What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 150 added, 154 removed, 657 unchanged (32% of the section changed)

3 unchanged sentences

(amounts in thousands, except per unit amounts)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

ASSETS (unaudited)

51 unchanged sentences

(amounts in thousands, except per unit amounts)

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

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

2022 2021 2022 2021

20 unchanged sentences

Gain on disposition of property — — 27,170 —

Income before income taxes 49,058 3,226 30,241 ( 2,071 )

Income (loss) before income taxes 11,575 ( 10,163 ) 41,816 ( 12,234 )

Income tax (expense) benefit ( 1,457 ) ( 20 ) ( 224 ) 3,271

Net income 48,695 4,411 31,474 1,220

Net income (loss) 10,118 ( 10,183 ) 41,592 ( 8,963 )

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

10 unchanged sentences

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive Income (Loss)

(amounts in thousands)

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

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

2022 2021 2022 2021

Net income $ 48,695 $ 4,411 $ 31,474 $ 1,220

Net income (loss) $ 10,118 $ ( 10,183 ) $ 41,592 $ ( 8,963 )

Other comprehensive income:

2 unchanged sentences

Other comprehensive income 20,980 2,817 46,835 8,548

Comprehensive income 61,493 7,214 57,329 6,951

Comprehensive income (loss) 31,098 ( 7,366 ) 88,427 ( 415 )

Net loss attributable to non-controlling interest in other partnerships 49 — 271 —

Other comprehensive income attributable to non-controlling interest ( 670 ) — ( 2,297 ) —

Comprehensive income attributable to OP unitholders $ 60,025 $ 7,214 $ 55,924 $ 6,951

Comprehensive income (loss) attributable to OP unitholders $ 30,477 $ ( 7,366 ) $ 86,401 $ ( 415 )

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

1 unchanged sentence

Condensed Consolidated Statements of Capital

For The Three Months Ended June 30, 2022 and 2021

For The Three Months Ended September 30, 2022 and 2021

(amounts in thousands)

2 unchanged sentences

Private Perpetual Preferred Units Private Perpetual Preferred Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Non-controlling Interest in Other Partnerships Total Capital

Balance at March 31, 2022 6,224 $ 29,940 169,726 $ 978,421 80,998 $ 648,004 22,034 $ ( 5,206 ) 5,821 $ ( 1,695 ) 2,937 $ ( 845 ) $ 13,413 $ 1,662,032

Balance at June 30, 2022 6,224 $ 29,940 163,684 $ 957,803 81,073 $ 665,520 21,746 $ ( 1,137 ) 5,738 $ ( 637 ) 2,862 $ ( 277 ) 14,881 $ 1,666,093

Issuance of OP units, net of costs — — — — — — — — — — — — — —

1 unchanged sentence

— — 461 39 ( 39 ) ( 4 ) ( 324 ) ( 27 ) ( 60 ) ( 5 ) ( 38 ) ( 3 ) — —

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

Repurchases of common shares — — ( 2,567 ) ( 18,105 ) — — — — — — — — — ( 18,105 )

1 unchanged sentence

Distributions — ( 1,050 ) — ( 5,694 ) — ( 2,837 ) — ( 751 ) — ( 199 ) — ( 100 ) — ( 10,631 )

Net income (loss) — 1,051 — 29,579 — 12,823 — 3,872 — 1,003 — 526 ( 159 ) 48,695

Other comprehensive income — — — 6,878 — 3,031 — 904 — 235 — 123 1,627 12,798

Balance at June 30, 2022 6,224 $ 29,940 163,684 $ 957,803 81,073 $ 665,520 21,746 $ ( 1,137 ) 5,738 $ ( 637 ) 2,862 $ ( 277 ) 14,881 $ 1,666,093

Net income — 1,050 — 5,557 — 2,529 — 739 — 192 — 100 ( 49 ) 10,118

Other comprehensive income (loss) — — — 12,462 — 5,553 — 1,646 — 426 — 223 670 20,980

Balance at September 30, 2022 6,224 $ 29,940 161,570 $ 952,379 81,034 $ 675,818 21,422 $ 470 5,678 $ ( 223 ) 2,824 $ ( 57 ) $ 15,502 $ 1,673,829

Series PR Operating Partnership Units Series ES Operating Partnership Units Limited Partners Series 60 Operating Partnership Units Limited Partners Series 250 Operating Partnership Units Limited Partners

1 unchanged sentence

Balance at March 31, 2021 6,224 $ 29,940 172,332 $ 1,053,495 80,656 $ 650,254 23,270 $ ( 1,418 ) 6,253 $ ( 727 ) 3,110 $ ( 349 ) $ — $ 1,731,195

Balance at June 30, 2021 6,224 $ 29,940 173,400 $ 1,055,659 80,241 $ 650,473 22,923 $ ( 1,692 ) 6,112 $ ( 789 ) 3,045 $ ( 383 ) $ — $ 1,733,208

