What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-04 compared with 2022-11-03 · 79 added, 156 removed, 273 unchanged (46% of the section changed)

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The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

(i) economic, market, political and social impact of, and uncertainty relating to, the COVID-19 pandemic;

(i) economic, market, political and social impact of, and uncertainty relating to, any pandemic;

(ii) a failure of conditions or performance regarding any event or transaction described herein, (iii) resolution of legal proceedings involving the Company;

(iv) reduced demand for office, multifamily or retail space, including as a result of the COVID-19 pandemic;

(iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work;

(v) changes in our business strategy;

(vi) changes in technology and market competition that affect utilization of our office, retail, observatory, broadcast or other facilities;

(vii) changes in domestic or international tourism, including due to health crises such as the COVID-19 pandemic, geopolitical events, including global hostilities, currency exchange rates, and/or competition from recently opened observatories in New York City, any or all of which may cause a decline in Observatory visitors;

(vii) changes in domestic or international tourism, including due to health crises and pandemics, geopolitical events, including global hostilities, currency exchange rates, and/or competition from other observatories in New York City, any or all of which may cause a decline in Observatory visitors;

(viii) defaults on, early terminations of, or non-renewal of, leases by tenants;

(ix) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the current phasing out of LIBOR;

(ix) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the phasing out of LIBOR;

(x) declining real estate valuations and impairment charges;

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and (xxi) accuracy of our methodologies and estimates regarding ESG metrics and goals, tenant willingness and ability to collaborate in reporting ESG metrics and meeting ESG goals, and impact of governmental regulation on our ESG efforts.

For a further discussion of these and other factors that could impact the Company's future results, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

For a further discussion of these and other factors that could impact the Company's future results, performance or transactions, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

While forward-looking statements reflect the Company's good faith beliefs, they are not guarantees of future performance.

The Company disclaims any obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this Quarterly

Report on Form 10-Q, except as required by applicable law.

Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company.

Empire State Realty OP, L.P.

is the entity through which ESRT, a self-administered and self-managed REIT, conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

We own and manage office, retail and multifamily assets in Manhattan and the greater New York metropolitan area.

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

Highlights for the three months ended September 30, 2022

• Incurred net income attributable to common unitholders of $9.1 million and achieved Core Funds From Operations attributable to common unitholders ("Core FFO") of $56.5 million.

• Total commercial portfolio 88.5% leased, New York City office portfolio 89.4% leased.

Highlights for the three months ended March 31, 2023

• Net income attributable to common unitholders of $10.7 million.

• Core Funds From Operations attributable to common unitholders ("Core FFO") of $43.0 million.

• Commercial portfolio 89.4% leased, Manhattan office portfolio 90.7% leased.

• Signed a total of 202,057 rentable square feet of new, renewal, and expansion leases.

• Empire State Building Observatory generated $24.5 million of net operating income for the third quarter 2022.

• ESRT repurchased $20.1 million of its common stock in the third quarter of 2022 and through October 24, 2022.

• Empire State Building Observatory generated $14.3 million of net operating income and visitor count increased 65% year over year.

• ESRT repurchased $11.6 million of its common stock in the first quarter of 2023 and through April 25, 2023.

Results of Operations

The discussion below relates to our financial condition and results of operations for the three months ended September 30, 2022 and 2021, respectively.

Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

The following table summarizes our historical results of operations for the three months ended September 30, 2022 and 2021 (amounts in thousands):

Three Months Ended September 30,

The discussion below relates to our financial condition and results of operations for the three months ended March 31, 2023 and 2022, respectively.

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

The following table summarizes our historical results of operations for the three months ended March 31, 2023 and 2022 (amounts in thousands):

Three Months Ended March 31,

2023 2022 Change %

Real Estate Segment Observatory Segment Total Real Estate Segment Observatory Segment Total

Rental revenue

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3,233 14,255 17,488 (943) 6,991 6,048 11,440 189.2

Intercompany rent revenue (expense) 15,914 (15,914) — 10,620 (10,620) —

Other income (expense):

3 unchanged sentences

(25,304) — (25,304) (25,014) — (25,014) (290) (1.2)

Gain on sale of property

15,696 — 15,696 — — — 15,696 —

Income (loss) before income taxes

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$ 10,892 $ (205) $ 10,687 $ (16,319) $ (1,889) $ (18,208) $ 28,895 158.7 %

Real Estate Segment

Rental Revenue

The increase in rental revenue reflects the inclusion of revenue from our multifamily properties which were acquired on December 22, 2021.

Observatory Revenue

Observatory revenues were higher driven by increased visitation.

The decrease in rental revenue was primarily attributable to reserves recorded on straight-line rent receivables related to a one-time reserve tied to Signature Bank entering receivership.

See "Financial Statements - Note 8.

Leases" for more information.

Other Revenues and Fees

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Property Operating Expenses

The increase in property operating expenses reflects higher payroll, utilities, cleaning and other operating expenses, and the inclusion of operating expenses from our recently acquired multifamily properties.

General and Administrative Expenses

The increase in general and administrative expenses reflects higher equity compensation and payroll costs, information technology costs and professional fees.

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as labor, union, security, cleaning and maintenance costs.

Real Estate Taxes

Higher real estate taxes primarily attributable to the inclusion of real estate taxes from our recently acquired multifamily properties.

Depreciation and Amortization

The decrease in depreciation and amortization reflects write-offs primarily related to one tenant in the third quarter 2021.

Interest Income

The increase reflects higher interest rates in the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Interest Expense

The increase was primarily attributable to interest expense from our recently acquired multifamily properties, partially offset by the cancellation of debt from 383 Main Avenue, Norwalk CT.

The increase in income tax expense was attributable to higher net operating income for the observatory segment.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

The following table summarizes our historical results of operations for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

Nine Months Ended September 30,

2022 2021 Change %

Rental revenue

$ 445,143 $ 420,586 $ 24,557 5.8 %

Observatory revenue 73,660 23,758 49,902 210.0 %

Lease termination fees 20,032 15,949 4,083 25.6 %

Third-party management and other fees

1,025 917 108 11.8 %

Other revenues and fees

5,908 2,550 3,358 131.7 %

Total revenues

545,768 463,760 82,008 17.7 %

Operating expenses:

Property operating expenses

118,875 92,429 (26,446) (28.6) %

Ground rent expenses

6,994 6,994 — — %

The increase in property operating expenses reflects higher payroll and repairs and maintenance due to increased building utilization at our office properties.

General and Administrative Expenses

45,287 42,369 (2,918) (6.9) %

Observatory expenses

22,507 16,226 (6,281) (38.7) %

The increase in general and administrative expenses primarily reflects higher payroll costs and equity compensation.

Real Estate Taxes

91,637 92,367 730 0.8 %

Higher real estate taxes primarily attributable to higher assessed values for multiple properties and the inclusion of real estate taxes from our recently acquired multifamily property.

Depreciation and Amortization

172,394 155,339 (17,055) (11.0) %

Total operating expenses

457,694 405,724 (51,970) (12.8) %

Operating income

88,074 58,036 30,038 51.8 %

Other income (expense):

The decrease in depreciation and amortization reflects accelerated depreciation at one property recorded in the three months ended March 31, 2022.

Interest Income

2,144 497 1,647 331.4 %

The increase reflects higher interest rates in the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Interest Expense

(75,572) (70,553) (5,019) (7.1) %

Loss on early extinguishment of debt — (214) 214 100.0 %

Gain on disposition of property

27,170 — 27,170 100.0 %

Income (loss) before income taxes

41,816 (12,234) 54,050 441.8 %

Income tax (expense) benefit

(224) 3,271 (3,495) (106.8) %

Net income (loss)

41,592 (8,963) 50,555 564.0 %

Private perpetual preferred unit distributions (3,151) (3,151) — — %

Net loss attributable to non-controlling interests in other partnerships 271 — 271 100.0 %

Net income (loss) attributable to common unitholders

$ 38,712 $ (12,114) $ 50,826 419.6 %

Rental Revenue

The increase in rental revenue reflects the inclusion of revenue from our multifamily properties which were acquired on December 22, 2021.

