What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-08 · 260 added, 298 removed, 526 unchanged (51% of the section changed)

3 unchanged sentences

(amounts in thousands, except per unit amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

ASSETS (unaudited)

6 unchanged sentences

Commercial real estate properties, net 2,413,798 2,405,130

Assets held for sale — 35,538

Cash and cash equivalents 333,573 346,620

18 unchanged sentences

Tenants’ security deposits 25,457 35,499

Liabilities related to assets held for sale — 5,943

Total liabilities 2,465,853 2,488,288

20 unchanged sentences

(amounts in thousands, except per unit amounts)

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

2023 2022 2023 2022

Three Months Ended March 31,

Rental revenue $ 153,882 $ 140,091

Observatory revenue 24,596 22,154

Lease termination fees — — — 20,032

Third-party management and other fees 265 427

14 unchanged sentences

Interest expense ( 25,128 ) ( 25,304 )

Loss on early extinguishment of debt ( 553 ) —

Gain on disposition of property — 15,696

Income before income taxes 9,560 10,475

Income tax benefit (expense) ( 1,409 ) ( 1,457 ) ( 923 ) ( 224 )

Income tax benefit 655 1,219

Net income 10,215 11,694

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

Net (income) loss attributable to non-controlling interest in other partnerships ( 111 ) 49 ( 69 ) 271

Net (income) loss attributable to non-controlling interests in other partnerships ( 4 ) 43

Net income attributable to common unitholders $ 9,161 $ 10,687

10 unchanged sentences

(amounts in thousands)

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

2023 2022 2023 2022

Three Months Ended March 31,

Net income $ 10,215 $ 11,694

Other comprehensive income:

Unrealized gain on valuation of interest rate swap agreements 9,525 19,588 16,058 39,407

Other comprehensive income (loss):

Unrealized gain (loss) on valuation of interest rate swap agreements 8,198 ( 5,402 )

Amount reclassified into interest expense ( 2,324 ) ( 1,272 )

Other comprehensive income 7,250 20,980 10,629 46,835

Other comprehensive income (loss) 5,874 ( 6,674 )

Comprehensive income 16,089 5,020

Net (income) loss attributable to non-controlling interest in other partnerships ( 111 ) 49 ( 69 ) 271

Other comprehensive income attributable to non-controlling interest in other partnerships ( 480 ) ( 670 ) ( 384 ) ( 2,297 )

Net (income) loss attributable to non-controlling interests in other partnerships ( 4 ) 43

Other comprehensive loss attributable to non-controlling interest in other partnerships — 381

Comprehensive income attributable to OP unitholders $ 16,085 $ 5,444

2 unchanged sentences

Condensed Consolidated Statements of Capital

For The Three Months Ended September 30, 2023 and 2022

(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 Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Operating Partnership Units Operating Partnership Unitholders Non-controlling Interest in Other Partnerships Total Capital

Balance at June 30, 2023 6,224 $ 29,940 160,830 $ 965,950 81,611 $ 695,416 20,426 $ 3,810 5,380 $ 681 2,669 $ 375 15,440 $ 1,711,612

Conversion of operating partnership units to ESRT Partner's Capital

— — 1,506 10,663 ( 1,244 ) ( 10,616 ) ( 183 ) ( 36 ) ( 55 ) ( 8 ) ( 24 ) ( 3 ) — —

Contributions from consolidated joint ventures — — — — — — — — — — — — 75 75

Repurchases of common shares — — — — — — — — — — — — — —

Equity compensation — — ( 2 ) 449 36 4,540 — — — — — — — 4,989

Distributions — ( 1,050 ) — ( 5,683 ) — ( 2,814 ) — ( 708 ) — ( 187 ) — ( 92 ) — ( 10,534 )

Net income — 1,050 — 11,560 — 5,208 — 1,417 — 394 — 188 111 19,928

Other comprehensive income — — — 4,144 — 1,893 — 524 — 142 — 67 480 7,250

Balance at September 30, 2023 6,224 $ 29,940 162,334 $ 987,083 80,403 $ 693,627 20,243 $ 5,007 5,325 $ 1,022 2,645 $ 535 $ 16,106 $ 1,733,320

General Partner Limited Partners

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

Conversion of operating partnership units to ESRT Partner's Capital

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

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

Equity compensation — — ( 8 ) 317 — 5,057 — — — — — — — 5,374

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

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

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

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

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Nine Months Ended September 30, 2023 and 2022

For The Three Months Ended March 31, 2024 and 2023

(amounts in thousands)

4 unchanged sentences

Conversion of operating partnership units to ESRT Partner's Capital — — 1,566 7,132 ( 807 ) ( 6,981 ) ( 560 ) ( 121 ) ( 153 ) ( 22 ) ( 46 ) ( 8 ) — —

— — 3,038 15,682 ( 1,823 ) ( 15,523 ) ( 838 ) ( 131 ) ( 233 ) ( 12 ) ( 144 ) ( 16 ) — —

Contributions from consolidated joint ventures — — — — — — — — — — — — 187 187

Repurchases of common units — — — — — — — — — — — — — —

Acquisition of non-controlling interests in other partnerships — — — 114 — — — — — — — — ( 15,411 ) ( 15,297 )

Equity compensation — — 186 ( 260 ) 2,884 3,709 — — — — — — — 3,449

2 unchanged sentences

Other comprehensive income — — — 3,722 — 1,572 — 417 — 107 — 56 — 5,874

Balance at September 30, 2023 6,224 $ 29,940 162,334 $ 987,083 80,403 $ 693,627 20,243 $ 5,007 5,325 $ 1,022 2,645 $ 535 $ 16,106 $ 1,733,320

Balance at March 31, 2024 6,224 $ 29,940 164,798 $ 996,122 82,266 $ 692,575 19,387 $ 4,722 4,991 $ 863 2,573 $ 512 $ — $ 1,724,734

4 unchanged sentences

— — 806 2,544 ( 282 ) ( 2,433 ) ( 397 ) ( 89 ) ( 55 ) ( 9 ) ( 72 ) ( 13 ) — —

Repurchases of common shares — — ( 933 ) ( 5,694 ) — — — — — — — — — ( 5,694 )

Contributions from consolidated joint ventures — — — — — — — — — — — — 18 18

Repurchases of common units — — ( 10,433 ) ( 82,545 ) — — — — — — — — — ( 82,545 )

Equity compensation — — 327 21 1,519 4,353 — — — — — — — 4,374

Distributions — ( 1,050 ) — ( 5,675 ) — ( 2,006 ) — ( 724 ) — ( 193 ) — ( 95 ) — ( 9,743 )

Net income (loss) — 3,151 — 23,847 — 10,490 — 3,136 — 813 — 426 ( 271 ) 41,592

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

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

Net income — 1,050 — 6,519 — 2,993 — 844 — 224 — 107 ( 43 ) 11,694

Other comprehensive income (loss) — — — ( 3,839 ) — ( 1,762 ) — ( 497 ) — ( 132 ) — ( 63 ) ( 381 ) ( 6,674 )

Balance at March 31, 2023 6,224 $ 29,940 161,329 $ 948,251 81,712 $ 682,972 20,684 $ 925 5,503 $ ( 94 ) 2,717 $ 12 $ 15,060 $ 1,677,066

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

2 unchanged sentences

(amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows From Operating Activities

8 unchanged sentences

Equity based compensation 3,449 4,374

Loss on early extinguishment of debt 553 —

Increase (decrease) in cash flows due to changes in operating assets and liabilities:

7 unchanged sentences

Cash Flows From Investing Activities

Acquisition of real estate property ( 26,910 ) —

Acquisition of non-controlling interests in other partnerships ( 14,226 ) —

Net proceeds from disposition of property — 39,137

Post-closing costs from a prior period sale of property ( 4,034 ) —

Development costs ( 9 ) ( 12 )

5 unchanged sentences

(amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows From Financing Activities

Repayment of mortgage notes payable ( 1,470 ) ( 2,142 )

Contributions from consolidated joint ventures 187 224

Proceeds from unsecured term loan 95,000 —

Repayment of unsecured term loan ( 215,000 ) —

Proceeds from unsecured revolving credit facility 120,000 —

Deferred financing costs ( 9,280 ) —

Repurchases of common units — ( 5,694 )

18 unchanged sentences

Derivative instruments at fair values included in prepaid expenses and other assets 16,726 12,446

Derivative instruments at fair values included in accounts payable and accrued expenses — 2,171

Conversion of operating partnership units to ESRT partner's capital 7,132 2,544

Disposal of land in connection with foreclosure — 1,680

Extinguishment of debt in connection with property disposition — 30,000

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

6 unchanged sentences

(the "Operating Partnership") is the entity through which Empire State Realty Trust, Inc.

(“ESRT”), a New York City-focused real estate investment trust ("REIT"), conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

We have four revenue drivers:

a portfolio of modernized, amenitized and well-located office, retail, and multifamily assets.

ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – also includes its Observatory Experience, Tripadvisor’s #1 United States destination attraction in its 2023 Travelers’ Choice Best of the Best Awards for two consecutive years.

As of September 30, 2023, ESRT’s portfolio is comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units.

ESRT), a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets, and the Observatory deck attraction in ESRT’s flagship Empire State Building – the “World’s Most Famous Building”, conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets.

The Company is a recognized leader in energy efficiency and indoor environmental quality.

As of March 31, 2024, ESRT’s portfolio was comprised of approximately 8.6 million rentable square feet of office space, 0.7 million rentable square feet of retail space and 727 residential units.

Our office portfolio included 11 properties (including three long-term ground leasehold interests) encompassing approximately 8.6 million rentable square feet.

1 unchanged sentence

The remaining two office properties encompass approximately 1.1 million rentable square feet and are located in Stamford, Connecticut, with immediate access to mass transportation.

Additionally, we have entitled land adjacent to one of the Stamford office properties, that can support the development of an approximately 0.4 million rentable square foot office building and garage.

Our retail portfolio included approximately 0.7 million rentable square feet of retail space, predominantly located in Manhattan.

Our multifamily portfolio included 727 residential units in New York City, 721 of which are located in Manhattan.

Additionally, we have entitled land adjacent to one of the Stamford office properties that can support the development of either office or residential per local zoning.

Our multifamily portfolio included 727 residential units in New York City.

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

ESRT's Class A common stock, par value $ 0.01 per share, is listed on the New York Stock Exchange under the symbol "ESRT." ESRT, as the sole general partner in our Company, has responsibility and discretion in the management and control of our Company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities, of our Company.

As of September 30, 2023, ESRT owned approximately 59.9 % of our operating partnership units.

As of March 31, 2024, ESRT owned approximately 60.1 % of our operating partnership units.

Summary of Significant Accounting Policies

1 unchanged sentence

Basis of Quarterly Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), for interim financial information, and with the rules and regulations of the Securities and Exchange Commission.

Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations.

2 unchanged sentences

These financial statements should be read in conjunction with the financial statements and accompanying notes included in the financial statements for the year ended December 31, 2023 contained in our Annual Report.

Our observatory business is subject to seasonality based on tourism trends and the weather.

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

Our multifamily business experiences some seasonality based on general market trends in New York City – the winter months (November through January) are slower in terms of leasing activity.

Our Observatory business is subject to tourism trends and the weather, and therefore does experience some seasonality.

For the year ended December 31, 2023, approximately 17 % of our annual Observatory revenue was realized in the first quarter, 26 % was realized in the second quarter, 29 % was realized in the third quarter, and 28 % was realized in the fourth quarter.

Our multifamily business experiences some seasonality based on general market trends in New York City – the winter months (November through January) are slower in terms of lease activity.

We seek to mitigate this by staggering lease terms such that

6 unchanged sentences

The primary beneficiary is required to consolidate the VIE.

At December 31, 2022, we were the primary beneficiary of a variable interest in the intermediary entity which held title to 298 Mulberry, the multifamily asset acquired in December 2022.

The intermediary entity was utilized to execute a like-kind exchange and subsequent to March 31, 2023, the like-kind exchange was completed and we took title to 298 Mulberry.

Therefore, we had no VIEs at September 30, 2023.

We had no VIEs as of March 31, 2024 and December 31, 2023.

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

6 unchanged sentences

The preparation of the condensed 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, right of use assets and other long-lived and indefinite-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 term loan and revolving credit facilities, and equity-based compensation.

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 and indefinite-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.

2 unchanged sentences

Property Acquisitions

On September 14, 2023, we closed on the acquisition of a retail property in Williamsburg, Brooklyn, located on the corner of North 6 th Street and Wythe Avenue for a purchase price of $ 26.4 million.

The property has three retail tenants and six residential units, and was fully leased as of September 30, 2023.

The transaction was executed in accordance with a "1031 Exchange" under Section 1031 of the Internal Revenue Code of 1986, as amended.

In September 2023, we closed on the acquisition of a retail property in Williamsburg, Brooklyn, located on the corner of North 6 th Street and Wythe Avenue for a purchase price of $ 26.4 million.

The property has three retail tenants and six residential units and was fully leased as of March 31, 2024.

The purchase price is the fair value at the date of acquisition.

The following table summarizes properties acquired during the nine and twelve months ended September 30, 2023 and December 31, 2022, respectively (amounts in thousands):

The following table summarizes properties acquired during the three and twelve months ended March 31, 2024 and December 31, 2023, respectively (amounts in thousands):

Property Date Acquired Land Building and Improvements Assets Liabilities Total*

Williamsburg Retail, Brooklyn 9/14/2023 $ 4,851 $ 20,936 $ 1,573 $ ( 300 ) $ 27,060

298 Mulberry Street, Manhattan 12/20/2022 $ 40,935 $ 69,508 $ 5,300 $ ( 150 ) $ 115,593

*Includes total capitalized transaction costs of $ 0.7 million.

In March 2024, we executed a buyout of our partner's 10 % interest in two of our multifamily properties located at 561 10 th Avenue and 345 East 94 th Street in Manhattan for $ 14.2 million in cash and the assumption of $ 18.0 million of in-place

As of March 31, 2024, we own 100 % of the interests in these assets.

As there was no change in control, we accounted for this acquisition as an equity transaction in accordance with Accounting Standards Codification 810-10 and no gain or loss was recognized.

Property Dispositions

The following table summarizes properties disposed of during the nine and twelve months ended September 30, 2023 and December 31, 2022, respectively (amounts in thousands):

The following table summarizes properties disposed of during the three and twelve months ended March 31, 2024 and December 31, 2023, respectively (amounts in thousands):

Property Date of Disposal Sales Price Gain on Disposition

1 unchanged sentence

69-97 and 103-107 Main Street, Westport, Connecticut 2/1/2023 $ 40,000 $ 15,689

10 Bank Street, White Plains, New York 12/7/2022 $ 42,000 $ 6,818

383 Main Avenue, Norwalk, Connecticut** 4/1/2022 $ 30,000 $ 27,170

*The gain is net of approximately $ 2.0 million of estimated post-closing obligations related to contaminated soil remediation costs and our commitment to reimburse the buyer for a delay in rent commencement from a tenant impacted by the soil remediation efforts.

Should this rent commencement be delayed beyond our current estimate, our maximum exposure to reimburse the buyer for such a delay, as limited by amounts held in escrow, is an incremental post-closing obligation of $ 3.6 million.

**We transferred the property, which was encumbered by a $ 30.0 million mortgage, back to the lender in a consensual foreclosure and recognized a non-cash gain upon the disposition.

*The gain is net of approximately $ 4.5 million of post-closing costs we accrued related to our commitment to reimburse the buyer for a lease that did not occur.

We funded the buyer for these costs and we have no further obligations or contingencies related to this property.

Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following as of September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023 December 31, 2022

Deferred costs, net, consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024 December 31, 2023

Leasing costs $ 230,108 $ 224,295

4 unchanged sentences

Total deferred costs, net, excluding net deferred financing costs $ 170,223 $ 169,580

At September 30, 2023 and December 31, 2022, $ 3.4 million and $ 5.0 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $ 5.8 million and $ 17.7 million for the three and nine months ended September 30, 2023, respectively, and $ 5.6 million and $ 19.8 million for the three and nine months ended September 30, 2022, respectively.

Amortization expense related to acquired lease intangibles was $ 1.5 million and $ 6.1 million for the three and nine months ended September 30, 2023, respectively, and $ 2.2 million and $ 10.6 million for the three and nine months ended September 30, 2022, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023 December 31, 2022

At March 31, 2024 and December 31, 2023, $ 10.2 million and $ 2.9 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $ 5.8 million and $ 5.8 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense related to acquired lease intangibles was $ 1.3 million and $ 2.4 million for the three months ended March 31, 2024 and 2023, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024 December 31, 2023

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

1 unchanged sentence

Acquired below-market ground leases, net $ 319,284 $ 321,241

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Acquired below-market leases $ ( 51,927 ) $ ( 55,155 )

1 unchanged sentence

Acquired below-market leases, net $ ( 12,798 ) $ ( 13,750 )

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $ 0.6 million and $ 1.9 million for the three and nine months ended September 30, 2023, respectively, and $ 0.7 million and $ 4.1 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, we had goodwill of $ 491.5 million.

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $ 0.5 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, we had goodwill of $ 491.5 million.

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

From the quarter ended June 30, 2020 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 temporary closure of our observatory due to the COVID-19 pandemic and subsequent slow increase in visitors due to continued pandemic-related restrictions impacting tourism and international travel.

We performed our annual goodwill testing in October 2023, where 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.

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 reporting unit exceeds its carrying value.

Subsequent to our last annual goodwill impairment test, we have performed quarterly qualitative assessments and have not identified any events which would indicate, on a more likely than not basis, that the goodwill allocated to the reporting unit was impaired.

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

We also perform quarterly qualitative assessments and have not identified any events which would indicate, on a more likely than not basis, that the goodwill allocated to the reporting unit was impaired.

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

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

Debt consisted of the following as of September 30, 2023 and December 31, 2022 (amounts in thousands):

Principal Balance As of September 30, 2023

September 30, 2023 December 31, 2022 Stated

Debt consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):

Principal Balance As of March 31, 2024

March 31, 2024 December 31, 2023 Stated

Rate Effective

Mortgage debt

Fixed rate mortgage debt

Metro Center $ 79,425 $ 80,070 3.59 % 3.67 % 11/5/2024

27 unchanged sentences

4.51 % 12/31/2026

Unsecured revolving credit facility (4)

— — SOFR plus 1.30 %

Unsecured term loan facility (4)

1 unchanged sentence

4.47 % 3/8/2029

Unsecured revolving credit facility (4)

120,000 — SOFR plus 1.30 %

4.03 % 3/8/2029

Total principal 2,255,529 2,256,998

3 unchanged sentences

______________

(1) The effective rate is the yield as of September 30, 2023 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(1) The effective rate is the yield as of March 31, 2024 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 at 4.09 % and a $ 11.9 million loan bearing interest at 6.25 %.

(4) At September 30, 2023, we were in compliance with all debt covenants.

In April 2024, we worked with the First Stamford P lace mortgage lender to structure a cooperative consensual foreclosure, which is anticipated to be completed by June 30, 2024.

Upon completion, this transaction is expected to eliminate a $ 175.9 million liability that matures in July 2027 from the balance sheet.

(4) At March 31, 2024, we were in compliance with all debt covenants.

Principal Payments

Aggregate required principal payments at September 30, 2023 are as follows (amounts in thousands):

Aggregate required principal payments at March 31, 2024 are as follows (amounts in thousands):

Year Amortization Maturities Total

7 unchanged sentences

Deferred Financing Costs

Deferred financing costs, net, consisted of the following at September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023 December 31, 2022

Deferred financing costs, net, consisted of the following at March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024 December 31, 2023

Financing costs $ 52,200 $ 43,473

1 unchanged sentence

Total deferred financing costs, net $ 20,072 $ 12,365

Amortization expense related to deferred financing costs was $ 1.1 million and $ 3.3 million for the three and nine months ended September 30, 2023, respectively, and $ 1.2 million and $ 3.8 million for the three and nine months ended September 30, 2022, respectively.

Amortization expense related to deferred financing costs was $ 1.0 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

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 an $ 850.0 million revolving credit facility that matures on March 31, 2025, and a $ 215.0 million term loan facility that matures on March 19, 2025.

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 September 30, 2023 , 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”).

On March 8, 2024, through our Operating Partnership, we entered into a second amended and restated credit agreement with Bank of America, N.A., as administrative agent and the other lenders party thereto, that amends and restates the amended and restated credit agreement, dated August 29, 2017 which governs our senior unsecured revolving credit facility and term loan facility (collectively, the “BofA Credit Facilities”).

The BofA Credit Facilities are comprised of a $ 620 million senior unsecured revolving credit facility (the “Revolving Credit Facility”) and a $ 95 million term loan facility (the “BofA Term Loan Facility”).

We may request that the BofA Credit Facilities be increased through one or more increases in the Revolving Credit Facility or one or more increases in the BofA Term Loan Facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount under the second amended and restated credit agreement not to exceed $ 1.5 billion.

The new Revolving Credit Facility matures on March 8, 2029, inclusive of two six-month extension periods and replaced the existing revolving credit facility that was due to mature in March 2025.

The new BofA Term Loan Facility matures on March 8, 2029, inclusive of two twelve-month extension periods and replaced the existing term loan facility that was due to mature in March 2025.

Initial interest rates on the new BofA Credit Facilities, which may change based on our leverage levels, are SOFR plus a benchmark adjustment of 10.0 basis points ("adjusted SOFR") plus 130 basis points for any drawn portion of the Revolving Credit Facility and adjusted SOFR plus 150 basis points for the BofA Term Loan Facility.

In addition, the BofA Credit Facilities have a sustainability-linked pricing mechanism that reduces the borrowing spread if certain benchmarks are

achieved each year.

As of March 31, 2024 , we had $ 120.0 million borrowings drawn on the Revolving Credit Facility and $ 95.0 million under the BofA Term Loan Facility.

On March 13, 2024, through our Operating Partnership, we entered into a third amendment to our credit agreement dated March 19, 2020 with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which governs a senior unsecured term loan facility (the “Wells Term Loan Facility”).

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

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.

The third amendment provides for, among other things, certain conforming changes to the BofA Credit Facilities agreement, including increases to the capitalization rate for certain of our properties.

No other changes were made to the amount of the commitments, the maturity date of the outstanding loans or the covenants.

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

As of September 30, 2023 , our borrowings amounted to $ 175.0 million under the Wells Term Loan Facility.

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

As of March 31, 2024 , our borrowings amounted to $ 175.0 million under the Wells Term Loan Facility.

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

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

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

As of September 30, 2023, we were in compliance with these covenants.

As of March 31, 2024, 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 terms also require compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio.

The agreements 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, 2023, we were in compliance with these covenants.

As of March 31, 2024, we were in compliance with these covenants.

On April 10, 2024, we entered into a Note Purchase Agreement with the purchasers named therein (the “Purchase Agreement”) in connection with a private placement of our Series I-K green guaranteed senior unsecured notes (the “Notes”).

Under the Purchase Agreement, we will issue and sell $ 225 million aggregate principal amount of Notes, consisting of (a) $ 155 million aggregate principal amount of 7.20 % Series I Green Guaranteed Senior Notes due June 17, 2029, (b) $ 45 million aggregate principal amount of 7.32 % Series J Green Guaranteed Senior Notes due June 17, 2031 and (c) $ 25 million aggregate principal amount of 7.41 % Series K Green Guaranteed Senior Notes due June 17, 2034.

The sale and purchase of the Notes is scheduled to be held on June 17, 2024, subject to customary closing conditions.

The issue price for the Notes is 100 % of the aggregate principal amount thereof.

Pursuant to the terms of the Purchase Agreement, we may prepay all or a portion of the Notes upon notice to the holders at a price equal to 100 % of the principal amount so prepaid plus a make-whole premium as set forth in the Purchase Agreement.

The Purchase Agreement contains customary covenants and customary events of default similar to those in our Series A-H senior unsecured notes.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023 December 31, 2022

Accounts payable and accrued expenses consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024 December 31, 2023

Accrued capital expenditures $ 48,771 $ 51,815

Accounts payable and accrued expenses 37,674 44,169

Interest rate swap agreements liability — 85

Accrued interest payable 4,560 3,687

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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 September 30, 2023, we did not have derivatives in a net liability position.

As of September 30, 2023 and December 31, 2022, we had interest rate swaps and caps with an aggregate notional value of $ 573.6 million and $ 574.8 million, respectively.

As of March 31, 2024, we did not have derivatives in a net liability position.

As of March 31, 2024 and December 31, 2023, we had interest rate swaps and caps with an aggregate notional value of $ 586.3 million and $ 573.2 million, respectively.

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

As of September 30, 2023 and December 31, 2022, the fair value of our derivative instruments in an asset position amounted to $ 25.6 million and $ 17.9 million, respectively, which is included in prepaid expenses and other assets on the condensed consolidated balance sheets.

As of March 31, 2024, the fair value of our derivative instruments in an asset position amounted to $ 16.7 million, which is included in prepaid expenses and other assets on the condensed consolidated balance sheet.

As of December 31, 2023, the fair value of our derivative instruments amounted to $ 11.8 million which is included in prepaid expenses and other assets, and ($ 0.1 million) which is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.

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

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 September 30, 2023 and 2022, our cash flow hedges are deemed highly effective and a net unrealized gain of $ 7.3 million and $ 10.6 million for the three and nine months ended September 30, 2023, respectively, and a net unrealized gain of $ 21.0 million and $ 46.8 million for the three and nine months ended September 30, 2022, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income.

As of March 31, 2024 and 2023, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $ 5.9 million and $( 6.7 ) million for the three months ended March 31, 2024 and 2023, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income.

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

We estimate that $ 6.8 million net gain of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months.

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023 December 31, 2022

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024 December 31, 2023

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

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Interest rate swap 107,500 SOFR OIS Compound 2.6280 % August 19, 2022 March 19, 2025 2,363 — 2,383 —

Interest rate cap 6,780 70 % of 1 Month SOFR

4.5000 % October 1, 2024 November 1, 2030 44 — — —

Interest rate cap 6,676 1 Month SOFR 5.5000 % October 1, 2024 November 1, 2030 96 — — —

$ 16,726 $ — $ 11,800 $ ( 85 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands):

Three Months Ended Nine Months Ended

Effects of Cash Flow Hedges September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Amount of gain recognized in other comprehensive income (loss) $ 9,525 $ 19,588 $ 16,058 $ 39,407

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense 2,275 ( 1,392 ) 5,429 ( 7,428 )

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands):

Three Months Ended Nine Months Ended

Effects of Cash Flow Hedges September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended

Effects of Cash Flow Hedges March 31, 2024 March 31, 2023

Amount of gain (loss) recognized in other comprehensive income (loss) $ 8,198 $ ( 5,402 )

Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense 2,324 1,272

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended

Effects of Cash Flow Hedges March 31, 2024 March 31, 2023

Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded $ ( 25,128 ) $ ( 25,304 )

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense 2,275 ( 1,392 ) 5,429 ( 7,428 )

Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense 2,324 1,272

Fair Valuation

The estimated fair values at September 30, 2023 and December 31, 2022 were determined by management, using available market information and appropriate valuation methodologies.

The estimated fair values at March 31, 2024 and December 31, 2023 were determined by management, using available market information and appropriate valuation methodologies.

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

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

The following tables summarize the carrying and estimated fair values of our financial instruments as of September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023

The following tables summarize the carrying and estimated fair values of our financial instruments as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024

Estimated Fair Value

Value Total Level 1 Level 2 Level 3

Interest rate swaps included in prepaid expenses and other assets $ 25,578 $ 25,578 $ — $ 25,578 $ —

Interest rate swaps and caps included in prepaid expenses and other assets $ 16,726 $ 16,726 $ — $ 16,726 $ —

Mortgage notes payable 876,497 765,660 — — 765,660

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Unsecured term loan facilities 268,503 270,000 — — 270,000

Unsecured revolving credit facility 120,000 120,000 — — 120,000

December 31, 2023

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Value Total Level 1 Level 2 Level 3

Interest rate swaps included in prepaid expenses and other assets $ 17,936 $ 17,936 $ — $ 17,936 $ —

Interest rate swaps and caps included in prepaid expenses and other assets $ 11,800 $ 11,800 $ — $ 11,800 $ —

Interest rate swaps included in accounts payable and accrued expenses 85 85 — 85 —

Mortgage notes payable 877,388 774,280 — — 774,280

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Unsecured term loan facilities 389,286 390,000 — — 390,000

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of September 30, 2023 and December 31, 2022.

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of March 31, 2024 and December 31, 2023.

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

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

Operating expense reimbursements are reflected in our September 30, 2023 and 2022 condensed consolidated statements of operations as rental revenue.

Operating expense reimbursements are reflected in our March 31, 2024 and 2023 condensed consolidated statements of operations as rental revenue.

Rental revenue includes fixed and variable payments.

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

The components of rental revenue for the three and nine months ended September 30, 2023 and 2022 are as follows (amounts in thousands):

Three Months Ended Nine Months Ended

Rental revenue September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

The components of rental revenue for the three months ended March 31, 2024 and 2023 are as follows (amounts in thousands):

Three Months Ended

Rental revenue March 31, 2024 March 31, 2023

Fixed payments $ 136,353 $ 124,564

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Total rental revenue $ 153,882 $ 140,091

As of September 30, 2023, 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):

As of March 31, 2024, 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):

Remainder of 2024 $ 387,079

Thereafter 1,893,377

The above future minimum lease payments exclude tenant recoveries and the net accretion of above and below-market lease intangibles.

The above future minimum lease payments exclude tenant recoveries and the net accretion of above-market leases and 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.

Refer to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 in the section "Financial Statements - Note 8.

Leases" for prior disclosures related to the Signature Bank and First Republic Bank leases.

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 $ 28.5 million and lease liabilities of $ 28.5 million in our condensed consolidated balance sheets as of September 30, 2023.

Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $ 28.4 million and lease liabilities of $ 28.4 million in our condensed consolidated balance sheets as of March 31, 2024.

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

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

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of September 30, 2023 was 4.5 %.

The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of March 31, 2024 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 September 30, 2023 was 46.7 years.

As of September 30, 2023, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

The weighted average remaining lease term as of March 31, 2024 was 46.2 years.

As of March 31, 2024, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2024 $ 1,139

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Legal Proceedings

Except as described below, as of September 30, 2023, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants.

Except as described below, as of March 31, 2024, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants.

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

As previously disclosed, in October 2014, 12 former investors (the "Claimants") in Empire State Building Associates L.L.C.

(“ESBA”), which, prior to the IPO, owned the fee title to the Empire State Building, filed an arbitration claim with the American Arbitration Association against Peter L.

(“ESBA”), which, prior to the IPO, owned the fee title to the Empire State Building, filed an arbitration with the American Arbitration Association against Peter L.

Malkin, Anthony E.

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The statement of claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleged breach of fiduciary duty and related claims in connection with the IPO and formation transactions and sought monetary damages and declaratory relief.

The Claimants had opted out of a prior class action bringing similar claims that were settled with court approval.

The Respondents filed an answer and counterclaims.

Claimants had opted out of a prior class action bringing similar claims that were 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.

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This amount was recorded as an IPO litigation expense in the consolidated statements of operations for the year ended December 31, 2020.

The Respondents believe that such award in favor of the Claimants is entirely without merit and, in an action filed in the United States District Court for the Southern District of New York, sought to vacate that portion of the award.

On September 27, 2021, the court denied the Respondents' motion to vacate and entered judgement in the aforementioned amount, inclusive of accumulated interest.

The Respondents appealed that ruling.

On May 10, 2022, the 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.

The Claimants opposed the motion.

On April 20, 2023, the federal appeals court granted the motion and the federal court action challenging the award was dismissed.

On April 21, 2023, the Respondents filed a petition to vacate in part and otherwise confirm in New York State court.

On April 28, 2023, all but one of the Claimants filed a motion to confirm in that same court.

Respondents believe that such award in favor of the Claimants is entirely without merit and sought to vacate that portion of the award.

On July 31, 2023, the New York State court denied the Respondents’ petition to vacate in part and confirmed the award.

The Respondents believe that ruling is incorrect and have filed an appeal, which is pending.

On August 4, 2023, one final Claimant who had not filed a petition to confirm in New York State court did so.

On September 14, 2023, the Respondents filed an opposition to that petition, which is pending.

In addition, certain of the Claimants in the federal court action sought to pursue claims in that case against the Respondents.

The Respondents believe that any such claims are meritless.

On January 22, 2024, that court entered judgment in favor of the Claimants (save for one Claimant, whose petition to confirm is still pending in New York state court) in an amount of approximately $ 1.26 million, inclusive of interest.

The Respondents believe those rulings are incorrect and have appealed them.

In addition, certain of the Claimants in the federal court action brought to toll the statute of limitations and sought to pursue claims in that case against the Respondents.

Respondents believe that any such claims are meritless.

The magistrate judge assigned to the action has issued a Report and Recommendation rejecting the Claimants’ claims;

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Malkin and Thomas N.

Keltner, Jr., our former general counsel, have defense and indemnity rights from us with respect to this arbitration.

have defense and indemnity rights from us with respect to this arbitration.

Unfunded Capital Expenditures

At September 30, 2023, we estimate that we will incur approximately $ 139.3 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.

At March 31, 2024, we estimate that we will incur approximately $ 125.2 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, cash on hand and other borrowings.

Future property acquisitions may require substantial capital investments for refurbishment and leasing costs.

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

At September 30, 2023, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the FDIC.

At March 31, 2024, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation.

Asset Retirement Obligations

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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 September 30, 2023, 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.

Environmental site assessments and investigations have identified asbestos or asbestos-

containing building materials in certain of our properties.

As of March 31, 2024, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates.

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

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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, other than our post-closing obligations for remediation at our previously owned Westport retail assets, as discussed in more detail in our Annual Report, and at our previously owned 500 Mamaroneck property as discussed in “Financial Statements - Note 3.

Acquisitions and Dispositions.” As of September 30, 2023, with the exception of these three assets, 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.

Under various federal, state and/or local laws, ordinances and regulations, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or release of hazardous substances, waste, or petroleum products at, on, in, under or from such property, including costs for investigation or remediation, natural resource damages, or third-party liability for personal injury or property damage.

These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such materials, and the liability may be joint and several.

Some of our properties have been or may be impacted by contamination arising from current or prior uses of the property or adjacent properties for commercial, industrial or other purposes.

Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials.

We also may be liable for the costs of remediating contamination at off-site disposal or treatment facilities when we arrange for disposal or treatment of hazardous substances at such facilities, regardless of whether we comply with environmental laws in doing so.

The presence of contamination or the failure to remediate contamination on our properties may adversely affect our ability to attract and/or retain tenants, and our ability to develop or sell or borrow against those properties.

In addition to potential liability for cleanup costs, private plaintiffs may bring claims for personal injury, property damage or for similar reasons.

Environmental laws also may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.

Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property.

Some of our properties are adjacent to or near other properties which are used for industrial or commercial purposes or have contained or currently contain underground storage tanks used to store petroleum products or other hazardous or toxic substances.

Releases from these properties could impact our properties.

In addition, some of our properties have previously been used by former owners or tenants for commercial or industrial activities, e.g., gas stations and dry cleaners, and a portion of the Metro Tower site is currently used for automobile parking and was formerly leased to a fueling facility that may release petroleum products or other hazardous or toxic substances at such properties or to surrounding properties.

While certain properties contain or contained uses that could have or have impacted our properties, we are not aware of any liabilities related to environmental contamination that we believe will have a material adverse effect on our operations.

We have post-closing obligations related to the 69-97 and 103-107 Main Street, Westport, Connecticut properties that we sold in February 2023 to (i) close out a voluntary remediation program at 69-97 Main Street to address residual impacts of prior presence of underground storage tanks and (ii) comply with a consent order issued by the Connecticut Department of Environmental Protection to investigate soil conditions at 103-107 Main Street.

We believe any expenses incurred to close out and comply with the remediation program and consent order, respectively, will be immaterial to the results of our operations.

In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations.

Noncompliance with these laws and regulations could subject us or our tenants to liability.

These liabilities could affect a tenant’s ability to make rental payments to us.

Moreover, changes in laws could increase the potential costs of compliance with such laws and regulations or increase liability for noncompliance.

This may result in significant unanticipated expenditures.

We sometimes require our tenants to comply with environmental and health and safety laws and regulations and to indemnify us for any related liabilities in our leases with them.

But in the event of the bankruptcy or inability of any of our tenants to satisfy such obligations, we may be required to satisfy such obligations.

We are not presently aware of any instances of material non-compliance with environmental or health and safety laws or regulations at our properties, and we believe that we and/or our tenants have all material permits and approvals necessary under current laws and regulations to operate our properties.

In addition, we may become subject to new compliance requirements and/or new costs or taxes associated with natural resource or energy usage and related emissions (such as a carbon tax), which could increase our operating costs.

In particular, as the owner of large commercial buildings in New York City, we are subject to Local Law 97 passed by the New York City Council in April 2019, which for each such building establishes annual limits for greenhouse gas emissions, requires yearly emissions reports beginning in May 2025, and imposes penalties for emissions above such limits.

Based upon our present understanding of the law and calculations related thereto, we expect to pay no fine on any building in our commercial portfolio in the 2024-2029 first period of enforcement.

As the owner or operator of real property, we may also incur liability based on various building conditions.

For example, environmental site assessments and investigations have identified asbestos or asbestos-containing material ("ACM") in certain of our properties, and it is possible that other properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained ACM.

Environmental and health and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with those requirements.

These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be disturbed during maintenance, redevelopment or demolition of a building, potentially resulting in substantial costs.

In addition, we may be subject to liability for personal injury or property damage sustained as a result of releases of ACM into the environment.

We are not presently aware of any material liabilities related to building conditions, including any instances of material non-compliance with asbestos requirements or any material liabilities related to asbestos.

Our properties may contain or develop harmful mold or suffer from other indoor air quality issues, which could lead to liability for adverse health effects or property damage or costs for remediation.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.

Some molds may produce airborne toxins or irritants.

Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria.

Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.

As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation.

In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury occurs.

We are not presently aware of any material adverse indoor air quality issues at our properties.

As of March 31, 2024, with the exception of the Westport assets, 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 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.

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

As of September 30, 2023, there were 161,346,829 shares of Class A common stock, 986,884 shares of Class B common stock and 108,617,764 operating partnership units outstanding.

As of March 31, 2024, there were 163,815,629 shares of Class A common stock, 982,689 shares of Class B common stock and 109,217,835 operating partnership units outstanding.

The controlling interest of 60.1 % is owned by ESRT.

The other 40.1 % noncontrolling interest in the OP is diversified among various limited partners, some of whom include Company directors, senior management and employees.

The other 39.9 % non-controlling interest in the OP is diversified among various limited partners, some of whom include Company directors, senior management and employees.

ESRT has two classes of common stock as a means to give its OP Unit holders voting rights in the public company that correspond to their economic interest in the combined entity.

A one-time option was created at our formation transactions for any pre-IPO OP Unit holder to exchange one OP Unit out of every 50 OP Units they owned for one ESRT Class B share, and such ESRT Class B share carries 50 votes per share.

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

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 our Series ES, Series 250 and Series 60 operating partnership units from January 1, 2024 through December 31, 2025.

Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions.

The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws.

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

As of March 31, 2024, we had $ 500.0 million remaining of the authorized repurchase amount.

There were no repurchases of equity securities during the three months ended March 31, 2024.

Private Perpetual Preferred Units

As of March 31, 2024, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding.

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

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.

Both series are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events.

Distributions

Total distributions paid to OP unitholders were $ 9.5 million and $ 8.7 million for the three months ended March 31, 2024 and 2023, respectively.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

Incentive and Share-Based Compensation

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

Empire State Realty OP, L.P.

2019 Equity Incentive Plan (the “2019 Plan”) and replaced the First Amended and Restated Empire State Realty Trust, Inc.

2019 Equity Incentive Plan (the “2019 Plan”) was approved by our shareholders.

The 2019 Plan provides for grants to directors, employees and consultants of ESRT and the Operating Partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards and replaced 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").

An aggregate of approximately 11.0 million shares of ESRT common stock are authorized for issuance under awards granted pursuant to the 2019 Plan.

We will not issue any new equity awards under the 2013 Plan.

The shares of ESRT Class A common stock underlying any awards under the Plans 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.

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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.

An aggregate of approximately 11.0 million shares of ESRT common stock was authorized for issuance under awards granted pursuant to the 2019 Plan, and as of March 31, 2024, 1.0 million shares of common stock remain available for future issuance.

Long-term incentive plan ("LTIP") units are a special class of partnership interests.

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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 capital events, and any increase in valuation from the time of one such event to the next 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.

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 one such event to the next 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 Series PR operating partnership units on a one -for-one basis.

LTIP units subject to time-based vesting, whether vested or not, receive per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock.

LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock.

Market and performance-based LTIPs 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.

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.

The timing, manner, price and amount of any repurchases will be determined by ESRT and us and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws.

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.

There were no purchases of equity securities in the three months ended September 30, 2023.

Private Perpetual Preferred Units

As of September 30, 2023, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding.

Both series are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events.

Distributions

Total distributions paid to OP unitholders were $ 9.5 million and $ 27.6 million for the three and nine months ended September 30, 2023, respectively, and $ 9.6 million and $ 29.1 million for the three and nine months ended September 30, 2022, respectively.

Total distributions paid to preferred unitholders were $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2023, respectively, and $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively.

Incentive and Share-Based Compensation

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

An aggregate of 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan, and as of September 30, 2023, 4.2 million shares of ESRT common stock remain available for future issuance.

During July 2023, we granted our two new directors, Christina Van Tassell and Hannah Yang, a total of 27,000 LTIP units which are subject to time-based vesting with a combined fair market value of $ 0.2 million.

One-fourth of the units will vest on May 12, 2024, and the remainder shall vest in substantially equal installments on each subsequent anniversary for a period of three years thereafter.

In March 2024, we made grants of LTIP units to executive officers under the 2019 Plan, including a total of 1,191,241 LTIP units that are subject to time-based vesting, 891,213 LTIP units that are subject to market-based vesting and 689,500 units that are subject to performance-based vesting with fair market values of $ 9.7 million, $ 5.4 million and $ 5.4 million, respectively.

In March 2024, we made grants of LTIP units and restricted stock to certain other employees under the 2019 Plan, including a total of 130,016 LTIP units and 259,927 shares of restricted stock that are subject to time-based vesting, 118,919 LTIP units that are subject to market-based vesting and 91,901 LTIP units that are subject to performance-based vesting, with fair market values of $ 1.2 million and $ 2.6 million, respectively, for the time-based vesting awards, $ 0.9 million for the market-based vesting awards and $ 0.9 million for the performance-based vesting awards.

The awards subject to time-based vesting vest ratably over a period of years, subject generally to the grantee's continued employment.

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.

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.

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.

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 the requisite 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 .

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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.

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.

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

LTIP units and ESRT restricted stock issued during the nine months ended September 30, 2023 were valued at $ 21.7 million.

The weighted average per unit or share fair value was $ 5.67 for grants issued for the nine months ended September 30, 2023.

LTIP units and ESRT restricted stock issued during the three months ended March 31, 2024 were valued at $ 26.1 million.

The weighted average per unit or share fair value was $ 7.74 for grants issued for the three months ended March 31, 2024.

The fair value per unit or share granted in 2024 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 1.6 %, a risk-free interest rate from 4.4 % to 5.1 %, and an expected price volatility from 37.0 % to 48.0 %.

No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding as of September 30, 2023.

The following is a summary of ESRT restricted stock and LTIP unit activity for the nine months ended September 30, 2023:

No other stock options, dividend equivalents, or stock appreciation rights were issued during the three months ended March 31, 2024.

The following is a summary of ESRT restricted stock and LTIP unit activity for the three months ended March 31, 2024:

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

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Forfeited or unearned ( 180 ) — ( 228,660 ) — 6.98

Unvested balance at September 30, 2023 609,663 3,297,550 3,005,200 1,276,363 $ 6.53

Unvested balance at March 31, 2024 673,122 3,624,499 3,097,854 2,057,764 $ 6.84

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

For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $ 0.5 million and $ 2.2 million for the three and nine months ended September 30, 2023, respectively, and $ 0.4 million and $ 2.0 million for the three and nine months ended September 30, 2022, respectively.

Unrecognized compensation expense was $ 3.5 million at September 30, 2023, which will be recognized over a weighted average period of 2.5 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $ 4.5 million and $ 12.6 million for the three and nine months ended September 30, 2023, respectively, and $ 4.8 million and $ 13.7 million for the three and nine months ended September 30, 2022, respectively.

Unrecognized compensation expense was $ 28.1 million at September 30, 2023, which will be recognized over a weighted average period of 2.5 years.

For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $ 0.7 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

Unrecognized compensation expense was $ 16.6 million at March 31, 2024, which will be recognized over a weighted average period of 2.8 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognized noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $ 2.7 million and $ 3.7 million for the three months ended March 31, 2024 and 2023, respectively.

Unrecognized compensation expense was $ 31.2 million at March 31, 2024, which will be recognized over a weighted average period of 2.6 years.

Earnings Per Unit

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Share-based payment awards are included in the calculation of diluted income using the treasury stock method if dilutive.

For the three and nine months ended September 30, 2023 and 2022, earnings per unit is computed as follows (amounts in thousands, except per share amounts):

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the three months ended March 31, 2024 and 2023, earnings per unit is computed as follows (amounts in thousands, except per share amounts):

Three Months Ended

March 31, 2024 March 31, 2023

Net income $ 10,215 $ 11,694

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Net (income) loss attributable to non-controlling interests in other partnerships ( 4 ) 43

Earnings allocated to unvested units — — — —

Net income attributable to common unitholders – basic and diluted $ 9,161 $ 10,687

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Stock-based compensation plans 2,932 704

3,317 1,086 1,890 1,086

Weighted average units outstanding –- diluted 267,494 265,197

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Diluted $ 0.03 $ 0.04

There were zero antidilutive shares and LTIP units for the three and nine months ended September 30, 2023, respectively, and zero antidilutive shares and LTIP units for the three and nine months ended September 30, 2022, respectively.

There were zero antidilutive shares and LTIP units for the three months ended March 31, 2024 and 2023, respectively.

Related Party Transactions

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Since we became a public company, we have earned supervisory fees from entities affiliated with Anthony E.

Malkin, our Chairman, President and Chief Executive Officer.

These fees were $ 0.2 million and $ 0.7 million for the three and nine months ended September 30, 2023, respectively, and $ 0.2 million and $ 0.8 million for the three and nine months ended September 30, 2022, respectively.

Malkin, our Chairman and Chief Executive Officer.

These fees were $ 0.2 million and $ 0.2 million for the three months ended March 31, 2024 and 2023, respectively.

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

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Since we became a public company, we have earned property management fees from entities affiliated with Anthony E.

These fees were $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2023, respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2022, respectively.

These fees were $ 0.1 million and $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

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

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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.

Malkin, our chairman emeritus, 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 properties and businesses to provide them with general computer-related support services.

Total aggregate revenue was $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2023, respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2022, respectively.

As disclosed in greater detail in our Annual Report, in connection with the sale of our Westport retail assets in February 2023, we advanced a loan to the buyer to facilitate closing with a principal amount of $ 0.6 million, which bears interest at SOFR plus 3.5 % and requires repayment of principal to the extent of available cash flow of the property.

As of September 30, 2023, the loan has been fully paid.

Total aggregate revenue was $ 0.1 million and $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

One of our directors, Hannah Yang, is sister to Heela Yang, who is Founder and Chief Executive Officer of Sol de Janerio USA, a tenant at One Grand Central Place — the lease is projected to commence on January 1, 2025 with a starting annualized rent of $ 3.5 million.

Sol de Janerio is a subsidiary of L’Occitane, a tenant at 111 W.

33 rd Street.

Segment Reporting

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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 includes the operation of the 86th and 102nd floor observatories at the Empire State Building.

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 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.

The following tables provide components of segment net income for each segment for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands):

Three Months Ended September 30, 2023

Real Estate Observatory Intersegment Elimination Total

Rental revenue $ 151,458 $ — $ — $ 151,458

Intercompany rental revenue 22,113 — ( 22,113 ) —

Observatory revenue — 37,562 — 37,562

Third-party management and other fees 268 — — 268

Other revenue and fees 2,238 — — 2,238

Total revenues 176,077 37,562 ( 22,113 ) 191,526

Operating expenses:

Property operating expenses 42,817 — — 42,817

Intercompany rent expense — 22,113 ( 22,113 ) —

Ground rent expenses 2,331 — — 2,331

General and administrative expenses 16,012 — — 16,012

Observatory expenses — 9,471 — 9,471

Real estate taxes 32,014 — — 32,014

Depreciation and amortization 46,593 31 — 46,624

Total operating expenses 139,767 31,615 ( 22,113 ) 149,269

Total operating income 36,310 5,947 — 42,257

Other income (expense):

Interest income 4,410 52 — 4,462

Interest expense ( 25,382 ) — — ( 25,382 )

Income before income taxes 15,338 5,999 — 21,337

Income tax expense ( 146 ) ( 1,263 ) — ( 1,409 )

Net income $ 15,192 $ 4,736 $ — $ 19,928

Segment assets $ 3,959,249 $ 257,298 $ — $ 4,216,547

Expenditures for segment assets $ 56,227 $ — $ — $ 56,227

Three Months Ended September 30, 2022

The following tables provide components of segment net income for each segment for the three months ended March 31, 2024 and 2023 (amounts in thousands):

Three Months Ended March 31, 2024

Real Estate Observatory Intersegment Elimination Total

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Interest expense ( 25,128 ) — — ( 25,128 )

Loss on early extinguishment of debt ( 553 ) — — ( 553 )

Income before income taxes 9,461 99 — 9,560

Income tax expense ( 359 ) ( 1,098 ) — ( 1,457 )

Income tax (expense) benefit ( 113 ) 768 — 655

Net income $ 9,348 $ 867 $ — $ 10,215

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Expenditures for segment assets $ 47,645 $ 39 $ — $ 47,684

Nine Months Ended September 30, 2023

Real Estate Observatory Intersegment Elimination Total

Rental revenue $ 446,152 $ — $ — $ 446,152

Intercompany rental revenue 58,969 — ( 58,969 ) —

Observatory revenue — 93,149 — 93,149

Third-party management and other fees 1,076 — — 1,076

Other revenue and fees 6,313 — — 6,313

Total revenues 512,510 93,149 ( 58,969 ) 546,690

Operating expenses:

Property operating expenses 124,380 — — 124,380

Intercompany rent expense — 58,969 ( 58,969 ) —

Ground rent expenses 6,994 — — 6,994

General and administrative expenses 47,795 — — 47,795

Observatory expenses — 25,983 — 25,983

Real estate taxes 95,292 — — 95,292

Depreciation and amortization 140,194 118 — 140,312

Total operating expenses 414,655 85,070 ( 58,969 ) 440,756

Total operating income 97,855 8,079 — 105,934

Other income (expense):

Interest income 10,257 139 — 10,396

Interest expense ( 76,091 ) — — ( 76,091 )

Gain on disposition of property 29,261 — — 29,261

Income before income taxes 61,282 8,218 — 69,500

Income tax expense ( 541 ) ( 382 ) — ( 923 )

Net income $ 60,741 $ 7,836 $ — $ 68,577

Expenditures for segment assets $ 123,671 $ 58 $ — $ 123,729

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Real Estate Observatory Intersegment Elimination Total

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Observatory revenue — 22,154 — 22,154

Lease termination fees 20,032 — — 20,032

Third-party management and other fees 427 — — 427

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Interest expense ( 25,304 ) — — ( 25,304 )

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

Gain on sale of property 15,696 — — 15,696

Income (loss) before income taxes 12,097 ( 1,622 ) — 10,475

Income tax (expense) benefit ( 198 ) 1,417 — 1,219

Net income $ 37,020 $ 4,572 $ — $ 41,592

Net income (loss) $ 11,899 $ ( 205 ) $ — $ 11,694

Segment assets $ 3,903,661 $ 253,702 $ — $ 4,157,363

Expenditures for segment assets $ 34,536 $ 58 $ — $ 34,594

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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 1. Financial Statements