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What changed in Empire State Realty Trust, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Empire State Realty Trust, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+375 added−420 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in Empire State Realty Trust, Inc.'s 2023 10-K

375 paragraphs added · 420 removed · 285 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

57 edited+21 added−38 removed54 unchanged
Biggest changeWe have received from the IRS a private letter ruling that the rent that our operating partnership receives from Observatory TRS pursuant to the lease of the Empire State Building observatory is qualifying income for purposes of the REIT gross income tests so long as such rent reflects the fair market rental value of the Empire State Building observatory as determined by an appraisal rendered by a qualified third party appraiser. 9 In addition, our operating partnership has acquired various license agreements (i) granting certain third party broadcasters the right to use space on the tower on the top of the Empire State Building for certain broadcasting and other communication purposes and (ii) granting certain third party vendors the right to operate concession stands in the observatory.
Biggest changeWe have received from the IRS a private letter ruling that the rent that our operating partnership receives from Observatory TRS pursuant to the lease of the Empire State Building Observatory is qualifying income for purposes of the REIT gross income tests so long as such rent reflects the fair market rental value of the Empire State Building Observatory as determined by an appraisal rendered by a qualified third-party appraiser.
In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.
In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our financial position or results of operations.
Our comprehensive building management services and our strong commitment to tenant and broker relationships and satisfaction enable us to negotiate attractive leasing deals, which attracts and retains high credit-quality tenants. We proactively manage our rent roll, foster strong tenant relationships, maintain continuous communication with our tenants, and are responsive to tenant needs.
Our comprehensive building management services and our strong commitment to tenant and broker relationships and satisfaction enable us to negotiate attractive leasing deals, which attracts and retains high credit-quality tenants. We proactively manage our 3 rent roll, foster strong tenant relationships, maintain continuous communication with our tenants, and are responsive to tenant needs.
Through our commitment to brokers, we have developed long- term relationships with a focus to attract high quality potential tenants to our properties. We proactively manage and cultivate our industry relationships and make the most senior members of our management team available to our constituencies.
Through our commitment to brokers, we have developed long-term relationships with a focus to attract high quality tenants to our properties. We proactively manage and cultivate our industry relationships and make the most senior members of our management team available to our constituencies.
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.
As a result, the presence of significant mold or 6 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.
Affordable Housing Certain units in our multifamily properties are designated for lower income households and are therefore subject to supervision and regulation by state and federal governmental authorities regulate affordable housing rental activities.
Affordable Housing Certain units in our multifamily properties are designated for lower income households and are therefore subject to supervision and regulation by state and federal governmental authorities which regulate affordable housing rental activities.
Enhance Shareholder Value We enhance shareholder value primarily through the execution of our capital allocation goals, maintenance of our balance sheet flexibility and enhanced transparency and disclosure. As it relates to capital allocation goals we (i) opportunistically recycle our capital, (ii) make selective, value-enhancing acquisitions and (iii) reinvest in our own shares through share repurchases.
Enhance Shareholder Value We enhance shareholder value primarily through the execution of our capital allocation strategy, maintenance of our balance sheet flexibility and enhanced transparency and disclosure. As it relates to capital allocation strategy, we (i) opportunistically recycle our capital, (ii) make selective, value-enhancing acquisitions and (iii) reinvest in our own shares through share repurchases.
We generally have and expect to continue to maintain good relations with our employees and workforce, including those employees covered by collective bargaining agreements. We believe that our success is realized through the attraction, retention, development, engagement and empowerment of the highly valued employees amongst our diverse pool of talent, and we endeavor to set our policies and practices accordingly.
We generally have and expect to continue to maintain good relations with our employees and workforce, including those employees covered by collective bargaining agreements. We believe that our success is realized through the attraction, retention, development, engagement and empowerment of our highly-valued and diverse employees, and we endeavor to set our policies and practices accordingly.
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 prior fueling facility, that may release petroleum products or other hazardous or toxic substances at such properties or to surrounding 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.
We do extensive diligence on our tenants' financial prospects, businesses and business models to determine if we think there is potential to establish long-term relationships in which they will both renew with us and expand over time. Since the Offering, we have completed 258 expansions with existing tenants which total 2.495 million square feet within our portfolio.
We do extensive diligence on our tenants' financial prospects, businesses and business models to determine if we think there is potential to establish long-term relationships in which they will both renew with us and expand over time. Since the Offering, we have completed 277 expansions with existing tenants which total 2.6 million square feet within our portfolio.
The SEC maintains an Internet site ( http://www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 11
The SEC maintains an Internet site ( http://www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 10
We purchased a $50 million limit of Nuclear, Biological, Chemical and Radiological ("NBCR") insurance in excess of a $1.0 million deductible in the commercial insurance market. ESRT Captive Insurance provides NBCR insurance with a limit of $1.95 billion in excess of the $50 million policy.
We purchased a $50 million limit of Nuclear, Biological, Chemical and Radiological ("NBCR") insurance in excess of a $1.0 million deductible in the commercial insurance market. ESRT Captive Insurance provides NBCR insurance coverage under TRIPRA with a limit of $1.95 billion in excess of the $50 million policy.
In addition, competition from new and existing observatories and/or broadcasting operations could have a negative impact on revenues from our observatory operations and/or broadcasting revenues.
In addition, competition from new and existing observatories and/or broadcasting operations may have a negative impact on revenues from our Observatory operations and/or broadcasting revenues.
We believe that our consistent, open dialogue with our tenants and brokers enables us to maximize our results. Our focus on performance and long-term perspective allows us to concentrate on the ongoing management of our portfolio, while we concurrently seek opportunities for growth in the future. We believe we benefit from the tenant flight to quality trend.
We believe that our consistent, open dialogue with our tenants and brokers enables us to maximize our results. Our focus on performance and long-term perspective allows us to concentrate on the ongoing management of our portfolio, while we concurrently seek opportunities for growth in the future.
Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our commercial and multifamily real estate assets, principally office properties, located in Manhattan and the greater New York metropolitan area. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building.
Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our commercial and multifamily real estate assets, principally office assets, located in Manhattan. Our Observatory segment operates the 86th and 102nd floor observatories at the Empire State Building.
We are diversified and we believe we will benefit from New York City’s recovery from our office, observatory, retail, and multifamily exposure in the city. We have built a dedicated investment function which includes our Chief Investment Officer and a full acquisitions team and positions us to identify potential investment opportunities.
We are diversified and we believe we benefit from New York City’s rebound from our office, Observatory, retail, and multifamily exposure in the city. We have a dedicated investment function to identify potential investment opportunities, which includes our Chief Investment Officer and a full acquisitions team.
Under an exception to this rule, related party rent is treated as qualifying income for purposes of the REIT gross income tests if it is paid by a TRS of the REIT and (i) at least 90% of the leased space in the relevant property is rented to persons other than either TRSs or other related parties of the REIT, and (ii) the amounts paid to the REIT as rent from real property are substantially comparable to the rents paid by unrelated tenants of the REIT for comparable space.
Under an exception to this rule, related party rent is treated as qualifying income for purposes of the REIT gross income tests if it is paid by a TRS of the REIT and (i) at least 90% of the leased space in the relevant property is rented to persons other than either TRSs or other related parties of the REIT, and (ii) the amounts paid to the REIT as rent from real property are substantially comparable to the rents paid by unrelated tenants of the REIT for comparable space. 8 Income from admissions to the Empire State Building Observatory, and certain other income generated by the Observatory, would not likely be qualifying income for purposes of the REIT gross income tests.
We have also completed the disposition (or otherwise entered into a contract for sale) of non-core assets in our greater New York metropolitan area portfolio, including office assets in Norwalk, CT, White Plains, NY and Harrison, NY, and retail assets in Westport, Connecticut. See Item 2. Properties for more information.
We have also completed the disposition of non-core assets in our greater New York metropolitan area portfolio, including office assets in Norwalk, CT, White Plains, NY and Harrison, NY, and retail assets in Westport, CT. See ITEM 2. Properties for more information.
We invest in employee training, including certain programs which are mandatory for all employees, and other programs which are voluntary and self-directed on platforms provided by the company. We provided classroom training for our employees in 2022 in addition to on-the-job training.
We invest in employee training, including certain programs which are mandatory for all employees, and other programs which are voluntary and self-directed on platforms provided by the Company.
Furthermore, business interruption insurance due to pandemic level or other public health events may not be readily available at commercially acceptable rates. Competition The leasing of real estate is highly competitive in the Manhattan and the greater New York metropolitan markets in which we operate.
Furthermore, business interruption insurance due to pandemic level or other public health events may not be readily available at commercially acceptable rates. 7 Competition The leasing of real estate is highly competitive in New York City and Stamford, Connecticut where we operate.
During the COVID-19 shutdown, we reprogrammed our Observatory business to operate by reservations only, created a new focus on customer experience and reduction of crowds and lines, with an emphasis on revenue per visitor, and match our hours of operation to the reservations demand.
In 2020, we reprogrammed our Observatory business to operate by reservations only, created a new focus on customer experience and reduction of crowds and lines, with an emphasis on growing revenue per visitor, and matched our hours of operation to the reservations demand to manage expenses.
Empire State Realty Trust, Inc., as the sole general partner in our operating partnership, has responsibility and discretion in the management and control of our operating partnership, and the limited partners in our operating partnership, in such capacity, have no authority to transact business for, or participate in the management activities of, our operating partnership.
We, as the sole general partner in the Operating Partnership, have responsibility and discretion in the management and control of the Operating Partnership, and the limited partners in the Operating Partnership, in such capacity, have no authority to transact business for, or participate in the management activities of, the Operating Partnership. Accordingly, the Operating Partnership has been consolidated by us.
We elected to be subject to tax as a REIT and have operated in a manner that we believe allows us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013.
We elected to be subject to tax as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013.
Tenants seek a compelling value proposition, and we offer a high-quality experience in high - quality assets at our attractive price point. Our buildings are fully modernized, well-located near mass transit, well-amenitized, and feature industry leadership in energy efficiency and indoor environmental quality, which helps us to draw consistent leasing volumes through cycles. They also have character.
Our buildings are fully modernized, well-located near mass transit, well-amenitized, and feature industry leadership in energy efficiency and indoor environmental quality, which helps us to draw consistent leasing volumes through cycles. They also have character.
We enhanced health and safety protocols, improved marketing and cross-promotional activities to increase brand awareness, and managed expenses prudently. Our efforts have resulted in consistent recovery in Observatory results and we achieved improved results in Observatory revenue and operating income throughout 2022.
We enhanced health and safety protocols, improved marketing and cross-promotional activities to increase brand awareness, and managed expenses prudently. Our efforts have resulted in strong performance from our Observatory and we experienced continued improvement in Observatory revenue and operating income throughout 2023.
We aggressively manage and control operating expenses at all of our properties. In addition, we have made energy efficiency retrofitting and sustainability a portfolio-wide initiative driven by economic return. We pass on cost savings achieved by such improvements to our tenants through lower utility costs and reduced operating expense escalations.
In addition, we have made energy efficiency retrofitting and sustainability a portfolio-wide initiative driven by economic return. We pass on cost savings achieved by such improvements to our tenants through lower utility costs and reduced operating expense escalations. We believe these initiatives make our properties more desirable to a broader tenant base than the properties of our competitors.
We also have additional regional leasing and property management offices in Manhattan and the greater New York metropolitan area. Our current facilities are adequate for our present and future operations, although we may add or eliminate regional offices, depending upon our future operations. Available Information Our website address is http://www.esrtreit.com.
Our current facilities are adequate for our present and future operations, although we may add or eliminate regional offices, depending upon our future operations. Available Information Our website address is http://www.esrtreit.com.
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. Soil contamination and prior presence of underground storage tanks (UST’s) were previously identified at 69-97 Main Street, Westport, Connecticut.
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.
However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.
The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.
For example, buildings and other structures on properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained, asbestos-containing material, or ACM.
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.
See Risk Factors - Government housing regulations may limit opportunities at the multifamily properties in which we invest, and failure to comply with resident qualification requirements may result in financial penalties or loss of benefits – for more information. 7 Insurance We carry comprehensive liability, fire, extended coverage, earthquake, terrorism and rental loss insurance covering all of our Manhattan properties and our greater New York metropolitan area properties under a blanket policy.
See "Risk Factors - Government housing regulations may limit opportunities at the multifamily properties in which we invest, and failure to comply with resident qualification requirements may result in financial penalties or loss of benefits" for more information.
We believe our flexible balance sheet, access to capital, and expertise in redevelopment gives us significant flexibility to structure and consummate accretive acquisitions. Since December 2021, we have completed acquisitions of three multifamily properties in Manhattan for a combined 721 units.
We believe our well-positioned balance sheet, access to capital, and expertise in redevelopment gives us significant flexibility to structure and pursue attractive investment opportunities. Since December 2021, we have completed acquisitions of three multifamily properties in Manhattan and a retail asset in the Williamsburg neighborhood of Brooklyn, NY.
We had approximately 2.2 million visitors in 2022 as compared to 0.5 million in 2020 and 0.8 million in 2021. Additionally, the Empire State Building Observatory was ranked the # 1 attraction in the U.S. and #3 in the world by Tripadvisor.
We had approximately 2.6 million visitors in 2023 as compared to 0.5 million in 2020, 0.8 million in 2021 and 2.2 million in 2022. Additionally, the Empire State Building Observatory was ranked the # 1 attraction in the United States in Tripadvisor's Travelers’ Choice Awards: Best of the Best for two consecutive years.
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.
Environmental laws also may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.
Adverse impacts on domestic and international travel and changes in foreign currency exchange rates may also decrease demand in the future, which could have a material adverse effect on our results of operations, financial condition and ability to make distributions to our securityholders. 8 If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets or in higher quality facilities, we may lose potential tenants and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire.
If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets or in higher quality facilities, we may lose potential tenants and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire.
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.
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.
The property situated at 500 Mamaroneck Avenue in Harrison, New York was the subject of a voluntary remedial action work cleanup plan performed by the former owner following its conveyance of title to the present owners under an agreement with the New York State Department of Environmental Conservation, or ("NYDEC").
Our property situated at 500 Mamaroneck Avenue in Harrison, New York was the subject of a voluntary remedial action work cleanup plan under an agreement with the New York State Department of Environmental Conservation, but we sold this property in April 2023 and the obligations have been transferred to the buyer.
There exists a consent order issued by CT DEP to investigate soil conditions at the 103-107 Main Street Property. The properties have since been sold and post-closing obligations remain to (i) close out the Voluntary Remediation Program at 69-97 Main Street and (ii) comply with the consent order at 103-107 Main Street.
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.
Business and Growth Strategies Our primary business objectives are to maximize cash flow and total returns to our shareholders and to increase the value of our properties through the pursuit of the following strategies: Lease Space We have a brand that we believe tenants associate with a consistently high level of quality of services, healthy buildings, amenities, maintenance, and tenant installations, with high performance design guidelines for energy efficiency and indoor environmental quality, and long-term financial stability.
Additionally, we believe our proactive, service-intensive approach to asset and property management helps increase occupancy and rental rates. We have a brand that we believe tenants associate with a consistently high level of quality of services, healthy buildings, amenities, maintenance, and tenant installations, with high performance design guidelines for energy efficiency and indoor environmental quality, and long-term financial stability.
The quality of our commercial portfolio contributed to a solid leasing year in 2022 – we leased over one million square feet of space and made meaningful absorption progress with a 210 basis point increase in Manhattan office occupancy throughout the year. 3 Additionally, we believe our proactive, service-intensive approach to asset and property management helps increase occupancy and rental rates.
The quality of our commercial portfolio contributed to a strong leasing year in 2023; we leased 951,000 square feet of space and made meaningful absorption progress with a 130 basis point increase in Manhattan office occupancy and a 250 basis point increase in Manhattan leased rate throughout the year.
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.
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. 5 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.
We proactively manage our office properties and rent rolls to (i) aggregate smaller demised spaces to create large blocks of vacant space in order to attract high credit-quality tenants at higher rental rates, and (ii) create efficient, modern, pre-built offices that can be rented through several lease cycles and attract high credit-quality tenants.
We self-manage all of our office and retail properties, and we use a third-party property manager to manage our multifamily properties. We proactively manage our office properties and rent rolls to create efficient, modern, pre-built offices that can be rented through several lease cycles and attract high credit-quality tenants. We manage and control operating expenses at all of our properties.
We believe these initiatives make our properties more desirable to a broader tenant base than the properties of our competitors. Sell Tickets to the Empire State Building Observatory The Empire State Building offers panoramic views of New York and neighboring states from its world-famous 86th and 102nd floor observatories.
Sell Tickets to the Empire State Building Observatory The Empire State Building offers panoramic views of New York and neighboring states from its world-famous 86th and 102nd floor observatories. In December 2019, we completed the Observatory’s comprehensive multi-year reimagination and redevelopment.
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.
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.
Furthermore, a substantial portion of the site that had been substantially unimproved prior to acquisition may not be further developed. In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations. Noncompliance with these environmental and health and safety laws and regulations could subject us or our tenants to liability.
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.
The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. We believe the existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.
Americans with Disabilities Act Our properties must comply with Title III of the Americans with Disabilities Act, or ("ADA"), to the extent that such properties are “public accommodations” as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
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.
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.
Nine properties are located in the midtown Manhattan market and encompass approximately 7.6 million rentable square feet of office space, including the Empire State Building. Our Manhattan office properties also contain 0.5 million rentable square feet of premier retail space on their ground floor and/or contiguous levels.
Nine of these office properties are located in midtown Manhattan and encompass approximately 7.6 million rentable square feet, including the Empire State Building. 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.
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.
Seasonality Our Observatory business is subject to tourism trends and 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.
We do not consider the balance of our business to be subject to material seasonal fluctuations. Human Capital Management As of December 31, 2022, we employed 667 people, of whom approximately 442 are covered by collective bargaining agreements.
Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter. Human Capital Management As of December 31, 2023, we employed 666 people, of whom approximately 429 are covered by collective bargaining agreements.
Our operating partnership holds substantially all of our assets and conducts substantially all of our business. As of December 31, 2022, we owned approximately 59.4% of the interests in our operating partnership ("OP Units").
As of December 31, 2023, we owned approximately 60.2% of the aggregate operating partnership units in the Operating Partnership.
We believe open and honest two-way communication is paramount and we regularly collect employee feedback to understand and improve our employees’ experiences. As of February 2023, we are Great Place to Work-Certified. Training and Development We believe continuous learning supports productivity, innovation and retention, as well as personal and professional growth for our employees.
Our retention strategy is based on the effective training and development of, and focus on the total wellness of, our employees. We believe continuous learning supports productivity, innovation and retention, as well as personal and professional growth for our employees.
Achieve Sustainability Goals We are recognized as leaders in the real estate industry in energy efficiency in the existing built environment, sustainability, indoor environmental quality, and healthy buildings.
Our well-positioned balance sheet has also allowed us to be nimble and recycle capital as well as repurchase shares. Achieve Sustainability Goals We are recognized as a leader in the real estate industry in sustainability, and we focus on net zero emissions, energy efficiency, water use reduction, indoor environmental quality, and healthy buildings.
For more information about our segments, refer to “Financial Statements-Note 13 Segment Reporting” in this Annual Report on Form 10-K. Regulation General The properties in our portfolio are subject to various laws, ordinances and regulations, including regulations relating to common areas.
For more information about our segments, refer to “Financial Statements - Note 13 Segment Reporting” in this Annual Report on Form 10-K. Rental Revenue We derive revenues primarily from rents, rent escalations, expense reimbursements and other income received from tenants under existing leases at each of our properties.
As of December 31, 2022, we owned 12 office properties (including three long-term ground leasehold interests) encompassing approximately 8.9 million rentable square feet of office space, which were approximately 85.1% occupied or 88.3% leased including signed leases not yet commenced.
As of December 31, 2023, our 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. Our office portfolio included 11 properties (including three long-term ground leasehold interests) encompassing approximately 8.6 million rentable square feet.
ITEM 1. BUSINESS Overview We are a New York City focused real estate investment trust ("REIT") that owns and manages a well-positioned property portfolio of office, retail and multifamily assets in Manhattan and the greater New York metropolitan area. ESRT owns the Empire State Building, the "World’s Most Famous Building", and the newly reimagined Empire State Building Observatory Experience.
ITEM 1. BUSINESS Overview Empire State Realty Trust, Inc. (NYSE: ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. The Company is a recognized leader in energy efficiency and indoor environmental quality.
We believe each of the existing properties has the necessary permits and approvals to operate its business. 5 Americans with Disabilities Act Our properties must comply with Title III of the Americans with Disabilities Act, or ("ADA"), to the extent that such properties are “public accommodations” as defined by the ADA.
Regulation General The properties in our portfolio are subject to various laws, ordinances and regulations, including regulations relating to common areas. We believe each of the existing properties has the necessary permits and approvals to operate its business.
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As of December 31, 2022, our office and retail portfolio contained 9.7 million rentable square feet of office and retail space, and was 85.2% occupied. Including signed leases not yet commenced, our total office and retail portfolio was 88.6% leased.
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ESRT’s flagship Empire State Building – the “World’s Most Famous Building” – includes its Observatory, the #1 attraction in the U.S. in Tripadvisor’s Travelers’ Choice Awards: Best of the Best for two consecutive years .
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Three office properties are located in Fairfield County, Connecticut and Westchester County, New York, encompassing approximately 1.3 million rentable square feet. The majority of the square footage for these three properties is located in densely populated metropolitan communities with immediate access to mass transportation.
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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.
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Additionally, we have entitled land at the Stamford Transportation Center in Stamford, Connecticut, adjacent to one of our office properties, that will support the development of an approximately 0.4 million rentable square foot office building and garage, which we refer to herein as Metro Tower.
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We were organized as a Maryland corporation on July 29, 2011 and commenced operations upon completion of our initial public offering and related formation transactions on October 7, 2013 (the "IPO"). Our operating partnership, Empire State Realty OP, L.P. (the "Operating Partnership"), holds substantially all of our assets and conducts substantially all of our business.
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As of December 31, 2022, our commercial portfolio also included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 0.2 million rentable square feet in the aggregate. Subsequent to year-end, on February 1, 2023, the two retail properties in Westport, Connecticut were sold. See Item 2.
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Business and Growth Strategies Our primary business objectives are to maximize cash flow and total returns to our shareholders and to increase the value of our properties through the pursuit of the following strategies: Lease Space We believe we benefit from the tenant flight to quality trend.
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Properties for more information. As of December 31, 2022, our standalone retail properties were 97.6% leased. Additionally, as of December 31, 2022, our portfolio included three multifamily properties located in Manhattan totaling 721 units of which 96.3% were leased. We were organized as a Maryland corporation on July 29, 2011.
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Tenants seek a compelling value proposition from landlords with a strong balance sheet and low leverage that continue to invest in the improvement of their buildings, and we offer a high-quality experience in high - quality assets at our attractive price point.
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We presently self-manage all of our office and retail properties, and we use a third-party property manager to manage our multifamily properties.
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We have pioneered certain practices to achieve emissions reduction and energy efficiency, including those described in our Empire Building Playbook, a free guide that we published in partnership with the New York Energy Research Development Authority and the Clinton Global Initiative, for existing commercial buildings to follow our lead and develop a technical and economic pathway to achieve net zero carbon reduction with a proven payback.
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In December 2019, we completed the Observatory’s comprehensive, approximately $165 million multi-year reimagination and redevelopment. Prior to the outbreak of COVID-19, the number of visitors to the observatories was approximately 3.8 million and 3.5 million for the years ended December 31, 2018 and 2019, respectively, approximately two-thirds of which were international visitors.
Added
The reduced energy consumption and emissions lower costs for us and our tenants, and we believe creates a competitive advantage for our properties. We believe that higher quality tenants prioritize sustainability, cost reduction, and lower contributions to greenhouse gas emissions. 4 Business Segments Our reportable segments consist of a real estate segment and an Observatory segment.
Removed
Further, we have a development site, Metro Tower at the Stamford Transportation Center, which is adjacent to our Metro Center property, which we believe to be one of the premier office buildings in Connecticut. All zoning approvals have been obtained to allow development of an approximately 0.4 million rentable square foot office tower and garage.
Added
“Escalations and expense reimbursements” consist of payments made by tenants to us under contractual lease obligations to reimburse a portion of the property operating expenses and real estate taxes incurred at each property.
Removed
We intend to develop this site when we deem the appropriate combination of market and other conditions are in place.
Added
We believe that the average rental rates for in-place leases at our properties are generally below the current market rates, although individual leases at particular properties presently may be leased above, at or below the current market rates within its particular submarket.
Removed
Our flexible balance sheet has also allowed us to be nimble and repurchase shares as well as recycle capital. 4 Lastly, we introduced guidance for the first time in 2022 to provide investors with enhanced transparency on the earnings trajectory and outlook for our company.
Added
We believe the existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants.
Removed
We have pioneered certain practices in energy efficiency, beginning in 2007 at the Empire State Building where we partnered with the Clinton Climate Initiative, Johnson Controls Inc., Jones Lang LaSalle and the Rocky Mountain Institute to create and implement a groundbreaking, replicable process for integrating energy efficiency retrofits in the existing built environment.
Added
Releases from these properties could impact our properties.
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The reduced energy consumption and emissions lower costs for us and our tenants, and we believe creates a competitive advantage for our properties. Since 2009, we have reduced carbon emissions at the Empire State Building by over 54% and across our commercial portfolio by 43%.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe 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.
Biggest changeMoreover, 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.
Amongst the impacts the COVID-19 pandemic had, and any future public health crisis could have, a material adverse effect on our business, results of operations, cash flows and financial condition due to, among other factors: • downturn in national and/or local economies decreases prospects, demand, occupancy and rental rates for our office, multifamily and retail space, all with an adverse impact on the value or price of our assets; • delays, cost increases and/or cancellations of planned capital projects; • potential impairment of our ability to comply with existing debt agreements, to pay down, refinance, or extend maturing debt, and to incur new debt; • changes in the number of domestic and international tourists to our markets; • volatility and downward pressure on the market price of our Class A common stock and publicly traded partnership units, which may also reduce our access to capital and/or our equity currency for new acquisitions; and • reduction of our cash flows and our ability to pay dividends, with potential impairment of REIT qualification, and business continuity.
Amongst the impacts the COVID-19 pandemic had, and any future public health crisis could have, is a material adverse effect on our business, results of operations, cash flows and financial condition due to, among other factors: • downturn in national and/or local economies that decreases prospects, demand, occupancy and rental rates for our office, multifamily and retail space, all with an adverse impact on the value or price of our assets; • delays, cost increases and/or cancellations of planned capital projects; • potential impairment of our ability to comply with existing debt agreements, to pay down, refinance, or extend maturing debt, and to incur new debt; • changes in the number of domestic and international tourists to our markets; • volatility and downward pressure on the market price of our Class A common stock and publicly traded partnership units, which may also reduce our access to capital and/or our equity currency for new acquisitions; and • reduction of our cash flows and our ability to pay dividends, with potential impairment of REIT qualification, and business continuity.
Any future health or other economic crises, geopolitical events (including global hostilities) or currency exchange rate fluctuations could negatively impact tourist trends and visitor demand for our observatory, which could have a material adverse effect on our business, results of operations, cash flow and financial condition. We are also susceptible to reductions in visitor demand due to adverse weather.
Any future health or other economic crises, geopolitical 13 events (including global hostilities) or currency exchange rate fluctuations could negatively impact tourist trends and visitor demand for our Observatory, which could have a material adverse effect on our business, results of operations, cash flow and financial condition. We are also susceptible to reductions in visitor demand due to adverse weather.
In particular, as the owner of large commercial and multifamily 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 for full calendar year 2024, and imposes penalties for emissions above such limits.
In particular, as 17 the owner of large commercial and multifamily 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 for full calendar year 2024, and imposes penalties for emissions above such limits.
Any compromise of our security could also result in a violation of applicable privacy (e.g., observatory customer data, company employee data, or residential data at multifamily properties) and other laws, which could result in negative legal consequences as well as significant damage to our financial condition, reputation, business, records, and confidence of our business partners in our business relationships.
Any compromise of our security could also result in a violation of applicable privacy laws (e.g., Observatory customer data, Company employee data, or residential data at multifamily properties), which could result in negative legal consequences as well as significant damage to our financial condition, reputation, business, records, and confidence of our business partners in our business relationships.
Additionally, we will not share in any increase in value of the land or improvements and will not receive any revenue from the property beyond the term of our ground leases. If the government acquires the properties under its eminent domain 14 power, we would only be entitled to a portion of any compensation awarded.
Additionally, we will not share in any increase in value of the land or improvements and will not receive any revenue from the property beyond the term of our ground leases. If the government acquires the properties under its eminent domain power, we would only be entitled to a portion of any compensation awarded.
Our success depends on the efforts of key personnel, particularly Anthony E. Malkin, our Chairman, President and Chief Executive Officer, whose leadership and national industry reputation benefits us in many ways. He has led the acquisition, operation and repositioning of our assets for more than two decades.
Our success depends on the efforts of key personnel, particularly Anthony E. Malkin, our Chairman and Chief Executive Officer, whose leadership and national industry reputation benefits us in many ways. He has led the acquisition, operation and repositioning of our assets for more than two decades.
As a result, our business is dependent on the New York City economy in general and the market for office, retail and multifamily space in Manhattan in particular, which exposes us to greater economic and regulatory risks than if we owned a more geographically diverse portfolio.
As a result, our business is dependent on the New York City economy in general and the market for office, retail and multifamily space in New York City in particular, which exposes us to greater economic and regulatory risks than if we owned a more geographically diverse portfolio.
Our change in operations of the Empire State Building Observatory to focus on capacity controls to maximize the customer experience, require reservations to control overcrowding and staffing costs, and our increase of per visitor pricing may cause our 2022 and future observatory results to differ from previous observatory results.
Our change in operations of the Empire State Building Observatory to focus on capacity controls to maximize the customer experience, require reservations to control overcrowding and staffing costs, and our increase of per visitor pricing may cause our future Observatory results to differ from previous Observatory results.
Our significant tenants have in the past, and may in the future, experience financial strain leading to lease default or bankruptcy filing. In such cases, we may not recover our upfront investments in tenant improvement allowances, concessions, and transaction costs like professional fees and commissions.
Our significant tenants have in the past, and may in the future, experience financial strain leading to lease default or bankruptcy. In such cases, we may not recover our upfront investments in tenant improvement allowances, concessions, and transaction costs like professional fees and commissions.
We publicly announced our achievement of carbon neutrality in 2022 and our commitment to a 2030 net zero carbon emissions target for the Empire State Building and a 2035 net zero carbon emissions target for the balance of our office portfolio, defined as the goal of 80% operational emissions reduction in partnership with the grid.
We publicly announced our achievement of carbon neutrality in 2022 and our commitment to a 2030 net zero carbon emissions target for the Empire State Building and a 2035 net zero carbon emissions target for the balance of our portfolio, defined as the goal of 80% operational emissions reduction in partnership with the grid.
In either 22 case, if we are not able to appropriately restructure our operations in a timely manner, we would likely realize significant income that does not qualify for the REIT gross income tests, which could cause us to fail to qualify as a REIT.
In either case, if we are not able to appropriately restructure our operations in a timely manner, we would likely realize significant income that does not qualify for the REIT gross income tests, which could cause us to fail to qualify as a REIT.
Risks Related to our Common Stock and Traded OP Units 25 Our cash available for distribution may not be sufficient to make distributions at expected levels, and the market price of shares of our Class A common stock and traded OP units could be adversely affected by our level of cash distributions.
Risks Related to our Common Stock and Traded OP Units Our cash available for distribution may not be sufficient to make distributions at expected levels, and the market price of shares of our Class A common stock and traded OP units could be adversely affected by our level of cash distributions.
The market value of our common stock is based on a number of factors, including, but not limited to, the market’s perception of the current and future value of our assets, our growth potential and our current and potential future earnings and distributions. The future exercise of registration rights may adversely affect the market price of our common stock.
The market value of our common stock is based on a number of factors, including, but not limited to, the market’s perception of the current and future value of our assets, our growth potential and our current and potential future earnings and distributions. 24 The future exercise of registration rights may adversely affect the market price of our common stock.
We may become subject to litigation, which could have a material adverse effect on our financial condition. In the past we have been, and in the future we may become, subject to litigation, including claims relating to our operations, offerings, and otherwise in the ordinary course of business.
We may become subject to litigation, which could have a material adverse effect on our financial condition. 18 In the past we have been, and in the future we may become, subject to litigation, including claims relating to our operations, offerings, and otherwise in the ordinary course of business.
This could have the effect of reducing our income and amounts available for distribution. The REIT distribution requirements could require us to borrow funds during unfavorable market conditions or subject us to tax, which would reduce the cash available for distribution to our securityholders.
This could have the effect of reducing our income and amounts available for distribution. 20 The REIT distribution requirements could require us to borrow funds during unfavorable market conditions or subject us to tax, which would reduce the cash available for distribution to our securityholders.
As a result of the unrealized built-in gain attributable to a property at the time of contribution, some holders of operating partnership units, including our Chairman, President and Chief Executive Officer, Anthony E. Malkin, and our Chairman Emeritus, Peter L.
As a result of the unrealized built-in gain attributable to a property at the time of contribution, some holders of operating partnership units, including our Chairman and Chief Executive Officer, Anthony E. Malkin, and our Chairman Emeritus, Peter L.
Conflicts of interest exist or could arise in the future between the interests of our securityholders and OP unit holders. 24 Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any partner thereof, on the other.
Conflicts of interest exist or could arise in the future between the interests of our securityholders and OP unit holders. Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any partner thereof, on the other.
For example, we have entered into such a waiver with QIA, which permits QIA to own up to 15% of the outstanding shares of our Class A common stock and an aggregate amount of Class A common stock equal to a 9.9% fully diluted economic interest in the company (inclusive of all outstanding common OP units and LTIP units), which currently equals approximately 18.67% of our outstanding Class A common stock, all subject to a supplementary waiver which may adjust the foregoing limits to the extent QIA’s ownership percentage increases solely as a result the Company’s share buybacks.
For example, we have entered into such a waiver with QIA, which permits QIA to own up to 15% of the outstanding shares of our Class A common stock and an aggregate amount of Class A common stock equal to a 9.9% fully diluted economic interest in the Company (inclusive of all outstanding common OP units and LTIP units), which currently equals approximately 18.45% of our outstanding Class A common stock, all subject to a supplementary waiver which may adjust the foregoing limits to the extent QIA’s ownership percentage increases solely as a result the Company’s share buybacks.
Refer to Part I, Item 1, “Business – Our Tax Status” for more information. 21 Failure to qualify as a domestically controlled REIT could subject our non-U.S. securityholders to adverse U.S. federal income tax consequences.
Refer to Part I, ITEM 1, “Business – Our Tax Status” for more information. Failure to qualify as a domestically controlled REIT could subject our non-U.S. securityholders to adverse U.S. federal income tax consequences.
Malkin has the ability to influence the outcome of matters presented to our securityholders, including the election of our board and approval of significant corporate transactions, including business combinations, consolidations and mergers and the determination of our day-to-day corporate and management policies.
Malkin has the ability to influence the outcome of matters presented to our securityholders, including the election of our board and approval of significant corporate transactions, 22 including business combinations, consolidations and mergers and the determination of our day-to-day corporate and management policies.
Our Chairman, President and Chief Executive Officer has outside business interests that take his time and attention away from us, which could materially and adversely affect us. Under his employment agreement, Mr.
Our Chairman and Chief Executive Officer has outside business interests that take his time and attention away from us, which could materially and adversely affect us. Under his employment agreement, Mr.
Our failure or perceived failure to pursue or fulfill our announced aspirations and targets or to satisfy various reporting standards within the timelines we announce, or at all, could have a negative impact on investor sentiment, ratings outcomes for evaluating our approach to ESG matters, stock price, and cost of capital and expose us to government enforcement actions and private litigation, among other possible material adverse impacts.
Our failure or perceived failure to pursue or fulfill our announced aspirations and targets or to satisfy various reporting standards within the timelines we announce, or at all, could have a negative impact on investor sentiment, ratings outcomes for evaluating our approach to sustainability matters, stock price, and cost of capital and expose us to government enforcement actions and private litigation, among other possible material adverse impacts.
While we intend to continue to qualify as a “domestically controlled” REIT for purposes of the Foreign Investment in Real Property Tax Act of 1980, we cannot assure that result, as our Class A common stock is publicly traded, QIA (a non-U.S. holder) owns approximately 18.67% of our common stock and other non-U.S. holders may now or in the future hold additional shares.
While we intend to continue to qualify as a “domestically controlled” REIT for purposes of the Foreign Investment in Real Property Tax Act of 1980, we cannot assure that result, as our Class A common stock is publicly traded, QIA (a non-U.S. holder) owns approximately 18.45% of our common stock and other non-U.S. holders may now or in the future hold additional shares.
Any such termination could result in a loss of revenue or otherwise negatively affect our business. We may incur significant costs complying with the ADA and similar laws. Under the Americans with Disabilities Act of 1990 (the “ADA”), all public accommodations must meet federal requirements related to access and use by disabled persons.
Any such termination could result in a loss of revenue or otherwise negatively affect our business. We may incur significant costs to comply with the ADA and similar laws. Under the Americans with Disabilities Act of 1990 (the “ADA”), all public accommodations must meet federal requirements related to access and use by disabled persons.
The current registration statement filed on July 31, 2020, registers up to 29,894,869 shares. If QIA decides to sell all or a substantial portion of its shares, or there is market perception that it may intend to do so, it could have a material adverse impact on the market price of our Class A common stock.
The current registration statement filed on July 31, 2023, registers up to 29,894,869 shares. If QIA decides to sell all or a substantial portion of its shares, or there is market perception that it may intend to do so, it could have a material adverse impact on the market price of our Class A common stock.
The standards for tracking, rating, and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve rapidly at a global scale. Our selection of disclosure frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of comparative data from period to period.
The standards for tracking, rating, and reporting on sustainability matters are relatively new, have not been harmonized and continue to evolve rapidly at a global scale. Our selection of disclosure frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of comparative data from period to period.
In addition, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting ESG metrics, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
In addition, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting sustainability metrics, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters, including climate change and transitional and physical climate-related risks. Such ratings are used by some investors to inform their investment and voting decisions.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to sustainability matters, including climate change and transitional and physical climate-related risks. Such ratings are used by some investors to inform their investment and voting decisions.
Our revenue and cash available for distribution would be materially and adversely affected if any of these six properties were materially damaged or a significant number of their tenants experienced financial strain leading to lease default or bankruptcy filing.
Our revenue and cash available for distribution would be materially and adversely affected if any of these three properties were materially damaged or a significant number of their tenants experienced financial strain leading to lease default or bankruptcy filing.
In any such event for any extended period of time, we would likely engage temporary replacement workers, which would result in increased operating costs. Risks Relating to Legal Compliance, ESG and Cybersecurity We face risks associated with our tenants being designated “Prohibited Persons” by OFAC and similar requirements. 19 The Office of Foreign Assets Control of the U. S.
In any such event for any extended period of time, we would likely engage temporary replacement workers, which would result in increased operating costs. Risks Relating to Legal Compliance, Sustainability and Cybersecurity We face risks associated with our tenants being designated “Prohibited Persons” by OFAC and similar requirements. The Office of Foreign Assets Control of the U.S.
These governmental programs typically provide mortgage insurance, favorable financing terms, tax credits or rental assistance payments to property owners. As a condition of the receipt of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre- approved amounts and impose restrictions on resident incomes.
These governmental programs typically provide mortgage insurance, favorable financing terms, tax credits or rental assistance payments to property owners. As a condition of the initial receipt and potential extensions of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre-approved amounts and impose restrictions on resident incomes.
Unfavorable ESG ratings may lead to negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
Unfavorable sustainability ratings may lead to negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
As of December 31, 2022, our five largest tenants together represented approximately 15.9% of our total commercial portfolio’s annualized rent, with our largest tenant leasing an aggregate of 0.5 million rentable square feet of office space at one of our office properties, representing approximately 5.2% of our total commercial portfolio rentable square feet and approximately 6.2% of our total commercial portfolio annualized rent.
As of December 31, 2023, our five largest tenants together represented approximately 15.9% of our total commercial portfolio’s annualized rent, with our largest tenant leasing an aggregate of 0.5 million rentable square feet of office space at one of our office properties, representing approximately 5.4% of our total commercial portfolio rentable square feet and approximately 6.2% of our total commercial portfolio annualized rent.
Increasing attention to ESG matters, including those related to climate change and sustainability, and increasing societal, investor and legislative pressure on companies to address ESG matters may result in increased costs, greater litigation risks, negative impacts on our access to capital markets, and damage to our reputation.
Increasing attention to sustainability matters may impact our business. Increasing attention to sustainability matters, including those related to climate change, and increasing societal, investor and legislative pressure on companies to address sustainability matters may result in increased costs, greater litigation risks, negative impacts on our access to capital markets, and damage to our reputation.
In recent years, the retail industry has faced reductions in sales revenues and increase in bankruptcies throughout the United States, due to a consumer shift to online shopping, all exacerbated by the pandemic. This has reduced demand for physical retail space especially at street level, which typically commanded the highest rental rates per square foot in office properties.
In recent years, the retail industry has faced reductions in sales revenues and increase in bankruptcies throughout the United States, due to a consumer shift to online shopping. This has reduced demand for physical retail space especially at street level, which typically commanded the highest rental rates per square foot in office properties.
In addition, these efforts are impacted by our tenants’ willingness and ability to collaborate in reporting ESG metrics and meeting ESG goals.
In addition, these efforts are impacted by our tenants’ willingness and ability to collaborate in reporting sustainability metrics and meeting sustainability goals.
The concentration of our voting power may adversely affect the ability of new investors to influence our policies. As of December 31, 2022, our Chairman, President and Chief Executive Officer, Anthony E.
The concentration of our voting power may adversely affect the ability of new investors to influence our policies. As of December 31, 2023, our Chairman and Chief Executive Officer, Anthony E.
Our balance sheet includes goodwill of approximately $491.5 million at December 31, 2022, consisting primarily of goodwill associated with our acquisition of the controlling interest in Empire State Building Company L.L.C. and 501 Seventh Avenue Associates L.L.C.
Our balance sheet included goodwill of approximately $491.5 million at December 31, 2023, consisting primarily of goodwill associated with our acquisition of the controlling interest in Empire State Building Company L.L.C. and 501 Seventh Avenue Associates L.L.C.
Our failure to maintain satisfactory labor relations could materially and adversely affect us. As of December 31, 2022, we have collective bargaining agreements that cover 442 employees, or 66% of our workforce, that service our portfolio. Our inability to negotiate acceptable renewals as existing agreements expire could result in strikes or work stoppages and disrupt our operations.
Our failure to maintain satisfactory labor relations could materially and adversely affect us. As of December 31, 2023, we have collective bargaining agreements that cover 429 employees, or 64% of our workforce, that service our portfolio. Our inability to negotiate acceptable renewals as existing agreements expire could result in strikes or work stoppages and disrupt our operations.
We will fail to recover expenses and management time already incurred if we abandon any then pending development. Significant inflation could adversely affect our business and financial results. Increased inflation could adversely affect us by increasing costs of properties, development and renovation.
We will fail to recover expenses and management time already incurred if we abandon any then pending development. Significant inflation could adversely affect our business and financial results. Increased inflation has and may in the future adversely affect us by increasing costs of properties, development and renovation.
During the year ended December 31, 2022, we derived 15 approximately $14.2 million of revenue (excluding tenant reimbursement income) from such broadcasting licenses and related leases, as compared with about $21 million at its peak.
During the year ended December 31, 2023, we derived approximately $14.7 million of revenue (excluding tenant reimbursement income) from such broadcasting licenses and related leases, as compared with about $21 million at its peak.
Risks Relating to Portfolio Concentration Our properties are geographically concentrated in New York and Connecticut, and adverse state or local economic or regulatory developments could have a material adverse effect on our business, results of operations, cash flow and financial condition.
See “Forward-Looking Statements.” Risks Related to Our Business and Properties Risks Relating to Portfolio Concentration Our properties are geographically concentrated in New York and Connecticut, and adverse state or local economic or regulatory developments could have a material adverse effect on our business, results of operations, cash flow and financial condition.
Adverse economic and geopolitical conditions impacting the industries of our tenants, in particular the retail industry, could cause reduced demand, rental rates and occupancy for our retail and office space. As of December 31, 2022, approximately 17.7% of our commercial portfolio’s annualized rent was comprised of retail tenants.
Adverse economic and geopolitical conditions impacting the industries of our tenants, in particular the retail industry, could cause reduced demand, rental rates and occupancy for our retail and office space. As of December 31, 2023, approximately 18.2% of our commercial portfolio’s annualized rent was comprised of retail tenants.
Additionally, with increased employer flexibility to work from home, current and prospective residents may be less likely to live in dense urban centers or multifamily housing like the properties we own. These trends and the related effects may continue after the pandemic, which could impair demand and value at our properties.
Additionally, with increased employer flexibility to work from home, current and prospective residents may be less likely to live in dense urban centers or multifamily housing like the properties we own. If these trends continue, it could impair demand and value at our properties.
Because of the distribution requirements to maintain our status as a REIT (See Part I, Item 1, “Business - Our Tax Status”), we may not be able to fund future capital needs, including any acquisition financing, from operating cash flow and may need to rely on third-party sources.
Our growth depends on external sources of capital that are outside of our control. 15 Because of the distribution requirements to maintain our status as a REIT (See Part I, ITEM 1, “Business - Our Tax Status”), we may not be able to fund future capital needs, including any acquisition financing, from operating cash flow and may need to rely on third-party sources.
As of December 31, 2022, QIA had a 11.03% fully diluted interest in us, which represented 18.67% of the outstanding Class A common stock.
As of December 31, 2023, QIA had a 11.03% fully diluted interest in us, which represented 18.45% of the outstanding Class A common stock.
Upon expiration of leases at our properties and with respect to our current vacant space, we may be required to make rent or other concessions to tenants, accommodate increased requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants.
Increased competition challenges our ability to lease space and maximize our effective rents. Upon expiration of leases at our properties and with respect to our current vacant space, we may be required to make rent or other concessions to tenants, accommodate increased requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants.
Malkin, together with the Malkin Group, has the right to vote 40,859,706 shares of our common stock, which represents approximately 19.5% of the voting power of our outstanding common stock. Consequently, Mr.
Malkin, together with the Malkin Gro up, has the right to vote 40,859,706 shares of our common stock, which represents approximately 19.3% of the voting power of our outstanding common stock. Consequently, Mr.
Refer to “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses” for more information. As a result of entering into the tax protection agreement, Messrs. Malkin may have an incentive to cause us to enter into transactions from which they may personally benefit.
Refer to “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses” in this Annual Report on Form 10-K for more information. As a result of entering into the tax protection agreement, Messrs. Malkin may have an incentive to cause us to enter into transactions from which they may personally benefit.
As a result, and due to the increased competition from lessors in the greater New York City and its surrounding metropolitan area, we have made, and may have to make, significant capital or other expenditures in order to maintain the competitiveness of our properties and renew existing tenants and to attract new tenants.
As a result, and due to the increased competition from lessors in the greater New York City area, we have made, and may have to make, significant capital or other expenditures in order to maintain the competitiveness of our properties.
Risks Related to Our Non-Real Estate Operations The observatory operations at the Empire State Building are not traditional real estate operations, and may be negatively impacted by competition, adverse weather, and changes in tourist trends caused by public health crises, among other factors.
Risks Related to Our Non-Real Estate Operations The Observatory operations at the Empire State Building are not traditional real estate operations, and may be negatively impacted by competition, adverse weather, and changes in tourist trends.
Provisions in our charter and the partnership agreement of our operating partnership, may delay or prevent a change of control over the company or a tender offer, even if such action might be beneficial to the company’s stockholders.
Limits on changes in control may discourage takeover attempts beneficial to securityholders. 23 Provisions in our charter and the partnership agreement of our operating partnership, may delay or prevent a change of control over the Company or a tender offer, even if such action might be beneficial to the Company’s stockholders.
Our revenues declined significantly in 2020, 2021 and 2022, compared to 2019, as a result of the pandemic and government mandated closures and a slow ramp-up in visitor volume after reopening in July 2020, in large part due to travel restrictions. We cannot predict when our observatory revenues will return to pre-pandemic levels.
Our revenues declined significantly in 2020, 2021 and 2022, compared to 2019, as a result of the pandemic and government mandated closures and a slow ramp-up in visitor volume after reopening in July 2020, in large part due to travel restrictions.
See “Financial Statements – Note 11 Related Party Transactions” for further information. We may choose to moderate or omit enforcement of our rights under his employment agreement to maintain our relationship with him given his knowledge of our business, relationships with our customers, and significant equity ownership in us, and this could have a material adverse effect on our business.
We may choose to moderate or omit enforcement of our rights under his employment agreement to maintain our relationship with him given his knowledge of our business, relationships with our customers, and significant equity ownership in us, and this could have a material adverse effect on our business.
In addition, if a like-kind exchange was later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders.
In addition, if a like-kind exchange was later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders. We could also be subject to significant indemnity obligations if the applicable property was subject to a tax protection agreement.
As a result, we and our securityholders may have limited rights against all such persons, which could limit your recourse in the event of actions not in your best interest. Limits on changes in control may discourage takeover attempts beneficial to securityholders.
As a result, we and our securityholders may have limited rights against all such persons, which could limit your recourse in the event of actions not in your best interest.
We may be unable to renew leases or re-lease vacant space on favorable terms or at all as leases expire. As of December 31, 2022, we had approximately 1.1 million rentable square feet of vacant space (excluding leases signed but not yet commenced) in our office and retail properties.
We may be unable to renew leases or re-lease vacant space on favorable terms or at all as leases expire. As of December 31, 2023, we had approximately 0.9 million rentable square feet of vacant space in our office and retail properties.
These obligations may restrict our ability to engage in a strategic transaction, require us to maintain more or different debt, and/or inhibit our disposing of a property that we might judge to be otherwise be in the best interest of the securityholders. 23 Holders of our Class B common stock have a significant vote in matters submitted to a vote of our securityholders.
These obligations may restrict our ability to engage in a strategic transaction, require us to maintain more or different debt, and/or inhibit our disposing of a property that we might judge to be otherwise be in the best interest of the securityholders.
See “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses.” If we were to trigger such tax indemnification obligations, we would be required to pay the resulting tax liability to the Malkin Group, the additional third-party investor in Metro Center and/ or QIA, as applicable.
See “Financial Statements – Note 11 Related Party Transactions – Excluded Properties and Businesses” in this Annual Report on Form 10-K for further information. If we were to trigger such tax indemnification obligations, we would be required to pay the resulting tax liability to the Malkin Group, the additional third-party investor in Metro Center and/or QIA, as applicable.
In addition, to the extent we are unable to refinance loans, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger our related indemnification obligation. Our growth depends on external sources of capital that are outside of our control.
In addition, to the extent we are unable to refinance loans, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger our related indemnification obligation.
The broadcasting operations at the Empire State Building are not traditional real estate operations, and competition and changes in the broadcasting of signals over air may subject us to additional risks.
The broadcasting operations at the Empire State Building are not traditional real estate operations, and competition and changes in the broadcasting of signals over air may subject us to additional risks. We license the use of the Empire State Building broadcasting mast to third-party television and radio broadcasters.
For fiscal years ending December 31, 2020, 2021 and 2022, we derived revenues of approximately $29.1 million, $41.5 million and $106.0 million from our observatory operations.
For fiscal years ended December 31, 2021, 2022 and 2023, we derived revenues of approximately $41.5 million, $106.0 million and $129.4 million from our Observatory operations.
We have jointly elected with each of observatory TRS and Holding TRS, for each of observatory TRS and Holding TRS to be treated as a TRS under the Code for U.S. federal income tax purposes in 2013. observatory TRS, Holding TRS, and any other TRSs that we form pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income is available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification.
Observatory TRS, Holding TRS, and any other TRSs that we form pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income is available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification.
Although we monitor the aggregate value of the securities of such TRSs and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, and such securities taken together with other non-qualifying assets will represent less than 25% of the value of our total assets, at the end of each calendar quarter, there can be no assurance that we will be able to comply with the TRS limitations in all market conditions.
Although we monitor the aggregate value of the securities of such TRSs and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, and such securities taken together with other non-qualifying assets will represent less than 25% of the value of our total assets, at the end of each calendar quarter, there can be no assurance that we will be able to comply with the TRS limitations in all market conditions. 21 Our state and local taxes could increase due to property tax rate changes, reassessment and/or changes in state and local tax laws, which could materially and adversely affect us.
See Part I, Item 1, “Business – Insurance.” If we experience a loss that is uninsured or exceeds our policy limits, we could incur significant costs and loss of capital or property. If the damaged property is subject to recourse debt, we would continue to be liable for the debt, regardless of the property condition.
If we experience a loss that is uninsured or exceeds our policy limits, we could incur significant costs and loss of capital or property. If the damaged property is subject to recourse debt, we would continue to be liable for the debt, regardless of the property condition. Our debt instruments contain customary covenants to maintain insurance, including terrorism insurance.
In addition, eight of our existing properties are pre-war office properties, which may require more frequent and costly maintenance to retain existing tenants or attract new tenants than newer properties. Further, our multifamily properties face competition for residents as a result of technology innovation.
In addition, eight of our existing properties are pre-war office properties, which may require more frequent and costly maintenance to retain existing tenants or attract new tenants than newer properties.
Generally, our multifamily leases are for twelve months or less. If the terms of the renewal or reletting are less favorable than current terms, our business, results of operations, cash flow and financial condition will be negatively affected. Given their short-term lease structure, our multifamily rental revenues are more sensitive to market declines.
Generally, our multifamily leases are for twelve months or less. If the terms of the renewal or reletting are less favorable than current terms, our business, results of operations, cash flow and financial condition will be negatively affected.
Certain litigation or its resolution may affect the availability or cost of our insurance coverage, which could adversely impact our financial condition, expose us to increased uninsured risks, and/or adversely impact our ability to attract officers and directors. See “Financial Statements – Note 9 Commitments and Contingencies.” Increasing attention to ESG matters may impact our business.
Certain litigation or its resolution may affect the availability or cost of our insurance coverage, which could adversely impact our financial condition, expose us to increased uninsured risks, and/or adversely impact our ability to attract officers and directors. See “Financial Statements – Note 9 Commitments and Contingencies” in this Annual Report on Form 10-K.
On an annual basis and whenever circumstances indicate the carrying value or goodwill may be impaired, we are required to assess any such impairment and charge to operating earnings the resulting non-cash impairment.
On an annual basis and whenever circumstances indicate the carrying value or goodwill may be impaired, we are required to assess any such impairment and charge to operating earnings the resulting non-cash impairment. For example, during the pandemic, the closure of our Observatory caused us to perform such an assessment quarterly.
Such negative consequences may be even more likely in a high-profile property like the Empire State Building and its observatory. Additionally, a terrorist event could cause insurance premiums at certain of our properties to increase significantly. We rely on six properties, in particular the Empire State Building and its Observatory, for a significant portion of our revenue.
Additionally, a terrorist event could cause insurance premiums at certain of our properties to increase significantly. We rely on three properties, in particular the Empire State Building and its Observatory, for a significant portion of our revenue.
The bankruptcy or insolvency of any tenant could result in the termination of such tenant’s lease and material losses to us. 13 As we have experienced in the past with the bankruptcy of one of our largest tenants at the time, the occurrence of a tenant bankruptcy or insolvency could diminish or terminate the income we receive from that tenant.
The bankruptcy or insolvency of any tenant could result in the termination of such tenant’s lease and material losses to us. The occurrence of a tenant bankruptcy or insolvency has in the past, and could in the future, diminish or terminate the income we receive from that tenant.
For the year ended December 31, 2022, six of our properties together accounted for approximately 72.5% of our portfolio’s rental revenues, with the Empire State Building individually accounting for approximately 29.9%.
For the year ended December 31, 2023, three of our properties together accounted for approximately 53.2% of our portfolio’s rental revenues, with the Empire State Building individually accounting for approximately 29.6%.
Risks Relating to Our Properties We face various risks related to our ground leases, including those arising from breach, expiration and eminent domain proceedings, and we have no permanent economic interest in the land or improvements at such properties.
Given their short-term lease structure, our multifamily rental revenues are more sensitive to market declines. 12 Risks Relating to Our Properties We face various risks related to our ground leases, including those arising from breach, expiration and eminent domain proceedings, and we have no permanent economic interest in the land or improvements at such properties.
In a highly inflationary environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins. In addition, our cost of labor and materials could increase, which could have an adverse impact on our business, results of operations, cash flow or financial condition.
In a highly inflationary environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins. In addition, our cost of labor and materials has and may in the future further increase.
See “Forward-Looking Statements.” Risks Related to Our Business and Properties Risks Related to the COVID-19 Pandemic The COVID-19 pandemic had, and any future public health crisis could have, serious adverse effects on our and our tenants’ businesses, results of operations, cash flows and financial condition, and on local, national, and global economic activity.
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic had, and any future public health crisis could have, serious adverse effects on our and our tenants’ businesses, results of operations, cash flows and financial condition, and on local, national, and global economic activity. The COVID-19 pandemic impacted the entire U.S., including New York and Connecticut where our properties are located.
Our commercial portfolio is comprised of properties primarily in Manhattan as well as in Fairfield County, Connecticut and Westchester County, New York.
Our commercial portfolio is comprised of properties primarily in New York City as well as in Stamford, Connecticut.
The leasing of real estate in the greater New York City and its surrounding metropolitan area is highly competitive in rental rates, location, services and property condition. We have seen increased competition from lessors in offering concessions, short term, amenities, indoor environmental quality and sustainability certifications. Increased competition challenges our ability to lease space and maximize our effective rents.
The leasing of real estate in New York City and its surrounding metropolitan area is highly competitive in rental rates, location, services and property condition. We have seen increased competition from lessors in offering concessions, short term, amenities, indoor environmental quality and sustainability certifications. See Part I, ITEM 1, “Business – Competition” for more information.
In such case, our taxable income and earnings and profits would increase. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.
It is possible that the qualification of a transaction as a like-kind exchange could be successfully challenged and determined to be currently taxable. In such case, our taxable income and earnings and profits would increase. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.
Our properties are concentrated in the New York metropolitan area. Natural disasters, and physical climate risk including earthquakes, storms, storm surges, tornados, floods, extreme temperatures, and hurricanes, could cause significant damage or limit access to our properties and the surrounding area.
Natural disasters and physical climate risk including earthquakes, storms, storm surges, tornados, floods, extreme temperatures, and hurricanes, could cause significant damage or limit access to our properties and the surrounding area. Physical climate risk, including rising sea levels, storm surges, and extreme temperature fluctuations, could adversely impact the coastal metropolitan areas in which we operate.

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Item 2. Properties

Properties — owned and leased real estate

24 edited+13 added−16 removed1 unchanged
Biggest changeOne Grand Central Place Feb.2023 - Oct. 2035 9.8 years 89,300 0.9 % 5,617,792 1.1 % ASCAP 250 West 57th Street Aug. 2034 11.7 years 87,943 0.9 % 5,344,751 1.0 % Walgreens ESB, 1350 Broadway May 2025 - Sept. 2027 3.5 years 39,142 0.4 % 4,903,003 0.9 % The Interpublic Group of Co's, Inc. 111 West 33rd St & 1400 B'Way Jul. 2024 - Feb. 2025 1.8 years 77,364 0.8 % 4,744,134 0.9 % Total 2,729,111 28.3 % $ 187,827,586 35.6 % (1) Expiration dates are per lease and do not assume exercise of renewal or extension options.
Biggest changeFox Foundation 111 West 33rd Street Nov. 2029 5.9 years 86,492 0.9 % 6,267,495 1.2 % Shutterstock Empire State Building Apr. 2029 5.3 years 104,386 1.1 % 6,096,096 1.1 % Fragomen 1400 Broadway Feb. 2035 11.2 years 107,680 1.2 % 5,959,656 1.1 % Burlington Merchandising Corp. 1400 Broadway Jan. 2038 14.1 years 102,898 1.1 % 5,932,832 1.1 % ASCAP 250 West 57th Street Aug. 2034 10.7 years 87,943 0.9 % 5,384,628 1.0 % Duane Reade Empire State Building, 1350 Broadway May 2025 - Sept. 2027 2.5 years 39,142 0.4 % 4,941,165 0.9 % Total 2,740,366 29.3 % $ 191,445,044 35.5 % (1) Expiration dates are per lease and do not assume exercise of renewal or extension options.
The following table sets forth information regarding the 20 largest tenants in our commercial portfolio based on annualized rent as of December 31, 2022.
The following table sets forth information regarding the 20 largest tenants in our commercial portfolio based on annualized rent as of December 31, 2023.
Our tenants represent a broad array of industries as follows: Diversification by Industry Percent (1) Arts and entertainment 3.3 % Broadcast 1.0 % Consumer goods 15.5 % Finance, insurance, real estate 17.3 % Government entity 2.1 % Healthcare 1.7 % Legal services 5.3 % Non-profit 4.2 % Professional services (not including legal services) 9.4 % Retail 17.7 % Technology, media and advertising 18.0 % Others 4.5 % Total 100.0 % (1) Based on annualized rent.
Our tenants represent a broad array of industries as follows: Diversification by Industry Percent (1) Arts and entertainment 3.2 % Broadcast 1.0 % Consumer goods 15.8 % Finance, insurance, real estate 16.9 % Government entity 2.1 % Healthcare 1.8 % Legal services 5.2 % Non-profit 4.2 % Professional services (not including legal services) 9.2 % Retail 18.2 % 28 Technology, media and advertising 18.0 % Others 4.4 % Total 100.0 % (1) Based on annualized rent.
For tenants with more than two leases, the lease expiration is shown as a range. (2) Represents the weighted average remaining lease term, based on annualized rent. (3) Based on leases signed and commenced as of December 31, 2022. (4) Represents the percentage of rentable square feet of our office and retail portfolios in the aggregate.
For tenants with more than two leases, the lease expiration is shown as a range. (2) Represents the weighted average remaining lease term, based on annualized rent. (3) Based on leases signed and commenced as of December 31, 2023. (4) Represents the percentage of rentable square feet of the Company's office and retail portfolios in the aggregate.
Year Ended December 31, 2022 2021 2020 New and renewal leases entered into during the year (square feet) 1,118,579 1,005,630 923,379 Weighted average annualized cash rent per square foot for new and renewal leases executed during the year $ 59.42 $ 57.55 $ 57.45 Weighted average annualized cash rent per square foot for previous leases $ 58.58 $ 58.04 $ 61.18 Increase (decrease) in mark-to-market rent 1.4 % (0.8) % (6.1) % The following tables set forth a summary schedule of expirations for leases in place as of December 31, 2022 plus available space for each of the ten calendar years beginning with the year ended December 31, 2022 at the office and retail properties in our commercial portfolio.
Year Ended December 31, 2023 2022 2021 New and renewal leases entered into during the year (square feet) 950,746 1,118,579 1,005,630 Weighted average annualized cash rent per square foot for new and renewal leases executed during the year $ 65.30 $ 59.42 $ 57.55 Weighted average annualized cash rent per square foot for previous leases $ 61.25 $ 58.58 $ 58.04 Increase (decrease) in mark-to-market rent 6.6 % 1.4 % (0.8) % 29 The following tables set forth a summary schedule of expirations for leases in place as of December 31, 2023 plus available space for each of the ten calendar years beginning with the year ended December 31, 2023 at the office and retail properties in our commercial portfolio.
(6) Represents the percentage of annualized rent of our office and retail portfolios in the aggregate. 29 Lease Expirations The following table sets forth new and renewal leases entered into at our properties, the weighted average annualized cash rent per square foot for new and renewal leases executed during the year, the previous weighted average annualized cash rent prior to the renewal or re-leasing of these leases and the percent increase (decrease) in mark-to-market rent.
Lease Expirations The following table sets forth new and renewal leases entered into at our properties, the weighted average annualized cash rent per square foot for new and renewal leases executed during the year, the previous weighted average annualized cash rent prior to the renewal or re-leasing of these leases and the percent increase (decrease) in mark-to-market rent.
(7) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 41 years (expiring December 31, 2063). (8) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 55 years (expiring May 31, 2077).
(7) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 40 years (expiring December 31, 2063). (8) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 54 years (expiring June 10, 2077).
The tables below present an overview as of December 31, 2022. Annualized Rentable Rent per Square Percent Annualized Occupied Number of Property Name Location or Sub-Market Feet (1) Occupied (2) Rent (3) Square Foot (4) Leases (5) Manhattan Office Properties - Office The Empire State Building (6) Penn Station -Times Sq.
Annualized Rentable Rent per Square Percent Percent Annualized Occupied Number of Property Name Location or Sub-Market Feet (1) Occupied (2) Leased (3) Rent (4) Square Foot (5) Leases (6) Office - Manhattan The Empire State Building Penn Station -Times Sq.
(2) Excludes (i) 184,725 rentable square feet across our commercial portfolio attributable to building management use and tenant amenities and (ii) 80,225 square feet of space attributable to our observatory. (3) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.
(2) Excludes (i) 189,148 rentable square feet across the Company's portfolio attributable to building management use and tenant amenities and (ii) 31 83,190 square feet of space attributable to the Company's Observatory. (3) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.
Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of all of our real estate assets other than the 86th and 102nd floor observatories at the Empire State Building, which are operated by our observatory segment. (1) On February 1, 2023, the two retail properties in Westport, Connecticut were sold.
Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of all of our real estate assets other than the 86th and 102nd floor observatories at the Empire State Building, which are operated by our Observatory segment. The tables below present an overview as of December 31, 2023.
(2) Based on leases signed and commenced as of December 31, 2022 and calculated as (i) rentable square feet less available square feet divided by (ii) rentable square feet. (3) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.
(2) Based on leases signed and commenced as of December 31, 2023. (3) Includes occupied space plus leases signed but not commenced as of December 31, 2023. (4) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. (5) Represents annualized rent under leases commenced as of December 31, 2023 divided by occupied square feet.
Subsequent to the year ended December 31, 2022, on February 1, 2023 we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million. The Westport sale was a related party transaction approved in accordance with the Company's protocols. See "Financial Statements - Note 11 Related Party Transactions ".
Portfolio Transaction Activity On February 1, 2023, we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million. Refer to "Financial Statements - Note 11 Related Party Transactions" in this Annual Report on Form 10-K.
(9) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to us, of approximately 28 years (expiring July 31, 2050). (10) First Stamford Place consists of three buildings. (11) We have entered into an agreement to sell this property.
(9) Denotes a ground leasehold interest in the property with a remaining term, including unilateral extension rights available to the Company, of approximately 27 years (expiring July 31, 2050). (10) First Stamford Place consists of three buildings. (11) Does not include the square footage related to the 417 residential units at this property.
If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations. (6) Includes 37,747 rentable square feet of space leased by our broadcasting tenants.
(6) Represents the number of leases at each property or on a portfolio basis. If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations.
ITEM 2. PROPERTIES Summary of Office and Retail Portfolio As of December 31, 2022, our office and retail portfolio consisted of approximately 9.7 million rentable square feet and was approximately 85.2% occupied, yielding approximately $526.9 million of annualized rent.
ITEM 2. PROPERTIES Summary of Office, Retail, and Multifamily Portfolio As of December 31, 2023, our office and retail portfolio was comprised of approximately 8.6 million rentable square feet of office space and 0.7 million rentable square feet of retail space and was approximately 86.3% occupied and 90.6% leased, yielding approximately $536.0 million of annualized rent.
(5) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes.
(5) Represents annualized base rent and current reimbursement for operating expenses and real estate taxes. (6) Represents the percentage of annualized rent of the Company's office and retail portfolios in the aggregate.
Weighted Percent of Average Total Portfolio Percent of Remaining Occupied Rentable Portfolio Lease Lease Square Square Annualized Annualized Tenant Property Expiration (1) Term (2) Feet (3) Feet (4) Rent (5) Rent (6) LinkedIn Empire State Building Aug. 2036 13.7 years 501,409 5.2 % $ 32,772,732 6.2 % Signature Bank 1333 & 1400 Broadway Jul. 2030 - Apr. 2035 12.1 years 308,207 3.2 % 18,175,128 3.4 % PVH Corp. 501 Seventh Avenue Oct. 2028 5.8 years 237,281 2.5 % 11,548,477 2.2 % Centric Brands Inc.
Weighted Percent of Average Total Portfolio Percent of Remaining Occupied Rentable Portfolio Lease Lease Square Square Annualized Annualized Tenant Property Expiration (1) Term (2) Feet (3) Feet (4) Rent (5) Rent (6) LinkedIn Empire State Building Aug. 2036 12.7 years 501,409 5.4 % $ 33,465,435 6.2 % Flagstar Bank 1400 Broadway Aug. 2039 15.7 years 313,109 3.3 % 18,285,046 3.4 % Centric Brands Inc.
Mar. 2037 - Jan. 2038 14.7 years 81,340 0.8 % 8,825,395 1.7 % Macy's 111 West 33rd Street May 2030 7.4 years 131,117 1.4 % 8,382,100 1.6 % Urban Outfitters 1333 Broadway Sept. 2029 6.8 years 56,730 0.6 % 7,955,384 1.5 % Coty Empire State Building Jan. 2030 7.1 years 156,187 1.6 % 7,950,113 1.5 % Foot Locker 112 West 34th Street Sept. 2031 8.8 years 34,192 0.4 % 7,745,959 1.5 % Federal Deposit Insurance Corp.
Empire State Building Jan. 2030 6.1 years 156,187 1.7 % 8,497,458 1.6 % Macy's 111 West 33rd Street May 2030 6.4 years 131,117 1.4 % 8,451,562 1.6 % Urban Outfitters 1333 Broadway Sept. 2029 5.8 years 56,730 0.6 % 8,185,595 1.5 % Li & Fung 1359 Broadway, ESB Oct. 2027 - Oct. 2028 4.5 years 149,061 1.6 % 7,954,806 1.5 % Footlocker 112 West 34th Street Sept. 2031 7.8 years 34,192 0.4 % 7,745,828 1.4 % Federal Deposit Insurance Corp.
Empire State Building Oct. 2028 5.8 years 221,365 2.3 % 11,289,615 2.1 % Sephora 112 West 34th Street Jan. 2029 6.1 years 11,334 0.1 % 10,533,628 2.0 % Li & Fung 1359 Broadway, ESB Oct. 2023 - Oct. 2028 4.8 years 173,273 1.8 % 9,260,886 1.8 % Target 112 West 34th St, 10 Union Sq.
Empire State Building Oct. 2028 4.8 years 221,365 2.4 % 11,952,833 2.2 % PVH Corp. 501 Seventh Avenue Oct. 2028 4.8 years 237,281 2.5 % 11,519,383 2.1 % Sephora 112 West 34th Street Jan. 2029 5.1 years 11,334 0.1 % 10,533,585 2.0 % Target 112 West 34th St., 10 Union Sq.
Empire State Building Dec. 2024 2.0 years 119,226 1.2 % 7,567,274 1.4 % HNTB Corporation Empire State Building Feb. 2029 6.2 years 105,143 1.1 % 6,982,050 1.3 % The Michael J.
Empire State Building Dec. 2025 2.0 years 119,226 1.3 % 7,578,004 1.4 % HNTB Corporation Empire State Building Feb. 2029 5.2 years 105,143 1.1 % 7,000,733 1.3 % Institutional Capital Network, Inc. One Grand Central Place Feb. 2024 - Oct. 2035 10.6 years 94,331 1.0 % 6,351,680 1.2 % The Michael J.
The transaction is expected to close in the first quarter 2023, subject to customary closing conditions. (12) Property was sold on February 1, 2023. 28 Tenant Diversification As of December 31, 2022, our office and retail portfolios were leased to a diverse tenant base consisting of approximately 678 leases.
Tenant Diversification As of December 31, 2023, our office and retail portfolios were leased to a diverse tenant base consisting of approximately 628 leases.
All of the Manhattan properties are located in dynamic retail corridors with convenient access to mass transportation, a diverse te nant base and high pedestrian traffic. Giving effect to leases signed but not yet commenced, our office and retail portfolio was approximately 88.6% leased as of December 31, 2022.
We have 11 office properties and our retail properties are comprised of retail space at the base of our New York City office and multifamily properties, and five standalone retail properties predominantly located in Manhattan. All properties are located in dynamic retail corridors with convenient access to mass transportation, a diverse te nant base and high pedestrian traffic.
(4) Excludes (i) retail space in our Manhattan office properties and (ii) the Empire State Building broadcasting licenses and observatory operations. (5) Includes an aggregate of 541,996 rentable square feet of retail space in our Manhattan office properties and multifamily properties. Excludes the Empire State Building broadcasting licenses and observatory operations.
(4) Represents leases that are included in occupancy as of December 31, 2023 and expire on December 31, 2023. (5) Excludes (i) retail space in our Manhattan office properties and (ii) the Empire State Building broadcasting licenses and Observatory operations. (6) Represents a telecom lease with no square footage.
In December 2022, we also entered into a purchase and sale agreement for 500 Mamaroneck Avenue in Harrison, NY at a gross asset valuation of $53.0 million. This transaction is expected to close in the first quarter of 2023, subject to customary closing conditions. 32
On April 5, 2023, we closed on the sale of 500 Mamaroneck Avenue in Harrison, New York at a gross asset valuation of $53.0 million.
Removed
We have 12 office properties and our retail properties are comprised of retail space at the base of our Manhattan office and multifamily properties, four standalone retail properties in Manhattan and two contiguous standalone retail properties in Westport, Connecticut (1) .
Added
South 2,713,783 84.6 % 91.8 % $ 149,146,291 $ 64.98 144 One Grand Central Place Grand Central 1,241,235 85.2 % 90.7 % 64,495,396 61.01 148 1400 Broadway (7) Penn Station -Times Sq. South 917,281 100.0 % 100.0 % 51,543,523 56.19 20 111 West 33rd Street (8) Penn Station -Times Sq.
Removed
South 2,714,737 82.4 % $ 141,668,705 $ 63.34 144 One Grand Central Place Grand Central 1,245,439 87.1 % 65,602,130 60.48 161 1400 Broadway (7) Penn Station -Times Sq. South 916,579 94.0 % 47,963,370 55.64 18 111 West 33rd Street (8) Penn Station -Times Sq.
Added
South 639,496 94.2 % 95.7 % 40,779,657 67.68 21 250 West 57th Street Columbus Circle - West Side 472,707 80.6 % 84.5 % 23,990,288 62.98 28 501 Seventh Avenue Penn Station -Times Sq. South 461,209 88.4 % 88.4 % 20,432,035 50.09 19 1359 Broadway Penn Station -Times Sq.
Removed
South 641,036 96.2 % 39,930,094 64.76 22 250 West 57th Street Columbus Circle - West Side 466,642 84.8 % 24,667,590 62.32 33 501 Seventh Avenue Penn Station -Times Sq. South 461,370 85.0 % 19,602,186 49.98 22 1359 Broadway Penn Station -Times Sq. South 457,313 76.5 % 20,912,746 59.81 29 1350 Broadway (9) Penn Station -Times Sq.
Added
South 456,004 83.5 % 91.4 % 22,376,656 58.75 32 1350 Broadway (9) Penn Station -Times Sq. South 372,599 85.5 % 86.4 % 19,076,631 59.90 50 1333 Broadway Penn Station -Times Sq.
Removed
South 373,003 83.2 % 18,650,756 60.13 51 1333 Broadway Penn Station -Times Sq.
Added
South 296,349 84.4 % 94.4 % 14,545,148 58.12 13 Office - Manhattan 7,570,663 87.3 % 92.1 % 406,385,625 61.47 475 Office - Greater New York Metropolitan Area First Stamford Place (10) Stamford, CT 781,731 78.7 % 82.3 % 26,691,177 43.38 48 Metro Center Stamford, CT 281,510 70.9 % 70.9 % 10,914,848 54.71 20 Office - Greater New York Metropolitan Area 1,063,241 76.6 % 79.3 % 37,606,025 46.15 68 Total/Weighted Average Office Properties 8,633,904 86.0 % 90.5 % 443,991,650 59.79 543 Retail Properties 112 West 34th Street (8) Penn Station -Times Sq.
Removed
South 296,360 90.0 % 15,621,887 58.55 14 Manhattan Office Properties - Office 7,572,479 86.0 % 394,619,464 60.58 494 Greater New York Metropolitan Area Office Properties First Stamford Place (10) Stamford, CT 776,386 75.8 % 25,161,553 42.74 43 Metro Center Stamford, CT 284,786 81.8 % 13,209,172 56.72 21 500 Mamaroneck Avenue (11) Harrison, NY 286,335 90.4 % 7,681,621 29.69 34 Sub-Total/Weighted Average Greater New York Metropolitan Office Properties 1,347,507 80.2 % 46,052,346 42.63 98 Manhattan Office Properties - Retail The Empire State Building Penn Station -Times Sq.
Added
South 93,057 100.0 % 100.0 % 24,825,569 266.78 4 The Empire State Building Penn Station -Times Sq. South 90,670 71.9 % 76.4 % 7,032,389 107.93 10 One Grand Central Place Grand Central 68,733 99.4 % 99.4 % 8,977,805 131.41 12 1333 Broadway Penn Station -Times Sq.
Removed
South 91,554 76.6 % 6,920,076 98.62 12 One Grand Central Place Grand Central 68,733 99.4 % 8,675,896 126.99 13 1400 Broadway (7) Penn Station -Times Sq. South 18,618 75.1 % 1,471,265 105.24 6 112 West 34th Street (8) Penn Station -Times Sq.
Added
South 67,001 100.0 % 100.0 % 10,155,485 151.57 4 250 West 57th Street Columbus Circle - West Side 65,526 91.4 % 91.4 % 9,111,860 152.07 7 10 Union Square Union Square 58,006 91.9 % 91.9 % 8,181,304 153.49 10 27 1542 Third Avenue Upper East Side 56,135 100.0 % 100.0 % 2,542,042 45.28 4 1010 Third Avenue Upper East Side 38,235 100.0 % 100.0 % 3,460,188 90.50 2 501 Seventh Avenue Penn Station -Times Sq.
Removed
South 93,057 96.4 % 22,875,282 255.04 3 27 250 West 57th Street Columbus Circle - West Side 67,231 89.1 % 8,896,423 148.47 7 501 Seventh Avenue Penn Station -Times Sq. South 34,564 73.2 % 1,609,862 63.64 6 1359 Broadway Penn Station -Times Sq. South 27,467 68.9 % 1,079,511 57.01 4 1350 Broadway Penn Station -Times Sq.
Added
South 35,859 50.8 % 59.6 % 1,310,333 71.94 5 1350 Broadway (9) Penn Station -Times Sq. South 30,710 77.8 % 77.8 % 5,962,833 249.70 5 1359 Broadway Penn Station -Times Sq.
Removed
South 30,787 77.6 % 5,975,808 250.24 5 1333 Broadway Penn Station -Times Sq.
Added
South 29,247 83.0 % 100.0 % 1,668,652 68.73 5 561 10th Avenue (11) Hudson Yards 28,266 100.0 % 100.0 % 2,007,748 71.03 3 77 West 55th Street Midtown 25,388 100.0 % 100.0 % 1,978,407 77.93 3 1400 Broadway (7) Penn Station -Times Sq.
Removed
South 67,001 100.0 % 9,899,557 147.75 4 Manhattan Office Properties - Retail 499,012 87.6 % 67,403,680 154.17 60 Standalone Retail Properties 10 Union Square Union Square 58,006 85.5 % 6,944,628 139.95 8 1542 Third Avenue Upper East Side 56,250 100.0 % 2,652,308 41.15 4 1010 Third Avenue Upper East Side 38,235 26.1 % 412,120 41.24 1 77 West 55th Street Midtown 25,388 100.0 % 1,952,250 76.90 3 69-97 Main Street (12) Westport, CT 16,874 100.0 % 1,866,809 110.63 5 103-107 Main Street (12) Westport, CT 4,330 100.0 % 756,705 174.76 1 Sub-Total/Weighted Average Standalone Retail Properties 199,083 81.6 % 14,584,820 89.78 22 Multifamily Retail Properties 561 10th Avenue Hudson Yards 28,919 94.9 % 2,395,101 87.27 2 345 East 94th Street Upper East Side 3,700 100.0 % 247,782 66.97 1 298 Mulberry Street NoHo 10,365 100.0 % 1,645,002 158.71 1 Sub-Total/Weighted Average Multifamily Retail Properties 42,984 96.6 % 4,287,885 103.30 4 Office and Retail Portfolio Total 9,661,065 85.2 % $ 526,948,195 $ 63.98 678 Total/Weighted Average Office Properties 8,919,986 85.1 % $ 440,671,810 $ 58.02 592 Total/Weighted Average Retail Properties 741,079 86.5 % 86,276,385 134.56 86 Office and Retail Portfolio Total 9,661,065 85.2 % $ 526,948,195 $ 63.98 678 (1) Excludes (i) 197,242 square feet of space across our commercial portfolio attributable to building management use and tenant amenities and (ii) 80,225 square feet of space attributable to our observatory.
Added
South 17,879 78.2 % 78.2 % 1,538,836 110.07 6 298 Mulberry Street (12) NoHo 10,365 100.0 % 100.0 % 1,802,507 173.90 1 Williamsburg Retail (13) Brooklyn 6,538 100.0 % 100.0 % 1,158,422 177.18 3 345 East 94th Street (14) Upper East Side 3,700 100.0 % 100.0 % 263,134 71.12 1 Total/Weighted Average Retail Properties 725,315 90.4 % 92.1 % 91,977,514 140.27 85 Portfolio Total 9,359,219 86.3 % 90.6 % $ 535,969,164 $ 66.32 628 (1) Excludes (i) 189,148 square feet of space across the Company's portfolio attributable to building management use and tenant amenities and (ii) 83,190 square feet of space attributable to the Company's Observatory.
Removed
(4) Represents annualized rent under leases commenced as of December 31, 2022 divided by occupied square feet. (5) Represents the number of leases at each property or on a portfolio basis.
Added
(12) Does not include the square footage related to the 96 residential units at this property. (13) Does not include the square footage related to the 6 residential units at this property. (14) Does not include the square footage related to the 208 residential units at this property.
Removed
Fox Foundation 111 West 33rd Street Nov. 2029 6.9 years 86,492 0.9 % 6,219,167 1.2 % Shutterstock Empire State Building Apr. 2029 6.3 years 104,386 1.1 % 6,087,598 1.2 % Fragoman 1400 Broadway Feb. 2035 12.2 years 107,680 1.1 % 5,922,400 1.1 % Institutional Capital Network, Inc.
Added
Jan. 2038 14.1 years 81,340 0.9 % 9,341,224 1.7 % Coty Inc.
Removed
Office and Retail Portfolio Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 1,105,719 11.4 % $ — — % $ — Signed leases not commenced 36 319,351 3.3 % — — % — Fourth quarter 2022 17 51,771 0.5 % 2,077,733 0.4 % 40.13 2023 89 494,016 5.1 % 30,276,946 5.7 % 61.29 2024 95 641,385 6.6 % 38,063,823 7.2 % 59.35 2025 83 523,666 5.4 % 34,354,748 6.5 % 65.60 2026 71 690,336 7.1 % 38,296,385 7.3 % 55.47 2027 89 716,550 7.4 % 44,105,885 8.4 % 61.55 2028 47 914,331 9.5 % 48,868,734 9.3 % 53.45 2029 47 962,150 10.0 % 70,258,628 13.3 % 73.02 2030 35 706,825 7.3 % 46,759,804 8.9 % 66.15 2031 23 171,061 1.8 % 20,665,463 3.9 % 120.81 2032 30 382,405 4.0 % 26,756,490 5.1 % 69.97 Thereafter 52 1,981,499 20.6 % 126,463,556 24.0 % 63.82 Total 714 9,661,065 100.0 % $ 526,948,195 100.0 % $ 63.98 30 Manhattan Office Properties (4) Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 789,933 10.4 % $ — — % $ — Signed leases not commenced 29 268,085 3.5 % — — % — Fourth quarter 2022 10 33,457 0.4 % 1,838,529 0.5 % 54.95 2023 75 384,161 5.1 % 23,610,627 6.0 % 61.46 2024 82 583,319 7.7 % 35,330,760 9.0 % 60.57 2025 61 372,985 4.9 % 24,405,244 6.2 % 65.43 2026 50 464,437 6.1 % 27,837,943 7.1 % 59.94 2027 66 571,936 7.6 % 32,887,868 8.3 % 57.50 2028 32 796,300 10.5 % 42,948,266 10.9 % 53.93 2029 33 724,521 9.6 % 43,731,139 11.1 % 60.36 2030 20 547,490 7.2 % 33,017,325 8.4 % 60.31 2031 11 82,182 1.1 % 5,782,918 1.5 % 70.37 2032 22 344,750 4.6 % 23,649,713 6.0 % 68.60 Thereafter 32 1,608,923 21.3 % 99,579,132 25.0 % 61.89 Total 523 7,572,479 100.0 % $ 394,619,464 100.0 % $ 60.58 Greater New York Metropolitan Area Office Properties Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 257,970 19.1 % $ — — % $ — Signed leases not commenced 2 9,161 0.7 % — — % — Fourth quarter 2022 5 6,922 0.5 % 60,189 0.1 % 8.70 2023 11 88,694 6.6 % 4,741,365 10.3 % 53.46 2024 6 39,232 2.9 % 1,443,769 3.1 % 36.80 2025 17 127,930 9.5 % 5,378,016 11.7 % 42.04 2026 14 154,669 11.5 % 6,129,451 13.3 % 39.63 2027 16 88,575 6.6 % 3,679,727 8.0 % 41.54 2028 11 111,044 8.2 % 4,216,464 9.2 % 37.97 2029 6 130,748 9.7 % 5,928,349 12.9 % 45.34 2030 4 78,526 5.8 % 3,457,648 7.5 % 44.03 2031 2 5,176 0.4 % 153,755 0.3 % 29.71 2032 2 4,718 0.4 % 147,782 0.3 % 31.32 Thereafter 4 244,142 18.1 % 10,715,831 23.3 % 43.89 Total 100 1,347,507 100.0 % $ 46,052,346 100.0 % $ 42.63 31 Retail (5) Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 57,816 7.8 % $ — — % $ — Signed leases not commenced 5 42,105 5.7 % — — % — Fourth quarter 2022 2 11,392 1.5 % 179,015 0.2 % 15.71 2023 3 21,161 2.9 % 1,924,954 2.2 % 90.97 2024 7 18,834 2.5 % 1,289,294 1.5 % 68.46 2025 5 22,751 3.1 % 4,571,488 5.3 % 200.94 2026 7 71,230 9.6 % 4,328,991 5.0 % 60.77 2027 7 56,039 7.6 % 7,538,290 8.7 % 134.52 2028 4 6,987 0.9 % 1,704,004 2.0 % 243.88 2029 8 106,881 14.4 % 20,599,140 23.9 % 192.73 2030 11 80,809 10.9 % 10,284,831 11.9 % 127.27 2031 10 83,703 11.3 % 14,728,790 17.1 % 175.96 2032 6 32,937 4.4 % 2,958,995 3.4 % 89.84 Thereafter 16 128,434 17.4 % 16,168,593 18.8 % 125.89 Total 91 741,079 100.0 % $ 86,276,385 100.0 % $ 134.56 (1) If a lease has two different expiration dates, it is considered to be two leases (for the purposes of lease count and square footage).
Added
Office and Retail Portfolio Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 875,777 9.4 % $ — — % $ — Signed leases not commenced 28 402,268 4.3 % — — % — Fourth quarter 2023 (4) 15 143,627 1.5 % 7,522,786 1.4 % 52.38 2024 89 509,671 5.4 % 30,075,202 5.6 % 59.01 2025 85 594,946 6.4 % 40,363,625 7.5 % 67.84 2026 72 628,943 6.7 % 37,384,704 7.0 % 59.44 2027 87 713,569 7.6 % 47,192,095 8.8 % 66.14 2028 63 945,077 10.1 % 52,486,474 9.8 % 55.54 2029 50 981,952 10.5 % 73,521,837 13.7 % 74.87 2030 38 745,546 8.0 % 50,024,340 9.3 % 67.10 2031 23 174,491 1.9 % 20,214,026 3.8 % 115.85 2032 29 368,694 3.9 % 26,223,606 4.9 % 71.13 2033 29 329,711 3.5 % 21,332,708 4.0 % 64.70 Thereafter 48 1,944,947 20.8 % 129,627,759 24.2 % 66.65 Total 656 9,359,219 100.0 % $ 535,969,162 100.0 % $ 66.32 Manhattan Office Properties (5) Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 597,862 7.9 % $ — — % $ — Signed leases not commenced 20 362,213 4.8 % — — % — Fourth quarter 2023 (4) 12 124,643 1.6 % 7,044,490 1.7 % 56.52 2024 76 431,339 5.7 % 25,204,397 6.2 % 58.43 2025 67 495,292 6.5 % 32,205,906 7.9 % 65.02 2026 57 485,929 6.4 % 29,511,170 7.3 % 60.73 2027 71 600,450 7.9 % 36,782,006 9.1 % 61.26 2028 47 854,943 11.3 % 47,465,773 11.7 % 55.52 2029 35 738,291 9.8 % 44,821,337 11.0 % 60.71 2030 27 599,150 7.9 % 37,243,747 9.2 % 62.16 2031 12 86,541 1.1 % 6,076,449 1.5 % 70.21 2032 21 334,698 4.4 % 23,105,190 5.7 % 69.03 2033 15 141,599 1.9 % 8,587,282 2.1 % 60.65 Thereafter 35 1,717,713 22.8 % 108,337,878 26.6 % 63.07 Total 495 7,570,663 100.0 % $ 406,385,625 100.0 % $ 61.47 30 Greater New York Metropolitan Area Office Properties Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 220,593 20.7 % $ — — % $ — Signed leases not commenced 3 27,802 2.5 % — — % — Fourth quarter 2023 (4) 2 2,540 0.2 % 63,701 0.2 % 25.08 2024 7 52,728 5.0 % 2,222,975 5.9 % 42.16 2025 13 76,903 7.2 % 3,597,773 9.6 % 46.78 2026 8 71,784 6.8 % 3,508,404 9.3 % 48.87 2027 10 58,730 5.5 % 2,801,695 7.5 % 47.70 2028 11 84,915 8.0 % 3,735,230 9.9 % 43.99 2029 5 128,271 12.1 % 5,907,668 15.7 % 46.06 2030 4 78,033 7.3 % 3,562,425 9.5 % 45.65 2031 2 16,560 1.6 % 843,885 2.2 % 50.96 2032 (6) 1 — — % 6,180 — % — 2033 3 151,754 14.3 % 7,494,005 19.9 % 49.38 Thereafter 2 92,628 8.8 % 3,862,084 10.3 % 41.69 Total 71 1,063,241 100.0 % $ 37,606,025 100.0 % $ 46.15 Retail Properties Percent of Rentable Portfolio Annualized Number Square Rentable Percent of Rent Per of Leases Feet Square Feet Annualized Annualized Rentable Year of Lease Expiration Expiring (1) Expiring (2) Expiring Rent (3) Rent Square Foot Available — 57,322 7.9 % $ — — % $ — Signed leases not commenced 5 12,253 1.7 % — — % — Fourth quarter 2023 (4) 1 16,444 2.3 % 414,595 0.5 % 25.21 2024 6 25,604 3.5 % 2,647,830 2.9 % 103.41 2025 5 22,751 3.1 % 4,559,946 5.0 % 200.43 2026 7 71,230 9.8 % 4,365,130 4.7 % 61.28 2027 6 54,389 7.5 % 7,608,394 8.3 % 139.89 2028 5 5,219 0.7 % 1,285,471 1.4 % 246.31 2029 10 115,390 15.9 % 22,792,832 24.8 % 197.53 2030 7 68,363 9.4 % 9,218,168 10.0 % 134.84 2031 9 71,390 9.8 % 13,293,692 14.5 % 186.21 2032 7 33,996 4.7 % 3,112,236 3.4 % 91.55 2033 11 36,358 5.0 % 5,251,421 5.7 % 144.44 Thereafter 11 134,606 18.7 % 17,427,798 18.8 % 129.47 Total 90 725,315 100.0 % $ 91,977,514 100.0 % $ 140.27 (1) If a tenant has more than one lease, whether or not at the same property, but with different expirations, the number of leases is calculated equal to the number of leases with different expirations.
Removed
Portfolio Transaction Activity During April 2022, we transferred 383 Main Avenue, Norwalk CT, which was encumbered by a $30.0 million mortgage, back to the lender in a consensual foreclosure and recognized a non-cash gain of $27.2 million, which is included in Gain on sale/disposition of properties in our condensed consolidated statement of operations.
Added
On September 14, 2023, we closed on the acquisition of a Williamsburg retail property located on the corner of North 6 th Street and Wythe Avenue in Brooklyn, New York, for a purchase price of $26.4 million. Refer to "Financial Statements - Note 3 Acquisitions and Dispositions" in this Annual Report on Form 10-K.
Removed
Prior to the consummation of this transaction, in December 2021, we recorded a $7.7 million impairment charge on the property as we had concluded the cost basis of the asset exceeded its fair value given our reduced holding period and new intent to transfer property ownership to the lender.
Removed
On December 7, 2022, we closed on the sale of 10 Bank Street, White Plains, NY, which was encumbered by a $30.0 million mortgage, at a gross asset valuation of $42.0 million.
Removed
On December 20, 2022, we closed on the acquisition of a 100% free-market, full service multifamily asset located at 298 Mulberry Street in Manhattan for a purchase price of $114.9 million. The property has a total of 96 units and was 100% leased as of December 31, 2022.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+3 added−3 removed20 unchanged
Biggest changeThere can be no assurance that the performance of our Class A common stock will continue in line with the same or similar trends depicted in the graph below. 34 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Empire State Realty Trust, Inc. $ 100.00 $ 73.15 $ 73.82 $ 50.56 $ 48.78 $ 36.59 S&P 500 Index $ 100.00 $ 115.51 $ 151.88 $ 179.82 $ 231.44 $ 156.88 MSCI US REIT Index $ 100.00 $ 99.88 $ 125.69 $ 116.17 $ 166.20 $ 119.87 FTSE NAREIT Equity REIT Office Index $ 100.00 $ 89.99 $ 118.26 $ 96.46 $ 117.68 $ 73.41 The graph is not deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act regardless of any general statement regarding incorporation by reference in any such filing, and is not otherwise deemed filed under the Securities Act or the Exchange Act.
Biggest changeThere can be no assurance that the performance of our Class A common stock will continue in line with the same or similar trends depicted in the graph below. 33 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Empire State Realty Trust, Inc. $ 100.00 $ 100.92 $ 69.12 $ 66.68 $ 51.47 $ 75.33 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 MSCI US REIT Index $ 100.00 $ 125.84 $ 116.31 $ 166.39 $ 125.61 $ 142.87 FTSE NAREIT Equity REIT Office Index $ 100.00 $ 131.42 $ 107.19 $ 130.77 $ 81.58 $ 83.23 The graph is not deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act regardless of any general statement regarding incorporation by reference in any such filing, and is not otherwise deemed filed under the Securities Act or the Exchange Act.
Any distributions we pay in the future will depend upon our taxable income, actual results of operations, economic conditions and other factors that could differ materially from our current expectations.
Any distributions we pay in the 32 future will depend upon our taxable income, actual results of operations, economic conditions and other factors that could differ materially from our current expectations.
Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. We declared dividends of $0.035 per share for each quarter of 2022, which equates to an annualized rate of $0.14 per share.
Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. We declared dividends of $0.035 per share for each quarter of 2023, which equates to an annualized rate of $0.14 per share.
The graph assumes that $100.00 was invested on December 31, 2017 and dividends were reinvested without the payment of any commissions.
The graph assumes that $100.00 was invested on December 31, 2018 and dividends were reinvested without the payment of any commissions.
Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on our Class A common stock, the Standard & Poor's 500 Index (the "S&P 500 Index"), the FTSE NAREIT All Equity Index (the "FTSE NAREIT All Equity Index") and the FTSE NAREIT Equity REIT Office Index ("FTSE NAREIT Equity REIT Office Index").
Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on our Class A common stock, the Standard & Poor's 500 Index (the "S&P 500 Index"), the MSCI US REIT Index and the FTSE NAREIT Equity REIT Office Index.
The following table presents certain information about our equity compensation plans as of December 31, 2022: 35 Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table) Equity compensation plans approved by securityholders (1) N/A N/A 6,274,115 (2) Equity compensation plans not approved by securityholders — — — Total N/A N/A 6,274,115 ______________ (1) These consist of the Empire State Realty Trust, Inc.
The following table presents certain information about our equity compensation plans as of December 31, 2023: 34 Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table) Equity compensation plans approved by securityholders (1) N/A N/A 4,162,516 (2) Equity compensation plans not approved by securityholders — — — Total N/A N/A 4,162,516 ______________ (1) These consist of the Empire State Realty Trust, Inc.
Dividends paid in 2022 of $0.14 per share are classified for income tax purposes 100% as taxable ordinary dividends eligible for the Section 199A deduction and 0% as a return of capital.
Dividends paid in 2023 of $0.14 per share are classified for income tax purposes 89.2% as taxable ordinary dividends eligible for the Section 199A deduction and 10.8% as a return of capital.
Empire State Realty OP, L.P. 2019 Equity Incentive Plan and the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan . As of December 31, 2022, we have issued 786,881 shares of restricted stock and 13,300,702 LTIP units under the Plans since 2013.
Empire State Realty OP, L.P. 2019 Equity Incentive Plan and the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan . As of December 31, 2023, we have issued 1,147,005 shares of restricted stock and 15,052,177 LTIP units under the Plans since 2013.
On February 24, 2023, the last sales price for our Class A common stock on the NYSE was $7.53 per share. Holders As of February 24, 2023, we had 578 registered holders of our Class A common stock and 572 registered holders of our Class B common stock.
On February 22, 2024, the last sales price for our Class A common stock on the NYSE was $9.96 per share. Holders As of February 22, 2024, we had 570 registered holders of our Class A common stock and 550 registered holders of our Class B common stock.
For a further discussion of the Plans, see "Financial Statements - Note 10 Equity".
For a further discussion of the Plans, see "Financial Statements - Note 10 Equity" in this Annual Report on Form 10-K.
As of February 24, 2023, we had approximately 583 registered holders of Series PR OP Units, 1,281 registered holders of Series ES OP Units, 393 registered holders of Series 60 OP Units and 290 registered holders of Series 250 OP Units.
As of February 22, 2024, we had approximately 574 registered holders of Series PR OP Units, 1,225 registered holders of Series ES OP Units, 357 registered holders of Series 60 OP Units and 279 registered holders of Series 250 OP Units.
Removed
This replaces an earlier $500.0 million repurchase authorization that ran from January 1, 2021 through December 31, 2021.
Added
Upon expiration of this program, the Board of Directors authorized the repurchase of up to $500 million of our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units during the period from January 1, 2024 through December 31, 2025.
Removed
As of December 31, 2022, we had approximately $409.8 million remaining of the authorized repurchase amount.
Added
At December 31, 2023, we had used approximately $103.3 million of the authorized repurchase amount for the 2022-2023 period. There were no repurchases of equity securities in the three-month period ended December 31, 2023 under this repurchase program. See "Financial Statements - Note 10 Equity" in this Annual Report on Form 10-K.
Removed
The following table summarizes our purchases of equity securities in each of the three months in the three month period ended December 31, 2022 under the repurchase program described above: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value Available for Future Purchase (in thousands) October 1-31, 2022 313,530 $ 6.60 313,530 $ 415,384 November 1-30, 2022 — $ — — $ — December 1-31, 2022 824,684 $ 6.74 824,684 $ 409,824,000 36
Added
There have also been no repurchases of equity securities yet under the new repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+26 added−54 removed40 unchanged
Biggest changeYear Ended December 31, 2022 Compared to the Year Ended December 31, 2021 The following table summarizes the historical results of operations for the years ended December 31, 2022 and 2021 (amounts in thousands) : 39 Years Ended December 31, 2022 2021 Change % Real Estate Segment Observatory Segment Total Real Estate Segment Observatory Segment Total Revenues: Rental revenue $ 591,048 $ — $ 591,048 $ 559,690 $ — $ 559,690 $ 31,358 5.6 % Observatory revenue — 105,978 105,978 — 41,474 41,474 64,504 155.5 % Lease termination fees 20,032 — 20,032 16,230 — 16,230 3,802 23.4 % Third-party management and other fees 1,361 — 1,361 1,219 — 1,219 142 11.6 % Other revenues and fees 8,622 — 8,622 5,343 138 5,481 3,141 57.3 % Total revenues 621.063 105.978 727,041 582,482 41,612 624,094 102,947 16.5 % Operating expenses: Property operating expenses 157,935 — 157,935 126,986 — 126,986 (30,949) (24.4) % Ground rent expenses 9,326 — 9,326 9,326 — 9,326 — — % General and administrative expenses 61,765 — 61,765 55,947 — 55,947 (5,818) (10.4) % Observatory expenses — 31,036 31,036 — 23,206 23,206 (7,830) (33.7) % Real estate taxes 123,057 — 123,057 119,967 — 119,967 (3,090) (2.6) % Impairment charge — — — 7,723 — 7,723 7,723 100.0 % Depreciation and amortization 216,707 187 216,894 201,676 130 201,806 (15,088) (7.5) % Total operating expenses 568,790 31,223 600,013 521,625 23,336 544,961 (55,052) (10.1) % Operating income 52,273 74,755 127,028 60,857 18,276 79,133 47,895 60.5 % Intercompany rent income (expense) 65,005 (65,005) — 23,413 (23,413) — — — % Other income (expense): Interest income 4,901 47 4,948 701 3 704 4,244 602.8 % Interest expense (101,206) — (101,206) (94,292) (102) (94,394) (6,812) (7.2) % Gain on sale/disposition of properties 33,988 — 33,988 — — — 33,988 — % Loss on early extinguishment of debt — — — (214) — (214) 214 100.0 % Income (loss) before income taxes 54,961 9,797 64,758 (9,535) (5,236) (14,771) 79,529 (538.4) % Income tax (expense) benefit (584) (962) (1,546) (613) 2,347 1,734 (3,280) (189.2) % Net income (loss) 54,377 8,835 63,212 (10,148) (2,889) (13,037) 76,249 (584.9) % Private perpetual preferred unit distributions (4,201) — (4,201) (4,201) — (4,201) — — % Net (income) loss attributable to non-controlling interests: Non-controlling interests in the Operating Partnership (22,812) — (22,812) 6,527 — 6,527 (29,339) 449.5 % Non-controlling interests in other partnerships 243 — 243 — — — 243 — % Net income (loss) attributable to common shareholders $ 27,607 $ 8,835 $ 36,442 $ (7,822) $ (2,889) $ (10,711) $ 47,153 (440.2) % Real Estate Segment Rental Revenue The increase in rental revenue reflects the inclusion of revenues from our multifamily properties which were acquired on December 22, 2021. 40 Other Revenues and Fees The increase in other revenues and fees was due to higher food and beverage sales, insurance claim income, parking income and bad debt recovery income.
Biggest changeYear Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table summarizes the historical results of operations for the years ended December 31, 2023 and 2022 (amounts in thousands) : Years Ended December 31, 2023 2022 Change % Real Estate Segment Observatory Segment Total Real Estate Segment Observatory Segment Total Revenues: Rental revenue $ 597,319 $ — $ 597,319 $ 591,048 $ — $ 591,048 $ 6,271 1.1 % Observatory revenue — 129,366 129,366 — 105,978 105,978 23,388 22.1 % Lease termination fees — — — 20,032 — 20,032 (20,032) (100.0) % Third-party management and other fees 1,351 — 1,351 1,361 — 1,361 (10) (0.7) % Other revenues and fees 11,536 — 11,536 8,622 — 8,622 2,914 33.8 % Total revenues 610,206 129,366 739,572 621,063 105,978 727,041 12,531 1.7 % Operating expenses: Property operating expenses 167,324 — 167,324 157,935 — 157,935 (9,389) (5.9) % Ground rent expenses 9,326 — 9,326 9,326 — 9,326 — — % General and administrative expenses 63,939 — 63,939 61,765 — 61,765 (2,174) (3.5) % Observatory expenses — 35,265 35,265 — 31,036 31,036 (4,229) (13.6) % Real estate taxes 127,101 — 127,101 123,057 — 123,057 (4,044) (3.3) % Depreciation and amortization 189,762 149 189,911 216,707 187 216,894 26,983 12.4 % Total operating expenses 557,452 35,414 592,866 568,790 31,223 600,013 7,147 1.2 % Operating income 52,754 93,952 146,706 52,273 74,755 127,028 19,678 15.5 % Intercompany rent income (expense) 80,514 (80,514) — 65,005 (65,005) — — — % Other income (expense): Interest income 14,936 200 15,136 4,901 47 4,948 10,188 205.9 % Interest expense (101,484) — (101,484) (101,206) — (101,206) (278) (0.3) % Gain on sale/disposition of properties 26,764 — 26,764 33,988 — 33,988 (7,224) (21.3) % Income before income taxes 73,484 13,638 87,122 54,961 9,797 64,758 22,364 34.5 % Income tax expense (552) (2,163) (2,715) (584) (962) (1,546) (1,169) (75.6) % Net income 72,932 11,475 84,407 54,377 8,835 63,212 21,195 33.5 % Net (income) loss attributable to non-controlling interests: Non-controlling interests in the Operating Partnership (31,094) — (31,094) (22,812) — (22,812) (8,282) (36.3) % Non-controlling interests in other partnerships (68) — (68) 243 — 243 (311) (128.0) % Private perpetual preferred unit distributions (4,201) — (4,201) (4,201) — (4,201) — — % Net income attributable to common shareholders $ 37,569 $ 11,475 $ 49,044 $ 27,607 $ 8,835 $ 36,442 $ 12,602 35.0 % 37 Real Estate Segment Rental Revenue The increase in rental revenue was primarily attributable to a $13.7 million increase in base rent from new or renewed tenants and higher rents and higher tenant escalations, partially offset by a net $7.4 million decrease in revenue from our recent transaction activity as disclosed in "Financial Statements - Note 3.
This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding the components of net income that are eliminated in the calculation of NOI.
This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in this Management's Discussion and Analysis of Financial Condition and Results of Operations regarding components of net income that are eliminated in the calculation of NOI.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that 46 result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results of operations, the utility of FFO as a measure of performance is limited.
Additionally, for the performance-based equity awards, we assess, at 51 each reporting period, whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment.
Additionally, for the performance-based equity awards, we assess, at each reporting period, whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment.
Our board may from time to time modify our leverage policies in light of the then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general market conditions for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. See ITEM 1A.
Our Board of Directors may from time to time modify our leverage policies in light of the then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general market conditions for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors. See ITEM 1A.
While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time.
While certain aspects of real property do decline in value over time in a manner that is reasonably 42 captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time.
Our taxable REIT subsidiaries account for their income taxes in accordance with GAAP, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns.
Our taxable REIT subsidiaries account for their income taxes in accordance with GAAP, which includes an estimate of the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.
Although our board has not adopted a policy that limits the total amount of indebtedness that we may incur, we anticipate that our board will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed or floating rate.
Although our Board of Directors has not adopted a policy that limits the total amount of indebtedness that we may incur, we anticipate that our Board of Directors will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed or floating rate.
NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner.
NOI is used by our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by: (i) the cost of funds of the property owner, (ii) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (iii) acquisition expenses, loss on early extinguishment of debt, impairment charges and loss from derivative financial instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner.
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.
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, EBITDA multiples and control premium rates.
Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheets and in the consolidated statements of income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests.
Non-controlling interests are required to be presented as a separate component of equity in the 45 consolidated balance sheets and in the consolidated statements of income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests.
We expect to meet our short-term liquidity requirements, including distributions, operating expenses, working capital, debt service, and capital expenditures from cash flows from operations, cash on hand, debt issuances, and available borrowing capacity under our unsecured revolving credit and term loan facilities. The availability of these borrowings is subject to the conditions set forth in the applicable loan agreements.
We expect to meet our short-term liquidity requirements, including distributions, operating expenses, working capital, debt service, and capital expenditures from cash flows from operations, cash on hand, debt issuances, and available borrowing capacity under our unsecured revolving credit facility. The availability of these borrowings is subject to the conditions set forth in the applicable loan agreements.
We consider this a useful supplemental measure in evaluating our operating performance due to the non-cash accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results.
We believe this is a useful supplemental measure in evaluating our operating performance due to the non-cash accounting treatment under GAAP, which stems from the third quarter 2014 acquisition of two option properties following our formation transactions as they carry significantly below market ground leases, the amortization of which is material to our overall results.
We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment writedowns of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures.
We compute FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-off of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures.
We present Modified FFO because we consider it an important supplemental measure of our operating performance in that it adds back the non-cash amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs.
We present Modified FFO because we believe it is an important supplemental measure of our operating performance in that it adds back the non-cash amortization of below-market ground leases. There can be no assurance that Modified FFO presented by us is comparable to similarly titled measures of other REITs.
Other limitations may apply to ESRT’s ability to use its NOL to offset taxable income. As of December 31, 2022, the Observatory TRS had a federal income tax receivable of $2.5 million. This receivable reflects an anticipated refund resulting from the carryback of 2020 NOL to previous tax years.
Other limitations may apply to ESRT’s ability to use its NOL to offset taxable income. As of December 31, 2023, the Observatory TRS had a federal income tax receivable of $2.5 million. This receivable reflects an anticipated refund resulting from the carryback of 2020 NOL to previous tax years.
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.
Results of Operations Overview The discussion below relates to the financial condition and results of operations for the years ended December 31, 2022 and 2021. For a discussion of our 2020 financial results as compared to our 2021 financial results, please see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Results of Operations Overview The discussion below relates to the financial condition and results of operations for the years ended December 31, 2023 and 2022. For a discussion of our 2021 financial results as compared to our 2022 financial results, please see our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
We declared dividends of $0.035 per share for each quarter of 2022, which equates to an annualized rate of $0.14 per share. The Board of Directors will continue its regular review of its dividend and capital allocation policies at each Board meeting.
We declared dividends of $0.035 per share for each quarter of 2023, which equates to an annualized rate of $0.14 per share. The Board of Directors will continue its regular review of its dividend and capital allocation policies at each Board meeting.
As of December 31, 2022, we were in compliance with the covenants under the outstanding senior unsecured notes. Leverage Policies We expect to employ leverage in our capital structure in amounts determined from time to time by our board of directors.
As of December 31, 2023, we were in compliance with the covenants under the outstanding senior unsecured notes. Leverage Policies We expect to employ leverage in our capital structure in amounts determined from time to time by our Board of Directors.
We expect to meet our long-term capital requirements, including acquisitions, redevelopments and capital expenditures through our cash flows from operations, cash on hand, our unsecured revolving credit and term loan facilities, mortgage financings, debt issuances, common and/or preferred equity issuances and asset sales.
We expect to meet our long-term capital requirements, including acquisitions, redevelopments and capital expenditures through our cash flows from operations, cash on hand, our unsecured revolving credit facility, mortgage financings, debt issuances, common and/or preferred equity issuances and asset sales.
Our methodology to review goodwill impairment, which included a significant amount of judgment and estimates, provided a reasonable basis to determine whether impairment had occurred. Each quantitative analysis performed concluded the fair value of the standalone observatory reporting unit exceeds its carrying value.
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. The quantitative analysis performed concluded the fair value of the reporting unit exceeds its carrying value.
We believe that eliminating these costs from net income is useful because the resulting measure captures the actual revenue, generated and actual expenses 45 incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.
We believe that eliminating these costs from net income is useful to investors because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.
These 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 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.
For a further discussion of these and other factors that could impact the company's future results, performance or transactions, see the section entitled “Risk Factors” of this Annual Report on Form 10-K. While forward-looking statements reflect the company's good faith beliefs, they are not guarantees of future performance.
For a further discussion of these and other factors that could impact the Company's future results, performance or transactions, see the section entitled “Risk Factors” of this Annual Report on Form 10-K. While forward-looking statements reflect the Company's good faith beliefs, they do not guarantee future performance.
In connection with our three ground leases (i.e. long-term leaseholds of the land and the improvements) at 1350 Broadway, 111 West 33rd Street and 1400 Broadway), we also have contractual rent obligations totaling $69.8 million as of December 31, 2022 of which $7.5 million is due within the next five years.
In connection with our three ground leases (i.e. long-term leaseholds of the land and the improvements) at 1350 Broadway, 111 West 33rd Street and 1400 Broadway, we also have contractual rent obligations totaling $68.3 million as of December 31, 2023, of which $7.5 million is due within the next five years.
Risk Factors - Risks Relating to Our Indebtedness and Liquidity in this Annual Report on Form 10-K for more information. At December 31, 2022, we had approximately $264.4 million available in cash and cash equivalents and there was $850.0 million available under our unsecured revolving credit facility.
"Risk Factors - Risks Relating to Our Indebtedness and Liquidity" in this Annual Report on Form 10-K for more information. At December 31, 2023, we had approximately $346.6 million available in cash and cash equivalents and there was $850.0 million available under our unsecured revolving credit facility.
At December 31, 2022, we had approximately $2.3 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 6.4 years.
At December 31, 2023, we had approximately $2.2 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 5.4 years.
(4) Includes an aggregate of 499,012, 507,276 and 504,284 rentable square feet of retail space in our Manhattan office properties in 2022, 2021 and 2020, respectively. Excludes the Empire State Building broadcasting licenses and observatory operations. (5) The tables above exclude three multifamily properties.
(4) Includes an aggregate of 498,682, 499,012 and 507,276 rentable square feet of retail space in our Manhattan office properties in 2023, 2022 and 2021, respectively. Excludes the Empire State Building broadcasting licenses and Observatory operations. (5) The tables above exclude our multifamily properties.
In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and we are the primary beneficiary.
In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members.
Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur nor do they restrict the form in which our indebtedness will be taken (including, but not limited to, recourse or non-recourse debt and cross-collateralized debt).
Our charter and bylaws do not limit the amount or percentage of indebtedness that we may incur nor do they restrict the form in which our indebtedness will be taken (including, but not limited to, recourse or non-recourse debt and cross-collateralized debt). Our overall leverage will depend on our mix of investments and the cost of leverage.
As of December 31, 2022, ESRT had $99.8 million of net operating loss ("NOL") carryforwards that may be used in the future to reduce the amount otherwise required to be distributed by ESRT to meet REIT requirements.
As of December 31, 2023, ESRT had $103.0 million of net operating loss ("NOL") carryforwards that may be used in the future to reduce the amount otherwise required to be distributed by ESRT to meet REIT requirements.
Distribution to Equity Holders Distributions and dividends have been made to equity holders in 2020, 2021 and 2022 as follows (amounts in thousands): 44 Year ended December 31, 2020 65,047 Year ended December 31, 2021 32,764 Year ended December 31, 2022 42,786 Stock and Publicly Traded Operating Partnership Unit Repurchase Program Our Board of Directors authorized the repurchase of up to $500 million of our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units through December 31, 2023.
Distribution to Equity Holders Distributions and dividends have been made to equity holders in 2021, 2022 and 2023 as follows (amounts in thousands): 41 Year ended December 31, 2021 32,764 Year ended December 31, 2022 42,786 Year ended December 31, 2023 41,323 Stock and Publicly Traded Operating Partnership Unit Repurchase Program Our Board of Directors authorized the repurchase of up to $500 million of our Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units during the period from January 1, 2022 through December 31, 2023.
We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand, short term investments and borrowings under the unsecured revolving credit and term loan facilities. Capital expenditures are considered part of both our short-term and long-term liquidity requirements.
We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand and borrowings. Capital expenditures are considered part of both our short-term and long-term liquidity requirements. We intend to fund the capital improvements through a combination of operating cash flow, cash on hand and borrowings.
The first maturity is in November 2024. See "Financial Statements - Note 5 Debt" for more information on mortgage debt. Senior Unsecured Notes The terms of the senior unsecured notes include customary covenants, including limitations on liens, investment, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports.
The next mortgage debt maturity is November 2024. See "Financial Statements - Note 5 Debt" in this Annual Report on Form 10-K for more information on mortgage debt. 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.
Years Ended December 31, 2022 2021 2020 Total Commercial Portfolio Capital expenditures (1) $ 38,445 $ 24,279 $ 43,022 _______________ (1) Includes all capital expenditures, excluding tenant improvements and leasing commission costs. As of December 31, 2022, we expect to incur additional costs relating to obligations under signed new leases of approximately $118.3 million for tenant improvements and leasing commissions.
Years Ended December 31, 2023 2022 2021 Total Commercial Portfolio Capital expenditures (1) $ 55,385 $ 38,445 $ 24,279 _______________ (1) Includes all capital expenditures, excluding tenant improvements and leasing commission costs. As of December 31, 2023, we expect to incur additional costs relating to obligations under signed new leases of approximately $101.2 million for tenant improvements and leasing commissions.
Our primary sources of liquidity will generally consist of cash on hand, short term investments, cash generated from our operating activities, debt issuances and unused borrowing capacity under our unsecured revolving credit and term loan facilities.
Our primary sources of liquidity will generally consist of cash on hand, cash generated from our operating activities, debt issuances and unused borrowing capacity under our unsecured revolving credit facility.
We believe that the assumptions and estimates utilized are appropriate based on the information available to management at the time of grant. Accounting Standards Update See "Financial Statements - Note 2 Summary of Significant Accounting Policies" for information about recently issued and recently adopted accounting standards. 52
We believe that the assumptions and estimates utilized are appropriate based on the information available to management at the time of grant. Accounting Standards Update See "Financial Statements - Note 2 Summary of Significant Accounting Policies" in this Annual Report on Form 10-K for information about recently issued and recently adopted accounting standards. 47
The cost of funds is eliminated from NOI because it is specific to the particular financing capabilities and constraints of the owner and because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future.
The cost of funds is eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future.
The company disclaims any obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this Annual Report on Form 10-K, except as required by applicable law.
Any forward-looking statement speaks only as of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this Annual Report on Form 10-K, except as required by applicable law.
The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI for the periods presented (amounts in thousands): Years Ended December 31, 2022 2021 2020 Net income (loss) $ 63,212 $ (13,037) $ (22,889) Add: General and administrative expenses 61,765 55,947 62,244 Depreciation and amortization 216,894 201,806 191,006 Interest expense 101,206 94,394 89,907 Loss on early extinguishment of debt — 214 86 Income tax expense (benefit) 1,546 (1,734) (6,971) Impairment charges — 7,723 5,360 IPO litigation expense — — 1,165 Less: Gain on sale/disposition of properties (33,988) — — Interest income (4,948) (704) (2,637) Third-party management and other fees (1,361) (1,219) (1,225) Net operating income $ 404,326 $ 343,390 $ 316,046 Other Net Operating Income Data Straight line rental revenue $ 24,562 $ 21,078 $ 5,238 Net increase in rental revenue from the amortization of above and below-market lease assets and liabilities $ 4,758 $ 5,895 $ 3,627 Amortization of acquired below-market ground leases $ 7,831 $ 7,831 $ 7,831 Funds from Operations ("FFO") We present below a discussion of FFO.
The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI for the periods presented (amounts in thousands): Years Ended December 31, 2023 2022 2021 Net income (loss) $ 84,407 $ 63,212 $ (13,037) Add: General and administrative expenses 63,939 61,765 55,947 Depreciation and amortization 189,911 216,894 201,806 Interest expense 101,484 101,206 94,394 Loss on early extinguishment of debt — — 214 Income tax expense (benefit) 2,715 1,546 (1,734) Impairment charges — — 7,723 Less: Gain on sale/disposition of properties (26,764) (33,988) — Interest income (15,136) (4,948) (704) Third-party management and other fees (1,351) (1,361) (1,219) Net operating income $ 399,205 $ 404,326 $ 343,390 Other Net Operating Income Data Straight line rental revenue $ 19,563 $ 24,562 $ 21,078 Net increase in rental revenue from the amortization of above and below-market lease assets and liabilities $ 2,416 $ 4,758 $ 5,895 Amortization of acquired below-market ground leases $ 7,831 $ 7,831 $ 7,831 Funds from Operations ("FFO") We present below a discussion of FFO.
Share-Based Compensation Share-based compensation for time-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the shorter of (i) the stated vesting period, which is generally three, four or five years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant.
As of December 31, 2023, the tax years ended December 31, 2020 through December 31, 2023 remain open for an audit by the Internal Revenue Service, state or local authorities. 46 Share-Based Compensation Share-based compensation for time-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the shorter of (i) the stated vesting period, which is generally three, four or five years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant.
Office Properties (1)(5) Years Ended December 31, Total New Leases, Expansions, and Renewals 2022 2021 2020 Number of leases signed (2) 130 118 90 Total square feet 1,071,426 983,182 854,068 Leasing commission costs per square foot (3) $ 18.23 $ 20.14 $ 11.67 Tenant improvement costs per square foot (3) 56.72 66.25 38.52 Total leasing commissions and tenant improvement costs per square foot (3) $ 74.95 $ 86.39 $ 50.19 43 Retail Properties (4)(5) Years Ended December 31, Total New Leases, Expansions, and Renewals 2022 2021 2020 Number of leases signed (2) 14 11 14 Total Square Feet 47,153 22,448 69,311 Leasing commission costs per square foot (3) $ 62.30 $ 57.27 $ 32.31 Tenant improvement costs per square foot (3) 55.13 61.75 109.29 Total leasing commissions and tenant improvement costs per square foot (3) $ 117.43 $ 119.02 $ 141.60 _______________ (1) Excludes an aggregate of 499,012, 507,276 and 504,284 rentable square feet of retail space in our Manhattan office properties in 2022, 2021 and 2020, respectively.
Office Properties (1)(5) Years Ended December 31, Total New Leases, Expansions, and Renewals 2023 2022 2021 Number of leases signed (2) 82 130 118 Total square feet 929,031 1,071,426 983,182 Leasing commission costs per square foot (3) $ 19.80 $ 18.23 $ 20.14 Tenant improvement costs per square foot (3) 81.86 56.72 66.25 Total leasing commissions and tenant improvement costs per square foot (3) $ 101.66 $ 74.95 $ 86.39 40 Retail Properties (4)(5) Years Ended December 31, Total New Leases, Expansions, and Renewals 2023 2022 2021 Number of leases signed (2) 8 14 11 Total Square Feet 21,715 47,153 22,448 Leasing commission costs per square foot (3) $ 54.62 $ 62.30 $ 57.27 Tenant improvement costs per square foot (3) 38.57 55.13 61.75 Total leasing commissions and tenant improvement costs per square foot (3) $ 93.19 $ 117.43 $ 119.02 _______________ (1) Excludes an aggregate of 498,682, 499,012 and 507,276 rentable square feet of retail space in our Manhattan office properties in 2023, 2022 and 2021, respectively.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act.
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act.
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: (i) economic, market, political and social impact of, and uncertainty relating to, any pandemic; (ii) a failure of conditions or performance regarding any event or transaction described herein, (iii) resolution of legal proceedings involving the Company; (iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work; (v) changes in our business strategy; (vi) changes in technology and market competition that affect utilization of our office, retail, observatory, broadcast or other facilities; (vii) changes in domestic or international tourism, including due to health crises and pandemics, geopolitical events, including global hostilities, currency exchange rates, and/or competition from recently opened observatories in New York City, any or all of which may cause a decline in Observatory visitors; (viii) defaults on, early terminations of, or non-renewal of, leases by tenants; (ix) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the current phasing out of LIBOR; (x) declining real estate valuations and impairment charges; (xi) termination of our ground leases; (xii) changes in our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due and potential limitations on our ability to borrow additional funds in compliance with drawdown conditions and financial covenants; (xiii) decreased rental rates or increased vacancy rates; (xiv) our failure to execute any newly planned capital project successfully or on the anticipated timeline or budget; (xv) difficulties in identifying and completing acquisitions; (xvi) risks related to any development project (including our Metro Tower potential development site); (xvii) impact of changes in governmental regulations, tax laws and rates and similar matters; (xviii) our failure to qualify as a REIT; (xix) environmental uncertainties and risks related to climate change, adverse weather conditions, rising sea levels and natural disasters; (xx) incurrence of taxable capital gain on disposition of an asset due to failure of use or compliance with a 1031 exchange program; and (xxi) accuracy of our methodologies and estimates regarding ESG metrics and goals, tenant willingness and ability to collaborate in reporting ESG metrics and meeting ESG goals, and impact of governmental regulation on our ESG efforts.
Many important factors could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements, including, among other things: (i) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, climate-related risks such as natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats and technology disruptions; (ii) a failure of conditions or performance regarding any event or transaction described herein; (iii) resolution of legal proceedings involving the Company; (iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work; (v) changes in our business strategy; (vi) a decline in Observatory visitors due to changes in domestic or international tourism, including due to health crises, geopolitical events, currency exchange rates, and/or competition from other observatories; (vii) defaults on, early terminations of, or non-renewal of, leases by tenants; (viii) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (ix) declining real estate valuations and impairment charges; (x) termination of our ground leases; (xi) limitations on our ability to pay down, refinance, restructure or extend our indebtedness or borrow additional funds; (xii) decreased rental rates or increased vacancy rates; (xiii) difficulties in executing capital projects or development projects successfully or on the anticipated timeline or budget; (xiv) difficulties in identifying and completing acquisitions; (xv) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvi) our failure to qualify as a REIT; (xvii) incurrence of taxable capital gain on disposition of an asset due to failure of use or compliance with a 1031 exchange program; and (xviii) failure to achieve sustainability metrics and goals, including as a result of tenant collaboration, and impact of governmental regulation on our sustainability efforts.
Income Taxes The increase in income tax expense was attributable to higher taxable income for the observatory segment. 41 Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, including lease-up costs, fund our redevelopment and repositioning programs, acquire properties, make distributions to our securityholders and other general business needs.
Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, including lease-up costs, fund our redevelopment and repositioning programs, acquire properties, make distributions to our securityholders and fulfill other general business needs.
We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.
Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.
Unsecured Revolving Credit and Term Loan Facilities See "Financial Statements - Note 5 Debt" for a summary of our unsecured revolving credit and term loan facilities.
Unsecured Revolving Credit and Term Loan Facilities See "Financial Statements - Note 5 Debt" in this Annual Report on Form 10-K for a summary of our unsecured revolving credit and term loan facilities.
In addition, FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains residual value to a much greater extent than do other depreciable assets. Investors should review FFO, along with GAAP net income, when trying to understand an equity REIT’s operating performance.
In addition, we believe FFO is useful to investors as it captures features particular to real estate performance by recognizing that real estate has generally appreciated over time or maintains 43 residual value to a much greater extent than do other depreciable assets.
An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill.
Goodwill Goodwill is tested annually for impairment and more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill.
For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit.
This assessment will include a review of each entity’s organizational agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we will review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity’s economic performance and benefit.
The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. The authorization does not obligate us to acquire any particular amount of securities, and the program may be suspended or discontinued at our discretion without prior notice.
The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws.
Financial Covenants As of December 31, 2022, we were in compliance with the following financial covenants: 42 Financial Covenant Required December 31, 2022 In Compliance Maximum total leverage 35.6 % Yes Maximum secured debt 14.0 % Yes Minimum fixed charge coverage > 1.50x 2.8x Yes Minimum unencumbered interest coverage > 1.75x 5.0x Yes Maximum unsecured leverage 25.8 % Yes Mortgage Debt As of December 31, 2022, mortgage notes payable, net, amounted to $883.7 million.
Financial Covenants 39 As of December 31, 2023, we were in compliance with the following financial covenants related to our unsecured facilities: Financial Covenant Required December 31, 2023 In Compliance Maximum total leverage 31.5 % Yes Maximum secured leverage 12.3 % Yes Minimum fixed charge coverage > 1.50x 3.3x Yes Minimum unencumbered interest coverage > 1.75x 5.7x Yes Maximum unsecured leverage 23.4 % Yes Mortgage Debt As of December 31, 2023, mortgage notes payable, net, amounted to $877.4 million.
The Observatory TRS has $10.2 million NOL carryforwards that may be used to offset future taxable income, if any. The federal NOL may be carried forward indefinitely and the state and local NOL can be carried forward for up to 20 years. We apply provisions for measuring and recognizing tax benefits associated with uncertain income tax positions.
The Observatory TRS has $1.5 million of federal NOL carryforward that may be used to offset future taxable income, if any. The federal NOL may be carried forward indefinitely. We apply provisions for measuring and recognizing tax benefits associated with uncertain income tax positions. Penalties and interest, if incurred, would be recorded as a component of income tax expense.
As of December 31, 2022, excluding debt amortization, we have no debt maturity until November 2024 when principal repayments would amount to $77.7 million in 2024, $315.0 million in 2025, $225.0 million in 2026, $319.0 million in 2027 and $1.3 billion thereafter.
As of December 31, 2023, excluding debt amortization, we have a debt maturity of $77.7 million in November 2024, $315.0 million in 2025, $225.0 million in 2026, $319.0 million in 2027 and $1.3 billion thereafter. As of December 31, 2023, interest expense obligations and debt amortization from 2024 through 2028 and thereafter amount to $487.4 million and $51.6 million, respectively.
Distribution Policy We intend to distribute our net taxable income to our security holders in a manner intended to satisfy REIT distribution requirements and to avoid U.S. federal income tax liability.
Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements. Distribution Policy We intend to distribute our net taxable income to our securityholders in a manner intended to satisfy REIT distribution requirements and to avoid U.S. federal income tax liability.
Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP. Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.
There can be no assurance that Core FFO presented by the Company is comparable to similarly titled measures of other REITs. Core FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP.
Penalties and interest, if incurred, would be recorded as a component of income tax expense. As of December 31, 2022 and 2021, we do not have a liability for uncertain tax positions.
As of December 31, 2023 and 2022, we do not have a liability for uncertain tax positions.
The following table presents a reconciliation of net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands): 47 Years Ended December 31, 2022 2021 2020 Net income (loss) $ 63,212 $ (13,037) $ (22,889) Non-controlling interests in other partnerships 243 — — Private perpetual preferred unit distributions (4,201) (4,201) (4,197) Real estate depreciation and amortization 210,522 196,360 184,245 Impairment charges — 7,723 5,360 Gain on sale/disposition of properties (33,988) — — Funds from operations attributable to common stockholders and non-controlled interests 235,788 186,845 162,519 Amortization of below-market ground leases 7,831 7,831 7,831 Modified funds from operations attributable to common stockholders and non-controlled interests 243,619 194,676 170,350 Loss on early extinguishment of debt — 214 86 Severance expenses — — 3,813 IPO litigation expense — — 1,165 Core funds from operations attributable to common stockholders and non-controlled interests $ 243,619 $ 194,890 $ 175,414 Weighted average shares and Operating Partnership units Basic 268,337 277,420 283,826 Diluted 269,948 277,420 283,837 Factors That May Influence Future Results of Operations Rental Revenue We derive revenues primarily from rents, rent escalations, expense reimbursements and other income received from tenants under existing leases at each of our properties.
The following table presents a reconciliation of our net income (loss), the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands): 44 Years Ended December 31, 2023 2022 2021 Net income (loss) $ 84,407 $ 63,212 $ (13,037) Non-controlling interests in other partnerships (68) 243 — Private perpetual preferred unit distributions (4,201) (4,201) (4,201) Real estate depreciation and amortization 184,633 210,522 196,360 Impairment charges — — 7,723 Gain on sale/disposition of properties (26,764) (33,988) — Funds from operations attributable to common stockholders and non-controlled interests 238,007 235,788 186,845 Amortization of below-market ground leases 7,831 7,831 7,831 Modified funds from operations attributable to common stockholders and non-controlled interests 245,838 243,619 194,676 Loss on early extinguishment of debt — — 214 Core funds from operations attributable to common stockholders and non-controlled interests $ 245,838 $ 243,619 $ 194,890 Weighted average shares and Operating Partnership units Basic 263,226 268,337 277,420 Diluted 265,633 269,948 277,420 Critical Accounting Estimates Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements, have been prepared in conformity with GAAP and with the rules and regulations of the Securities and Exchange Commission (the "SEC"), represent our assets and liabilities and operating results.
In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
Core FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
All significant intercompany balances and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest.
The consolidated financial statements include our accounts and our partially owned and wholly owned subsidiaries as well as our Operating Partnership and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest.
Subsequent to the year ended December 31, 2022, on February 1, 2023 we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million.
Portfolio Transaction Activity On February 1, 2023, we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million. Refer to "Financial Statements - Note 11 Related Party Transactions" in this Annual Report on Form 10-K.
Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them.
Likewise, all of our statements regarding anticipated growth in our portfolio from operations, acquisitions and anticipated market conditions, demographics and results of operations are forward-looking statements. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control, and you should not rely on them as predictions of future events.
Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the company. Overview Unless the context otherwise requires or indicates, references in this section to "we," "our" and "us" refer to our company and its consolidated subsidiaries.
Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).
We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).
Non-amortizing intangible assets, such as trade names and trademarks, are subject to an annual impairment test based on fair value and amortizing intangible assets are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. 50 From the quarter ended June 30, 2020 and for each subsequent quarter through our annual goodwill testing on October 1, 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.
Non-amortizing intangible assets, such as trade names and trademarks, are subject to an annual impairment test based on fair value and amortizing intangible assets are tested whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Observatory Expenses The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as labor, union, security, cleaning and maintenance costs.
Observatory Segment Observatory Revenue Observatory revenues were higher driven by increased visitation and revenue per visitor during the year ended December 31, 2023 as compared to the year ended December 31, 2022. Observatory Expenses The increase in O bservatory expenses was driven by increased operating hours, which increased variable costs such as marketing, labor and maintenance costs.
Core Funds From Operations ("Core FFO") Core FFO adds back to Modified FFO the following items: IPO litigation expense, severance expenses and loss on early extinguishment of debt.
Core Funds From Operations ("Core FFO") Core FFO adds back to Modified FFO the following item: loss on early extinguishment of debt. The Company believes Core FFO is an important supplemental measure of its operating performance because it excludes non-recurring items.
The following table summarizes our purchases of equity securities for the year ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value Available for Future Purchase (in thousands) Year ended December 31, 2022 11,571,133 $ 7.79 11,571,133 $ 409,824 Cash Flows Comparison of Year Ended December 31, 2022 to the Year Ended December 31, 2021 Net cash .
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value Available for Future Purchase Year ended December 31, 2023 2,150,857 $ 6.09 2,150,857 $500,000,000 (a) (a) Represents the new board authorization for the January 1, 2024 - December 31, 2025 period.
Property Operating Expenses The increase in property operating expenses reflects higher payroll, utilities, repairs and maintenance costs, cleaning and other operating expenses due to increased building utilization at our office properties and the inclusion of operating expenses from our multifamily properties which were acquired on December 22, 2021.
Property Operating Expenses The increase in property operating expenses was primarily due to higher repair and maintenance costs, higher cleaning costs, and higher payroll costs in 2023 relating to increased building utilization.
In December 2022, we also entered into a purchase and sale agreement for 500 Mamaroneck Avenue in Harrison, NY at a gross asset valuation of $53.0 million. This transaction is expected to close in the first quarter of 2023, subject to customary closing conditions.
On April 5, 2023, we closed on the sale of 500 Mamaroneck Avenue in Harrison, New York at a gross asset valuation of $53.0 million.
The following discussion and analysis should be read in conjunction with our consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 and the notes related thereto which are included in this Annual Report on Form 10-K. 38 2022 Highlights • Net income attributable to the company of $36.4 million. • Core FFO of $243.6 million. • Signed a total of 1,118,579 rentable square feet of new, renewal and expansion leases. • Completed the acquisition of a multifamily asset located at 298 Mulberry Street in Manhattan in the fourth quarter. • Completed the dispositions of an office asset located at 10 Bank Street in White Plains, NY in the fourth quarter, and retail assets located in Westport, Connecticut subsequent to year-end in a tax-efficient manner through transactions that qualify as like-kind exchanges.
The following discussion and analysis should be read in conjunction with our consolidated financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 and the notes related thereto which are included in this Annual Report on Form 10-K.
Removed
You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “contemplates,” “aims,” “continues,” “would” or “anticipates” or the negative of these words and phrases or similar words or phrases.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context otherwise requires or indicates, references in this section to " we ," " our, " and " us " refer to our Company and its consolidated subsidiaries.
Removed
In particular, statements pertaining to our capital resources, portfolio performance, dividend policy and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our commercial portfolio from operations, acquisitions and anticipated market conditions, demographics and results of operations are forward-looking statements.
Added
You can identify forward-looking statements by the use of forward-looking terminology such as “aims," "anticipates," "approximately," "believes," "contemplates," "continues," "estimates," "expects," "forecasts," "hope," "intends," "may," "plans," "seeks," "should," "thinks," "will," "would" or the negative of these words and phrases. In particular, statements pertaining to our capital resources, portfolio performance, dividend policy and results of operations contain forward-looking statements.
Removed
General and Administrative Expenses The increase in general and administrative expenses reflects higher equity compensation and payroll costs, information technology costs and professional fees. Real Estate Taxes Higher real estate taxes were primarily attributable to the inclusion of real estate taxes from our multifamily properties which were acquired on December 22, 2021.
Added
Overview 2023 Highlights • Net income attributable to the Company of $49.0 million. • Core FFO of $245.8 million. • Signed a total of 950,746 rentable square feet of new, renewal and expansion leases. • Completed the acquisition of a retail asset located i n Williamsburg, Brooklyn in the third quarter. 36 • Completed the dispositions of retail assets located in Westport, Connecticut in the first quarter, and an office asset located in Harrison, New York in the second quarter.
Removed
Impairment Charge The impairment charge in 2021 related to 383 Main Avenue, Norwalk CT, which was disposed in April 2022. Depreciation and Amortization The increase in depreciation and amortization reflects accelerated depreciation at one property due to an impairment charge in the fourth quarter of 2021 and additional depreciation from our multifamily properties which were acquired on December 22, 2021.
Added
Acquisitions and Dispositions" in this Annual Report on Form 10-K. Other Revenues and Fees The increase in other revenues and fees relates to prior period real estate tax refunds and abatements, and bad debt recovery income during the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe will continue to work with our lenders and counterparties to replace or modify, as appropriate, the interest rate provisions in our other LIBOR swap and cap agreements. As of December 31, 2022, the weighted average interest rate on the $2.3 billion of fixed-rate indebtedness outstanding was 3.9% per annum, each with maturities at various dates through March 17, 2035.
Biggest changeAs of December 31, 2023, the weighted average interest rate on the $2.2 billion of fixed-rate indebtedness outstanding was 3.9% per annum, each with maturities at various dates through March 17, 2035.
As of December 31, 2022, the fair value of our outstanding debt was approximately $2.0 billion which was approximately $207.2 million less than the historical book value as of such date. Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.
As of December 31, 2023, the fair value of our outstanding debt was approximately $2.0 billion which was approximately $194.0 million less than the book value as of such date. Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.
As of December 31, 2022, we have interest rate LIBOR swap and cap agreements and SOFR swap agreements with an aggregate notional value of $574.8 million and which mature between October 1, 2024 and November 1, 2033.
As of December 31, 2023, we have interest rate SOFR swap and cap agreements with an aggregate notional value of $573.2 million and which mature between October 1, 2024 and November 1, 2033.
These "variable to fixed" interest rate swaps have been designated as cash flow hedges and are deemed highly effective with fair values of $17.9 million which is included in prepaid assets and other expenses on the consolidated balance sheet as of December 31, 2022.
These "variable to fixed" interest rate swaps have been designated as cash flow hedges and are deemed highly effective with fair values of $11.8 million that is included in prepaid expenses and other assets and ($0.1 million) that is included in accounts payable and accrued expenses on the consolidated balance sheet as of December 31, 2023.
However, we can provide no assurances that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility on our commercial portfolio. We are not subject to foreign currency risk. On March 5, 2021, the Financial Conduct Authority (“FCA”) announced that USD LIBOR will no longer be published after June 30, 2023.
However, we can provide no assurances that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility on our commercial portfolio. We are not subject to foreign currency risk.
Removed
This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to the Secured Overnight Financing Rate ("SOFR").
Removed
Given the phasing out of LIBOR, we have entered into SOFR swap agreements to begin the replacement of our LIBOR swap agreements. Additionally, in August 2022, we amended our BofA Credit Facility and Wells Term Loan Facility to replace LIBOR with SOFR given the phase out of LIBOR. See "Financial Statements - Note 5 Debt" for more information.

Other ESRT 10-K year-over-year comparisons