Issuance of OP units, net of costs — — — — — — — — — — — — — —

5 unchanged sentences

Net income — 1,050 — ( 6,977 ) — ( 2,954 ) — ( 931 ) — ( 248 ) — ( 123 ) — ( 10,183 )

Other comprehensive income — — — 1,739 — 742 — 233 — 59 — 30 — 2,803

Balance at June 30, 2021 6,224 $ 29,940 173,400 $ 1,055,659 80,241 $ 650,473 22,923 $ ( 1,692 ) 6,112 $ ( 789 ) 3,045 $ ( 383 ) $ — $ 1,733,208

Other comprehensive income (loss) — — — 1,756 — 739 — 229 — 62 — 31 — 2,817

Balance at September 30, 2021 6,224 $ 29,940 173,292 $ 1,038,978 80,155 $ 649,690 22,611 $ ( 3,172 ) 6,019 $ ( 1,176 ) 3,027 $ ( 579 ) $ — $ 1,713,681

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

1 unchanged sentence

Condensed Consolidated Statements of Capital

For The Six Months Ended June 30, 2022 and 2021

For The Nine Months Ended September 30, 2022 and 2021

(amounts in thousands)

11 unchanged sentences

Other comprehensive income — — — 27,435 — 12,070 — 3,608 — 935 — 490 2,297 46,835

Balance at June 30, 2022 6,224 $ 29,940 163,684 $ 957,803 81,073 $ 665,520 21,746 $ ( 1,137 ) 5,738 $ ( 637 ) 2,862 $ ( 277 ) $ 14,881 $ 1,666,093

Balance at September 30, 2022 6,224 $ 29,940 161,570 $ 952,379 81,034 $ 675,818 21,422 $ 470 5,678 $ ( 223 ) 2,824 $ ( 57 ) $ 15,502 $ 1,673,829

9 unchanged sentences

Other comprehensive income — — — 5,309 — 2,247 — 710 — 188 — 94 — 8,548

Balance at June 30, 2021 6,224 $ 29,940 173,400 $ 1,055,659 80,241 $ 650,473 22,923 $ ( 1,692 ) 6,112 $ ( 789 ) 3,045 $ ( 383 ) $ — $ 1,733,208

Balance at September 30, 2021 6,224 $ 29,940 173,292 $ 1,038,978 80,155 $ 649,690 22,611 $ ( 3,172 ) 6,019 $ ( 1,176 ) 3,027 $ ( 579 ) $ — $ 1,713,681

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

2 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities

Net income $ 31,474 $ 1,220

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ 41,592 $ ( 8,963 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 172,394 155,339

22 unchanged sentences

(amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Financing Activities

5 unchanged sentences

Net cash used in financing activities ( 119,692 ) ( 43,239 )

Net increase in cash and cash equivalents and restricted cash ( 61,879 ) 10,631

Net increase (decrease) in cash and cash equivalents and restricted cash ( 34,823 ) 53,028

Cash and cash equivalents and restricted cash—beginning of period 474,638 567,939

29 unchanged sentences

As the owner of the Empire State Building, the World’s Most Famous Building, ESRT also owns and operates its iconic, newly reimagined Observatory Experience.

As of June 30, 2022, our total portfolio contained 9.9 million rentable square feet of office, retail and multifamily space.

As of September 30, 2022, our total portfolio contained 9.9 million rentable square feet of office and retail space.

We owned 13 office properties (including three long-term ground leasehold interests) encompassing approximately 9.2 million rentable square feet of office space.

4 unchanged sentences

Additionally, we have entitled land at the Stamford Transportation Center in Stamford, Connecticut, adjacent to one of our office properties, that will support the development of an approximately 0.4 million rentable square foot office building and garage.

As of June 30, 2022, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing approximately 0.2 million rentable square feet in the aggregate.

Additionally, at June 30, 2022, our portfolio included two multifamily properties totaling 625 units.

As of September 30, 2022, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing approximately 0.2 million rentable square feet in the aggregate.

Additionally, at September 30, 2022, our portfolio included two multifamily properties totaling 625 units.

We were organized as a Delaware limited partnership on November 28, 2011 and operations commenced upon completion of the initial public offering of ESRT’s Class A common stock and related formation transactions on October 7, 2013.

ESRT, as the sole general partner in our company, has responsibility and discretion in the management and control of our company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities, of our company.

As of June 30, 2022, ESRT owned approximately 59.5 % of our operating partnership units.

As of September 30, 2022, ESRT owned approximately 59.3 % of our operating partnership units.

Summary of Significant Accounting Policies

7 unchanged sentences

We do not consider our business to be subject to material seasonal fluctuations, except that our observatory business is subject to tourism seasonality.

Historically, approximately 16.0 % to 18.0 % of our annual observatory revenue was realized in the first quarter, 26.0 % to 28.0 % was realized in the second quarter, 31.0 % to 33.0 % was realized in the third quarter and 23.0 % to 25.0 % was realized in the fourth quarter.

Prior to the outbreak of COVID-19, approximately 16.0 % to 18.0 % of our annual observatory revenue was realized in the first quarter, 26.0 % to 28.0 % was realized in the second quarter, 31.0 % to 33.0 % was realized in the third quarter and 23.0 % to 25.0 % was realized in the fourth quarter.

We consolidate entities in which we have a controlling financial interest.

3 unchanged sentences

The primary beneficiary is required to consolidate the VIE.

We had no VIEs as of June 30, 2022 and December 31, 2021.

We had no VIEs as of September 30, 2022 and December 31, 2021.

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

12 unchanged sentences

In December 2021, we recorded a $ 7.7 million impairment charge on the property as we had concluded the cost basis of the asset exceeded its fair value given our reduced holding period and new intent to transfer property ownership to the lender.

Subsequent to September 30, 2022, we entered into agreements to sell 500 Mamaroneck Avenue in Harrison, NY and 10 Bank Street in White Plains, NY at a gross asset valuation of $ 95.0 million.

These transactions are expected to close in the first quarter of 2023, subject to customary closing conditions.

Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following as of June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022 December 31, 2021

Deferred costs, net, consisted of the following as of September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022 December 31, 2021

Leasing costs $ 218,552 $ 211,189

4 unchanged sentences

Total deferred costs, net, excluding net deferred financing costs $ 183,210 $ 195,205

At June 30, 2022 and December 31, 2021, $ 6.1 million and $ 7.2 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $ 7.3 million and $ 6.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 14.3 million and $ 11.7 million for the six months ended June 30, 2022 and 2021, respectively.

Amortization expense related to acquired lease intangibles was $ 4.1 million and $ 1.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 8.3 million and $ 3.3 million for the six months ended June 30, 2022 and 2021, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022 December 31, 2021

At September 30, 2022 and December 31, 2021, $ 5.5 million and $ 7.2 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $ 5.6 million and $ 10.4 million for the three months ended September 30, 2022 and 2021, respectively, and $ 19.8 million and $ 22.1 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortization expense related to acquired lease intangibles was $ 2.2 million and $ 5.0 million for the three months ended September 30, 2022 and 2021, respectively, and $ 10.6 million and $ 8.3 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022 December 31, 2021

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

1 unchanged sentence

Acquired below-market ground leases, net $ 331,030 $ 336,904

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Acquired below-market leases $ ( 64,529 ) $ ( 65,403 )

1 unchanged sentence

Acquired below-market leases, net $ ( 18,897 ) $ ( 24,941 )

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $ 1.7 million and $ 0.7 million for the three months ended June 30, 2022 and 2021, respectively, and $ 3.5 million and $ 1.4 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had goodwill of $ 491.5 million.

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $ 0.7 million and $ 4.2 million for the three months ended September 30, 2022 and 2021, respectively, and $ 4.1 million and $ 5.6 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had goodwill of $ 491.5 million.

Goodwill was allocated $ 227.5 million to the observatory reportable segment and $ 264.0 million to the real estate reportable segment.

In compliance with the requirements of authorities, we closed the Empire State Building observatory on March 16, 2020 due to the COVID-19 pandemic and it remained closed until the 86th floor observation deck was reopened on July 20, 2020.

The 102nd observation deck was reopened on August 24, 2020.

The closure of our observatory and subsequent reopening under international, national, and local travel restrictions and quarantines caused us during the quarter ended June 30, 2020, and each subsequent quarter, to choose to perform an impairment test related to goodwill.

We engaged a third-party valuation consulting firm to perform the valuation process.

The analysis used a combination of the discounted cash flow method (a form of the income approach) utilizing Level 3 unobservable inputs and the guideline company method (a form of the market approach).

From the quarter ended June 30, 2020 through the quarter ended June 30, 2022, we bypassed the optional qualitative goodwill impairment assessment and proceeded directly to a quantitative assessment of the observatory reportable segment and engaged a third-party valuation consulting firm to perform the valuation process.

This was done in response to the closure of the observatory on March 16, 2020, due to the COVID-19 pandemic, which was subsequently fully reopened on August 24, 2020.

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

Significant assumptions under the former included revenue and cost projections, weighted average cost of capital, long-term growth rate and income tax considerations while the latter included guideline company enterprise values, revenue multiples and control premium rates.

Our methodology to review goodwill impairment, which included a significant amount of judgment and estimates, provided a reasonable basis to determine whether impairment had occurred.

Based upon the results of the second quarter 2022 goodwill impairment test of the standalone observatory reporting unit, which is after the intercompany rent expense paid to the Real Estate reporting unit, we determined that the fair value of the observatory reporting unit exceeded its carrying value by less than 15.0 %.

Many of the factors employed in determining whether or not goodwill is impaired are outside of our control, and it is reasonably likely that assumptions and estimates will change in future periods.

We will continue to assess the impairment of the observatory reporting unit goodwill going forward, and that continued assessment may again utilize a third-party valuation consulting firm.

Debt consisted of the following as of June 30, 2022 and December 31, 2021 (amounts in thousands):

Principal Balance As of June 30, 2022

June 30, 2022 December 31, 2021 Stated

Each quantitative analysis performed concluded the fair value of the reporting unit exceeds its carrying value.

For the quarter ended September 30, 2022, we performed an optional qualitative assessment and did not identify any events which occurred between our last quantitative assessment and the current reporting date which would indicate, on a more likely than not basis, that the goodwill allocated to the reporting unit was impaired.

Many of the factors employed in determining whether or not goodwill is impaired are outside

of our control, and it is reasonably likely that assumptions and estimates will change in future periods.

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

Debt consisted of the following as of September 30, 2022 and December 31, 2021 (amounts in thousands):

Principal Balance As of September 30, 2022

September 30, 2022 December 31, 2021 Stated

Rate Effective

31 unchanged sentences

Unsecured term loan facility (5) (6)

215,000 215,000 LIBOR plus 1.20 %

215,000 215,000 SOFR plus 1.20 %

4.22 % 3/19/2025

Unsecured revolving credit facility (5) (6)

— — LIBOR plus 1.30 %

— — SOFR plus 1.30 %

Unsecured term loan facility (5) (6)

175,000 175,000 LIBOR plus 1.50 %

175,000 175,000 SOFR plus 1.50 %

4.51 % 12/31/2026

4 unchanged sentences

______________

(1) The effective rate is the yield as of June 30, 2022 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(1) The effective rate is the yield as of September 30, 2022 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2) Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.

1 unchanged sentence

(4) Ownership of 383 Main Avenue, Norwalk CT was transferred to the lender during April 2022.

(5) At June 30, 2022, we were in compliance with all debt covenants.

(5) At September 30, 2022, we were in compliance with all debt covenants.

(6) As of August 29, 2022, the benchmark index interest rate was converted from LIBOR to SOFR, plus a benchmark adjustment of 10.0 basis points.

Principal Payments

Aggregate required principal payments at June 30, 2022 are as follows (amounts in thousands):

Aggregate required principal payments at September 30, 2022 are as follows (amounts in thousands):

Year Amortization Maturities Total

7 unchanged sentences

Deferred Financing Costs

Deferred financing costs, net, consisted of the following at June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022 December 31, 2021

Deferred financing costs, net, consisted of the following at September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022 December 31, 2021

Financing costs $ 44,065 $ 44,637

1 unchanged sentence

Total deferred financing costs, net $ 18,190 $ 22,112

Amortization expense related to deferred financing costs was $ 1.3 million and $ 1.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.7 million and $ 2.3 million for the six months ended June 30, 2022 and 2021, respectively.

Amortization expense related to deferred financing costs was $ 1.2 million and $ 1.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 3.8 million and $ 3.4 million for the nine months ended September 30, 2022 and 2021, respectively.

Unsecured Revolving Credit and Term Loan Facilities

On March 31, 2021, we entered into a second amendment to an existing credit agreement ("Amended Credit Agreement") that governs an amended senior unsecured credit facility (the "Credit Facility") with Bank of America, N.A., as administrative agent and the other lenders party thereto.

The Amended Credit Agreement amended the amended and restated credit agreement dated August 29, 2017 by and among the parties named therein.

The Credit Facility is in the initial maximum principal amount of up to $ 1.065 billion, which consists of $ 850.0 million revolving credit facility that matures on March 31, 2025, and a $ 215.0 million term loan facility that matures on March 19, 2025.

As of June 30, 2022 , we had no borrowings under the revolving credit facility and $ 215.0 million under the term loan facility.

On March 19, 2020, we entered into a senior unsecured term loan facility (the “Term Loan Facility”) with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto.

The Term Loan Facility is in the original principal amount of $ 175.0 million and matures on December 31, 2026.

We may request the Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $ 225 million.

As of June 30, 2022 , our borrowings amounted to $ 175.0 million under the Term Loan Facility.

The terms of both the Credit Facility and the Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports.

On August 29, 2022, we entered into a third amendment to our amended and restated credit agreement dated August 29, 2017 with Bank of America, N.A., as administrative agent and the other lenders party thereto, which governs our senior unsecured revolving credit facility and term loan facility (collectively, the “BofA Credit Facility”).

The BofA Credit Facility is in the initial maximum principal amount of up to $ 1.065 billion, which consists of an $ 850.0 million revolving credit facility that matures on March 31, 2025, and a $ 215.0 million term loan facility that matures on March 19, 2025.

As of September 30, 2022 , we had no borrowings under the revolving credit facility and $ 215.0 million under the term loan facility.

On August 29, 2022, we entered into a second amendment to our credit agreement dated March 19, 2020 with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which governs a senior unsecured term loan facility (the “Wells Term Loan Facility”).

The Wells Term Loan Facility is in the original principal amount of $ 175.0 million and matures on December 31, 2026.

We may request the Wells Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $ 225 million.

As of September 30, 2022 , our borrowings amounted to $ 175.0 million under the Wells Term Loan Facility.

The terms of both the BofA Credit Facility and the Wells Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports.

Both facilities also require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio.

The agreements governing both facilities also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss

of real estate investment trust qualification, and occurrence of a change of control.

As of June 30, 2022, we were in compliance with these covenants.

loan documents, loss of real estate investment trust qualification, and occurrence of a change of control.

As of September 30, 2022, we were in compliance with these covenants.

Senior Unsecured Notes

2 unchanged sentences

The agreements also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification.

As of June 30, 2022, we were in compliance with these covenants.

As of September 30, 2022, we were in compliance with these covenants.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022 December 31, 2021

Accounts payable and accrued expenses consisted of the following as of September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022 December 31, 2021

Accrued capital expenditures $ 55,320 $ 49,247

11 unchanged sentences

however, we currently do not anticipate that any of the counterparties will fail to meet its obligations.

In May 2022, we entered into forward interest rate swaps that aggregate $ 390.0 million to replace the $ 265.0 million swap which currently fixes the interest rate on a portion of our outstanding term loans balance and is due to expire in August 2022.

The new swaps go into effect upon the expiration of the current swap and once effective, the interest rate on our term loans will be 100 % fixed.

In May 2022, we entered into forward interest rate swaps with an aggregate notional value of $ 390.0 million that became effective in August 2022 and fixed the interest rate on 100 % of our term loans.

This replaced the $ 265.0 million swap which had fixed the interest rate on a portion of our outstanding term loans balance.

We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations.

As of June 30, 2022, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 6.1 million.

If we had breached any of these provisions at June 30, 2022, we could have been required to settle our obligations under the agreements at their termination value of $ 6.1 million.

As of June 30, 2022 and December 31, 2021, we had interest rate swaps and caps with an aggregate notional value of $ 841.3 million and $ 451.3 million, respectively.

As of September 30, 2022, we did not have any derivatives in a net liability position.

As of September 30, 2022 and December 31, 2021, we had interest rate swaps and caps with an aggregate notional value of $ 576.3 million and $ 451.3 million, respectively.

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

As of June 30, 2022, the fair value of our interest rate swaps amounted to $ 4.1 million, which is included in prepaid assets and other expenses and $( 5.6 ) million which is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.

As of September 30, 2022, the fair value of our interest rate swaps amounted to $ 18.5 million, which is included in prepaid assets and other expenses on the condensed consolidated balance sheet.

As of December 31, 2021, the fair value of our interest rate swaps amounted to $( 25.3 ) million, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.

These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing

variable-rate term loan facilities.

These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities.

Interest rate caps not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements.

As of June 30, 2022 and 2021, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $ 12.8 million and $ 2.8 million for the three months ended June 30, 2022 and 2021, respectively, and a net unrealized gain (loss) of $ 25.9 million and $ 5.7 million for the six months ended June 30, 2022 and 2021, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income (loss).

As of September 30, 2022 and 2021, our cash flow hedges are deemed highly effective and a net unrealized gain of $ 21.0 million and $ 2.8 million for the three months ended September 30, 2022 and 2021, respectively, and a net unrealized gain of $ 46.8 million and $ 8.5 million for the nine months ended September 30, 2022 and 2021, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income (loss).

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the debt.

We estimate that $ 2.4 million net loss of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months.

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022 December 31, 2021

We estimate that $ 3.3 million net loss of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months.

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022 December 31, 2021

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

10 unchanged sentences

Interest rate cap 9,188 1 Month LIBOR 5.5000 % December 1, 2021 October 1, 2024 43 — 8 —

Interest rate swap 175,000 1 Month SOFR 2.5620 % August 31, 2022 December 31, 2026 1,703 — — —

Interest rate swap 107,500 1 Month SOFR 2.6260 % August 19, 2022 March 19, 2025 828 — — —

Interest rate swap 107,500 1 Month SOFR 2.6280 % August 19, 2022 March 19, 2025 824 — — —

Interest rate swap 175,000 SOFR Compound 2.5620 % August 31, 2022 December 31, 2026 8,713 — — —

Interest rate swap 107,500 SOFR Compound 2.6260 % August 19, 2022 March 19, 2025 3,649 — — —

Interest rate swap 107,500 SOFR OIS Compound 2.6280 % August 19, 2022 March 19, 2025 3,646 — — —

$ 18,515 $ — $ 13 $ ( 25,308 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021 (amounts in thousands):

Three Months Ended Six Months Ended

Effects of Cash Flow Hedges June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021 (amounts in thousands):

Three Months Ended Nine Months Ended

Effects of Cash Flow Hedges September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Amount of gain (loss) recognized in other comprehensive income (loss) $ 19,588 $ ( 103 ) $ 39,407 $ ( 139 )

Amount of loss reclassified from accumulated other comprehensive loss into interest expense ( 2,741 ) ( 2,898 ) ( 6,036 ) ( 5,767 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (amounts in thousands):

Three Months Ended Six Months Ended

Effects of Cash Flow Hedges June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Amount of loss reclassified from accumulated other comprehensive income ( loss) into interest expense ( 1,392 ) ( 2,920 ) ( 7,428 ) ( 8,687 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 (amounts in thousands):

Three Months Ended Nine Months Ended

Effects of Cash Flow Hedges September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded $ ( 25,516 ) $ ( 23,577 ) $ ( 75,572 ) $ ( 70,553 )

Amount of loss reclassified from accumulated other comprehensive income into interest expense ( 2,741 ) ( 2,898 ) ( 6,036 ) ( 5,767 )

Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense ( 1,392 ) ( 2,920 ) ( 7,428 ) ( 8,687 )

Fair Valuation

The estimated fair values at June 30, 2022 and December 31, 2021 were determined by management, using available market information and appropriate valuation methodologies.

The estimated fair values at September 30, 2022 and December 31, 2021 were determined by management, using available market information and appropriate valuation methodologies.

Considerable judgment is necessary to interpret market data and develop estimated fair value.

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The fair values of our mortgage notes payable, senior unsecured notes - Series A, B, C, D, E, F, G and H - unsecured term loan facilities and unsecured revolving credit facility which are determined using Level 3 inputs are estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.

The following tables summarize the carrying and estimated fair values of our financial instruments as of June 30, 2022 and December 31, 2021 (amounts in thousands):

June 30, 2022

The following tables summarize the carrying and estimated fair values of our financial instruments as of September 30, 2022 and December 31, 2021 (amounts in thousands):

September 30, 2022

Estimated Fair Value

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Interest rate swaps included in prepaid expenses and other assets $ 18,457 $ 18,457 $ — $ 18,457 $ —

Interest rate swap included in accounts payable and accrued expenses 5,612 5,612 — 5,612 —

Mortgage notes payable 915,202 809,720 — — 809,720

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Unsecured term loan facilities 388,223 390,000 — — 390,000

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of June 30, 2022 and December 31, 2021.

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of September 30, 2022 and December 31, 2021.

Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

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The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation.

Operating expense reimbursements are reflected in our June 30, 2022 and 2021 condensed consolidated statements of operations as rental revenue.

Operating expense reimbursements are reflected in our September 30, 2022 and 2021 condensed consolidated statements of operations as rental revenue.

Rental revenue includes fixed and variable payments.

Fixed payments primarily relate to base rent and variable payments primarily relate to tenant expense reimbursements for certain property operating costs.

The components of rental revenue for the three and six months ended June 30, 2022 and 2021 are as follows (amounts in thousands):

Three Months Ended Six Months Ended

Rental revenue June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

The components of rental revenue for the three and nine months ended September 30, 2022 and 2021 are as follows (amounts in thousands):

Three Months Ended Nine Months Ended

Rental revenue September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Fixed payments $ 131,800 $ 124,764 $ 399,995 $ 374,968

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Total rental revenue $ 148,290 $ 139,558 $ 445,143 $ 420,586

As of June 30, 2022, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2039 (amounts in thousands):

As of September 30, 2022, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2039 (amounts in thousands):

Remainder of 2022 $ 120,126

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We determine if an arrangement is a lease at inception.

Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $ 28.8 million and lease liabilities of $ 28.8 million in our consolidated balance sheets as of June 30, 2022.

Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $ 28.7 million and lease liabilities of $ 28.7 million in our consolidated balance sheets as of September 30, 2022.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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2016-02, Leases (Topic 842), in determining the present value of lease payments.

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of June 30, 2022 was 4.5 %.

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of September 30, 2022 was 4.5 %.

Rent expense for lease payments related to our operating leases is recognized on a straight-line basis over the non-cancellable term of the leases.

The weighted average remaining lease term as of June 30, 2022 was 47.9 years.

As of June 30, 2022, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

The weighted average remaining lease term as of September 30, 2022 was 47.7 years.

As of September 30, 2022, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2022 $ 380

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Legal Proceedings

Except as described below, as of June 30, 2022, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants.

Except as described below, as of September 30, 2022, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants.

We believe that the costs and related liabilities, if any, which may result from such actions will not materially affect our condensed consolidated financial position, operating results or liquidity.

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Unfunded Capital Expenditures

At June 30, 2022, we estimate that we will incur approximately $ 105.3 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements.

At September 30, 2022, we estimate that we will incur approximately $ 117.9 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements.

We expect to fund these capital expenditures with operating cash flow, additional property level mortgage financings, our unsecured credit facility, cash on hand and other borrowings.

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Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, tenant and other receivables and deferred rent receivables.

At June 30, 2022, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation.

At September 30, 2022, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation.

Asset Retirement Obligations

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

As of June 30, 2022, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates.

As of September 30, 2022, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates.

As such, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation.

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Certain of our properties have been inspected for soil contamination due to pollutants, which may have occurred prior to our ownership of these properties or subsequently in connection with its development and/or its use.

Required remediation to such properties has been completed, and as of June 30, 2022, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents.

Required remediation to such properties has been completed, and as of September 30, 2022, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents.

All such maintenance costs are expensed as incurred.

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We carry insurance coverage on our properties of types and in amounts with deductibles that we believe are in line with coverage customarily obtained by owners of similar properties.

As of June 30, 2022, there were 162,689,535 share of Class A common stock 994,252 shares of Class B common stock and 111,420,579 operating partnership units outstanding, of which 163,683,787 , or 59.5 %, were owned by ESRT and 111,420,579 , or 40.5 %, were owned by other partners, including ESRT directors, members of senior management and other employees.

As of September 30, 2022, there were 160,576,042 shares of Class A common stock 993,332 shares of Class B common stock and 110,959,627 operating partnership units outstanding, of which 161,569,374 , or 59.3 %, were owned by ESRT and 110,959,627 , or 40.7 %, were owned by other partners, including ESRT directors, members of senior management and other employees.

On May 16, 2019, the Empire State Realty Trust, Inc.

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The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

The following table summarizes ESRT's purchases of equity securities in each of the three months ended June 30, 2022:

The following table summarizes ESRT's purchases of equity securities in each of the three months ended September 30, 2022:

Period Total Number of Shares Purchased Weighted Average Price Paid per Share Maximum Approximate Dollar Value Available for Future Purchase (in thousands)

April 2022 2,308,026 $ 8.95 $ 467,350

May 2022 1,050,731 $ 8.09 $ 458,849

June 2022 3,252,202 $ 7.16 $ 435,560

July 2022 184,045 $ 6.92 $ 434,286

August 2022 621,314 $ 7.32 $ 429,736

September 2022 1,761,561 $ 6.97 $ 417,455

Private Perpetual Preferred Units

As of June 30, 2022, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding.

As of September 30, 2022, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding.

The Series 2019 Preferred Units have a liquidation preference of $ 13.52 per unit and are entitled to receive cumulative preferential annual cash distributions of $ 0.70 per unit payable in arrears on a quarterly basis.

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Distributions

Total distributions paid to OP unitholders were $ 9.7 million and $ 19.5 million for the three and six months ended June 30, 2022, respectively, and $ 9.5 million for the three and six months ended June 30, 2021.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2022, respectively, and $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2021, respectively.

Total distributions paid to OP unitholders were $ 9.6 million and $ 29.1 million for the three and nine months ended September 30, 2022, respectively, and $ 10.0 million and $ 19.4 million for the three and nine months ended September 30, 2021, respectively.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively, and $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2021, respectively.

Incentive and Share-Based Compensation

The Plans provide for grants to directors, employees and consultants consisting of stock options, restricted stock, dividend equivalents, stock payments, performance shares, LTIP units, stock appreciation rights and other incentive awards.

An aggregate of 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan, and as of June 30, 2022, 5.9 million shares of ESRT common stock remain available for future issuance.

Annually, we make grants of LTIP units to our non-employee directors under the 2019 Plan.

In 2022, each of our directors received 60 % of their $ 200,000 annual base retainer in the form of equity vesting ratably over four years , and could elect to receive the remaining 40 % of such base retainer in (i) cash at the face value of the award, (ii) immediately vesting equity at the face value of the award, or (iii) equity vesting ratably over three years at 120 % of the face amount.

Each director could elect to receive any equity portion of the base retainer in either (i) LTIP units or (ii) restricted shares of our Class A common stock.

In accordance with each director's election, we granted a total of 142,358 LTIP units that are subject to time-based vesting with fair market values of $ 1.1 million.

The LTIP units vest ratably over three or four years from the date of the grant, based on grantee election, subject generally to the director's continued service on our Board of Directors.

We also granted 51,284 LTIP units that are subject to immediate vesting with fair market values of $ 0.3 million.

An aggregate of 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan, and as of September 30, 2022, 5.9 million shares of ESRT common stock remain available for future issuance.

Share-based compensation for time-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the shorter of (i) the stated vesting period, which is generally three , four or five years , or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant.

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For restricted stock awards, the fair value of the awards are based on the market price of ESRT stock at the grant date.

LTIP units and ESRT restricted stock issued during the six months ended June 30, 2022 were valued at $ 22.4 million.

LTIP units and ESRT restricted stock issued during the nine months ended September 30, 2022 were valued at $ 22.4 million.

The weighted average per unit or share fair value was $ 7.21 for grants issued in 2022.

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No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding in 2022.

The following is a summary of ESRT restricted stock and LTIP unit activity for the six months ended June 30, 2022:

The following is a summary of ESRT restricted stock and LTIP unit activity for the nine months ended September 30, 2022:

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

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Forfeited or unearned ( 17,830 ) — ( 1,311,839 ) — 7.21

Unvested balance at June 30, 2022 369,328 2,961,907 4,507,450 578,943 $ 6.67

Unvested balance at September 30, 2022 360,159 2,961,907 4,507,450 578,943 $ 6.67

The time-based LTIPs and ESRT restricted stock awards are treated for accounting purposes as immediately vested upon the later of (i) the date the grantee attains the age of 60 or 65 , as applicable, and (ii) the date on which grantee has first completed ten years of continuous service with our company or its affiliates.

For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $ 0.6 million and $ 1.6 million for the three and six months ended June 30, 2022, respectively, and $ 0.4 million and $ 1.4 million for the three and six months ended June 30, 2021, respectively.

Unrecognized compensation expense was $ 1.5 million at June 30, 2022, which will be recognized over a weighted average period of 3.6 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $ 5.4 million and $ 8.9 million for the three and six months ended June 30, 2022, respectively, and $ 4.8 million and $ 8.6 million for the three and six months ended June 30, 2021, respectively.

Unrecognized compensation expense was $ 35.1 million at June 30, 2022, which will be recognized over a weighted average period of 2.8 years.

For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $ 0.4 million and $ 2.0 million for the three and nine months ended September 30, 2022, respectively, and $ 0.7 million and $ 2.1 million for the three and nine months ended September 30, 2021, respectively.

Unrecognized compensation expense was $ 1.2 million at September 30, 2022, which will be recognized over a weighted average period of 3.3 years.

million for the three and nine months ended September 30, 2022, respectively, and $ 4.7 million and $ 13.3 million for the three and nine months ended September 30, 2021, respectively.

Unrecognized compensation expense was $ 30.7 million at September 30, 2022, which will be recognized over a weighted average period of 2.6 years.

Earnings Per Unit

Earnings per unit for the three and six months ended June 30, 2022 and 2021 is computed as follows (amounts in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net income $ 48,695 $ 4,411 $ 31,474 $ 1,220

Earnings per unit for the three and nine months ended September 30, 2022 and 2021 is computed as follows (amounts in thousands, except per share amounts):

Three Months Ended Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income (loss) $ 10,118 $ ( 10,183 ) $ 41,592 $ ( 8,963 )

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

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Stock-based compensation plans

1,086 — 1,086 —

Weighted average units outstanding –- diluted 267,121 277,716 270,966 277,829

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Diluted $ 0.03 $ ( 0.04 ) $ 0.14 $ ( 0.04 )

There were 603 and 398 antidilutive shares and LTIP units for the three and six months ended June 30, 2022, respectively, and 1,051 and 955 antidilutive shares and LTIP units for the three and six months ended June 30, 2021, respectively.

There were zero and zero antidilutive shares and LTIP units for the three and nine months ended September 30, 2022, respectively, and 1,084 and 998 antidilutive shares and LTIP units for the three and nine months ended September 30, 2021, respectively.

Related Party Transactions

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We earned supervisory fees from entities affiliated with Anthony E.

Malkin, our Chairman, President and Chief Executive Officer, of $ 0.3 million for the three months ended June 30, 2022 and 2021, and $ 0.5 million for the six months ended June 30, 2022 and 2021.

Malkin, our Chairman, President and Chief Executive Officer, of $ 0.2 million and $ 0.3 million for the three months ended September 30, 2022 and 2021, respectively, and $ 0.8 million and $ 0.8 million for the nine months ended September 30, 2022 and 2021, respectively.

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

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We earned property management fees from entities affiliated with Anthony E.

Malkin of $ 0.1 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.1 million for the six months ended June 30, 2022 and 2021.

Malkin of $ 0.1 million and $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2022 and 2021, respectively.

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

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We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support services.

Total revenue aggregated $ 0.1 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.2 million for the six months ended June 30, 2022 and 2021.

Total revenue aggregated $ 0.1 million and $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Segment Reporting

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We account for intersegment sales and rents as if the sales or rents were to third parties, that is, at current market prices.

The following tables provide components of segment net income (loss) for each segment for the three and six months ended June 30, 2022 and 2021 (amounts in thousands):

Three Months Ended June 30, 2022

The following tables provide components of segment net income (loss) for each segment for the three and nine months ended September 30, 2022 and 2021 (amounts in thousands):

Three Months Ended September 30, 2022

Real Estate Observatory Intersegment Elimination Total

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Expenditures for segment assets $ 18,686 $ 24 $ — $ 18,710

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Real Estate Observatory Intersegment Elimination Total

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Expenditures for segment assets $ 21,349 $ — $ — $ 21,349

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Real Estate Observatory Intersegment Elimination Total

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Expenditures for segment assets $ 70,795 $ 315 $ — $ 71,110

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Real Estate Observatory Intersegment Elimination Total

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Income tax (expense) benefit ( 365 ) 3,636 — 3,271

Net income (loss) $ 7,423 $ ( 6,203 ) $ — $ 1,220

Net loss $ ( 3,906 ) $ ( 5,057 ) $ — $ ( 8,963 )

Expenditures for segment assets $ 64,655 $ 4 $ — $ 64,659

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements