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

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including ESRT's Chief Executive Officer and Principal 52 Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As of December 31, 2022, the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the participation of ESRT management, including ESRT's Chief Executive Officer and Principal Financial Officer, regarding the effectiveness of our disclosure controls and procedures at the end of the period covered by this Report. Based on the foregoing, ESRT's Chief Executive Officer and Principal Financial Officer concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including ESRT's Chief Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting No significant changes to our internal control over financial reporting were identified in connection with the evaluation referenced above that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. (a) Management's Report on Internal Control Over Financial Reporting Management of Empire State Realty OP, L.P. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13(a)-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 as required by the Securities Exchange Act of 1934 Rule 13(a)-15(c). In making this assessment, we used the criteria set forth in the framework in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO criteria"). Based on our evaluation under the COSO criteria, our management concluded that our internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Ernst & Young LLP, an independent registered public accounting firm that audited our Financial Statements included in this Annual Report, has issued an attestation report on our internal control over financial reporting as of December 31, 2022, which appears in paragraph (b) of this Item 9A. (b) Attestation report of the independent registered public accounting firm Report of Independent Registered Public Accounting Firm To the Partners of Empire State Realty OP, L.P. Opinion on Internal Control Over Financial Reporting We have audited Empire State Realty OP, L.P.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Empire State Realty OP, L.P. (the Operating Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria . We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 consolidated financial statements of the Operating Partnership and our report dated February 28, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are 53 required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York February 28, 2023 54 ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE We are managed by Empire State Realty Trust, Inc. in its capacity as our sole general partner. The information required by Item 10 will be set forth in Empire State Realty Trust, Inc.'s definitive proxy statement for its 2022 Annual Meeting of Stockholders (which is scheduled to be held on May 11, 2023), to be filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended, or the ESRT Proxy Statement, and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION We are managed by Empire State Realty Trust, Inc. in its capacity as our sole general partner. The information required by Item 11 will be set forth in the ESRT Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 will be set forth in the ESRT Proxy Statement and is incorporated herein by reference. The information under Item 5 of this Form 10-K under the heading “Securities Authorized For Issuance Under Equity Compensation Plans” is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by Item 13 will be set forth in the ESRT Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 will be set forth in the ESRT Proxy Statement and is incorporated herein by reference. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES (a) The following documents are filed as part of this report: 1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K. 2. The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K. Schedule III-Real Estate and Accumulated Depreciation as of December 31, 2022 on page F-42. Schedules other than those listed are omitted as they are not applicable or the required or equivalent information has been included in the financial statements or notes thereto. 55 (b) The exhibits required by Item 601 of Regulation S-K ( § 229.601 of this chapter) are listed below: Exhibit Index Exhibit No. Description 3.1 Certificate of Limited Partnership of Empire State Realty OP, L.P. 3.2 Amended and Restated Agreement of Limited Partnership of Empire State Realty OP, L.P., dated October 1, 2013, incorporated by reference to Exhibit 10.1 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 3.3 Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of Empire State Realty OP, L.P., dated August 26, 2014, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on August 26, 2014. 3.4 Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of Empire State Realty OP, L.P., dated December 6, 2019, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 12, 2019. 4.1 Description of Securities of Empire State Realty OP, L.P. Registered under Section 12 of the Securities Exchange Act of 1934, as Amended 4.2 Indenture, dated August 12, 2014, by and among Empire State Realty OP, L.P., as issuer, Empire State Realty Trust, Inc., and Wilmington Trust, National Association, as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on August 12, 2014. 10.1 Contribution Agreement among Empire Realty Trust, Inc., Empire Realty Trust, L.P. and certain members of the Malkin Group listed on the signature pages thereto, dated November 28, 2011, incorporated by reference to Exhibit 10.8 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on February 13, 2012. 10.2 Amended and Restated Contribution Agreement among Empire Realty Trust, Inc., Empire Realty Trust, L.P. and certain entities affiliated with the Helmsley estate listed on the signature pages thereto, dated July 2, 2012, incorporated by reference to Exhibit 10.11 to Amendment No. 7 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on September 19, 2013. 10.3 Form of Contribution Agreement among Empire Realty Trust, Inc., Empire Realty Trust, L.P. and each of the private existing entities that contributed properties in the consolidation, incorporated by reference to Exhibit 10.10 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on February 13, 2012. 10.4 Form of Contribution Agreement among Empire State Realty Trust, Inc., Empire Realty OP, L.P. and each of the public existing entities that contributed properties in the consolidation, incorporated by reference to Exhibit 10.11 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on February 13, 2012. 10.5 Representation, Warranty and Indemnity Agreement among Empire Realty Trust, Inc., Empire Realty Trust, L.P., Anthony E. Malkin, Cynthia M. Blumenthal and Scott D. Malkin, dated November 28, 2011, incorporated by reference to Exhibit 10.13 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on February 13, 2012. 10.6 Form of Merger Agreement among Empire Realty Trust, Inc., Empire Realty Trust, L.P. and each of the predecessor management companies, incorporated by reference to Exhibit 10.12 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on February 13, 2012. 10.7+ First Amended and Restated Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2013 Equity Incentive Plan (as amended and restated as of April 4, 2016), incorporated by reference to Exhibit 10.10 to the Registrant's Form 10-Q filed with the SEC on May 5, 2016. 10.8 Registration Rights Agreement among Empire State Realty Trust, Inc. and the persons named therein, dated October 7, 2013, incorporated by reference to Exhibit 10.2 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 10.9 Tax Protection Agreement among Empire State Realty Trust, Inc., Empire State Realty OP, L.P., and the parties named therein, dated October 7, 2013, incorporated by reference to Exhibit 10.3 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 10.10 Indemnification Agreement among Empire State Realty Trust, Inc. and Peter L. Malkin, dated October 7, 2013, incorporated by reference to Exhibit 10.4 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 56 10.11 Indemnification Agreement among Empire State Realty Trust, Inc. and Anthony E. Malkin, dated October 7, 2013, incorporated by reference to Exhibit 10.5 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 10.13 Indemnification Agreement among Empire State Realty Trust, Inc. and Thomas P. Durels, dated October 7, 2013, incorporated by reference to Exhibit 10.7 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 10.14 Indemnification Agreement among Empire State Realty Trust, Inc. and Thomas N. Keltner, Jr., dated October 7, 2013, incorporated by reference to Exhibit 10.8 to Empire State Realty Trust, Inc.'s Form 10-Q filed with the SEC on November 12, 2013. 10.15 Indemnification Agreement among Empire State Realty Trust, Inc. and Christina Chiu, dated April 20, 2020 incorporated by reference to Exhibit 10.4 to the Registrant's Form 10-Q filed with the SEC on May 6, 2020. 10.16 Form of Empire State Realty Trust, Inc. Independent Director Indemnification Agreement, incorporated by reference to Exhibit 10.22 to Empire State Realty Trust's Form 10-K filed with the SEC on February 28, 2018. 10.17+ Amended and Restated Employment Agreement between Empire State Realty Trust, Inc. and Anthony E. Malkin, dated April 5, 2016, incorporated by reference to Exhibit 10.32 to the Registrant's Form 10-Q filed with the SEC on May 5, 2016. 10.18 Change in Control Severance Agreement between Empire State Realty Trust, Inc. and Christina Chiu, dated April 13, 2020 incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q filed with the SEC on May 6, 2020. 10.20+ Amended and Restated Change in Control Severance Agreement between Empire State Realty Trust, Inc. and Thomas P. Durels, dated April 5, 2016, incorporated by reference to Exhibit 10.35 to the Registrant's Form 10-Q filed with the SEC on May 5, 2016. 10.22 Note Purchase Agreement, dated March 27, 2015, among Empire State Realty OP, L.P., Empire State Realty Trust, Inc. and the purchasers named therein, incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed with the SEC on March 30, 2015. 10.23 Registration Rights Agreement among Empire State Realty Trust, Inc. and the persons named therein, dated July 15, 2014, incorporated by reference to Exhibit 10.4 to the Registrant's Form 8-K filed with the SEC on July 21, 2014. 10.25 Form of Asset and Property Management Agreement, incorporated by reference to Exhibit 10.18 to Amendment No. 6 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on September 6, 2013. 10.26 Form of Services Agreement, incorporated by reference to Exhibit 10.19 to Amendment No. 6 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No. 333-179485), filed with the SEC on September 6, 2013. 10.28 Note Purchase Agreement, dated December 13, 2017, among Empire State Realty OP, L.P., Empire State Realty Trust, Inc. and the purchasers named therein, incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed with the SEC on December 14, 2017. 10. 29 + Amended and Restated Employment Agreement between Empire State Realty Trust, Inc. and Anthony E. Malkin, dated October 6 2021, incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed with the SEC on October 6, 2021. 10.30+ Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan, incorporated by reference to Exhibit A to the Company's Definitive Proxy Statement filed with the SEC on April 4, 2019. 10.31+ Form of Restricted Stock Agreement (Time Based), incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (Registration No. 333-231544), filed with the SEC on May 16, 2019. 10.32+ Form of LTIP Agreement (Performance- Based), incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-8 (Registration No. 333-231544), filed with the SEC on May 16, 2019. 10.33+ Form of LTIP Agreement (Time-Based), incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-8 (Registration No. 333-231544), filed with the SEC on May 16, 2019. 10.34 Empire State Realty OP, L.P.,Empire State Realty Trust, Inc. $100,000,000 3.61% Series G Senior Notes due March 17, 2032, $75,000,000 3.73% Series H Senior Notes due March 17, 2035 Note Purchase Agreement dated March 17, 2020 incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 23, 2020. 10.37 First Amended and Restated Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan As Amended and Restated as of July 13, 2020 incorporated by reference to Exhibit 10.6 to Empire State Realty Trust, Inc. Form 10-Q filed with the SEC on August 10, 2020. 10.39+ Form of LTIP Agreement (Executive Officer, Time Based) incorporated by reference to Exhibit 10.1 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on August 5, 2021. 57 10.40+ Form of LTIP Agreement (Executive Officer, Performance Based) incorporated by reference to Exhibit 10.1 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on August 5, 2021. 10.41+ Form of LTIP Agreement (Executive Officer or Director, Immediate Vest) incorporated by reference to Exhibit 10.1 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on August 5, 2021. 10.42+ Form of LTIP Agreement (Director, Time-Based) incorporated by reference to Exhibit 10.1 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on August 5, 2021. 10.62 Second Amendment, dated as of August 29, 2022, to that certain Credit Agreement, dated as of March 19, 2020, among Empire State Realty Trust, Inc., Empire State Realty OP, L.P., the subsidiary guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent incorporated by reference to Exhibit 10.62 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on November 3, 2022. 10.63 Third Amendment, dated as of August 29, 2022, to that certain Amended and Restated Credit Agreement, dated August 29, 2017, among Empire State Realty Trust, Inc., Empire State Realty OP, L.P. , the subsidiary guarantors party thereto, the lenders party thereto, and Bank of America, N.A. , as administrative agent incorporated by reference to Exhibit 10.62 to the Empire State Realty OP, L.P. Form 10-Q filed with the SEC on November 3, 2022. 21.1* Subsidiaries of Registrant 23.1* Consent of Ernst & Young LLP 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Document 101.DEF* XBRL Taxonomy Extension Definitions Document 101.LAB* XBRL Taxonomy Extension Labels Document 101.PRE* XBRL Taxonomy Extension Presentation Document 104* Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.) 99.1 Articles of Amendment and Restatement of Empire State Realty Trust, Inc., incorporated by reference to Exhibit 3.1 to Amendment No. 8 to Empire State Realty Trust, Inc.'s Form S-11 (Registration No.333-179485), filed with the SEC on September 27, 2013. 99.2 Third Amended and Restated Bylaws of Empire State Realty Trust, Inc., incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K filed with the SEC on March 7, 2019. Notes: * Filed herewith. + Indicates management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K. ITEM 16. FORM 10-K SUMMARY None. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EMPIRE STATE REALTY OP, L.P. By: Empire State Realty Trust, Inc., its general partner Date: February 28, 2023 By: /s/ Anthony E. Malkin Chairman, President and Chief Executive Officer Date: February 28, 2023 By: /s/ Christina Chiu Executive Vice President, Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) Date: February 28, 2023 By: /s/ Stephen V. Horn Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of Empire State Realty Trust, Inc., as general partner of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Anthony E. Malkin Chairman of the Board of Directors, President and Chief Executive Officer February 28, 2023 Anthony E. Malkin (Principal Executive Officer) /s/ Christina Chiu Executive Vice President, Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) February 28, 2023 Christina Chiu /s/ Stephen V. Horn Senior Vice President, Chief Accounting Officer February 28, 2023 Stephen V. Horn (Principal Accounting Officer) /s/ Thomas J. DeRosa Director February 28, 2023 Thomas J. DeRosa /s/ Steven J. Gilbert Lead Independent Director February 28, 2023 Steven J. Gilbert /s/ S. Michael Giliberto Director February 28, 2023 S. Michael Giliberto /s/ Patricia S. Han Director February 28, 2023 Patricia S. Han /s/ Grant H. Hill Director February 28, 2023 Grant H. Hill /s/ R. Paige Hood Director February 28, 2023 R. Paige Hood /s/ James D. Robinson IV Director February 28, 2023 James D. Robinson IV 59 EMPIRE STATE REALTY OP, L.P. INDEX TO FINANCIAL STATEMENTS PAGE Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F- 3 Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 F- 4 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020 F- 5 Consolidated Statements of Capital for the years ended December 31, 2022, 2021 and 2020 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 F- 7 Notes to Consolidated Financial Statements F- 9 Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation F- 42 60 Report of Independent Registered Public Accounting Firm To the Partners of Empire State Realty OP, L.P. Opinion on the Financial Statements: We have audited the accompanying consolidated balance sheets of Empire State Realty OP, L.P. (the Operating Partnership) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), capital and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Operating Partnership's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2023, expressed an unqualified opinion thereon. Basis for Opinion : These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-1 Valuation of goodwill - observatory Description of the Matter At December 31, 2022, the Company’s goodwill related to the observatory reporting unit was $227.5 million as disclosed in Note 4 to the consolidated financial statements. As discussed in Note 2 to the consolidated financial statements, goodwill is tested for impairment at least annually or more frequently if there are indicators of impairment. The Company determined that interim impairment evaluations of goodwill were necessary for the observatory reporting unit and engaged a third-party valuation specialist to perform valuation procedures. Similarly, the Company performed its annual impairment testing as of October 1, 2022. Auditing management’s goodwill impairment tests were complex due to the highly judgmental nature of the assumptions used. The fair value estimates were sensitive to significant assumptions such as revenue and cost projections and the weighted average cost of capital, which are affected by expectations about future market and economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill impairment process, including controls over management’s review of the significant assumptions described above. To test the implied fair value of the Company’s observatory reporting unit, we performed audit procedures that included, among other procedures, assessing the methodologies and testing the significant assumptions and underlying data used by the Company. We utilized internal valuation specialists in assessing the fair value methodologies applied and evaluating the reasonableness of certain assumptions selected by management. We compared the significant assumptions used by management to current industry and economic trends, recent historical performance, and other relevant factors, and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the observatory reporting unit that would result from changes in the assumptions. /s/ Ernst & Young LLP We have served as the Operating Partnership’s auditor since 2010. New York, New York February 28, 2023 F-2 Empire State Realty OP, L.P. Consolidated Balance Sheets (amounts in thousands, except unit and per unit amounts) ASSETS December 31, 2022 December 31, 2021 Commercial real estate properties, at cost: Land $ 365,540 $ 336,278 Development costs 8,166 8,131 Building and improvements 3,177,743 3,156,508 3,551,449 3,500,917 Less: accumulated depreciation ( 1,137,267 ) ( 1,072,938 ) Commercial real estate properties, net 2,414,182 2,427,979 Assets held for sale 35,538 — Cash and cash equivalents 264,434 423,695 Restricted cash 50,244 50,943 Tenant and other receivables 24,102 18,647 Deferred rent receivables 240,188 224,922 Prepaid expenses and other assets 98,114 76,549 Deferred costs, net 187,570 202,437 Acquired below market ground leases, net 329,073 336,904 Right of use assets 28,670 28,892 Goodwill 491,479 491,479 Total assets $ 4,163,594 $ 4,282,447 LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable, net $ 883,705 $ 948,769 Senior unsecured notes, net 973,659 973,373 Unsecured term loan facilities, net 388,773 388,223 Unsecured revolving credit facility — — Accounts payable and accrued expenses 80,729 120,810 Acquired below market leases, net 17,849 24,941 Ground lease liabilities 28,670 28,892 Deferred revenue and other liabilities 76,091 84,358 Tenants’ security deposits 25,084 28,749 Liabilities related to assets held for sale 5,943 — Total liabilities 2,480,503 2,598,115 Commitments and contingencies Capital: Private perpetual preferred units: Series 2019 preferred units, $ 13.52 per unit liquidation preference, 4,664 issued and outstanding in 2022 and 2021, respectively 21,936 21,936 Series 2014 preferred units, $ 16.62 per unit liquidation preference, 1,560 issued and outstanding in 2022 and 2021 8,004 8,004 Series PR operating partnership units: ESRT partners' capital ( 2,710 and 2,812 general partner operating partnership units and 158,420 and 167,405 limited partner operating partnership units outstanding at December 31, 2022 and 2021, respectively) 954,375 998,128 Limited partners' interests ( 80,475 and 79,820 limited partner operating partnership units outstanding at December 31, 2022 and 2021, respectively) 681,827 649,157 Series ES operating partnership units ( 21,081 and 22,321 limited partner operating partnership units outstanding at December 31, 2022 and 2021, respectively) 1,391 ( 4,058 ) Series 60 operating partnership units ( 5,558 and 5,885 limited partner operating partnership units outstanding at December 31, 2022 and 2021, respectively) 16 ( 1,395 ) Series 250 operating partnership units ( 2,789 and 2,971 limited partner operating partnership units outstanding at December 31, 2022 and 2021, respectively) 76 ( 692 ) Total Empire State Realty OP, L.P.'s capital 1,667,625 1,671,080 Non-controlling interest in other partnerships 15,466 13,252 Total capital 1,683,091 1,684,332 Total liabilities and capital $ 4,163,594 $ 4,282,447 The accompanying notes are an integral part of these financial statements F-3 Empire State Realty OP, L.P. Consolidated Statements of Operations (amounts in thousands, except per unit amounts) For the Year Ended December 31, 2022 2021 2020 Revenues: Rental revenue $ 591,048 $ 559,690 $ 563,071 Observatory revenue 105,978 41,474 29,057 Lease termination fees 20,032 16,230 9,416 Third-party management and other fees 1,361 1,219 1,225 Other revenue and fees 8,622 5,481 6,459 Total revenues 727,041 624,094 609,228 Operating expenses: Property operating expenses 157,935 126,986 136,141 Ground rent expenses 9,326 9,326 9,326 General and administrative expenses 61,765 55,947 62,244 Observatory expenses 31,036 23,206 23,723 Real estate taxes 123,057 119,967 121,923 Impairment charges — 7,723 6,204 Depreciation and amortization 216,894 201,806 191,006 Total operating expenses 600,013 544,961 550,567 Total operating income 127,028 79,133 58,661 Other income (expense): Interest income 4,948 704 2,637 Interest expense ( 101,206 ) ( 94,394 ) ( 89,907 ) Gain on sale/disposition of properties 33,988 — — Loss on early extinguishment of debt — ( 214 ) ( 86 ) IPO litigation expense — — ( 1,165 ) Income (loss) before income taxes 64,758 ( 14,771 ) ( 29,860 ) Income tax (expense) benefit ( 1,546 ) 1,734 6,971 Net income (loss) 63,212 ( 13,037 ) ( 22,889 ) Private perpetual preferred unit distributions ( 4,201 ) ( 4,201 ) ( 4,197 ) Net loss attributable to non-controlling interest in other partnerships 243 17 — Net income (loss) attributable to common unitholders $ 59,254 $ ( 17,221 ) $ ( 27,086 ) Total weighted average units: Basic 268,337 277,420 283,826 Diluted 269,948 277,420 283,837 Earnings (loss) per unit: Basic $ 0.22 $ ( 0.06 ) $ ( 0.10 ) Diluted $ 0.22 $ ( 0.06 ) $ ( 0.10 ) The accompanying notes are an integral part of these financial statements F-4 Empire State Realty OP, L.P. Consolidated Statements of Comprehensive Income (Loss) (amounts in thousands) For the Year Ended December 31, 2022 2021 2020 Net income (loss) $ 63,212 $ ( 13,037 ) $ ( 22,889 ) Other comprehensive income (loss): Unrealized gain (loss) on valuation of interest rate swap agreements 40,044 348 ( 19,322 ) Amount reclassified into interest expense 7,230 11,653 8,870 Other comprehensive income (loss) 47,274 12,001 ( 10,452 ) Comprehensive income (loss) 110,486 ( 1,036 ) ( 33,341 ) The accompanying notes are an integral part of these financial statements F-5 Empire State Realty OP, L.P. Consolidated Statements of Capital (amounts in thousands) 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 General Partner Limited Partners Private Perpetual Preferred Units Private Perpetual Preferred Units 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 December 31, 2019 6,170 $ 29,151 181,894 $ 1,228,520 81,388 $ 680,580 25,810 $ 7,262 7,025 $ 1,593 3,535 $ 807 $ — $ 1,947,913 Issuance of private perpetual preferred in exchange for OP units 54 789 — — ( 97 ) ( 800 ) 43 11 — — — — — — Conversion of operating partnership units and Class B shares to ESRT Partner's Capital — — 6,807 29,863 ( 3,751 ) ( 29,803 ) ( 2,175 ) ( 92 ) ( 601 ) 22 ( 280 ) 10 — — Repurchases of common units — — ( 17,279 ) ( 143,713 ) — — — — — — — — — ( 143,713 ) Equity compensation — — 143 921 2,815 24,574 — — — — — — — 25,495 Distributions — ( 4,197 ) — ( 37,181 ) — ( 16,247 ) — ( 5,264 ) — ( 1,435 ) — ( 723 ) — ( 65,047 ) Net income (loss) — 4,197 — ( 16,712 ) — ( 7,043 ) — ( 2,356 ) — ( 650 ) — ( 325 ) — ( 22,889 ) Other comprehensive loss — — — ( 6,449 ) — ( 2,718 ) — ( 909 ) — ( 251 ) — ( 125 ) — ( 10,452 ) Balance at December 31, 2020 6,224 $ 29,940 171,565 $ 1,055,249 80,355 $ 648,543 23,678 $ ( 1,348 ) 6,424 $ ( 721 ) 3,255 $ ( 356 ) $ — $ 1,731,307 Conversion of operating partnership units and Class B shares to ESRT Partner's Capital — — 3,498 10,426 ( 1,317 ) ( 10,643 ) ( 1,357 ) 105 ( 540 ) 73 ( 285 ) 39 — — Repurchases of common units — — ( 4,887 ) ( 46,704 ) — — — — — — — — — ( 46,704 ) Contributions to consolidated joint venture interests — — — — — — — — — — — — 13,269 13,269 Equity compensation — — 41 513 782 19,747 — — — — — — — 20,260 Distributions — ( 4,201 ) — ( 18,110 ) — ( 7,121 ) — ( 2,382 ) — ( 632 ) — ( 318 ) — ( 32,764 ) Net income (loss) — 4,201 — ( 10,711 ) — ( 4,513 ) — ( 1,429 ) — ( 379 ) — ( 189 ) ( 17 ) ( 13,037 ) Other comprehensive income — — — 7,465 3,144 996 264 132 — 12,001 Balance at December 31, 2021 6,224 $ 29,940 170,217 $ 998,128 79,820 $ 649,157 22,321 $ ( 4,058 ) 5,884 $ ( 1,395 ) 2,970 $ ( 692 ) $ 13,252 $ 1,684,332 Conversion of operating partnership units and Class B shares to ESRT Partner's Capital — — 2,298 4,495 ( 551 ) ( 4,563 ) ( 1,240 ) 26 ( 326 ) 21 ( 181 ) 21 — — Repurchases of common units — — ( 11,571 ) ( 90,176 ) — — — — — — — — — ( 90,176 ) Contributions to consolidated joint venture interests — — — — — — — — — — — — 224 224 Equity compensation — — 185 894 1,206 20,117 — — — — — — — 21,011 Distributions — ( 4,201 ) — ( 23,109 ) — ( 11,251 ) — ( 3,025 ) — ( 800 ) — ( 400 ) — ( 42,786 ) Net income — 4,201 — 36,442 — 16,116 — 4,800 — 1,244 — 652 ( 243 ) 63,212 Other comprehensive income — — — 27,701 12,251 3,648 946 495 2,233 47,274 Balance at December 31, 2022 6,224 $ 29,940 161,129 $ 954,375 80,475 $ 681,827 21,081 $ 1,391 5,558 $ 16 2,789 $ 76 $ 15,466 $ 1,683,091 The accompanying notes are an integral part of these financial statements F-6 Empire State Realty OP, L.P. Consolidated Statements of Cash Flows (amounts in thousands) For the Year Ended December 31, 2022 2021 2020 Cash Flows From Operating Activities Net income (loss) $ 63,212 $ ( 13,037 ) $ ( 22,889 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 216,894 201,806 191,006 Gain on sale/disposition of properties ( 33,988 ) — — Impairment charges — 7,723 6,204 Amortization of non-cash items within interest expense 9,799 10,862 9,482 Amortization of acquired above and below-market leases, net ( 4,759 ) ( 5,896 ) ( 3,627 ) Amortization of acquired below-market ground leases 7,831 7,831 7,831 Straight-lining of rental revenue ( 24,562 ) ( 21,078 ) ( 5,238 ) Equity based compensation 21,011 20,260 25,495 Settlement of derivative contract — — ( 20,281 ) Loss on early extinguishment of debt — 214 86 Increase (decrease) in cash flows due to changes in operating assets and liabilities: Security deposits ( 828 ) ( 1,052 ) ( 151 ) Tenant and other receivables ( 5,306 ) 2,894 3,881 Deferred leasing costs ( 36,909 ) ( 16,090 ) ( 14,464 ) Prepaid expenses and other assets ( 2,263 ) 5,814 ( 11,730 ) Accounts payable and accrued expenses 4,705 ( 99 ) ( 3,305 ) Deferred revenue and other liabilities ( 3,664 ) 12,334 19,993 Net cash provided by operating activities 211,173 212,486 182,293 Cash Flows From Investing Activities Net proceeds from disposition of real estate 11,005 — — Additions to building and improvements ( 126,268 ) ( 95,037 ) ( 143,118 ) Development costs ( 35 ) ( 165 ) — Acquisition of real estate property ( 115,593 ) ( 117,540 ) — Net cash used in investing activities ( 230,891 ) ( 212,742 ) ( 143,118 ) The accompanying notes are an integral part of these financial statements F-7 Empire State Realty OP, L.P. Consolidated Statements of Cash Flows (continued) (amounts in thousands) For the Year Ended December 31, 2022 2021 2020 Cash Flows From Financing Activities Proceeds from mortgage notes payable — — 180,000 Repayment of mortgage notes payable ( 7,504 ) ( 4,091 ) ( 3,938 ) Proceeds from unsecured senior notes — — 175,000 Proceeds from unsecured term loan — — 175,000 Repayment of unsecured term loan — — ( 50,000 ) Proceeds from unsecured revolving credit facility — — 550,000 Repayment of unsecured revolving credit facility — — ( 550,000 ) Contributions from consolidated joint ventures 224 — — Deferred financing costs — ( 9,486 ) ( 10,135 ) Repurchases of common units ( 90,176 ) ( 46,704 ) ( 143,713 ) Private perpetual preferred unit distributions ( 4,201 ) ( 4,201 ) ( 4,197 ) Distributions ( 38,585 ) ( 28,563 ) ( 60,850 ) Net cash (used in) provided by financing activities ( 140,242 ) ( 93,045 ) 257,167 Net increase (decrease) in cash and cash equivalents and restricted cash ( 159,960 ) ( 93,301 ) 296,342 Cash and cash equivalents and restricted cash—beginning of period 474,638 567,939 271,597 Cash and cash equivalents and restricted cash—end of period $ 314,678 $ 474,638 $ 567,939 Reconciliation of Cash and Cash Equivalents and Restricted Cash: Cash and cash equivalents at beginning of period $ 423,695 $ 526,714 $ 233,946 Restricted cash at beginning of period 50,943 41,225 37,651 Cash and cash equivalents and restricted cash at beginning of period $ 474,638 $ 567,939 $ 271,597 Cash and cash equivalents at end of period $ 264,434 $ 423,695 $ 526,714 Restricted cash at end of period 50,244 50,943 41,225 Cash and cash equivalents and restricted cash at end of period $ 314,678 $ 474,638 $ 567,939 Supplemental disclosures of cash flow information: Cash paid for interest $ 91,012 $ 77,610 $ 75,416 Cash paid for income taxes $ 200 $ 644 $ 1,282 Non-cash investing and financing activities: Building and improvements included in accounts payable and accrued expenses $ 44,293 $ 49,247 $ 58,057 Write-off of fully depreciated assets 35,124 31,341 79,527 Derivative instruments at fair values included in prepaid expenses and other assets 17,902 — — Derivative instruments at fair values included in accounts payable and accrued expenses — 25,308 8,849 Conversion of operating partnership units and Class B shares to Class A shares 4,495 10,426 29,863 Transfer of assets related to assets held for sale 35,538 — — Transfer of liabilities related to assets held for sale 5,943 — — Mortgage assumed in connection with sale of real estate 30,117 — — Issuance of Series 2019 private perpetual preferred in exchange for operating partnership units — — 789 Debt assumed with the acquisition of real estate properties — 177,453 — Contribution from other partnerships — 13,269 — The accompanying notes are an integral part of these financial statements F-8 Empire State Realty OP, L.P. Notes to Consolidated Financial Statements 1. Description of Business and Organization As used in these consolidated financial statements, unless the context otherwise requires, “we,” “us,” "our," and the "company,” mean Empire State Realty OP, L.P. and its consolidated subsidiaries. Empire State Realty OP, L.P. is the entity through which Empire State Realty Trust, Inc. ("ESRT"), a self-administered and self-managed real estate investment trust, or REIT, conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We own, manage, operate, acquire and reposition office, retail and multifamily properties in Manhattan and the greater New York metropolitan area. Empire State Realty Trust, Inc.'s Class A common stock, par value $ 0.01 per share, is listed on the New York Stock Exchange under the symbol "ESRT." We were organized as a Delaware limited partnership on November 28, 2011. ESRT as the sole general partner in our company, has responsibility and discretion in the management and control in 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 December 31, 2022, ESRT owned approximately 59.4 % of our operating partnership units. As of December 31, 2022, our office and retail portfolio contained 9.7 million rentable square feet of office and retail space, and was 85.2 % occupied. Including signed leases not yet commenced, our total office and retail portfolio was 88.6 % leased. As of December 31, 2022, we owned 12 office properties (including three long-term ground leasehold interests) encompassing approximately 8.9 million rentable square feet of office space, which were approximately 85.1 % occupied or 88.3 % leased including signed leases not yet commenced. Nine properties are located in the midtown Manhattan market and encompass approximately 7.6 million rentable square feet of office space, including the Empire State Building. Our Manhattan office and multifamily properties also contain 0.5 million rentable square feet of premier retail space on their ground floor and/or contiguous levels. Three office properties are located in Fairfield County, Connecticut and Westchester County, New York, encompassing approximately 1.3 million rentable square feet. The majority of the square footage for these three properties is located in densely populated metropolitan communities with immediate access to mass transportation. 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, which we refer to herein as Metro Tower. As of December 31, 2022, our commercial portfolio also included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 0.2 million rentable square feet in the aggregate. On February 1, 2023, the two retail properties in Westport, Connecticut were sold. Note 3 Acquisitions and Dispositions. As of December 31, 2022, our standalone retail properties were 97.6 % leased. Additionally, as of December 31, 2022, our portfolio included three multifamily properties located in Manhattan totaling 721 units of which 96.3 % were leased. We have two entities that elected, together with ESRT, to be treated as taxable REIT subsidiaries, or TRSs, of ESRT. The TRSs, through several wholly owned limited liability companies, conduct third-party services businesses, which include the Empire State Building observatory, cleaning services, cafeteria, restaurant and health clubs, and asset and property management services. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements, have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the "SEC"), represent our assets and liabilities and operating results. The consolidated financial statements include our accounts and our partially owned and wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and F-9 whether we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. As of December 31, 2022, we have a variable interest in and are deemed to be the primary beneficiary of ESRT 298 Mulberry, L.L.C. which is the entity through which we acquired a multifamily asset located at 298 Mulberry Street in Manhattan in December 2022 (see Note 3 Acquisitions and Dispositions). We had no VIEs as of December 31, 2021. We will assess the accounting treatment for each investment we may have in the future. This assessment will include a review of each entity’s organizational agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit. In situations where we or our partner could approve, among other things, the annual budget, or leases that cover more than a nominal amount of space relative to the total rentable space at each property, we would not consolidate the investment as we consider these to be substantive participation rights that result in shared power of the activities that would most significantly impact the performance and benefit of such joint venture investment. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheets and in the consolidated statements of income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. Accounting Estimates The preparation of the consolidated financial statements in accordance with GAAP requires management to use estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Significant items subject to such estimates and assumptions include allocation of the purchase price of acquired real estate properties among tangible and intangible assets, determination of the useful life of real estate properties and other long-lived assets, valuation and impairment analysis of commercial real estate properties, goodwill, right-of-use assets and other long-lived assets, estimate of tenant expense reimbursements, valuation of the allowance for doubtful accounts, and valuation of derivative instruments, ground lease liabilities, senior unsecured notes, mortgage notes payable, unsecured revolving credit and term loan facilities, and equity based compensation. These estimates are prepared using management’s best judgment, after considering past, current, and expected events and economic conditions. Actual results could differ from those estimates. Revenue Recognition Rental Revenue Rental revenue includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease which includes the effects of rent steps and rent abatements under the leases. In general, we commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. We account for all of our leases as operating leases. Deferred rent receivables, including free rental periods and leasing arrangements allowing for increased base rent payments, are accounted for in a manner that provides an even amount of fixed lease revenues over the respective non-cancellable lease terms. Differences between rental income recognized and amounts due under the respective lease agreements are recognized as an increase or decrease to deferred rent receivables. In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in an index such as the Consumer Price Index over the index value in effect during a base year, or contain fixed percentage increases over the base rent to cover escalations. We recognize rental revenue of acquired in-place above- and below-market leases at their fair values over the terms of the respective leases, including, for below-market leases, fixed option renewal periods, if any. F-10 Lease termination fees are recognized when the fees are determinable, tenant vacancy has occurred, collectability is reasonably assured, we have no continuing obligation to provide services to such former tenants and the payment is not subject to any conditions that must be met or waived. Observatory Revenue Revenues from the sale of observatory tickets are recognized upon admission or ticket expirations. Deferred revenue related to unused and unexpired tickets as of December 31, 2022 and 2021 was $ 1.4 million and $ 0.9 million, respectively, and is included in deferred revenue and other liabilities on the consolidated balance sheets. Gains on Sale/Disposition of Real Estate We record a gain on sale of real estate pursuant to provisions under Accounting Standards Codification (ASC) 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. Under ASC 610-20, we must first determine whether the transaction is a sale to a customer or non-customer. We do not sell real estate within the ordinary course of our business and therefore, expect that sale transactions will not be contracts with customers. We will next determine whether we would have a controlling financial interest in the property after the sale. If we determine that we do not have a controlling financial interest in the real estate, we would evaluate whether a contract exists under ASC 606 Revenue from Contracts with Customers and whether the buyer has obtained control of the asset that was sold. We recognize the full gain on sale of real estate when the derecognition criteria under ASC 610-20 have been met. Third-Party Management and Other Fees We earn revenue arising from contractual agreements with related party entities for asset and property management services. This revenue is recognized as the related services are performed under the respective agreements in place. Other Revenues and Fees Other revenues and fees includes parking income, legal, tax and insurance settlements, demand response energy use earnings and sales from our restaurant at the Empire State Building. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred. The expense for the years ended December 31, 2022, 2021, and 2020 was $ 10.8 million, $ 7.9 million and $ 7.4 million, respectively, and is included within operating expenses in our consolidated statements of operations. Real Estate Properties and Related Intangible Assets Land and buildings and improvements are recorded at cost less accumulated depreciation and amortization. The recorded cost includes cost of acquisitions, development and construction and tenant allowances and improvements. Expenditures for ordinary repairs and maintenance are charged to property operating expense as incurred. Significant replacements and betterments which improve or extend the life of the asset are capitalized. Tenant improvements which improve or extend the life of the asset are capitalized. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any tenant improvements are written off if they are replaced or have no future value. For developed properties, direct and indirect costs that clearly relate to projects under development are capitalized. Costs include construction costs, professional services such as architectural and legal costs, capitalized interest and direct payroll costs. We begin capitalization when the project is probable. The assets relating to the project are stated at cost and are not depreciated. Once construction is completed and the assets are placed in service, the assets are reclassified to the appropriate asset class and depreciated in accordance with the useful lives as indicated below. Capitalization of interest ceases when the asset is ready for its intended use, which is generally near the date that a certificate of occupancy is obtained. There was no capitalized interest for the years ended December 31, 2022 and 2021. Depreciation and amortization are computed using the straight-line method for financial reporting purposes. Buildings and improvements are depreciated over the shorter of 39 years, the useful life, or the remaining term of any leasehold interest. Tenant improvement costs, which are included in building and improvements in the consolidated balance sheets, are depreciated over the shorter of (i) the related remaining lease term or (ii) the life of the improvement. Corporate and other equipment is depreciated over three to seven years . F-11 Acquisitions of properties are accounted for utilizing the acquisition method and accordingly the purchase cost is allocated to tangible and intangible assets and liabilities based on their fair values. The fair value of tangible assets acquired is determined by valuing the property as if it were vacant, applying methods similar to those used by independent appraisers of income-producing property. The resulting value is then allocated to land, buildings and improvements, and tenant improvements based on our determination of the fair value of these assets. The assumptions used in the allocation of fair values to assets acquired are based on our best estimates at the time of evaluation. Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the tenant based on the existing lease and (b) our estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts are amortized as a decrease to rental revenue over the remaining terms of the respective leases. Capitalized below-market lease amounts are amortized as an increase to rental revenue over the remaining terms of the respective leases. If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The aggregate value of other acquired intangible assets consists of acquired ground leases and acquired in-place leases and tenant relationships. The fair value allocated to acquired in-place leases consists of a variety of components including, but not necessarily limited to: (a) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute a lease, including leasing commissions, if any); (b) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period (i.e. real estate taxes, insurance and other operating expenses); (c) the value associated with lost rental revenue from existing leases during the assumed lease-up period; and (d) the value associated with any other inducements to secure a tenant lease. We assess the potential for impairment of our long-lived assets, including real estate properties, annually or whenever events occur or a change in circumstances indicate that the recorded value might not be fully recoverable. We determine whether impairment in value has occurred by comparing the estimated future undiscounted cash flows expected from the use and eventual disposition of the asset to its carrying value. If the undiscounted cash flows do not exceed the carrying value, the real estate is adjusted to fair value and an impairment loss is recognized. Assets held for sale are recorded at the lower of cost or fair value less costs to sell and depreciation expense is no longer recorded. During the fourth quarter 2021, we suspended debt service related to a $ 30 million mortgage secured by our property in Norwalk, Connecticut and we identified this action as an indicator of impairment. We concluded that the cost basis of the asset exceeded its fair value when considering our reduced holding period given our intent to transfer property ownership to the lender. As such, we incurred a $ 7.7 million impairment charge in the year ended December 31, 2021. Our methodology to calculate the fair value of the property involved a combination of the discounted cash flow method, utilizing Level 3 unobservable inputs such as market capitalization rates obtained from external sources, and the market- based approach utilizing recent sales comparables. During April 2022, we transferred 383 Main Avenue, Norwalk CT back to the lender in a consensual foreclosure. Refer to Note 3 Acquisitions and Dispositions. We do not believe that the value of any of our other properties and intangible assets were impaired during the years ended December 31, 2022, 2021 and 2020. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, government money markets, demand deposits with financial institutions and short-term liquid investments with original maturities of three months or less when purchased. Cash and cash equivalents held at major commercial banks may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash. Restricted Cash Restricted cash consists of amounts held for tenants in accordance with lease agreements such as security deposits and amounts held by lenders and/or escrow agents to provide for future real estate tax expenditures and insurance expenditures, tenant vacancy related costs and debt service obligations. Short-term Investments Short-term investments include time deposits with original maturities of greater than three months and remaining maturities of less than one year. Tenant and Other Receivables F-12 Tenant and other receivables, other than deferred rent receivable, are generally expected to be collected within one year. Deferred Leasing Costs Deferred leasing costs consist of fees incurred to initiate and renew leases, are amortized on a straight-line basis over the related lease term and the expense is included in depreciation and amortization in our consolidated statements of income. Upon the early termination of a lease, unamortized deferred leasing costs are charged to expense. Deferred Financing Costs Fees and costs incurred to obtain long-term financing have been deferred and are amortized as a component of interest expense in our consolidated statements of income over the life of the respective long-term financing on the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking debt, which do not close, are expensed in the period in which it is determined that the financing will not close. Equity Method Investments We account for investments under the equity method of accounting where we do not have control but have the ability to exercise significant influence. Under this method, investments are recorded at cost, and the investment accounts are adjusted for our share of the entities’ income or loss and for distributions and contributions. Equity income (loss) is allocated based on the portion of the ownership interest that is controlled by us. The agreements may designate different percentage allocations among investors for profits and losses; however, our recognition of the entity’s income or loss generally follows the entity’s distribution priorities, which may change upon the achievement of certain investment return thresholds. To the extent that we contributed assets to an entity, our investment in the entity is recorded at cost basis in the assets that were contributed to the entity. Upon contributing assets to an entity, we make a judgment as to whether the economic substance of the transaction is a sale. In accordance with the provisions of ASC 610-20, we will recognize a full gain on both the retained and sold portions of real estate contributed or sold to an entity by recognizing our new equity method investment interest at fair value. To the extent that the carrying amount of these investments on our combined balance sheets is different than the basis reflected at the entity level, the basis difference would be amortized over the life of the related asset and included in our share of equity in net income of the entity. On a periodic basis, we assess whether there are any indicators that the carrying value of our investments in entities may be impaired on an other than temporary basis. An investment is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment on an other than temporary basis. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the fair value of the investment. As of December 31, 2022 and 2021, we had no equity method investments. Goodwill Goodwill is tested annually for impairment and is tested for impairment 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. Non-amortizing intangible assets, such as trade names and trademarks, are subject to an annual impairment test based on fair value and amortizing intangible assets are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Fair Value Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable F-13 inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The methodologies used for valuing financial instruments have been categorized into three broad levels as follows: Level 1 - Quoted prices in active markets for identical instruments. Level 2 - Valuations based principally on other observable market parameters, including: • Quoted prices in active markets for similar instruments; • Quoted prices in less active or inactive markets for identical or similar instruments; • Other observable inputs (such as risk free interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates); and • Market corroborated inputs (derived principally from or corroborated by observable market data). Level 3 - Valuations based significantly on unobservable inputs, including: • Valuations based on third-party indications (broker quotes or counterparty quotes) which were, in turn, based significantly on unobservable inputs or were otherwise not supportable; and • Valuations based on internal models with significant unobservable inputs. These levels form a hierarchy. We follow this hierarchy for our financial instruments measured or disclosed at fair value on a recurring and nonrecurring basis and other required fair value disclosures. The classifications are based on the lowest level of input that is significant to the fair value measurement. We use the following methods and assumptions in estimating fair value disclosures for financial instruments. Cash and cash equivalents, restricted cash, short term investments, tenant and other receivables, prepaid expenses and other assets, deferred revenue, tenant security deposits, accounts payable and accrued expenses carrying values approximate their fair values due to the short term maturity of these instruments. The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy. The fair value of our mortgage notes payable, senior unsecured notes - Series A, B, C, D, E, F, G and H, and unsecured term loan facilities 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 to us. Derivative Instruments We are exposed to the effect of interest rate changes and manage these risks by following policies and procedures including the use of derivatives. To manage exposure to interest rates, derivatives are used primarily to fix the rate on debt based on floating-rate indices. We record all derivatives on the balance sheet at fair value. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. We measure the credit risk of our derivative instruments that are subject to master netting agreements on a net basis by counterparty portfolio. For derivatives that qualify as cash flow hedges, we report the gain or loss on the derivative designated as a hedge as part of other comprehensive income (loss) and subsequently reclassify the gain or loss into income in the period that the hedged transaction affects income. Income Taxes We are generally not subject to federal and state income taxes as our taxable income or loss is reportable by our partners. Accordingly, no provision has been made for federal and state income taxes. ESRT has elected, together with ESRT F-14 Observatory TRS, L.L.C., our subsidiary that holds our observatory operations, to treat ESRT Observatory TRS, L.L.C. as a TRS. ESRT has elected, together with ESRT Holdings TRS, L.L.C., our subsidiary that holds our third party management, restaurant, cafeteria, health clubs and certain cleaning operations, to treat ESRT Holdings TRS, L.L.C. as a TRS. TRSs may participate in non-real estate activities and/or perform non-customary services for tenants and their operations are generally subject to regular corporate income taxes. Our TRSs account for their income taxes in accordance with GAAP, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. The calculation of the TRSs' tax provisions may require interpreting tax laws and regulations and could result in the use of judgments or estimates which could cause its recorded tax liability to differ from the actual amount due. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The TRSs periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, or federal statutory tax audits or estimates and judgments used. We apply provisions for measuring and recognizing tax benefits associated with uncertain income tax positions. Penalties and interest, if incurred, would be recorded as a component of income tax expense. As of December 31, 2022 and 2021, we do not have a liability for uncertain tax positions. As of December 31, 2022, the tax years ended December 31, 2019 through December 31, 2022 remain open for an audit by the Internal Revenue Service, state or local authorities. Share-Based Compensation 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. An employee is retirement eligible when the employee attains the (i) age of 65 for awards granted in 2020 and after and age of 60 for awards granted before 2020 and (ii) the date on which the employee has first completed ten years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards and performance-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 three or four years . Additionally, for the performance-based equity awards, we assess, at each reporting period, whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment. Any forfeitures of share-based compensation awards are recognized as they occur. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of ESRT stock, expected dividend yield, expected term, and assumptions of whether these awards will achieve parity with other operating partnership units or achieve performance thresholds. We believe that the assumptions and estimates utilized are appropriate based on the information available to management at the time of grant. Per Unit Data Basic and diluted earnings per unit are computed based upon the weighted average number of shares outstanding during the respective period. Segment Reporting We have identified two reportable segments: (1) Real Estate and (2) Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rent as if the sales or rent were to third parties, that is, at current market prices. Recently Issued or Adopted Accounting Standards During March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged F-15 transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) Deferral of the Sunset Date of Topic 848 which defers the sunset date of ASU 2022-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform to December 31, 2024. ASU 2022-06 is effective immediately for all companies. ASU 2022-06 did not have an impact on our consolidated financial statements for the year ended December 31, 2022. 3. Acquisitions and Dispositions Acquisitions On December 20, 2022, we closed on the acquisition of a 100 % free-market, full service multifamily asset located at 298 Mulberry Street in Manhattan for a purchase price of $ 114.9 million. 298 Mulberry Street is located at the intersection of East Houston Street and Mulberry Street, walking distance to New York University’s campus in the NoHo neighborhood of Manhattan. In addition to the 96 residential units, the property also contains retail space leased to CVS and a garage. The purchase price is the fair value at the date of acquisition. On December 22, 2021, we acquired 90 % of two multifamily assets located in Manhattan, the Victory (561 10th Avenue) and 345 East 94th Street, previously owned by a joint venture of Fetner Properties and an institutional owner. The total transaction value was $ 307.0 million, inclusive of $ 134.0 million of debt on the Victory, that matures in 2033 and has an effective interest rate of 3.85 %, and $ 52.0 million of debt on 345 East 94th Street, that matures in 2030 and has an effective interest rate of 3.56 %. Fetner Properties retained a 10 % equity stake and continues to manage onsite operations. We will asset manage the properties and have control over all decision making through our voting interests in each entity. Additionally, we have the right to assume day-to-day management for no additional consideration. The fair value of the non-controlling interest retained by Fetner Properties was equivalent to 10 %, the equity stake they retained, of the gross purchase price less their pro-rata share of the debt assumed. The purchase price of the non-controlling interest is its fair value at the date of acquisition. Assets and liabilities acquired are as follows (amounts in thousands): Intangibles Date Acquired Land Building and Improvements Assets Liabilities Total* 298 Mulberry Street 12/20/2022 $ 40,935 $ 69,508 $ 5,300 $ ( 150 ) $ 115,593 The Victory 12/22/2021 91,437 124,997 13,573 ( 19,895 ) 210,112 345 East 94th St. 12/22/2021 44,228 55,766 4,824 ( 5,491 ) 99,327 *Includes total capitalized transaction costs of $ 3.1 million. Dispositions During April 2022, we transferred 383 Main Avenue, Norwalk CT, which was encumbered by a $ 30.0 million mortgage, back to the lender in a consensual foreclosure and recognized a non-cash gain of $ 27.2 million, which is included in Gain on sale/disposition of properties in our condensed consolidated statement of operations. Prior to the consummation of this transaction, 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. On December 7, 2022, we closed on the sale of 10 Bank Street in White Plains, NY, which was encumbered by a $ 30.0 million mortgage, at a gross asset valuation of $ 42.0 million and recorded a gain of $ 6.8 million, which is included in Gain on sale/disposition of properties in our consolidated statement of operations. In December 2022, we also entered into a purchase and sale agreement for 500 Mamaroneck Avenue in Harrison, NY at a gross asset valuation of $ 53.0 million. This transaction is expected to close in the first quarter of 2023, subject to customary closing conditions. The assets and related liabilities of the 500 Mamaroneck property are classified as held for sale in our consolidated balance sheet as of December 31, 2022 having met the held for sale criteria set forth in ASC 360 Property, Plant, and Equipment. F-16 Subsequent to the year ended December 31, 2022, on February 1, 2023 we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $ 40.0 million. The Westport sale was a related party transaction approved in accordance with the Company's protocols. See Note 11 Related Party Transactions . 4. Deferred Costs, Acquired Lease Intangibles and Goodwill Deferred costs, net, consisted of the following at December 31, 2022 and 2021 (amounts in thousands): 2022 2021 Leasing costs $ 218,707 $ 211,189 Acquired in-place lease value and deferred leasing costs 160,683 166,491 Acquired above-market leases 27,833 33,289 407,223 410,969 Less: accumulated amortization ( 223,246 ) ( 215,764 ) Total deferred costs, net, excluding net deferred financing costs $ 183,977 $ 195,205 At December 31, 2022 and 2021, $ 5.0 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 consolidated balance sheets. Amortization expense related to deferred leasing and acquired deferred leasing costs was $ 25.4 million, $ 28.6 million, and $ 24.8 million, for the years ended December 31, 2022, 2021, and 2020, respectively. Amortization expense related to acquired lease intangibles was $ 11.8 million, $ 10.5 million and $ 7.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Amortizing acquired intangible assets and liabilities consisted of the following at December 31, 2022 and 2021 (amounts in thousands): 2022 2021 Acquired below-market ground leases $ 396,916 $ 396,916 Less: accumulated amortization ( 67,843 ) ( 60,012 ) Acquired below-market ground leases, net $ 329,073 $ 336,904 2022 2021 Acquired below-market leases $ ( 64,656 ) $ ( 65,403 ) Less: accumulated amortization 46,807 40,462 Acquired below-market leases, net $ ( 17,849 ) $ ( 24,941 ) Rental revenue related to the amortization of below market leases, net of above market leases was $ 4.8 million, $ 5.9 million and $ 3.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. The remaining weighted-average amortization period as of December 31, 2022 is 22.6 years, 3.5 years, 3.7 years and 3.1 years for below-market ground leases, in-place leases and deferred leasing costs, above-market leases and below-market leases, respectively. We expect to recognize amortization expense and rental revenue from the acquired intangible assets and liabilities as follows (amounts in thousands): For the year ending: Future Ground Rent Amortization Future Amortization Expense Future Rental Revenue 2023 $ 7,831 $ 10,495 $ 2,450 2024 7,831 7,140 1,913 2025 7,831 6,292 1,891 2026 7,831 5,406 1,093 2027 7,831 4,742 859 Thereafter 289,918 7,824 528 $ 329,073 $ 41,899 $ 8,734 As of December 31, 2022, we had goodwill of $ 491.5 million. In 2013, we acquired the interests in Empire State Building Company, L.L.C. and 501 Seventh Avenue Associates, L.L.C. for an amount in excess of their net tangible and F-17 identified intangible assets and liabilities and as a result we recorded goodwill related to the transaction. Goodwill was allocated $ 227.5 million to the observatory operations of the Empire State Building, $ 250.8 million to Empire State Building, and $ 13.2 million to 501 Seventh Avenue. From the quarter ended June 30, 2020 and for each subsequent quarter through our annual goodwill testing in October 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. Each quantitative analysis performed concluded the fair value of the standalone observatory reporting unit exceeds its carrying value. 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. F-18 5. Debt Debt consisted of the following as of December 31, 2022 and 2021 (amounts in thousands): As of December 31, 2022 Principal Balance as of December 31, 2022 Principal Balance as of December 31, 2021 Stated Rate Effective Rate (1) Maturity Date (2) Fixed rate mortgage debt Metro Center $ 82,596 $ 85,032 3.59 % 3.67 % 11/5/2024 10 Union Square 50,000 50,000 3.70 % 3.97 % 4/1/2026 1542 Third Avenue 30,000 30,000 4.29 % 4.53 % 5/1/2027 First Stamford Place (3) 178,823 180,000 4.28 % 4.73 % 7/1/2027 1010 Third Avenue and 77 West 55th Street 35,831 36,670 4.01 % 4.21 % 1/5/2028 250 West 57th Street 180,000 180,000 2.83 % 3.21 % 12/1/2030 10 Bank Street (4) — 31,091 — % — % — 383 Main Avenue (5) — 30,000 — % — % — 1333 Broadway 160,000 160,000 4.21 % 4.29 % 2/5/2033 345 East 94th Street - Series A 43,600 43,600 70.0 % of LIBOR plus 0.95 % 3.56 % 11/1/2030 345 East 94th Street - Series B 7,865 8,650 LIBOR plus 2.24 % 3.56 % 11/1/2030 561 10th Avenue - Series A 114,500 114,500 70.0 % of LIBOR plus 1.07 % 3.85 % 11/1/2033 561 10th Avenue - Series B 17,415 19,250 LIBOR plus 2.45 % 3.85 % 11/1/2033 Total fixed rate mortgage debt 900,630 968,793 Senior unsecured notes: (6) Series A 100,000 100,000 3.93 % 3.96 % 3/27/2025 Series B 125,000 125,000 4.09 % 4.12 % 3/27/2027 Series C 125,000 125,000 4.18 % 4.21 % 3/27/2030 Series D 115,000 115,000 4.08 % 4.11 % 1/22/2028 Series E 160,000 160,000 4.26 % 4.27 % 3/22/2030 Series F 175,000 175,000 4.44 % 4.45 % 3/22/2033 Series G 100,000 100,000 3.61 % 4.89 % 3/17/2032 Series H 75,000 75,000 3.73 % 5.00 % 3/17/2035 Unsecured revolving credit facility (6)(7) — — SOFR plus 1.30 % — % 3/31/2025 Unsecured term loan facility (6)(7) 215,000 215,000 SOFR plus 1.20 % 4.22 % 3/19/2025 Unsecured term loan facility (6)(7) 175,000 175,000 SOFR plus 1.50 % 4.51 % 12/31/2026 Total principal 2,265,630 2,333,793 Deferred financing costs, net ( 11,748 ) ( 14,881 ) Unamortized debt discount ( 7,745 ) ( 8,547 ) Total $ 2,246,137 $ 2,310,365 _____________ (1) The effective rate is the yield as of December 31, 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. (3) Represents a $ 164 million mortgage loan bearing interest of 4.09 % and a $ 14.8 million loan bearing interest at 6.25 %. (4) 10 Bank Street was sold in December 2022. (5) Ownership of 383 Main Avenue, Norwalk CT was transferred to the lender during April 2022. (6) At December 31, 2022, we were in compliance with all debt covenants. (7) 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. F-19 Principal Payments Aggregate required principal payments at December 31, 2022 are as follows (amounts in thousands): Year Amortization Maturities Total 2023 $ 8,632 $ — $ 8,632 2024 8,861 77,675 86,536 2025 6,893 315,000 321,893 2026 7,330 225,000 232,330 2027 6,461 319,000 325,461 Thereafter 22,079 1,268,699 1,290,778 Total principal maturities $ 60,256 $ 2,205,374 $ 2,265,630 Deferred Financing Costs Deferred financing costs, net, consisted of the following at December 31, 2022 and 2021 (amounts in thousands): 2022 2021 Financing costs $ 43,473 $ 44,637 Less: accumulated amortization ( 26,753 ) ( 22,525 ) Total deferred financing costs, net $ 16,720 $ 22,112 Amortization expense related to deferred financing costs was $ 4.9 million, $ 4.5 million, and $ 4.1 million, for the years ended December 31, 2022, 2021 and 2020, respectively, and was included in interest expense. Mortgage Debt Mortgage debt of $ 30.0 million on our 383 Main Avenue property in Norwalk, Connecticut was in default as of December 31, 2021. We had suspended debt service as of November 1, 2021 and we identified this action as an indicator of impairment. We concluded that the cost basis of the asset exceeded its fair value when considering our reduced holding period given our intent to transfer property ownership to the lender. We believe this action was in the best interest of our shareholders given the challenging fundamentals of the Norwalk, CT submarket. During the quarter ended December 31, 2021, we had incurred an $ 7.7 million impairment charge on the same property. Refer to Note 2 Summary of Significant Accounting Policies. During April 2022, we transferred 383 Main Avenue, Norwalk CT back to the lender in a consensual foreclosure. Refer to Note 3 Acquisitions and Dispositions. Except as noted above, we were not in default on any of our loan agreements as of December 31, 2021.We were not in default on any of our loan agreements as of December 31, 2022. Unsecured Revolving Credit and Term Loan Facilities 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 a $ 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. The third amendment revised the terms of the BofA Credit Facility to (i) replace LIBOR with SOFR given the phase out of LIBOR and (ii) permit the addition of multifamily assets as Unencumbered Eligible Property (as defined therein) and add a capitalization rate for such assets. As of December 31, 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 million and matures on December 31, 2026. The second amendment revised the terms of the Wells Term Loan Facility to (i) replace LIBOR with SOFR given the phase out of LIBOR and (ii) permit the addition of multifamily assets as Unencumbered Eligible Property (as defined therein) and add a capitalization rate for such assets. 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 December 31, 2022, our borrowings amounted to $ 175.0 million under the Wells Term Loan Facility. F-20 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. It also requires 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 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 December 31, 2022, we were in compliance with these covenants. Senior Unsecured Notes The terms of the senior unsecured notes include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires 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 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 December 31, 2022, we were in compliance with these covenants. 6. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following as of December 31, 2022 and 2021 (amounts in thousands): 2022 2021 Accrued capital expenditures $ 44,293 $ 49,247 Accounts payable and accrued expenses 32,927 41,664 Interest rate swap agreements liability — 25,308 Accrued interest payable 3,509 3,460 Due to affiliated companies — 1,131 Total accounts payable and accrued expenses $ 80,729 $ 120,810 7. Financial Instruments and Fair Values Derivative Financial Instruments We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations. 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 December 31, 2022, we did not have any derivatives in a net liability position. 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. F-21 As of December 31, 2022 and 2021, we had interest rate LIBOR swaps and caps with an aggregate notional value of $ 574.8 million and $ 451.3 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of December 31, 2022 and 2021, the fair value of our derivative instruments amounted to $ 17.9 million, which is included in prepaid expenses and other assets and ($ 25.3 million), which is included in accounts payable and accrued expenses on the consolidated balance sheets. 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 December 31, 2022 and 2021, our cash flow hedges are deemed highly effective and for the years ended December 31, 2022 and 2021, net unrealized gains of $ 47.3 million and $ 12.0 million, respectively, are reflected in the consolidated statements of comprehensive income (loss) relating to both active and terminated cash flow hedges of interest rate risk. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $ 6.3 million net gain 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 agreement and the fair value of our derivative financial instruments as of December 31, 2022 and 2021 (dollar amounts in thousands): December 31, 2022 December 31, 2021 Derivative Notional Amount Receive Rate Pay Rate Effective Date Expiration Date Asset Liability Asset Liability Interest rate swap $ 265,000 1 Month LIBOR 2.1485 % August 31, 2017 August 24, 2022 $ — $ — $ — $ ( 3,184 ) Interest rate swap 36,820 70 % of 1 Month LIBOR 2.5000 % December 1, 2021 November 1, 2030 256 — — ( 4,527 ) Interest rate swap 103,790 70 %of 1 Month LIBOR 2.5000 % December 1, 2021 November 1, 2033 365 — — ( 15,945 ) Interest rate swap 10,710 70 % of 1 Month LIBOR 1.7570 % December 1, 2021 November 1, 2033 643 — — ( 754 ) Interest rate swap 17,544 1 Month LIBOR 2.2540 % December 1, 2021 November 1, 2030 1,070 — — ( 898 ) Interest rate cap 6,780 70 % of 1 Month LIBOR 4.5000 % December 1, 2021 October 1, 2024 8 — 5 — Interest rate cap 9,188 1 Month LIBOR 5.5000 % December 1, 2021 October 1, 2024 26 — 8 — Interest rate swap 175,000 SOFR Compound 2.5620 % August 31, 2022 December 31, 2026 8,040 — — — Interest rate swap 107,500 SOFR Compound 2.6260 % August 19, 2022 March 19, 2025 3,766 — — — Interest rate swap 107,500 SOFR OIS Compound 2.6280 % August 19, 2022 March 19, 2025 3,762 — — — $ 17,936 $ — $ 13 $ ( 25,308 ) During the year ended December 31, 2020, we terminated a $ 125.0 million swap and paid a settlement fee of $ 20.3 million. The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands): Effects of Cash Flow Hedges December 31, 2022 December 31, 2021 December 31, 2020 Amount of gain (loss) recognized in other comprehensive income (loss) $ 40,044 $ 348 $ ( 19,322 ) Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense ( 7,230 ) ( 11,653 ) ( 8,870 ) The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands): F-22 Effects of Cash Flow Hedges December 31, 2022 December 31, 2021 December 31, 2020 Total interest expense presented on the consolidated statements of income in which the effects of cash flow hedges are recorded $ ( 101,206 ) $ ( 94,394 ) $ ( 89,907 ) Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense ( 7,230 ) ( 11,653 ) ( 8,870 ) Fair Valuation The estimated fair values at December 31, 2022 and 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. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following tables summarize the carrying and estimated fair values of our financial instruments as of December 31, 2022 and 2021 (amounts in thousands): December 31, 2022 Carrying Value Estimated Fair Value Total Level 1 Level 2 Level 3 Interest rate swaps included in prepaid expenses and other assets 17,936 17,936 — 17,936 — Mortgage notes payable 883,705 783,648 — — 783,648 Senior unsecured notes - Series A, B, C, D, E, F, G and H 973,659 865,292 — — 865,292 Unsecured term loan facilities 388,773 390,000 — — 390,000 December 31, 2021 Carrying Value Estimated Fair Value Total Level 1 Level 2 Level 3 Interest rate swaps included in accounts payable and accrued expenses 25,308 25,308 — 25,308 — Mortgage notes payable 948,769 960,933 — — 960,933 Senior unsecured notes - Series A, B, C, D, E and F 973,373 994,389 — — 994,389 Unsecured term loan facility 388,223 390,000 — — 390,000 Disclosure about the fair value of financial instruments is based on pertinent information available to us as of December 31, 2022 and 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. 8. Leases Lessor We lease various spaces to tenants over terms ranging from one to 21 years. Certain leases have renewal options for additional terms. 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 December 31, 2022, 2021 and 2020 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 years ended December 31, 2022, 2021 and 2020 are as follows (amounts in thousands): F-23 Year Ended December 31, 2022 2021 2020 Fixed payments $ 531,740 $ 500,847 $ 496,515 Variable payments 59,308 58,843 66,556 Total rental revenue $ 591,048 $ 559,690 $ 563,071 As of December 31, 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 2040 (amounts in thousands): 2023 $ 490,849 2024 492,438 2025 464,150 2026 424,881 2027 405,017 Thereafter 1,749,941 $ 4,027,276 The above future minimum lease payments exclude tenant recoveries and the net accretion of above-below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised. Lessee 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 $ 28.7 million and lease liabilities of $ 28.7 million in our consolidated balance sheets as of December 31, 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. Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. We make payments under ground leases related to three of our properties. The ground leases are due to expire between the years 2050 and 2077, inclusive of extension options, and have no variable payments or residual value guarantees. As our leases do not provide an implicit rate, we determined our incremental borrowing rate based on information available at the date of adoption of ASU No. 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 December 31, 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 December 31, 2022 was 47.4 years. As of December 31, 2022, the following table summarizes our future minimum lease payments with the amounts discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands): 2023 $ 1,518 2024 1,518 2025 1,518 2026 1,503 2027 1,482 Thereafter 62,277 Total undiscounted lease payments 69,816 Present value discount ( 41,146 ) Ground lease liabilities $ 28,670 F-24 9. Commitments and Contingencies Legal Proceedings Litigation Except as described below, as of December 31, 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 consolidated financial position, operating results or liquidity. As previously disclosed, in October 2014, 12 former investors (the "Claimants") in Empire State Building Associates L.L.C. (“ESBA”), which prior to the initial public offering of our company (the "Offering"), owned the fee title to the Empire State Building, filed an arbitration with the American Arbitration Association against Peter L. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our subsidiary ESRT MH Holdings LLC, the former supervisor of ESBA, (the "Respondents"). The statement of claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleges breach of fiduciary duty and related claims in connection with the Offering and formation transactions and seeks monetary damages and declaratory relief. Claimants had opted out of a prior class action bringing similar claims that was settled with court approval. Respondents filed an answer and counterclaims. In March 2015, the federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings started in May 2016 and concluded in August 2018. On August 26, 2020, the arbitration panel issued an award that denied all Claimants’ claims with one exception, on which it awarded Claimants approximately $ 1.2 million, inclusive of seven years of interest through October 2, 2020. This amount was recorded as an IPO litigation expense in the consolidated statement of operations for the year ended December 31, 2020. Respondents believe that such award in favor of the Claimants is entirely without merit and sought to vacate that portion of the award. On September 27, 2021, the court denied Respondents' motion to vacate and entered judgement in the aforementioned amount, inclusive of accumulated interest. Respondents have appealed that ruling. On May 10, 2022, Respondents moved to dismiss the appeal and judgment on the grounds that a recent decision of the United States Supreme Court held that the federal courts have no subject matter jurisdiction over the case. Claimants opposed the motion, which is pending. The appeals court has scheduled argument on the appeal and motion for April 10, 2023. In addition, certain of the Claimants in the federal court action sought to pursue claims in that case against Respondents. Respondents believe that any such claims are meritless. The magistrate judge assigned to the action has issued a Report and Recommendation rejecting Claimants’ claims; the district judge will decide whether to adopt the Report and Recommendation. Pursuant to indemnification agreements which were made with our directors, executive officers and chairman emeritus as part of our formation transactions, Anthony E. Malkin, Peter L. Malkin and Thomas N. Keltner, Jr. have defense and indemnity rights from us with respect to this arbitration. Unfunded Capital Expenditures At December 31, 2022, we estimate that we will incur approximately $ 118.3 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. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion. Concentration of Credit Risk 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 December 31, 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 . Real Estate Investments Our properties are located in Manhattan, New York; Fairfield County, Connecticut; and Westchester County, New York. The latter locations are suburbs of the city of New York. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory and social factors affecting the markets in which the tenants operate. We perform ongoing credit evaluations of our tenants for potential credit losses. Tenant Credit Evaluations F-25 Our investments in real estate properties are subject to risks incidental to the ownership and operation of commercial real estate. These risks include, among others, the risks normally associated with changes in general economic conditions, trends in the real estate industry, creditworthiness of tenants, competition of tenants and customers, changes in tax laws, interest rate levels, the availability and cost of financing, and potential liability under environmental and other laws. We may require tenants to provide some form of credit support such as corporate guarantees and/or other financial guarantees and we perform ongoing credit evaluations of tenants. Although the tenants operate in a variety of industries, to the extent we have a significant concentration of rental revenue from any single tenant, the inability of that tenant to make its lease payments could have an adverse effect on our company. Major Customers and Other Concentrations For the year ended December 31, 2022, other than two tenants who accounted for 6.4 % and 2.0 % of rental revenues, no other tenant in our portfolio accounted for more than 2.0% of rental revenues. For the year ended December 31, 2021, other than four tenants who accounted for 4.6 %, 3.3 %, 2.8 % and 2.1 % of rental revenues, no other tenant in our commercial portfolio accounted for more than 2.0% of rental revenues. For the year ended December 31, 2020, other than two tenants who accounted for 6.9 % and 3.5 % of rental revenues, no other tenant in our portfolio accounted for more than 2.0% of rental revenues. For the years ended December 31, 2022, 2021 and 2020, the six properties listed below accounted for the highest respective percentages of total rental revenues. Year Ended December 31, 2022 2021 2020 Empire State Building 29.9 % 31.7 % 32.8 % One Grand Central Place 12.4 % 12.6 % 12.4 % 111 West 33rd Street 11.2 % 11.3 % 10.5 % 1400 Broadway 8.3 % 8.9 % 8.0 % 250 West 57th Street 6.0 % 5.8 % 5.7 % First Stamford Place 4.7 % 5.2 % 5.4 % Asset Retirement Obligations We are required to accrue costs that we are legally obligated to incur on retirement of our properties which result from acquisition, construction, development and/or normal operation of such properties. Retirement includes sale, abandonment or disposal of a property. Under that standard, a conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control and a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties. As of December 31, 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. However ongoing asbestos abatement, maintenance programs and other required documentation are carried out as required and related costs are expensed as incurred. Other Environmental Matters 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 December 31, 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. We expect that resolution of the environmental matters relating to the above will not have a material impact on our business, assets, consolidated and combined financial condition, results of operations or liquidity. However, we cannot be certain that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that such environmental liabilities arise. Insurance Coverage F-26 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. Multiemployer Pension and Defined Contribution Plans We contribute to a number of multiemployer defined benefit pension plans under the terms of collective bargaining agreements that cover our union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following respects: • Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. We participate in various unions. The union in which we have significant employees and costs is 32BJ. 32BJ We participate in the Building Service 32BJ ("Union") Pension Plan and Health Plan. The Pension Plan is a multi-employer, non-contributory defined benefit pension plan that was established under the terms of collective bargaining agreements between the Service Employees International Union, Local 32BJ, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. This Pension Plan is administered by a joint board of trustees consisting of union trustees and employer trustees and operates under employer identification number 13-1879376. The Pension Plan year runs from July 1 to June 30. Employers contribute to the Pension Plan at a fixed rate on behalf of each covered employee. Separate actuarial information regarding such pension plans is not made available to the contributing employers by the union administrators or trustees, since the plans do not maintain separate records for each reporting unit. On September 28, 2020 and September 28, 2021, the actuary certified that for the plan years beginning July 1, 2020 and July 1, 2021, respectively, the Pension Plan was in critical status under the Pension Protection Act of 2006. The Pension Plan trustees adopted a rehabilitation plan consistent with this requirement. However, on September 28, 2022, the actuary certified that for the plan year beginning July 1, 2022, the Pension Plan was in endangered status under the Pension Protection Act of 2006. The Pension Plan trustees adopted a funding improvement plan consistent with this requirement. For the plan years ended June 30, 2020 and June 30, 2021, the Pension Plan received contributions from employers totaling $ 291.3 million and $ 290.1 million, respectively. The Form 5500 is not yet available for the plan year June 30, 2022. The Health Plan was established under the terms of collective bargaining agreements between the Union, the Realty Advisory Board on Labor Relations, Inc. and certain other employers. The Health Plan provides health and other benefits to eligible participants employed in the building service industry who are covered under collective bargaining agreements, or other written agreements, with the Union. The Health Plan is administered by a Board of Trustees with equal representation by the employers and the Union and operates under employer identification number 13-2928869. The Health Plan receives contributions in accordance with collective bargaining agreements or participation agreements. Generally, these agreements provide that the employers contribute to the Health Plan at a fixed rate on behalf of each covered employee. For the plan years ended June 30, 2020, and June 30, 2021, the Health Plan received contributions from employers totaling $ 1.6 billion and $ 1.5 billion, respectively. The Form 5500 is not yet available for the plan year June 30, 2022. Term of Collective Bargaining Agreements Our collective bargaining agreement for local 32BJ commenced from January 1, 2020 and runs through December 31, 2023. We are also a signatory to a second collective bargaining agreement for local 32BJ with a term from April 21, 2022 to April 20, 2026 for our residential properties. Contributions Contributions we made to the multi-employer plans for the years ended December 31, 2022, 2021 and 2020 are included in the table below (amounts in thousands): F-27 For the Year Ended December 31, Benefit Plan 2022 2021 2020 Pension Plans (pension and annuity)* $ 2,958 $ 2,165 $ 2,383 Health Plans** 8,618 6,214 6,873 Other*** 460 305 416 Total plan contributions $ 12,036 $ 8,684 $ 9,672 * Pension plans include $ 0.8 million, $ 0.7 million and $ 0.8 million for the years ended 2022, 2021 and 2020, respectively, to multiemployer plans not discussed above. ** Health plans include $ 1.5 million, $ 1.4 million and $ 1.4 million for the years ended 2022, 2021 and 2020, respectively, to multiemployer plans not discussed above. *** Other consists of union costs which were not itemized between pension and health plans. Other includes $ 0.2 million, $ 0.2 million and $ 0.3 million for the years ended 2022, 2021 and 2020, respectively, in connection with other multiemployer plans not discussed above. The increase in plan contributions in 2022 is mainly due to higher payroll levels as a result of recovery from the COVID-19 pandemic. Benefit plan contributions are included in operating expenses in our consolidated statements of operations. 10. Capital Shares and Units As of December 31, 2022, there were approximately 271.0 million operating partnership units outstanding, of which approximately 161.1 million, or 59.5 %, were owned by ESRT and approximately 109.9 million, or 40.5 %, 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. Empire State Realty OP, L.P. 2019 Equity Incentive Plan (“2019 Plan”) was approved by our shareholders. The 2019 Plan provides for grants to directors, employees and consultants of our company and operating partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards. An aggregate of approximately 11.0 million shares of our common stock are authorized for issuance under awards granted pursuant to the 2019 Plan. We will not issue any new equity awards under the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, "the Plans"). The shares of ESRT Class A common stock underlying any awards under the 2019 Plan and the 2013 Plan that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. Shares tendered or held back upon exercise of a stock option or settlement of an award under the 2019 Plan or the 2013 Plan to cover the exercise price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. In addition, shares of ESRT Class A common stock repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Plans, reducing the availability for other equity awards on a one -for-one basis. The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified events, and any increase in valuation from the time of grant until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into operating partnership units on a one -for-one basis. LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as OP Units, which equal per share dividends (both regular and special) on our common stock. LTIP units subject to market-based vesting receive 10 % of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90 % and will commence receiving 100 % of such distributions thereafter. F-28 Stock and Publicly Traded Operating Partnership Unit Repurchase Program ESRT's Board of Directors authorized the repurchase of up to $ 500 million of ESRT Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units from January 1, 2022 through December 31, 2023. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. 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 our purchases of equity securities for the year ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value Available for Future Purchase (in thousands) Year ended December 31, 2022 11,571,133 $ 7.79 11,571,133 $ 409,824 Private Perpetual Preferred Units As of December 31, 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"). 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. The Series 2019 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. The Series 2014 Preferred Units which have a liquidation preference of $ 16.62 per unit and are entitled to receive cumulative preferential annual cash distributions of $ 0.60 per unit payable in arrears on a quarterly basis. The Series 2014 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. Distributions The following table summarizes the distributions paid on our operating partnership units for the years ended December 31, 2022, 2021 and 2020: Record Date Payment Date Amount per Operating Partnership Unit December 19, 2022 December 31, 2022 $ 0.035 September 15, 2022 September 30, 2022 $ 0.035 June 15, 2022 June 30, 2022 $ 0.035 March 15, 2022 March 31, 2022 $ 0.035 December 20, 2021 December 31, 2021 $ 0.035 September 15, 2021 September 30, 2021 $ 0.035 June 15, 2021 June 30, 2021 $ 0.035 June 19, 2020 June 30, 2020 $ 0.105 March 16, 2020 March 31, 2020 $ 0.105 Total distributions paid to OP unitholders and Preferred unitholders during 2022, 2021 and 2020 totaled $ 42.8 million, $ 32.8 million and $ 65.0 million, 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 are authorized for issuance under awards granted pursuant to the F-29 2019 Plan, and as of December 31, 2022, approximately 6.3 million shares of ESRT common stock remain available for future issuance under the Plans. In March 2022, we made grants of LTIP units to executive officers under the 2019 Plan, including a total of 412,689 LTIP units that are subject to time-based vesting, 694,383 LTIP units that are subject to market-based vesting and 515,369 units that are subject to performance-based vesting with fair market values of $ 3.2 million, $ 3.9 million and $ 3.1 million, respectively. In March 2022, we made grants of LTIP units and restricted stock to certain other employees under the 2019 Plan, including a total of 240,156 LTIP units and 210,212 shares of restricted stock that are subject to time-based vesting, 85,772 LTIP units that are subject to market-based vesting and 63,574 LTIP units that are subject to performance-based vesting, with fair market values of $ 2.1 million and $ 2.0 million, respectively, for the time-based vesting awards, $ 0.6 million for the market-based vesting awards and $ 0.5 million for the performance-based vesting awards. The awards subject to time-based vesting vest ratably over four years, subject generally to the grantee's continued employment, with the first installment vesting on January 1, 2023. The vesting of the LTIP units subject to market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2022. The vesting of the LTIP units subject to performance-based vesting is based on the achievement of (i) operational metrics over a one-year performance period, subject to a three-year absolute TSR modifier, and (ii) environmental, social and governance ("ESG") metrics over a three-year performance period, in each case, commencing on January 1, 2022. Following the completion of the respective performance periods, our Compensation and Human Capital Committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered in connection with the award grant. These units then vest in two equal installments, on January 1, 2025 and January 1, 2026, subject generally to the grantee's continued employment on those dates. In March 2022, we also made one-time additional grants of LTIP units and restricted stock to an executive officer and certain other employees under the 2019 Plan. At such time, we granted the executive officer 112,612 LTIP units that are subject to time-based vesting and we granted to certain other employees a total of 84,475 LTIP units and 18,380 shares of restricted stock that are subject to time-based vesting, with a fair market value of $ 1.7 million and $ 0.2 million, respectively. These awards are subject to time-based vesting and vest over five years , subject generally to the grantee's continued employment. The first installment vests 30 % on January 1, 2025, the second installment vests 30 % on January 1, 2026 and the remainder of 40 % will vest on January 1, 2027. In 2022 and prior years, our named executive officers could elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIPs at the face amount of such bonus or (ii) time-vesting LTIPs which would vest over three years , subject to continued employment, at a premium over such face amount ( 120 % for awards granted in 2021 and 2022; 125 % for years prior to 2021). In March 2022, we made grants of LTIP units to executive officers under the 2019 Plan in connection with the 2021 bonus election program. We granted to executive officers a total of 470,860 LTIP units that are subject to time-based vesting with a fair market value of $ 3.7 million. Of these LTIP units, 53,980 LTIP units vested immediately on the grant date and 416,880 LTIP units vest ratably over three years from January 1, 2022, subject generally to the grantee's continued employment. The first installment vests on January 1, 2023, and the remainder will vest thereafter in two equal annual installments. Annually, we also 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. 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. An employee is retirement eligible when the employee attains the (i) age of 65 for awards granted in 2020 and after, and age of 60 for awards granted before 2020 and (ii) the date on which the employee has first completed ten years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards and performance-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 t three or four years . Additionally, for the performance-based equity awards, we assess, at each reporting period, F-30 whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment. For the market-based LTIP units, the fair value of the awards was estimated using a Monte Carlo Simulation model and discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process. Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using an appropriate look-back period. The expected growth rate of the stock prices over the performance period is determined with consideration of the risk-free rate as of the grant date. For LTIP unit awards that are time or performance based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. For 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 year ended December 31, 2022, 2021 and 2020 were valued at $ 22.4 million, $ 20.0 million and $ 28.3 million, respectively. The weighted-average per unit or share fair value was $ 7.21 , $ 8.52 and $ 5.44 for grants issued in 2022, 2021 and 2020, respectively. The per unit or share granted in 2022 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.3 years, a dividend rate of 2.0 %, a risk-free interest rate from 1.4 % to 2.0 %, and an expected price volatility from 37.0 % to 53.0 %.The per unit or share granted in 2021 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.3 years, a dividend rate of 2.60 %, a risk-free interest rate from 0.12 % to 0.32 %, and an expected price volatility from 36.0 % to 53.0 %. The per unit or share granted in 2020 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.5 years, a dividend rate of 3.70 %, a risk-free interest rate from 0.16 % to 0.50 %, and an expected price volatility from 19.0 % to 26.0 %. No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding in 2022, 2021 and 2020. The following is a summary of ESRT restricted stock and LTIP unit activity for the year ended December 31, 2022: ESRT Restricted Stock Time-based LTIPs Market-based LTIPs Performance-based LTIPs Weighted Average Grant Fair Value Unvested balance at December 31, 2021 214,408 2,499,592 5,039,134 — $ 7.02 Vested ( 69,545 ) ( 1,300,504 ) ( 113,576 ) ( 35,695 ) 9.28 Granted 232,448 1,514,434 780,155 578,943 7.21 Forfeited or unearned ( 18,018 ) — ( 1,635,176 ) ( 32,259 ) 6.84 Unvested balance at December 31, 2022 359,293 2,713,522 4,070,537 510,989 $ 6.69 The total fair value of LTIP units and restricted stock that vested during 2022, 2021 and 2020 was $ 14.1 million, $ 12.3 million and $ 15.6 million, respectively. The time-based LTIPs and 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 the 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 $ 2.3 million, $ 1.3 million and $ 2.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Unrecognized compensation expense was $ 0.8 million at December 31, 2022, which will be recognized over a weighted average period of 3.1 years. For the remainder of the LTIP unit awards, we recognized noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 18.7 million, $ 19.0 million and $ 22.9 million in noncash compensation expense for the years ended December 31, 2022, 2021 and 2020, respectively. Unrecognized compensation expense was $ 25.2 million at December 31, 2022, which will be recognized over a weighted average period of 2.4 years. F-31 Earnings Per Unit Earnings per unit for the years ended December 31, 2022, 2021 and 2020 is computed as follows (amounts in thousands, except per share amounts): For the Year Ended December 31, 2022 2021 2020 Numerator: Net income (loss) $ 63,212 $ ( 13,037 ) $ ( 22,889 ) Private perpetual preferred unit distributions ( 4,201 ) ( 4,201 ) ( 4,197 ) Net income attributable to non-controlling interests in other partnerships 243 — — Earnings allocated to unvested shares — ( 340 ) ( 985 ) Net income (loss) attributable to common unitholders - basic and diluted $ 59,254 $ ( 17,578 ) $ ( 28,071 ) Denominator: Weighted average units outstanding - basic 268,337 277,420 283,826 Effect of dilutive securities: Stock-based compensation plans 1,611 — 11 Weighted average shares outstanding - diluted 269,948 277,420 283,837 Earnings per unit - basic and diluted $ 0.22 $ ( 0.06 ) $ ( 0.10 ) There were 0 , 1,052,390 and 307,536 antidilutive shares and LTIP units for the years ended December 31, 2022, 2021 and 2020, respectively. 11. Related Party Transactions Sale of Westport Retail Properties On February 1 2023, we closed on the disposition of our retail assets located at 69-97 and 103-107 Main Street in Westport, Connecticut, for total consideration of $ 40.0 million, to an entity affiliated with our Chairman, President and Chief Executive Officer, Anthony E. Malkin (the “Westport Transaction”). The Company determined to make the sale to the related party entity after a marketed sale process conducted from February 2022 through August 2022 through a broker in which it received several third-party bids. Deals with third party purchasers failed to materialize due to adverse changes in capital market conditions during that time. The Westport Transaction materialized due to timing because the related party entity had recently completed a sale of property and was in the market for exchange property to defer tax in a 1031 exchange, and the Company recently executed on the acquisition of 298 Mulberry Street. The $ 40.0 million valuation for the Westport Transaction is in the range of the bids the Company received during the marketed sale process. In connection with the Westport Transaction, we advanced a loan to the buyer to facilitate closing with a maximum principal amount of up to $ 1.0 million, which bears interest at SOFR plus 3.5 % and requires repayment of principal to the extent of available cash flow of the property. We anticipate that the loan will be fully repaid within one year. Post-sale, we will provide certain supervisory and property management services to the buyer on similar terms as those we provide to our other excluded properties. See “– Excluded Properties and Businesses” below. The Company has a written Related Party Transactions Policy (the “Policy”) which requires the Nominating and Corporate Governance Committee to review the material facts of all related party transactions and consider all relevant factors in approving any related party transaction. Further, the Policy provides that a director or executive officer shall not participate in any consideration, discussion or approval of such related party transaction in which he or she is a related party. The Westport Transaction process was completed in compliance with the Policy. F-32 The independent members of the Nominating and Corporate Governance Committee conducted an independent review under the guidance of outside counsel and then approved the transaction. The Company reviewed with outside counsel best practices for the specific Westport Transaction and took additional precautions to ensure an arms-length process. There were separate counsels and appraisals for both buyer and seller. Tax Protection Agreements In 2013, we and ESRT entered into a tax protection agreement with Anthony E. Malkin and Peter L. Malkin that is intended to protect to a limited extent the Malkin Group and an additional third party investor in Metro Center (who was one of the original landowners and was involved in the development of the property) against certain tax consequences arising from a transaction involving one of four properties, which we refer to in this section as the protected assets. First, this agreement provides that our operating partnership will not sell, exchange, transfer or otherwise dispose of such protected assets, or any interest in a protected asset, until (i) October 7, 2025, with respect to one protected asset, First Stamford Place, and (ii) the later of (x) October 7, 2021 and (y) the death of both Peter L. Malkin and Isabel W. Malkin, who are 89 and 86 years old, respectively, for the three other protected assets, Metro Center, 298 Mulberry Street (“substituted basis property” as contemplated by the tax protection agreement for 10 Bank Street, which was sold on December 7, 2022) and 1542 Third Avenue, unless: (1) Anthony E. Malkin consents to the sale, exchange, transfer or other disposition; or (2) we deliver to each protected party thereunder a cash payment intended to approximate the tax liability arising from the recognition of the pre-contribution built-in gain resulting from the sale, exchange, transfer or other disposition of such protected asset (with the pre-contribution “built-in gain” being not more than the taxable gain that would have been recognized by such protected party if the protected asset been sold for fair market value in a taxable transaction at the time of the consolidation) plus an additional amount so that, after the payment of all taxes on amounts received pursuant to the agreement (including any tax liability incurred as a result of receiving such payment), the protected party retains an amount equal to such protected party’s total tax liability incurred as a result of the recognition of the pre-contribution built-in gain pursuant to such sale, exchange, transfer or other disposition; or (3) the disposition does not result in a recognition of any built-in gain by the protected party. Second, with respect to the Malkin Group, including Anthony E. Malkin and Peter L. Malkin, and one additional third party investor in Metro Center (who was one of the original landowners and was involved in the development of the property), to protect against gain recognition resulting from a reduction in such continuing investor’s share of the operating partnership liabilities, the agreement provides that during the period from October 7, 2013 until such continuing investor owns less than the aggregate number of operating partnership units and shares of ESRT common stock equal to 50 % of the aggregate number of such units and shares such investor received in the formation transactions, which we refer to in this section as the tax protection period, we will (i) refrain from prepaying any amounts outstanding under any indebtedness secured by the protected assets and (ii) use our commercially reasonable efforts to refinance such indebtedness at or prior to maturity at its current principal amount, or, if we are unable to refinance such indebtedness at its current principal amount, at the highest principal amount possible. The agreement also provides that, during the tax protection period, we will make available to such continuing investors the opportunity (i) to enter into a “bottom dollar” guarantee of their allocable share of $ 160.0 million of our aggregate indebtedness meeting certain requirements or (ii) in the event we have recourse debt outstanding and such a continuing investor agrees, in lieu of guaranteeing debt pursuant to clause (i) above, to enter into a deficit restoration obligation, in each case, in a manner intended to provide an allocation of our liabilities to the continuing investor. In the event that a continuing investor guarantees our debt, such continuing investor will be responsible, under certain circumstances, for the repayment of the guaranteed amount to the lender in the event that the lender would otherwise recognize a loss on the loan, such as, for example, if property securing the loan was foreclosed and the value was not sufficient to repay a certain amount of the debt. A deficit restoration obligation is a continuing investor’s obligation, under certain circumstances, to contribute a designated amount of capital to us upon our liquidation in the event that our assets are insufficient to repay our liabilities. Because we expect that we will at all times have sufficient liabilities to allow us to meet our obligations to allocate liabilities to our partners that are protected parties under the tax protection agreement, our indemnification obligation with respect to “certain tax liabilities” would generally arise only in the event that we dispose in a taxable transaction of a protected asset within the period specified above in a taxable transaction. In the event of such a disposition, the amount of our indemnification obligation would depend on several factors, including the amount of “built-in gain,” if any, recognized and allocated to the indemnified partners with respect to such disposition and the effective tax rate to be applied to such gain at the F-33 time of such disposition. Our disposition of the 10 Bank Street asset on December 7, 2022 did not trigger any obligation of payment pursuant to the tax protection agreement. Our partnership agreement requires that allocations with respect to such acquired property be made in a manner consistent with Section 704(c) of the Code. Treasury Regulations issued under Section 704(c) of the Code provide partnerships with a choice of several methods of allocating book-tax differences. Under the tax protection agreement, we have agreed to use the “traditional method” for accounting for book-tax differences for the properties acquired by us in the consolidation. Under the traditional method, which is the least favorable method from our perspective, the carryover basis of the acquired properties in our hands (i) may cause us to be allocated lower amounts of depreciation and other deductions for tax purposes than would be allocated to us if all of the acquired properties were to have a tax basis equal to their fair market value at the time of acquisition and (ii) in the event of a sale of such properties, could cause us to be allocated gain in excess of its corresponding economic or book gain (or taxable loss that is less than its economic or book loss), with a corresponding benefit to the partners transferring such properties to us for interests in us. In 2016, we entered into a tax protection agreement with Q REIT Holding LLC, a Qatar Financial Centre limited liability company and a wholly owned subsidiary of the Qatar Investment Authority, a governmental authority of the State of Qatar ("QREIT", and together with any eligible transferee, "QIA"). Subject to certain minimum thresholds and conditions, ESRT will indemnify QIA for certain applicable U.S. federal and state taxes payable by QIA in connection with dividends paid by ESRT on the QIA shares that are attributable to capital gains from the sale or exchange of any U.S. real property interests. ESRT's obligation to indemnify QIA will terminate one year following the date on which the sum of the QIA shares then owned by QIA falls below 10 % of ESRT outstanding common shares. Registration Rights We entered into a registration rights agreement with certain persons receiving shares of ESRT common stock or operating partnership units in the formation transactions, including certain members of ESRT's senior management team and our other continuing investors. In connection therewith, we have filed, and are obligated to maintain the effectiveness of, an automatically effective shelf registration statement, along with a prospectus supplement, with respect to, among other things, shares of ESRT Class A common stock that may be issued upon redemption of operating partnership units or issued upon conversion of shares of ESRT Class B common stock to continuing investors in the public existing entities. Pursuant to the registration rights agreement, under certain circumstances, ESRT will also be required to undertake an underwritten offering upon the written request of the Malkin Group, which we refer to as the holder, provided (i) the registrable shares to be registered in such offering will have a market value of at least $ 150.0 million, (ii) ESRT will not be obligated to effect more than two underwritten offerings during any 12-month period; and (iii) the holder will not have the ability to effect more than four underwritten offerings. In addition, if ESRT files a registration statement with respect to an underwritten offering for its own account or on behalf of the holder, the holder will have the right, subject to certain limitations, to register such number of registrable shares held by him, her or it as each such holder requests. With respect to underwritten offerings on behalf of the holder, ESRT will have the right to register such number of primary shares as it requests; provided, however, that if cut backs are required by the managing underwriters of such an offering, ESRT's primary shares shall be cutback first (but in no event will our shares be cut back to less than $ 25.0 million). ESRT has also agreed to indemnify the persons receiving rights against specified liabilities, including certain potential liabilities arising under the Securities Act, or to contribute to the payments such persons may be required to make in respect thereof. ESRT has agreed to pay all of the expenses relating to the registration and any underwritten offerings of such securities, including, without limitation, all registration, listing, filing and stock exchange or FINRA fees, all fees and expenses of complying with securities or “blue sky” laws, all printing expenses and all fees and disbursements of counsel and independent public accountants retained by ESRT, but excluding underwriting discounts and commissions, any out-of-pocket expenses (except ESRT will pay any holder’s out-of-pocket fees (including disbursements of such holder’s counsel, accountants and other advisors) up to $ 25,000 in the aggregate for each underwritten offering and each filing of a resale shelf registration statement or demand registration statement), and any transfer taxes. Employment Agreement and Change in Control Severance Agreements ESRT entered into an employment agreement with Anthony E. Malkin, which provides for salary, bonuses and other benefits, including among other things, severance benefits upon a termination of employment under certain circumstances and the issuance of equity awards. In addition, ESRT entered into change in control severance agreements with Thomas P. Durels and Christina Chiu. F-34 Indemnification of Our Directors and Officers We entered into indemnification agreements with each of ESRT's directors, executive officers, chairman emeritus and certain other parties, providing for the indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against (i) ESRT's directors, executive officers and chairman emeritus and (ii) ESRT's executive officers, chairman emeritus and certain other parties who are former members, managers, securityholders, directors, limited partners, general partners, officers or controlling persons of our predecessor in such capacities. Excluded Properties and Businesses The Malkin Group, including Anthony E. Malkin, our Chairman and Chief Executive Officer, owns non-controlling interests in, and Anthony E. Malkin and Peter L. Malkin control the general partners or managers of, the entities that own interests in eight multi-family properties and five net leased retail properties, (including one single tenant retail property in Greenwich, Connecticut). The Malkin Group also owns non-controlling interests in one Manhattan office property, two Manhattan retail properties and several retail properties outside of Manhattan, none of which were contributed to us in the formation transactions. Additionally, in February 2023, ESRT sold its two retail properties in Westport, Connecticut to an entity controlled by the Malkin Group (see Sale of Westport Retail Properties above). We refer to the non-controlling interests described above collectively as the excluded properties. In addition, the Malkin Group owns interests in one mezzanine (which was repaid in full on December 6, 2022) and senior equity fund and four property managers, and which we refer to collectively as the excluded businesses. We do not believe that the excluded properties or the excluded businesses are consistent with our commercial portfolio geographic or property type composition, management or strategic direction. Pursuant to management and/or service agreements with the owners of interests in those excluded properties and services agreements with five residential property managers and the managers of certain other excluded businesses which historically were managed by affiliates of our predecessor, we are designated as the asset manager (supervisor) and/or property manager of the excluded properties and will provide services to the owners of certain of the excluded properties and the five residential property managers and provide services and access to office space to the existing managers of the other excluded businesses. As the manager or service provider, we are paid a management or other fee with respect to those excluded properties and excluded businesses where our predecessor had previously received a management fee on the same terms as the fee paid to our predecessor, and reimbursed for our costs in providing the management and other services to those excluded properties and businesses where our predecessor had not previously received a management fee. ESRT's management of the excluded properties and provision of services to the five residential property managers and the existing managers of the other excluded businesses represent a minimal portion of our overall business. There is no established time period in which we will manage such properties or provide services to the owners of certain of the excluded properties and the five residential property managers and provide services and access to office space to the existing managers of the other excluded businesses; and Peter L. Malkin and Anthony E. Malkin expect to sell certain properties or unwind these businesses over time. We are not precluded from acquiring all or certain interests in the excluded properties or businesses. If we were to attempt any such acquisition, we anticipate that Anthony E. Malkin, ESRT's Chairman, President and Chief Executive Officer, will not participate in the negotiation process on our behalf with respect to our potential acquisition of any of these excluded properties or businesses, and the approval of a majority of ESRT's independent directors will be required to approve any such acquisition. Services are and were provided by us to excluded properties and businesses. These transactions are reflected in our consolidated statements of operations as third-party management and other fees. We earned asset management (supervisory) and service fees from excluded properties and businesses of $ 1.0 million, $ 1.0 million and $ 0.9 million during the years ended December 31, 2022, 2021 and 2020, respectively. We earned property management fees from excluded properties of $ 0.3 million, $ 0.2 million and $ 0.3 million during the years ended December 31, 2022, 2021 and 2020, respectively. Other We receive rent generally at market rental rate for 5,447 square feet of leased space from entities affiliated with Anthony E. Malkin at one of our properties. Under the lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We also have a shared use agreement with such tenant to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus and employee, utilizing approximately 15 % of the space, for which we pay to such tenant an allocable pro rata share of the cost. We also have agreements with these entities and excluded F-35 properties and businesses to provide them with general computer-related support services. Total revenue aggregated $ 0.3 million, $ 0.3 million and $ 0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. 12. Income Taxes Holdings TRS and Observatory TRS are taxable entities and their consolidated provision for income taxes consisted of the following for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands): For the Year Ended December 31, 2022 2021 2020 Current: Federal $ ( 319 ) $ ( 266 ) $ 4,932 State and local ( 227 ) ( 347 ) 2,699 Total current ( 546 ) ( 613 ) 7,631 Deferred: Federal ( 264 ) 1,206 ( 340 ) State and local ( 736 ) 1,141 ( 320 ) Total deferred ( 1,000 ) 2,347 ( 660 ) Income tax (expense) benefit $ ( 1,546 ) $ 1,734 $ 6,971 In March 2020, the Coronavirus Aid, Relief, Economic Security (“CARES”) Act was enacted. The CARES Act includes a number of federal tax reliefs, including the carryback of a net operating loss (“NOL”) incurred in 2018, 2019 and 2020 to each of the five preceding taxable years to generate a refund of previous paid income taxes. Such NOLs may offset 100% of taxable income for taxable years beginning before 2021 (80% thereafter). Many states, including New York, have not adopted the NOL provisions of the CARES Act and continue to have their own rules with respect to the application of NOLs. For the year ended December 31, 2020, the carryback of Observatory TRS’s NOL to previous tax years resulted in a 13 % increase of U.S. corporation income tax benefit. As of December 31, 2022, our parent and general partner, Empire State Realty Trust, Inc., had $ 99.8 million of NOL carryforwards that may be used in the future to reduce the amount otherwise required to be distributed by ESRT to meet REIT requirements. However, for federal income tax purposes, the NOL will not be able to offset more than 80% of ESRT’s REIT taxable income and, therefore, may not be able to reduce the amount required to be distributed by ESRT to meet REIT requirements to zero. The federal NOL may be carried forward indefinitely. Other limitations may apply to ESRT’s ability to use its NOL to offset taxable income. As of December 31, 2022, the Observatory TRS had a federal income tax receivable of $ 2.5 million. This receivable reflects an anticipated refund resulting from the carryback of 2020 NOL to previous tax years. The Observatory TRS has $ 10.2 million of NOL carryforwards that may be used to offset future taxable income, if any. The federal NOL may be carried forward indefinitely and the state and local NOL can be carried forward for up to 20 years. We measure deferred tax assets using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. The effective income tax rate is 33.6 %, 26.0 % and 47.0 % for the years ended December 31, 2022, 2021 and 2020, respectively. The actual tax provision differed from that computed at the federal statutory corporate rate as follows (amounts in F-36 thousands): For the Year Ended December 31, 2022 2021 2020 Federal tax benefit (expense) at statutory rate $ ( 583 ) $ 940 $ 2,544 State income tax benefit (expense), net of federal benefit ( 963 ) 794 2,379 Corporate income tax rate adjustment — — 2,048 Income tax (expense) benefit $ ( 1,546 ) $ 1,734 $ 6,971 The income tax effects of temporary differences that give rise to deferred tax assets are presented below as of December 31, 2022, 2021 and 2020 (amounts in thousands): 2022 2021 2020 Deferred tax assets: Deferred revenue on unredeemed observatory admission ticket sales $ 535 $ 383 $ 256 Federal net operating loss carryforward credit 969 1,393 — New York State net operating loss carryforward credit 250 612 — New York City net operating loss carryforward credit 233 704 334 Other deferred tax assets 261 — — Deferred tax assets $ 2,248 $ 3,092 $ 590 Deferred tax assets at December 31, 2022, 2021 and 2020 are included in prepaid expenses and other assets on the consolidated balance sheets. The deferred tax assets at December 31, 2022 are mainly attributable to the inclusion of the Federal net operating loss to be carried forward and utilized during income years indefinitely and the New York State and New York City net operating loss to be carried forward and utilized during income years for a period of 20 years. No valuation allowance has been recorded against the deferred tax asset because the company believes it is more likely than not that the deferred tax asset will be realized. This determination is based on the Observatory TRS’s anticipated future taxable income and the reversal of the deferred tax asset. At December 31, 2022, 2021 and 2020, the TRS entities have no amount of unrecognized tax benefits. The federal and state tax returns of 2022, 2021 and 2019 remain open for examination. 13. Segment Reporting We have identified two reportable segments: (1) real estate and (2) observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, redevelopment, repositioning and disposition of our traditional real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rents as if the sales or rents were to third parties, that is, at current market prices. 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 profit for each segment for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands): F-37 2022 Real Estate Observatory Intersegment Elimination Total Revenues: Rental revenue $ 591,048 $ — $ — $ 591,048 Intercompany rental revenue 65,005 — ( 65,005 ) — Observatory revenue — 105,978 — 105,978 Lease termination fees 20,032 — — 20,032 Third-party management and other fees 1,361 — — 1,361 Other revenue and fees 8,622 — — 8,622 Total revenues 686,068 105,978 ( 65,005 ) 727,041 Operating expenses: Property operating expenses 157,935 — — 157,935 Intercompany rent expense — 65,005 ( 65,005 ) — Ground rent expense 9,326 — — 9,326 General and administrative expenses 61,765 — — 61,765 Observatory expenses — 31,036 — 31,036 Real estate taxes 123,057 — — 123,057 Depreciation and amortization 216,707 187 — 216,894 Total operating expenses 568,790 96,228 ( 65,005 ) 600,013 Total operating income 117,278 9,750 — 127,028 Other income (expense): Interest income 4,901 47 — 4,948 Interest expense ( 101,206 ) — — ( 101,206 ) Gain on sale/disposition of properties 33,988 — — 33,988 Income before income taxes 54,961 9,797 — 64,758 Income tax expense ( 584 ) ( 962 ) — ( 1,546 ) Net income $ 54,377 $ 8,835 $ — $ 63,212 Segment assets $ 3,909,299 $ 254,295 $ — $ 4,163,594 Expenditures for segment assets $ 85,646 $ 315 $ — $ 85,961 F-38 2021 Real Estate Observatory Intersegment Elimination Total Revenues: Rental revenue $ 559,690 $ — $ — $ 559,690 Intercompany rental revenue 23,413 — ( 23,413 ) — Observatory revenue — 41,474 — 41,474 Lease termination fees 16,230 — — 16,230 Third-party management and other fees 1,219 — — 1,219 Other revenue and fees 5,343 138 — 5,481 Total revenues 605,895 41,612 ( 23,413 ) 624,094 Operating expenses: Property operating expenses 126,986 — — 126,986 Intercompany rent expense — 23,413 ( 23,413 ) — Ground rent expense 9,326 — — 9,326 General and administrative expenses 55,947 — — 55,947 Observatory expenses — 23,206 — 23,206 Real estate taxes 119,967 — — 119,967 Impairment charge 7,723 — — 7,723 Depreciation and amortization 201,676 130 — 201,806 Total operating expenses 521,625 46,749 ( 23,413 ) 544,961 Total operating income (loss) 84,270 ( 5,137 ) — 79,133 Other income (expense): Interest income 701 3 — 704 Interest expense ( 94,292 ) ( 102 ) — ( 94,394 ) Loss on early extinguishment of debt ( 214 ) — — ( 214 ) Loss before income taxes ( 9,535 ) ( 5,236 ) — ( 14,771 ) Income tax (expense) benefit ( 613 ) 2,347 — 1,734 Net loss $ ( 10,148 ) $ ( 2,889 ) $ — $ ( 13,037 ) Segment assets $ 4,037,122 $ 245,325 $ — $ 4,282,447 Expenditures for segment assets $ 398,368 $ 4 $ — $ 398,372 F-39 2020 Real Estate Observatory Intersegment Elimination Total Revenues: Rental revenue $ 563,071 $ — $ — $ 563,071 Intercompany rental revenue 17,827 — ( 17,827 ) — Observatory revenue — 29,057 — 29,057 Lease termination fees 9,416 — — 9,416 Third-party management and other fees 1,225 — — 1,225 Other revenue and fees 6,459 — — 6,459 Total revenues 597,998 29,057 ( 17,827 ) 609,228 Operating expenses: Property operating expenses 136,141 — — 136,141 Intercompany rent expense — 17,827 ( 17,827 ) — Ground rent expense 9,326 — — 9,326 General and administrative expenses 62,244 — — 62,244 Observatory expenses — 23,723 — 23,723 Real estate taxes 121,923 — — 121,923 Impairment charges 6,204 — — 6,204 Depreciation and amortization 190,863 143 — 191,006 Total operating expenses 526,701 41,693 ( 17,827 ) 550,567 Total operating income (loss) 71,297 ( 12,636 ) — 58,661 Other income (expense): Interest income 2,542 95 — 2,637 Interest expense ( 89,907 ) — — ( 89,907 ) Loss on early extinguishment of debt ( 86 ) — — ( 86 ) IPO litigation expense ( 1,165 ) — — ( 1,165 ) Loss before income taxes ( 17,319 ) ( 12,541 ) — ( 29,860 ) Income tax (expense) benefit ( 843 ) 7,814 — 6,971 Net loss $ ( 18,162 ) $ ( 4,727 ) $ — $ ( 22,889 ) Segment assets $ 3,903,884 $ 246,811 $ — $ 4,150,695 Expenditures for segment assets $ 101,306 $ 2,754 $ — $ 104,060 During the fourth quarter 2021, we incurred a $ 7.7 million impairment charge relating to our property in Norwalk, Connecticut. Our methodology to calculate the fair value of the property involved a combination of the discounted cash flow method, utilizing Level 3 unobservable inputs such as market capitalization rates obtained from external sources, and the market based approach utilizing recent sales comparables. During the second quarter 2020, we wrote off $ 4.1 million of prior expenditures on a Combined Heat Power/Redundancy onsite power generation project in our real estate segment that is rendered economically unviable due to New York City's Local Law 97 and from its measurement of carbon from natural gas combustion generates fines. During the third quarter 2020, we also wrote off $ 2.1 million of prior expenditures on a build-to-suit development project in our real estate segment that was halted due to reconsideration by the user driven by the COVID-19 pandemic. The $ 7.7 million and $ 6.2 million write-offs F-40 are shown as impairment charges in the consolidated statement of operations for the years ended December 31, 2021 and 2020, respectively. 14. Subsequent Events None. F-41 Empire State Realty OP, L.P. Schedule III—Real Estate and Accumulated Depreciation (amounts in thousands) Initial Cost to the Company Cost Capitalized Subsequent to Acquisition Gross Amount at which Carried at 12/31/22 Development Type Encumbrances Land and Development Costs Building & Improvements Improvements Carrying Costs Land and Development Costs Buildings & Improvements Total Accumulated Depreciation Date of Construction Date Acquired Life on which depreciation in latest income statement is computed 111 West 33rd Street, New York, NY office / retail $ — $ 13,630 $ 244,461 $ 129,400 n/a $ 13,630 $ 373,861 $ 387,491 $ 102,821 1954 2014 various 1400 Broadway, New York, NY office / retail — — 96,338 99,511 n/a — 195,849 195,849 62,721 1930 2014 various 1333 Broadway, New York, NY office / retail 160,000 91,435 120,189 13,505 n/a 91,435 133,694 225,129 38,766 1915 2013 various 1350 Broadway, New York, NY office / retail — — 102,518 43,218 n/a — 145,736 145,736 47,750 1929 2013 various 250 West 57th Street, New York, NY office/ retail 180,000 2,117 5,041 173,858 n/a 2,117 178,899 181,016 66,939 1921 1953 various 501 Seventh Avenue, New York, NY office/ retail — 1,100 2,600 102,027 n/a 1,100 104,627 105,727 53,647 1923 1950 various 1359 Broadway, New York, NY office/ retail — 1,233 1,809 70,051 n/a 1,233 71,860 73,093 28,960 1924 1953 various 350 Fifth Avenue (Empire State Building), New York, NY office/ retail — 21,551 38,934 1,022,237 n/a 21,551 1,061,170 1,082,721 392,159 1930 2013 various One Grand Central Place, New York, NY office/ retail — 7,240 17,490 293,122 n/a 7,222 310,630 317,852 152,636 1930 1954 various First Stamford Place, Stamford, CT office 178,823 22,952 122,738 80,128 n/a 24,860 200,958 225,818 105,519 1986 2001 various One Station Place, Stamford, CT (Metro Center) office 82,596 5,313 28,602 36,575 n/a 5,313 65,177 70,490 37,901 1987 1984 various 10 Union Square, New York, NY retail 50,000 5,003 12,866 5,574 n/a 5,003 18,440 23,443 9,444 1987 1996 various 1542 Third Avenue, New York, NY retail 30,000 2,239 15,266 467 n/a 2,239 15,733 17,972 9,511 1991 1999 various 1010 Third Avenue, New York, NY and 77 West 55th Street, New York, NY retail 35,831 4,462 15,819 2,821 n/a 4,462 18,640 23,102 10,457 1962 1998 various 69-97 Main Street, Westport, CT (1) retail — 2,782 15,766 6,862 n/a 2,782 22,628 25,410 9,441 1922 2003 various 103-107 Main Street, Westport, CT (1) retail — 1,243 7,043 371 n/a 1,260 7,397 8,657 3,184 1900 2006 various 345 E 94th Street NY multi-family 51,465 44,228 55,766 1,044 n/a 44,228 56,811 101,039 1,698 2000 2021 various Victory 561 10th Ave NY multi-family 131,915 91,437 124,997 804 n/a 91,437 125,801 217,238 3,713 2004 2021 various 298 Mulberry, New York, NY multi-family — 40,935 69,509 514 n/a 41,126 69,832 110,958 — 1986 2022 various Property for development at the Transportation Hub in Stamford, CT land — 4,541 — 8,167 n/a 12,708 — 12,708 — n/a n/a n/a Totals $ 900,630 $ 363,441 $ 1,097,752 $ 2,090,256 $ — $ 373,706 $ 3,177,743 $ 3,551,449 $ 1,137,267 1 Property sold on February 1, 2023 F-42 Empire State Realty OP, L.P. Notes to Schedule III—Real Estate and Accumulated Depreciation (amounts in thousands) 1 . Reconciliation of Investment Properties The changes in our investment properties for the years ended December 31, 2022, 2021 and 2020 are as follows: 2022 2021 2020 Balance, beginning of year $ 3,500,917 $ 3,133,966 $ 3,109,433 Acquisition of new properties 110,444 316,428 — Improvements 79,070 89,426 104,060 Property classified as held for sale ( 61,965 ) — — Disposals ( 77,017 ) ( 38,903 ) ( 79,527 ) Balance, end of year $ 3,551,449 $ 3,500,917 $ 3,133,966 The unaudited aggregate cost of investment properties for federal income tax purposes as of December 31, 2022 was $ 3.7 billion. 2 . Reconciliation of Accumulated Depreciation The changes in our accumulated depreciation for the years ended December 31, 2022, 2021 and 2020 are as follows: 2022 2021 2020 Balance, beginning of year $ 1,072,938 $ 941,612 $ 862,534 Depreciation expense 179,872 162,667 158,605 Property classified as held for sale ( 30,315 ) — — Disposals ( 85,228 ) ( 31,341 ) ( 79,527 ) Balance, end of year $ 1,137,267 $ 1,072,938 $ 941,612 Depreciation of investment properties reflected in the combined statements of income is calculated over the estimated original lives of the assets as follows: Buildings 39 years or useful life Building improvements 39 years or useful life Tenant improvements Term of related lease F-43