EMPIRE STATE REALTY OP, L.P. FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025

Overview of 2025 Financial Performance

Empire State Realty Trust (ESRT) reported solid financial results for the year ended December 31, 2025. The company generated net income of $68.8 million and Core Funds From Operations (Core FFO) of $234.2 million attributable to common unitholders. ESRT signed 1,009,009 rentable square feet of new, renewal and expansion leases during the year.

The company made two notable acquisitions in 2025 - two retail properties in Williamsburg, Brooklyn for $31 million and 130 Mercer Street in the SoHo submarket of Manhattan for $386 million. ESRT also closed on the sale of Metro Center in Stamford, Connecticut, realizing a gain of $35 million.

Revenue and Profit Trends

ESRT’s total revenues increased slightly to $768.3 million in 2025, up from $767.9 million in 2024. This was driven by a $11.6 million increase in rental revenue, partially offset by an $8 million decline in observatory revenue.

The increase in rental revenue was primarily due to higher tenant reimbursement income and base rent from new or renewed leases. However, this was partially offset by a net decrease from recent property transactions. Observatory revenue declined due to lower international tourism levels, though this was partially offset by increased domestic visitation and higher revenue per visitor.

On the expense side, property operating expenses increased by $5.5 million, driven by higher cleaning, utilities and maintenance costs. Real estate taxes also rose by $3.9 million due to higher assessed property values. Overall, total operating expenses increased by $23.4 million to $632.6 million.

As a result, operating income declined by 14.5% to $135.6 million. Net income attributable to common unitholders decreased by 9.7% to $68.8 million. Core FFO, which adjusts for non-recurring items, decreased by 8.6% to $234.2 million.

Strengths and Weaknesses

A key strength for ESRT is its diversified portfolio of office and retail properties in the New York City metropolitan area. The company has been able to maintain high occupancy levels and achieve rent growth through new leases and renewals. The recent acquisitions in Williamsburg and SoHo also demonstrate ESRT’s ability to identify attractive investment opportunities.

However, the company continues to face headwinds in its observatory segment, with lower international tourism impacting revenue. The increase in operating expenses, particularly for property taxes and maintenance, is also a concern and puts pressure on profitability.

ESRT’s balance sheet remains relatively strong, with $132.7 million in cash and cash equivalents and $475 million available under its unsecured revolving credit facility as of December 31, 2025. The company has a weighted average debt maturity of 4.8 years and a weighted average interest rate of 4.48%.

Outlook and Future Prospects

Looking ahead, ESRT will need to navigate a challenging office and retail environment in New York City. The company will likely continue to focus on leasing activity, tenant retention and strategic acquisitions to drive growth. Improving the performance of the observatory segment will also be a key priority.

The company’s stock repurchase program, which authorizes the repurchase of up to $500 million of ESRT Class A common stock and operating partnership units through 2027, provides ESRT with additional financial flexibility and the ability to return capital to shareholders.

Overall, ESRT appears to be weathering the current market conditions reasonably well, but will need to closely manage its expenses and identify new avenues for growth to drive improved financial performance going forward.