Interest expense was consistent with prior year.

Gain on Sale of Property

Reflects the gain on sale of 69-97 and 103-107 Main Street in Westport, Connecticut in February 2023.

Observatory Segment

Observatory Revenue

Observatory revenues were higher driven by increased visitation.

Other Revenues and Fees

The increase in other revenues and fees was due to higher food and beverage sales, insurance claim income, parking income and bad debt recovery income.

Property Operating Expenses

The increase in property operating expenses reflects higher payroll, utilities, repairs and maintenance costs, cleaning and other operating expenses, and the inclusion of operating expenses from our recently acquired multifamily properties.

General and Administrative Expenses

The increase in general and administrative expenses reflects higher equity compensation and payroll costs, information technology costs and professional fees.

Observatory revenues were higher driven by increased visitation as compared to the three months ended March 31, 2022.

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as labor, union, security, cleaning and maintenance costs.

Depreciation and Amortization

The increase in depreciation and amortization reflects accelerated depreciation at one property due to an impairment charge in the fourth quarter of 2021 and additional depreciation from our recently acquired multifamily properties.

Interest Income

The increase reflects higher interest rates in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Interest Expense

The increase was primarily attributable to interest expense from our recently acquired multifamily properties, partially offset by the cancellation of debt from 383 Main Avenue, Norwalk CT.

The increase in income tax expense was attributable to higher net operating income for the observatory segment.

Gain on disposition of property

Represents a gain on the transfer of 383 Main Avenue, Norwalk CT, which was encumbered by a $30.0 million mortgage, back to the lender in a consensual foreclosure.

The decrease in income tax benefit was attributable to lower taxable loss for the observatory segment for the three months ended March 31, 2023.

Liquidity and Capital Resources

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We expect to meet our short-term liquidity requirements, including distributions, operating expenses, working capital, debt service, and capital expenditures from cash flows from operations, cash on hand, debt issuances, and available borrowing capacity under our unsecured revolving credit facility.

The availability of these borrowings is subject to the conditions set forth in the applicable

loan agreements.

The availability of these borrowings is subject to the conditions set forth in the applicable loan agreements.

We expect to meet our long-term capital requirements, including acquisitions, redevelopments and capital expenditures through our cash flows from operations, cash on hand, our unsecured revolving credit facility, mortgage financings, debt issuances, common and/or preferred equity issuances and asset sales.

Our properties require periodic investments of capital for individual lease related tenant improvements allowances, general capital improvements and costs associated with capital expenditures.

Our properties require periodic investments of capital for individual lease related tenant improvements allowances, general capital

improvements and costs associated with capital expenditures.

Our overall leverage will depend on our mix of investments and the cost of leverage.

ESRT's charter does not restrict the amount of leverage that we may use.

At September 30, 2022, we had $387.2 million available in cash and cash equivalents, and $850 million available under our unsecured revolving credit facility.

As of September 30, 2022, we had approximately $2.3 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 6.7 years.

As of September 30, 2022, excluding principal amortization, we have no outstanding debt maturing until November 2024.

At March 31, 2023, we had $272.6 million available in cash and cash equivalents, and $850 million available under our unsecured revolving credit facility.

As of March 31, 2023, we had approximately $2.3 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 6.2 years.

As of March 31, 2023, excluding principal amortization, we have no outstanding debt maturing until November 2024.

Portfolio Transaction Activity

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.

In December 2022, we entered into a purchase and sale agreement for 500 Mamaroneck Avenue in Harrison, NY at a gross asset valuation of $53.0 million.

Subsequent to March 31, 2023, the sale of this asset closed on April 5, 2023.

Unsecured Revolving Credit and Term Loan Facilities

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Mortgage Debt

As of September 30, 2022, our consolidated mortgage notes payable amounted to $933.1 million.

As of March 31, 2023, our consolidated mortgage notes payable amounted to $898.5 million.

The first maturity is in November 2024.

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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 September 30, 2022, we were in compliance with the covenants under the outstanding senior unsecured notes.

As of March 31, 2023, we were in compliance with the covenants under the outstanding senior unsecured notes.

Financial Covenants

As of September 30, 2022, we were in compliance with the following financial covenants:

Financial covenant Required September 30, 2022 In Compliance

As of March 31, 2023, we were in compliance with the following financial covenants:

Financial covenant Required March 31, 2023 In Compliance

Maximum total leverage < 60% 36.9 % Yes

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Office Properties (1)

Nine Months Ended September 30,

Three months ended March 31,

Total New Leases, Expansions, and Renewals 2023 2022

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Retail Properties (4)

Nine Months Ended September 30,

Three months ended March 31,

Total New Leases, Expansions, and Renewals 2023 2022

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Total square feet

45,655 16,382

Leasing commission costs per square foot (3)

$ 59.85 $ 42.88

Tenant improvement costs per square foot (3)

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_______________

(1) Excludes an aggregate of 498,196 and 504,953 rentable square feet of retail space in our Manhattan office properties in 2023 and 2022, respectively.

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Excludes the Empire State Building broadcasting licenses and observatory operations.

Nine Months Ended September 30,

Three months ended March 31,

Total Portfolio

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(1) Excludes tenant improvements and leasing commission costs.

As of September 30, 2022, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $117.9 million for tenant improvements and leasing commissions.

As of March 31, 2023, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $107.9 million for tenant improvements and leasing commissions.

We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand, additional property level mortgage financings and borrowings under the unsecured revolving credit facility.

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Off-Balance Sheet Arrangements

As of September 30, 2022, we did not have any off-balance sheet arrangements.

As of March 31, 2023, we did not have any off-balance sheet arrangements.

Distribution Policy

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Distribution to Equity Holders

Distributions and dividends amounting to $32.2 million and $22.6 million have been made to equity holders for the nine months ended September 30, 2022 and 2021, respectively.

Distributions and dividends amounting to $9.7 million and $10.8 million have been made to equity holders for the three months ended March 31, 2023 and 2022, respectively.

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 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.

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See "Financial Statements - Note 10.

Capital" for a summary of ESRT's purchases of equity securities in each of the three months ended September 30, 2022.

Comparison of Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

Cash and cash equivalents and restricted cash were $439.8 million and $621.0 million, respectively, as of September 30, 2022 and 2021.

The decrease was primarily due to the acquisition of real estate property at the end of 2021 and higher spending for capital expenditures, higher repurchases of common shares and higher dividends paid in 2022.

Capital" for a summary of ESRT's purchases of equity securities in each of the three months ended March 31, 2023.

Comparison of Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

Cash and cash equivalents and restricted cash were $380.8 million and $482.7 million, respectively, as of March 31, 2023 and 2022.

The decrease was primarily due to the acquisition of real estate property in December 2022 and higher spending for capital expenditures, partially offset by net proceeds from the sale of property in February 2023 and lower repurchases of common shares.

Operating activities .

Net cash provided by operating activities increased by $7.0 million to $174.0 million.

Net cash provided by operating activities increased by $18.7 million to $86.4 million due to changes in working capital.

Investing activities .

Net cash used in investing activities increased by $18.3 million to $89.1 million due to higher capital expenditures.

Net cash used in investing activities decreased by $32.4 million to $2.6 million primarily due to net proceeds from the sale of 69-97 and 103-107 Main Street in Westport, Connecticut on February 1, 2023.

Financing activities .

Net cash used in financing activities increased by $76.5 million to $119.7 million primarily due to higher repurchases of common shares and higher dividends and distributions.

Net cash used in financing activities decreased by $7.1 million to $17.6 million primarily due to lower repurchases of common shares.

Net Operating Income ("NOI")

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While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time.

Gains and losses from the sale of real

property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period.

Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period.

These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales.

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The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI for the periods presented (amounts in thousands):

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

2022 2021 2022 2021

(unaudited) (unaudited)

Three Months Ended March 31,

Net income (loss)

6 unchanged sentences

25,304 25,014

Loss on early extinguishment of debt

Income tax expense (benefit)

Income tax benefit

(1,219) (1,596)

Gain on disposition of property — — (27,170) —

Gain on sale of property (15,696) —

Third-party management and other fees

(389) (314) (1,025) (917)

Interest income

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We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-off of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a widely recognized non-GAAP financial measure for REITs that we

believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs.

FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs.

In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets.

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FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.

Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.

Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the

computation of FFO may vary from one company to another.

Modified Funds From Operations ("Modified FFO")

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The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands):

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

2022 2021 2022 2021

(unaudited) (unaudited)

Three Months Ended March 31,

Net income (loss)

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46,024 65,414

Gain on disposition of property

— — (27,170) —

Gain on sale of property

FFO attributable to common unitholders

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Amortization of below-market ground leases

1,957 1,957 5,873 5,873

Modified FFO attributable to common unitholders

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Factors That May Influence Future Results of Operations

Portfolio Transaction Activity

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

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

Due to the relatively small number of leases that are signed in any particular quarter, one or more larger leases may have a disproportionately positive or negative impact on average rent, tenant improvement and leasing commission costs for that period.

As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years.

we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years.

Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant.

Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter.

As of September 30, 2022, there were approximately 1.1 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 11.5% of the net rentable square footage of the properties in our portfolio.

As of March 31, 2023, there were approximately 1.0 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 10.6% of the net rentable square footage of the properties in our portfolio.

In addition, leases representing 4.6% and 6.7% of net rentable square footage of the properties in our portfolio will expire in 2023 and in 2024, respectively.

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Our revenues and results of operations can be impacted by expiring leases that are not renewed or re-leased or that are renewed or re-leased at base rental rates equal to, above or below the current average base rental rates.

Further, our revenues and results of operations can also be affected by the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant.

Despite the challenge of the uncertain near-term environment, we continue to believe that as we have largely completed the redevelopment and repositioning of our properties we will, over the long-term, experience increased occupancy levels and rental revenues.

Over the short-term, as we renovate and reposition our properties, including aggregating smaller spaces to offer large blocks of space, we may experience lower occupancy levels as a result of having to relocate tenants to alternative space and the strategic expiration of existing leases.

We believe that despite the short-term lower occupancy levels we may experience, we will continue to obtain better quality tenants, whom have higher likelihood for growth within the portfolio, following the redevelopment and repositioning of our properties.

Further, our revenues and results of operations can also be affected by downtime after space is vacated and the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant.

Observatory Operations

For the three months ended September 30, 2022, the observatory hosted 687,000 visitors, compared to 255,000 visitors for the same period in 2021.

Our return of attendance to pre-COVID-19 levels is closely tied to national and international travel trends and these remain adversely impacted by developments around the COVID-19 pandemic.

Observatory revenue for the three months ended September 30, 2022 was $33.1 million, compared to $12.8 million for the three months ended September 30, 2021.

For the three months ended March 31, 2023, the observatory hosted 443,000 visitors, compared to 269,000 visitors for the same period in 2022.

Our return of attendance to pre-pandemic levels is closely tied to national and international travel trends, our new reservations-only model of operation, and our desire to provide a better experience with fewer crowds to visitors from whom we receive higher revenues per person.

Observatory revenue for the three months ended March 31, 2023 was $22.2 million, compared to $13.2 million for the three months ended March 31, 2022.

The observatory revenue increase was driven by higher visitation levels in 2023.

Observatory revenues and admissions are dependent upon the following:

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis