Segment Reporting

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

    We have identified two reportable segments: (1) real estate and (2) observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, redevelopment, repositioning and disposition of our traditional real estate assets. Our observatory segment includes the operation of the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and marketing strategies. We account for intersegment sales and rent as if the sales or rent were to third parties, that is, at current market prices.

The following tables provide components of segment net income (loss) for each segment for the three and nine months ended September 30, 2021 and 2020 (amounts in thousands):

	Three Months Ended September 30, 2021
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	139,558	$	—	$	—	$	139,558
Intercompany rental revenue	5,310		—		(5,310)		—
Observatory revenue	—		12,796		—		12,796
Lease termination fees	11,321		—		—		11,321
Third-party management and other fees	314		—		—		314
Other revenue and fees	921		138		—		1,059
Total revenues	157,424		12,934		(5,310)		165,048
Operating expenses:
Property operating expenses	33,357		—		—		33,357
Intercompany rent expense	—		5,310		(5,310)		—
Ground rent expense	2,331		—		—		2,331
General and administrative expenses	14,427		—		—		14,427
Observatory expenses	—		6,370		—		6,370
Real estate taxes	29,566		—		—		29,566
Depreciation and amortization	65,759		35		—		65,794
Total operating expenses	145,440		11,715		(5,310)		151,845
Total operating income	11,984		1,219		—		13,203
Other income (expense):
Interest income	211		—		—		211
Interest expense	(23,577)		—		—		(23,577)
Income (loss) before income taxes	(11,382)		1,219		—		(10,163)
Income tax (expense) benefit	53		(73)		—		(20)
Net income (loss)	$	(11,329)	$	1,146	$	—	$	(10,183)
Segment assets	$	3,870,142	$	242,021	$	—	$	4,112,163
Expenditures for segment assets	$	21,349	$	—	$	—	$	21,349

	Three Months Ended September 30, 2020
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	139,909	$	—	$	—	$	139,909
Intercompany rental revenue	(2,233)		—		2,233		—
Observatory revenue	—		4,419		—		4,419
Lease termination fees	331		—		—		331
Third-party management and other fees	283		—		—		283
Other revenue and fees	1,633		—		—		1,633
Total revenues	139,923		4,419		2,233		146,575
Operating expenses:
Property operating expenses	33,836		—		—		33,836
Intercompany rent expense	—		(2,233)		2,233		—
Ground rent expense	2,331		—		—		2,331
General and administrative expenses	14,517		—		—		14,517
Observatory expenses	—		5,931		—		5,931
Real estate taxes	31,196		—		—		31,196
Impairment charges	2,103		—		—		2,103
Depreciation and amortization	44,679		54		—		44,733
Total operating expenses	128,662		3,752		2,233		134,647
Total operating income	11,261		667		—		11,928
Other income (expense):
Interest income	360		6		—		366
Interest expense	(23,360)		—		—		(23,360)
IPO litigation expense	(1,165)		—		—		(1,165)
Income (loss) before income taxes	(12,904)		673		—		(12,231)
Income tax (expense) benefit	(196)		158		—		(38)
Net income (loss)	$	(13,100)	$	831	$	—	$	(12,269)
Segment assets	$	3,771,476	$	239,238	$	—	$	4,010,714
Expenditures for segment assets	$	30,831	$	516	$	—	$	31,347

	Nine Months Ended September 30, 2021
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	420,586	$	—	$	—	$	420,586
Intercompany rental revenue	16,271		—		(16,271)		—
Observatory revenue	—		23,758		—		23,758
Lease termination fees	15,949		—		—		15,949
Third-party management and other fees	917		—		—		917
Other revenue and fees	2,412		138		—		2,550
Total revenues	456,135		23,896		(16,271)		463,760
Operating expenses:
Property operating expenses	92,429		—		—		92,429
Intercompany rent expense	—		16,271		(16,271)		—
Ground rent expense	6,994		—		—		6,994
General and administrative expenses	42,369		—		—		42,369
Observatory expenses	—		16,226		—		16,226
Real estate taxes	92,367		—		—		92,367
Depreciation and amortization	155,244		95		—		155,339
Total operating expenses	389,403		32,592		(16,271)		405,724
Total operating income (loss)	66,732		(8,696)		—		58,036
Other income (expense):
Interest income	494		3		—		497
Interest expense	(70,553)		—		—		(70,553)
Loss on early extinguishment of debt	(214)		—		—		(214)
Loss before income taxes	(3,541)		(8,693)		—		(12,234)
Income tax (expense) benefit	(365)		3,636		—		3,271
Net loss	$	(3,906)	$	(5,057)	$	—	$	(8,963)
Expenditures for segment assets	$	64,655	$	4	$	—	$	64,659

	Nine Months Ended September 30, 2020
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	426,021	$	—	$	—	$	426,021
Intercompany rental revenue	13,356		—		(13,356)		—
Observatory revenue	—		24,049		—		24,049
Lease termination fees	1,575		—		—		1,575
Third-party management and other fees	930		—		—		930
Other revenue and fees	5,254		—		—		5,254
Total revenues	447,136		24,049		(13,356)		457,829
Operating expenses:
Property operating expenses	105,054		—		—		105,054
Intercompany rent expense	—		13,356		(13,356)		—
Ground rent expense	6,994		—		—		6,994
General and administrative expenses	48,617		—		—		48,617
Observatory expenses	—		18,087		—		18,087
Real estate taxes	90,029		—		—		90,029
Impairment charges	6,204		—		—		6,204
Depreciation and amortization	143,522		87		—		143,609
Total operating expenses	400,420		31,530		(13,356)		418,594
Total operating income (loss)	46,716		(7,481)		—		39,235
Other income (expense):
Interest income	2,438		91		—		2,529
Interest expense	(66,906)		—		—		(66,906)
Loss on early extinguishment of debt	(86)		—		—		(86)
IPO litigation expense	(1,165)		—		—		(1,165)
Loss before income taxes	(19,003)		(7,390)		—		(26,393)
Income tax (expense) benefit	(692)		3,486		—		2,794
Net loss	$	(19,695)	$	(3,904)	$	—	$	(23,599)
Expenditures for segment assets	$	77,503	$	2,748	$	—	$	80,251

    During the second quarter 2020, we wrote off $4.1 million of prior expenditures on a Combined Heat Power/Redundancy onsite power generation project in our real estate segment that is rendered economically unviable due to New York City's Local Law 97 and from its measurement of carbon from natural gas combustion generates fines. During the third quarter 2020, we also wrote off $2.1 million of prior expenditures on a build-to-suit development project in our real estate segment that was halted due to reconsideration by the user driven by the COVID-19 pandemic. For the nine months ended September 30, 2020, the $6.2 million write-off is shown as impairment charges in the condensed consolidated statements of operations.