400 Broadway in May 2026, and the $46.5 million acquisition, inclusive of transaction costs and closing credits, of a retail property on North 6 th Street in Williamsburg in March 2026 compared to the $31.7 million acquisition, inclusive of transaction costs and closing credits, of two retail properties on North 6 th Street in Williamsburg in June 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.

Net cash provided by financing activities increased by $254.4 million to $7.6 million primarily due to the net $30.0 million borrowings on the unsecured revolving credit facility in the six months ended June 30, 2026 compared to the repayments in the six months ended June 30, 2025, which included $120.0 million repayments of the unsecured revolving credit facility and the $100.0 million repayment of Series A senior unsecured notes.

See "Financial Statements - Note 5.

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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.

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.

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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,

The following table presents a reconciliation of our net income (loss), the most directly comparable GAAP measure, to NOI:

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

(amounts in thousands) 2026 2025 2026 2025

Net income $ 2,995 $ 15,778

(unaudited) (unaudited)

Net income (loss) $ (39,554) $ 11,385 $ (36,559) $ 27,163

General and administrative expenses 25,123 18,685 43,216 35,625

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Interest expense associated with property in receivership — — — 647

Income tax benefit (1,062) (619)

Gain on disposition of property — (13,170)

Goodwill impairment charge 166,113 — 166,113 —

Income tax expense (benefit) (767) 478 (1,829) (141)

Gain on disposition of properties (124,622) — (124,622) (13,170)

Third-party management and other fees (268) (408) (545) (839)

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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.

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.

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Modified Funds From Operations ("Modified FFO") adds back an adjustment for any below-market ground lease amortization to traditionally defined FFO.

transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results.

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 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.

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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.

loss on early extinguishment of debt, acquisition expenses, severance expenses, IPO litigation expense, goodwill impairment charge 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.

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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,

The following table presents a reconciliation of our net income (loss), the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO:

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

(amounts in thousands) 2026 2025 2026 2025

Net income $ 2,995 $ 15,778

(unaudited) (unaudited)

Net income (loss) $ (39,554) $ 11,385 $ (36,559) $ 27,163

Private perpetual preferred unit distributions (1,051) (1,051) (2,101) (2,101)

Real estate depreciation and amortization 49,463 46,921 98,755 94,792

Gain on disposition of property — (13,170)

Gain on disposition of properties (124,622) — (124,622) (13,170)

FFO attributable to common unitholders (115,764) 57,255 (64,527) 106,684

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Interest expense associated with property in receivership — — — 647

Severance expenses 5,536 — 5,536 —

Goodwill impairment charge 166,113 — 166,113 —

Core FFO attributable to common unitholders $ 57,134 $ 59,213 $ 110,329 $ 111,247

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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.

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.

As of June 30, 2026, there were approximately 1.0 million rentable square feet of space in our portfolio available to occupy (including leases signed but not yet commenced) representing 12.1% of the net rentable square footage of the properties in our commercial portfolio.

In addition, leases representing 3.1% and 5.9% of net rentable square footage of the properties in our commercial portfolio will expire in 2026 and in 2027, respectively.

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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.

For the six months ended June 30, 2026, the Observatory hosted 800,000 visitors, compared to 1,057,000 visitors for the six months ended June 30, 2025, a decrease of 24.3%.

Observatory revenue for the six months ended June 30, 2026 was $42.7 million, a 25.1% decrease from $57.1 million for the six months ended June 30, 2025.

Observatory revenues were lower primarily from a reduction in pass program performance and a continued decrease in international visitors.

Observatory revenues and admissions are dependent upon the following:

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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.

Additionally, the risk of slower global economic growth could impact the number of visitors to the Empire State Building Observation Deck, as well as our pricing power.

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.

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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.

Goodwill is tested annually for impairment and more frequently if events and circumstances indicate that the asset might be impaired.

An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill.

During the second quarter of 2026, the Company identified triggering events indicating that the fair value of its Observatory reporting unit may have declined below its carrying amount, including goodwill, due to a sustained decline in visitor volume from a reduction in pass program performance and a continued decrease in international visitors.

As a result of a decline in the projected performance and expected future cash flows of the Observatory reporting unit, the Company engaged a third-party valuation consulting firm and performed an interim quantitative goodwill analysis as of June 30, 2026.

The quantitative analysis used a discounted cash flow method (a form of the income approach) utilizing Level 3 unobservable inputs.

Significant assumptions under the income approach included revenue and cost projections, weighted average cost of capital and long-term growth rate.

As a result of the quantitative analysis, the carrying value of the Observatory reporting unit, including goodwill, exceeded its estimated fair value, and the Company recognized a non-cash goodwill impairment charge of $166.1 million for the three and six months ended June 30, 2026, in the Company’s consolidated statements of operations.

Although the Company does not currently anticipate significant changes in the assumptions used in the quantitative analysis, many of the assumptions underlying the estimated fair value of the Observatory reporting unit are inherently uncertain, are outside of our control, and actual results may differ materially from the Company’s estimates.

The remaining goodwill relating to the Observatory reporting unit of $61.4 million remains at risk of future impairment if the fair value of the reporting unit decreases due to changes in the amount and timing of expected future cash flows, decreases in visitation in excess of expectations, an inability to execute management’s business strategies, or general market conditions, such as economic downturns and changes in interest rates, which may impact discount rates.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis