UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number: 001-36105

EMPIRE STATE REALTY TRUST, INC.

(Exact name of Registrant as specified in its charter)

Maryland	37-1645259
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

111 West 33rd Street, 12th Floor

New York, New York 10120

(Address of principal executive offices) (Zip Code)

(212) 850-2600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Securities	Trading Symbol	Exchange on which traded
Class A Common Stock, par value $0.01 per share	ESRT	The New York Stock Exchange
Class B Common Stock, par value $0.01 per share	N/A	N/A

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of May 2, 2022, there were 166,569,918 shares of Class A Common Stock, $0.01 par value per share, outstanding and 994,837 shares of Class B Common Stock, $0.01 par value per share, outstanding.

	EMPIRE STATE REALTY TRUST, INC.
	FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022
	TABLE OF CONTENTS	PAGE
PART 1.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021	2
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	38
PART II.	OTHER INFORMATION	38
ITEM 1.	LEGAL PROCEEDINGS	38
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	39
ITEM 4.	MINE SAFETY DISCLOSURES	39
ITEM 5.	OTHER INFORMATION	39
ITEM 6.	EXHIBITS	40
SIGNATURES		41

1

ITEM 1. FINANCIAL STATEMENTS

Empire State Realty Trust, Inc.

Condensed Consolidated Balance Sheets

(amounts in thousands, except per share amounts)

	March 31, 2022		December 31, 2021
ASSETS	(unaudited)
Commercial real estate properties, at cost:
Land	$	336,278	$	336,278
Development costs	8,162		8,131
Building and improvements	3,190,927		3,156,508
	3,535,367		3,500,917
Less: accumulated depreciation	(1,124,090)		(1,072,938)
Commercial real estate properties, net	2,411,277		2,427,979
Cash and cash equivalents	429,716		423,695
Restricted cash	52,951		50,943
Tenant and other receivables	17,800		18,647
Deferred rent receivables	226,565		224,922
Prepaid expenses and other assets	52,152		76,549
Deferred costs, net	197,602		202,437
Acquired below-market ground leases, net	334,946		336,904
Right of use assets	28,842		28,892
Goodwill	491,479		491,479
Total assets	$	4,243,330	$	4,282,447
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	947,479	$	948,769
Senior unsecured notes, net	973,426		973,373
Unsecured term loan facilities, net	388,365		388,223
Unsecured revolving credit facility	—		—
Accounts payable and accrued expenses	108,077		120,810
Acquired below-market leases, net	22,459		24,941
Ground lease liabilities	28,842		28,892
Deferred revenue and other liabilities	84,380		84,358
Tenants’ security deposits	28,270		28,749
Total liabilities	2,581,298		2,598,115
Commitments and contingencies
Equity:
Empire State Realty Trust, Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000 shares authorized, none issued or outstanding	—		—
Class A common stock, $0.01 par value, 400,000 shares authorized, 168,731 and 169,221 shares issued and outstanding in 2022 and 2021, respectively	1,687		1,692
Class B common stock, $0.01 par value, 50,000 shares authorized, 995 and 996 shares issued and outstanding in 2022 and 2021, respectively	10		10
Additional paid-in capital	1,119,201		1,150,884
Accumulated other comprehensive loss	(12,730)		(20,848)
Retained deficit	(129,747)		(133,610)
Total Empire State Realty Trust, Inc. stockholders' equity	978,421		998,128
Non-controlling interests in the Operating Partnership	640,258		643,012
Non-controlling interests in other partnerships	13,413		13,252
Private perpetual preferred units:
Private perpetual preferred units, $13.52 liquidation preference, 4,664 issued and outstanding in 2022 and 2021, respectively	21,936		21,936
Private perpetual preferred units, $16.62 liquidation preference, 1,560 issued and outstanding in 2022 and 2021	8,004		8,004
Total equity	1,662,032		1,684,332
Total liabilities and equity	$	4,243,330	$	4,282,447

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

2

Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(amounts in thousands, except per share amounts)

	Three Months Ended March 31,
	2022		2021
Revenues:
Rental revenue	$	147,514	$	140,231
Observatory revenue	13,241		2,603
Lease termination fees	1,173		1,289
Third-party management and other fees	310		276
Other revenue and fees	1,796		905
Total revenues	164,034		145,304
Operating expenses:
Property operating expenses	38,644		30,279
Ground rent expenses	2,331		2,331
General and administrative expenses	13,686		13,853
Observatory expenses	6,215		4,588
Real estate taxes	30,004		31,447
Depreciation and amortization	67,106		44,457
Total operating expenses	157,986		126,955
Total operating income	6,048		18,349
Other income (expense):
Interest income	149		122
Interest expense	(25,014)		(23,554)
Loss on early extinguishment of debt	—		(214)
Loss before income taxes	(18,817)		(5,297)
Income tax benefit	1,596		2,106
Net loss	(17,221)		(3,191)
Net loss attributable to non-controlling interests:
Non-controlling interests in the Operating Partnership	6,919		1,620
Non-controlling interests in other partnerships	63		—
Private perpetual preferred unit distributions	(1,050)		(1,050)
Net loss attributable to common stockholders	$	(11,289)	$	(2,621)
Total weighted average shares:
Basic	169,731		171,735
Diluted	273,759		277,881
Earnings per share attributable to common stockholders:
Basic	$	(0.07)	$	(0.02)
Diluted	$	(0.07)	$	(0.02)
Dividends per share	$	0.035	$	—

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

3

Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2022		2021
Net loss	$	(17,221)	$	(3,191)
Other comprehensive income (loss):
Unrealized gain on valuation of interest rate swap agreements	9,763		59
Less: amount reclassified into interest expense	3,294		2,869
Other comprehensive income	13,057		2,928
Comprehensive loss	(4,164)		(263)
Net loss attributable to non-controlling interests and private perpetual preferred unitholders	5,932		570
Other comprehensive (income) loss attributable to non-controlling interests	(4,962)		(1,114)
Comprehensive loss attributable to common stockholders	$	(3,194)	$	(807)

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

4

Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Stockholders' Equity

For The Three Months Ended March 31, 2022 and 2021

(unaudited)(amounts in thousands)

	Number of Class A Common Shares	Class A Common Stock		Number of Class B Common Shares	Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Deficit		Total Stockholders' Equity		Non-controlling Interests		Private Perpetual Preferred Units		Total Equity
Balance at December 31, 2021	169,221	$	1,692	996	$	10	$	1,150,884	$	(20,848)	$	(133,610)	$	998,128	$	656,264	$	29,940	$	1,684,332
Conversion of operating partnership units and Class B shares to Class A shares	574	6		(1)	—		1,468		23		—		1,497		(1,497)		—		—
Repurchases of common shares	(1,255)	(12)		—	—		(33,089)		—		21,100		(12,001)		—		—		(12,001)
Contributions from consolidated joint ventures	—	—		—	—		—		—		—		—		224		—		224
Equity compensation:
LTIP units	—	—		—	—		—		—		—		—		4,521		—		4,521
Restricted stock, net of forfeitures	191	1		—	—		(62)		—		—		(61)		—		—		(61)
Dividends and distributions	—	—		—	—		—		—		(5,948)		(5,948)		(3,821)		(1,050)		(10,819)
Net income (loss)	—	—		—	—		—		—		(11,289)		(11,289)		(6,982)		1,050		(17,221)
Other comprehensive income	—	—		—	—		—		8,095		—		8,095		4,962		—		13,057
Balance at March 31, 2022	168,731	$	1,687	995	$	10	$	1,119,201	$	(12,730)	$	(129,747)	$	978,421	$	653,671	$	29,940	$	1,662,032

	Number of Class A Common Shares	Class A Common Stock		Number of Class B Common Shares	Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Stockholders' Equity		Non-controlling Interests		Private Perpetual Preferred Units		Total Equity
Balance at December 31, 2020	170,555	$	1,705	1,010	$	10	$	1,147,527	$	(28,320)	$	(65,673)	$	1,055,249	$	646,118	$	29,940	$	1,731,307
Conversion of operating partnership units and Class B shares to Class A shares	1,071	11		(5)	—		2,689		(38)		—		2,662		(2,662)		—		—
Repurchases of common shares	(383)	(4)		—	—		(2,551)		—		(978)		(3,533)		—		—		(3,533)
Equity compensation:
LTIP units	—	—		—	—		—		—		—		—		4,810		—		4,810
Restricted stock, net of forfeitures	84	1		—	—		(77)		—		—		(76)		—		—		(76)
Dividends and distributions	—	—		—	—		—		—		—		—		—		(1,050)		(1,050)
Net income (loss)	—	—		—	—		—		—		(2,621)		(2,621)		(1,620)		1,050		(3,191)
Other comprehensive income	—	—		—	—		—		1,814		—		1,814		1,114		—		2,928
Balance at March 31, 2021	171,327	$	1,713	1,005	$	10	$	1,147,588	$	(26,544)	$	(69,272)	$	1,053,495	$	647,760	$	29,940	$	1,731,195

5

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

6

Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2022		2021
Cash Flows From Operating Activities
Net loss	$	(17,221)	$	(3,191)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	67,106		44,457
Amortization of non-cash items within interest expense	14,593		2,733
Amortization of acquired above- and below-market leases, net	(1,784)		(654)
Amortization of acquired below-market ground leases	1,958		1,958
Straight-lining of rental revenue	(2,595)		(6,347)
Equity based compensation	4,460		4,734
Loss on early extinguishment of debt	—		214
Increase (decrease) in cash flows due to changes in operating assets and liabilities:
Security deposits	(478)		(2,550)
Tenant and other receivables	847		4,792
Deferred leasing costs	(14,525)		(3,243)
Prepaid expenses and other assets	27,018		26,755
Accounts payable and accrued expenses	(12,661)		(3,302)
Deferred revenue and other liabilities	975		7,044
Net cash provided by operating activities	67,693		73,400
Cash Flows From Investing Activities
Development costs	(31)		(98)
Additions to building and improvements	(34,945)		(20,714)
Net cash used in investing activities	(34,976)		(20,812)

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

7

Empire State Realty Trust, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2022		2021
Cash Flows From Financing Activities
Repayment of mortgage notes payable	(2,092)		(1,008)
Deferred financing costs	—		(7,539)
Contributions to consolidated joint ventures	224		—
Repurchases of common shares	(12,001)		(3,533)
Private perpetual preferred unit distributions	(1,050)		(1,050)
Dividends paid to common stockholders	(5,948)		—
Distributions paid to non-controlling interests in the operating partnership	(3,821)		—
Net cash used in financing activities	(24,688)		(13,130)
Net increase in cash and cash equivalents and restricted cash	8,029		39,458
Cash and cash equivalents and restricted cash—beginning of period	474,638		567,939
Cash and cash equivalents and restricted cash—end of period	$	482,667	$	607,397
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	423,695	$	526,714
Restricted cash at beginning of period	50,943		41,225
Cash and cash equivalents and restricted cash at beginning of period	$	474,638	$	567,939
Cash and cash equivalents at end of period	$	429,716	$	567,102
Restricted cash at end of period	52,951		40,295
Cash and cash equivalents and restricted cash at end of period	$	482,667	$	607,397
Supplemental disclosures of cash flow information:
Cash paid for interest	$	19,655	$	19,239
Cash paid for income taxes	$	93	$	13
Non-cash investing and financing activities:
Building and improvements included in accounts payable and accrued expenses	$	57,072	$	60,536
Write-off of fully depreciated assets	4,744		4,853
Derivative instruments at fair values included in prepaid expenses and other assets	45		—
Derivative instruments at fair values included in accounts payable and accrued expenses	13,290		7,450
Conversion of operating partnership units and Class B shares to Class A shares	1,497		2,662
Issuance of Series 2019 private perpetual preferred in exchange for common shares	—		—
Right of use assets	—		—
Ground lease liabilities	—		—

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

8

Empire State Realty Trust, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Description of Business and Organization

    As used in these condensed consolidated financial statements, unless the context otherwise requires, “we,” “us,” “our,” the “company,” and "ESRT" mean Empire State Realty Trust, Inc. and its consolidated subsidiaries.

    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. As the owner of the Empire State Building, the World’s Most Famous Building, we also own and operate our iconic, newly reimagined Observatory Experience.

    As of March 31, 2022, our total portfolio contained 10.1 million rentable square feet of office, retail and multifamily space. We owned 14 office properties (including three long-term ground leasehold interests) encompassing approximately 9.4 million rentable square feet of office space. Nine of these properties are located in the midtown Manhattan market and aggregate approximately 7.6 million rentable square feet of office space, including the Empire State Building. Our Manhattan office properties also contain an aggregate of approximately 0.5 million rentable square feet of retail space on their ground floor and/or contiguous levels. Our remaining five office properties are located in Fairfield County, Connecticut and Westchester County, New York, encompassing in the aggregate approximately 1.8 million rentable square feet. The majority of square footage for these five properties is located in densely populated metropolitan communities with immediate access to mass transportation. 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. As of March 31, 2022, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing approximately 0.2 million rentable square feet in the aggregate. Additionally, at March 31, 2022, our portfolio included two multifamily properties totaling 625 units.

     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. 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. As of March 31, 2022, we owned approximately 60.3% of the aggregate operating partnership units in the 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 taxed as a REIT and operate in a manner that we believe allows us to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2013.

2. Summary of Significant Accounting Policies

    There have been no material changes to the summary of significant accounting policies included in the section entitled "Summary of Significant Accounting Policies" in our December 31, 2021 Annual Report on Form 10-K.

Basis of Quarterly Presentation and Principles of Consolidation

    The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments and eliminations (including intercompany balances and transactions), consisting of normal recurring adjustments, considered necessary for the fair presentation of the financial statements have been included.

    The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the corresponding full years. These financial statements should be read in conjunction with the financial statements and accompanying notes included in the financial statements for the year ended December 31, 2021 contained in our Annual Report

9

on Form 10-K. We do not consider our business to be subject to material seasonal fluctuations, except that our observatory business is subject to tourism seasonality and currently impacted by the Coronavirus 19 ("COVID-19") pandemic. Historically prior to the COVID-19 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.

    We consolidate entities in which we have a controlling financial interest.  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.  For variable interest entities ("VIE"), we consolidate the entity if we are deemed to have a variable interest in the entity and through that interest we are deemed the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. The Operating Partnership is a VIE of our company, Empire State Realty Trust, Inc.  As the Operating Partnership is already consolidated in the financial statements of Empire State Realty Trust, Inc., the identification of this entity as a VIE has no impact on our consolidated financial statements.

    We will assess the accounting treatment for each investment we may have in the future. 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. In situations where we or our partner could approve, among other things, the annual budget, or leases that cover more than a nominal amount of space relative to the total rentable space at each property, we would not consolidate the investment as we consider these to be substantive participation rights that result in shared power of the activities that would most significantly impact the performance and benefit of such joint venture investment.

    A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the condensed consolidated balance sheets and in the condensed consolidated statements of operations by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests.

Accounting Estimates

    The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to use estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Significant items subject to such estimates and assumptions include allocation of the purchase price of acquired real estate properties among tangible and intangible assets, determination of the useful life of real estate properties and other long-lived assets, valuation and impairment analysis of commercial real estate properties, right of use assets and other long-lived and indefinite lived assets, estimate of tenant expense reimbursements, valuation of the allowance for doubtful accounts, and valuation of derivative instruments, ground lease liabilities, senior unsecured notes, mortgage notes payable, unsecured term loan and revolving credit facilities, and equity based compensation. These estimates are prepared using management’s best judgment, after considering past, current, and expected events and economic conditions. Actual results could differ from those estimates.    

3. Deferred Costs, Acquired Lease Intangibles and Goodwill

    Deferred costs, net, consisted of the following as of March 31, 2022 and December 31, 2021 (amounts in thousands):  

	March 31, 2022		December 31, 2021
Leasing costs	$	215,278	$	211,189
Acquired in-place lease value and deferred leasing costs	162,870		166,491
Acquired above-market leases	30,509		33,289
	408,657		410,969
Less: accumulated amortization	(217,702)		(215,764)
Total deferred costs, net, excluding net deferred financing costs	$	190,955	$	195,205

10

    At March 31, 2022 and December 31, 2021, $6.6 million and $7.2 million, respectively, of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheets.

    Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $7.0 million and $5.6 million for the three months ended March 31, 2022 and 2021, respectively. Amortization expense related to acquired lease intangibles was $4.2 million and $1.7 million for the three months ended March 31, 2022 and 2021, respectively.

    Amortizing acquired intangible assets and liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (amounts in thousands):

	March 31, 2022		December 31, 2021
Acquired below-market ground leases	$	396,916	$	396,916
Less: accumulated amortization	(61,970)		(60,012)
Acquired below-market ground leases, net	$	334,946	$	336,904

	March 31, 2022		December 31, 2021
Acquired below-market leases	$	(65,329)	$	(65,403)
Less: accumulated amortization	42,870		40,462
Acquired below-market leases, net	$	(22,459)	$	(24,941)

    Rental revenue related to the amortization of below-market leases, net of above-market leases, was $1.8 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively.

     As of March 31, 2022, we had goodwill of $491.5 million. Goodwill was allocated $227.5 million to the observatory reportable segment and $264.0 million to the real estate reportable segment.

    In compliance with the requirements of authorities, we closed the Empire State Building observatory on March 16, 2020 due to the COVID-19 pandemic and it remained closed until the 86th floor observation deck was reopened on July 20, 2020. The 102nd observation deck was reopened on August 24, 2020. The closure of our observatory and subsequent reopening under international, national, and local travel restrictions and quarantines caused us during the quarter ended June 30, 2020, and each subsequent quarter, to choose to perform an impairment test related to goodwill. We engaged a third-party valuation consulting firm to perform the valuation process. The analysis used a combination of the discounted cash flow method (a form of the income approach) utilizing Level 3 unobservable inputs and the guideline company method (a form of the market approach). Significant assumptions under the former included revenue and cost projections, weighted average cost of capital, long-term growth rate and income tax considerations while the latter included guideline company enterprise values, revenue multiples and control premium rates. Our methodology to review goodwill impairment, which included a significant amount of judgment and estimates, provided a reasonable basis to determine whether impairment had occurred. Based upon the results of the goodwill impairment test of the standalone observatory reporting unit, which is after the intercompany rent expense paid to the Real Estate reporting unit, we determined that the fair value of the observatory reporting unit exceeded its carrying value by less than 15.0%.  Many of the factors employed in determining whether or not goodwill is impaired are outside of our control, and it is reasonably likely that assumptions and estimates will change in future periods.  We will continue to assess the impairment of the observatory reporting unit goodwill going forward, and that continued assessment may again utilize a third-party valuation consulting firm.

4. Debt

    Debt consisted of the following as of March 31, 2022 and December 31, 2021 (amounts in thousands):

11

	Principal Balance				As of March 31, 2022
	March 31, 2022		December 31, 2021		Stated Rate		Effective Rate(1)		Maturity Date(2)
Mortgage debt collateralized by:
Fixed rate mortgage debt
Metro Center	$	84,432	$	85,032	3.59	%	3.69	%	11/5/2024
10 Union Square	50,000		50,000		3.70	%	3.97	%	4/1/2026
1542 Third Avenue	30,000		30,000		4.29	%	4.53	%	5/1/2027
First Stamford Place(3)	180,000		180,000		4.28	%	4.71	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	36,463		36,670		4.01	%	4.24	%	1/5/2028
250 West 57th Street	180,000		180,000		2.83	%	3.19	%	12/1/2030
10 Bank Street	30,851		31,091		4.23	%	4.37	%	6/1/2032
383 Main Avenue(4)	30,000		30,000		4.44	%	4.56	%	6/30/2032
1333 Broadway	160,000		160,000		4.21	%	4.29	%	2/5/2033
345 East 94th Street - Series A	43,600		43,600		70.0% of LIBOR plus 0.95%		3.56	%	11/1/2030
345 East 94th Street - Series B	8,321		8,650		LIBOR plus 2.24%		3.56	%	11/1/2030
561 10th Avenue - Series A	114,500		114,500		70.0% of LIBOR plus 1.07%		3.85	%	11/1/2033
561 10th Avenue - Series B	18,535		19,250		LIBOR plus 2.45%		3.85	%	11/1/2033
Total mortgage debt	966,702		968,793
Senior unsecured notes:(5)
Series A	100,000		100,000		3.93	%	3.96	%	3/27/2025
Series B	125,000		125,000		4.09	%	4.12	%	3/27/2027
Series C	125,000		125,000		4.18	%	4.21	%	3/27/2030
Series D	115,000		115,000		4.08	%	4.11	%	1/22/2028
Series E	160,000		160,000		4.26	%	4.27	%	3/22/2030
Series F	175,000		175,000		4.44	%	4.45	%	3/22/2033
Series G	100,000		100,000		3.61	%