10-Q

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, 2020

☐ 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: 001-36106

EMPIRE STATE REALTY OP, L.P.

(Exact name of Registrant as specified in its charter)  

Delaware	45-4685158
(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) 687-8700

(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
Series ES operating partnership units	ESBA	NYSE Arca, Inc.
Series 60 operating partnership units	OGCP	NYSE Arca, Inc.
Series 250 operating partnership units	FISK	NYSE Arca, Inc.

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 April 30, 2020, there were 25,007,880 units of the Registrant Series ES operating partnership units outstanding, 6,817,297 units of the Series 60 operating partnership units outstanding, and 3,421,700 units of the Series 250 operating partnership units outstanding.

	EMPIRE STATE REALTY OP, L.P.
	FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2020
	TABLE OF CONTENTS	PAGE
PART 1.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	2
	Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Capital for the three months ended March 31, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	42
ITEM 4.	CONTROLS AND PROCEDURES	42
PART II.	OTHER INFORMATION	43
ITEM 1.	LEGAL PROCEEDINGS	43
ITEM 1A.	RISK FACTORS	43
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	43
ITEM 4.	MINE SAFETY DISCLOSURES	43
ITEM 5.	OTHER INFORMATION	43
ITEM 6.	EXHIBITS	47
SIGNATURES		47

1

ITEM 1. FINANCIAL STATEMENTS

Empire State Realty OP, L.P.

Condensed Consolidated Balance Sheets

(amounts in thousands, except unit and per unit amounts)

	March 31, 2020			December 31, 2019
ASSETS	(unaudited)
Commercial real estate properties, at cost:
Land	$	201,196		$	201,196
Development costs	8,800			7,989
Building and improvements	2,913,312			2,900,248
	3,123,308			3,109,433
Less: accumulated depreciation	(886,822		)	(862,534		)
Commercial real estate properties, net	2,236,486			2,246,899
Cash and cash equivalents	1,008,983			233,946
Restricted cash	36,881			37,651
Tenant and other receivables	22,549			25,423
Deferred rent receivables	229,154			220,960
Prepaid expenses and other assets	40,583			65,453
Deferred costs, net	218,578			228,150
Acquired below-market ground leases, net	350,609			352,566
Right of use assets	29,256			29,307
Goodwill	491,479			491,479
Total assets	$	4,664,558		$	3,931,834
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net	$	604,763		$	605,542
Senior unsecured notes, net	973,002			798,392
Unsecured term loan facilities, net	386,568			264,640
Unsecured revolving credit facility, net	546,436			—
Accounts payable and accrued expenses	142,315			143,786
Acquired below-market leases, net	37,623			39,679
Ground lease liabilities	29,256			29,307
Deferred revenue and other liabilities	64,176			72,015
Tenants’ security deposits	30,543			30,560
Total liabilities	2,814,682			1,983,921
Commitments and contingencies
Capital:
Private perpetual preferred units:
Private perpetual preferred units, $13.52 per unit liquidation preference, 4,664,038 and 4,610,383 issued and outstanding in 2020 and 2019, respectively	21,936			21,147
Private perpetual preferred units, $16.62 per unit liquidation preference, 1,560,360 issued and outstanding in 2020 and 2019	8,004			8,004
Series PR operating partnership units:
ESRT partner's capital (2,976,762 and 2,996,520 general partner operating partnership units and 174,151,247 and 178,897,876 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	1,148,584			1,228,520
Limited partners' interests (84,899,960 and 81,387,763 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	666,778			680,580
Series ES operating partnership units (25,359,132 and 25,809,604 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	3,652			7,262
Series 60 operating partnership units (6,824,249 and 7,025,089 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	607			1,593
Series 250 operating partnership units (3,464,875 and 3,535,197 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	315			807
Total capital	1,849,876			1,947,913
Total liabilities and capital	$	4,664,558		$	3,931,834

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

2

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Income

(unaudited)

(amounts in thousands, except per unit amounts)

	Three Months Ended March 31,
	2020			2019
Revenues:
Rental revenue	$	148,113		$	143,417
Observatory revenue	19,544			20,569
Lease termination fees	211			388
Third-party management and other fees	346			320
Other revenue and fees	2,010			2,599
Total revenues	170,224			167,293
Operating expenses:
Property operating expenses	41,468			42,955
Ground rent expenses	2,331			2,331
General and administrative expenses	15,951			14,026
Observatory expenses	8,154			7,575
Real estate taxes	29,254			28,232
Depreciation and amortization	46,093			46,098
Total operating expenses	143,251			141,217
Total operating income	26,973			26,076
Other income (expense):
Interest income	637			3,739
Interest expense	(19,618		)	(20,689		)
Loss on early extinguishment of debt	(86		)	—
Income before income taxes	7,906			9,126
Income tax expense	382			730
Net income	8,288			9,856
Private perpetual preferred unit distributions	(1,050		)	(234		)
Net income attributable to common unitholders	$	7,238		$	9,622
Total weighted average units:
Basic	292,645			298,049
Diluted	292,645			298,049
Earnings per unit attributable to common unitholders:
Basic	$	0.02		$	0.03
Diluted	$	0.02		$	0.03
Dividends per unit	$	0.105		$	0.105

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

3

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2020			2019
Net income	$	8,288		$	9,856
Other comprehensive income (loss):
Unrealized gain (loss) on valuation of interest rate swap agreements	(17,695		)	(7,390		)
Less: amount reclassified into interest expense	796			149
Other comprehensive income (loss)	(16,899		)	(7,241		)
Comprehensive income (loss)	$	(8,611	)	$	2,615

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

4

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Capital

For The Three Months Ended March 31, 2020 and 2019

(unaudited)

(amounts in thousands)

					Series PR Operating Partnership Units										Series ES Operating Partnership Units Limited Partners					Series 60 Operating Partnership Units Limited Partners					Series 250 Operating Partnership Units Limited Partners
					General Partner					Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Total Capital
Balance at December 31, 2019	6,170	$	29,151		181,894		$	1,228,520		81,388		$	680,580		25,810		$	7,262		7,025		$	1,593		3,535		$	807		1,947,913
Issuance of private perpetual preferred in exchange for common units	54	789			—		—			(97	)	(800		)	43		11			—		—			—		—			—
Conversion of operating partnership units to ESRT Partner's Capital	—	—			1,659		7,562			(894	)	(7,416		)	(494	)	(104		)	(201	)	(31		)	(70	)	(11		)	—
Repurchases of common units	—	—			(6,571	)	(62,666		)	—		—			—		—			—		—			—		—			(62,666		)
Equity compensation	—	—			146		154			4,503		5,737			—		—			—		—			—		—			5,891
Distributions	—	(1,050		)	—		(18,987		)	—		(8,849		)	—		(2,677		)	—		(723		)	—		(365		)	(32,651		)
Net income	—	1,050			—		4,495			—		1,852			—		630			—		174			—		87			8,288
Other comprehensive income (loss)	—	—			—		(10,494		)	—		(4,326		)	—		(1,470		)	—		(406		)	—		(203		)	(16,899		)
Balance at March 31, 2020	6,224	$	29,940		177,128		$	1,148,584		84,900		$	666,778		25,359		$	3,652		6,824		$	607		3,465		$	315		$	1,849,876

					Series PR Operating Partnership Units									Series ES Operating Partnership Units Limited Partners					Series 60 Operating Partnership Units Limited Partners					Series 250 Operating Partnership Units Limited Partners
					General Partner				Limited Partners
	Private Perpetual Preferred Units	Private Perpetual Preferred Unitholders			Operating Partnership Units	Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Operating Partnership Units		Operating Partnership Unitholders			Total Capital
Balance at December 31, 2018	1,560	$	8,004		174,912	$	1,238,482		86,202		$	725,108		30,129		$	14,399		8,020		$	3,385		4,064		$	1,731		1,991,109
Issuance of private perpetual preferred in exchange for common units	—	—			—	—			—		—			—		—			—		—			—		—			—
Conversion of operating partnership units to ESRT Partner's Capital	—	—			1,622	3,282			(318	)	(2,674		)	(1,081	)	(514		)	(145	)	(61		)	(78	)	(33		)	—
Repurchases of common units	—	—			—	—			—		—			—		—			—		—			—		—			—
Equity compensation	—	—			59	40			1,440		5,379			—		—			—		—			—		—			5,419
Distributions	—	(234		)	—	(18,520		)	—		(8,882		)	—		(3,059		)	—		(829		)	—		(418		)	(31,942		)
Net income	—	234			—	5,677			—		2,607			—		953			—		260			—		125			9,856
Other comprehensive income (loss)	—	—			—	(4,272		)	—		(1,962		)	—		(717		)	—		(196		)	—		(94		)	(7,241		)
Balance at March 31, 2019	1,560	$	8,004		176,593	$	1,224,689		87,324		$	719,576		29,048		$	11,062		7,875		$	2,559		3,986		$	1,311		$	1,967,201

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

5

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2020			2019
Cash Flows From Operating Activities
Net income	$	8,288		$	9,856
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	46,093			46,098
Amortization of non-cash items within interest expense	1,052			2,074
Amortization of acquired above- and below-market leases, net	(908		)	(2,354		)
Amortization of acquired below-market ground leases	1,958			1,958
Straight-lining of rental revenue	(8,193		)	(5,404		)
Equity based compensation	5,891			5,419
Loss on early extinguishment of debt	86			—
Increase (decrease) in cash flows due to changes in operating assets and liabilities:
Security deposits	(17		)	(1,243		)
Tenant and other receivables	2,874			7,385
Deferred leasing costs	(4,118		)	(3,270		)
Prepaid expenses and other assets	24,869			24,046
Accounts payable and accrued expenses	(5,261		)	(5,192		)
Deferred revenue and other liabilities	(7,840		)	(1,471		)
Net cash provided by operating activities	64,774			77,902
Cash Flows From Investing Activities
Short-term investments	—			50,000
Development costs	(811		)	—
Additions to building and improvements	(39,799		)	(61,163		)
Net cash used in investing activities	(40,610		)	(11,163		)

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

6

Empire State Realty OP, L.P.

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

(amounts in thousands)

	Three Months Ended March 31,
	2020			2019
Cash Flows From Financing Activities
Repayment of mortgage notes payable	(970		)	(934		)
Proceeds from unsecured senior notes	175,000			—
Repayment of unsecured term loan	(50,000		)	—
Proceeds from unsecured term loan	175,000			—
Proceeds from unsecured revolving credit facility	550,000			—
Repurchases of common units	(62,666		)	—
Deferred financing costs	(3,610		)	—
Distributions	(32,651		)	(31,942		)
Net cash provided by (used in) financing activities	750,103			(32,876		)
Net increase in cash and cash equivalents and restricted cash	774,267			33,863
Cash and cash equivalents and restricted cash—beginning of period	271,597			270,813
Cash and cash equivalents and restricted cash—end of period	$	1,045,864		$	304,676
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	233,946		$	204,981
Restricted cash at beginning of period	37,651			65,832
Cash and cash equivalents and restricted cash at beginning of period	$	271,597		$	270,813
Cash and cash equivalents at end of period	$	1,008,983		$	242,910
Restricted cash at end of period	36,881			61,766
Cash and cash equivalents and restricted cash at end of period	$	1,045,864		$	304,676
Supplemental disclosures of cash flow information:
Cash paid for interest	$	17,081		$	20,768
Cash paid for income taxes	$	898		$	1,075
Non-cash investing and financing activities:
Building and improvements included in accounts payable and accrued expenses	$	78,107		$	82,399
Write-off of fully depreciated assets	13,932			6,126
Derivative instruments at fair values included in prepaid expenses and other assets	—			3
Derivative instruments at fair values included in accounts payable and accrued expenses	30,387			10,336
Conversion of limited partners' operating partnership units to ESRT partner's capital	7,562			3,282
Issuance of Series 2019 private perpetual preferred in exchange for common units	789			—
Right of use assets	—			29,452
Ground lease liabilities	—			29,452

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

7

Empire State Realty OP, L.P.

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," and the "company,” mean Empire State Realty OP, L.P. and its consolidated subsidiaries.

Empire State Realty OP, L.P. (the "Operating Partnership") is the entity through which Empire State Realty Trust, Inc. (“ESRT”), a self-administered and self-managed real estate investment trust ("REIT"), conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We own, manage, operate, acquire and reposition office and retail properties in Manhattan and the greater New York metropolitan area. As of March 31, 2020, our total portfolio contained 10.1 million rentable square feet of office and retail 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 509,244 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 415,000 rentable square foot office building and garage. As of March 31, 2020, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 205,488 rentable square feet in the aggregate.

We were organized as a Delaware limited partnership on November 28, 2011 and operations commenced upon completion of the initial public offering of ESRT’s Class A common stock and related formation transactions on October 7, 2013. ESRT, as the sole general partner in our company, has responsibility and discretion in the management and control of our company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities, of our company. As of March 31, 2020, ESRT owned approximately 59.5% of our operating partnership units.

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, 2019 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, 2019 contained in our Annual Report 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. During the past ten years, 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

8

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. We had no VIEs as of March 31, 2020 and December 31, 2019.

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 income 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 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.

Revenue Recognition

For Coronavirus 2019 (“COVID-19”) pandemic related rent deferral agreements, we will generally elect to record rental revenue and a receivable during the deferral period.

Recently Issued or Adopted Accounting Standards

During April 2020, the Financial Accounting Standards Board ("FASB") staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease.

During March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the

9

presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

During January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which contain amendments that modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. ASU No. 2017-04 should be applied on a prospective basis and the amendments adopted for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this standard and related amendments on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

During June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which contains amendments that replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted in accordance with ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-13 and ASU No. 2018-19 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier adoption as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, is permitted. The amendments must be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified retrospective approach). We adopted these standards on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

3. Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):  

	March 31, 2020			December 31, 2019
Leasing costs	$	200,792		$	199,033
Acquired in-place lease value and deferred leasing costs	193,478			200,296
Acquired above-market leases	44,813			49,213
	439,083			448,542
Less: accumulated amortization	(220,505		)	(224,598		)
Total deferred costs, net, excluding net deferred financing costs	$	218,578		$	223,944

At December 31, 2019, $4.2 million of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheet. At March 31, 2020, the net deferred financing costs associated with the unsecured revolving credit facility were included as a reduction of debt.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $5.9 million and $6.2 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense related to acquired lease intangibles was $2.0 million and $3.2 million for the three months ended March 31, 2020 and 2019, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

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	March 31, 2020			December 31, 2019
Acquired below-market ground leases	$	396,916		$	396,916
Less: accumulated amortization	(46,307		)	(44,350		)
Acquired below-market ground leases, net	$	350,609		$	352,566

	March 31, 2020			December 31, 2019
Acquired below-market leases	$	(97,101	)	$	(100,472	)
Less: accumulated amortization	59,478			60,793
Acquired below-market leases, net	$	(37,623	)	$	(39,679	)

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $0.9 million and $2.4 million for the three months ended March 31, 2020 and 2019, respectively.

As of March 31, 2020, 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 segment.

4. Debt

Debt consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	Principal Balance						As of March 31, 2020
	March 31, 2020			December 31, 2019			Stated Rate		Effective Rate(1)		Maturity Date(2)
Mortgage debt collateralized by:
Fixed rate mortgage debt
Metro Center	$	89,090		$	89,650		3.59	%	3.68	%	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	%	4.75	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	38,061			38,251			4.01	%	4.23	%	1/5/2028
10 Bank Street	32,700			32,920			4.23	%	4.36	%	6/1/2032
383 Main Avenue	30,000			30,000			4.44	%	4.55	%	6/30/2032
1333 Broadway	160,000			160,000			4.21	%	4.29	%	2/5/2033
Total mortgage debt	609,851			610,821
Senior unsecured notes:(4)
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			—			3.61	%	4.90	%	3/17/2032
Series H	75,000			—			3.73	%	5.00	%	3/17/2035
Unsecured revolving credit facility (4)	550,000			—			LIBOR plus 1.10%		3.48	%	8/29/2021
Unsecured term loan facility (4)	215,000			265,000			LIBOR plus 1.20%		3.39	%	3/19/2025
Unsecured term loan facility (4)	175,000			—			LIBOR plus 1.50%		3.87	%	12/31/2026
Total principal	2,524,851			1,675,821
Deferred financing costs, net	(14,082		)	(7,247		)
Total	$	2,510,769		$	1,668,574

______________

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(1) The effective rate is the yield as of March 31, 2020 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2) Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.

(3) Represents a $164 million mortgage loan bearing interest at 4.09% and a $16 million loan bearing interest at 6.25%.

(4) At March 31, 2020, we were in compliance with all debt covenants.

Principal Payments

Aggregate required principal payments at March 31, 2020 are as follows (amounts in thousands):

Year	Amortization		Maturities		Total
2020	$	2,967	$	—	$	2,967
2021	4,090		550,000		554,090
2022	5,628		—		5,628
2023	7,876		—		7,876
2024	7,958		77,675		85,633
Thereafter	25,909		1,842,748		1,868,657
Total	$	54,428	$	2,470,423	$	2,524,851

Deferred Financing Costs

Deferred financing costs, net, consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Financing costs	$	28,839		$	25,315
Less: accumulated amortization	(14,757		)	(13,863		)
Total deferred financing costs, net	$	14,082		$	11,452

At December 31, 2019, $4.2 million of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheet. At March 31, 2020, the net deferred financing costs associated with the unsecured revolving credit facility were included as a reduction of debt.

Amortization expense related to deferred financing costs was $0.9 million and $1.0 million for the three months ended March 31, 2020 and 2019, respectively.

Unsecured Revolving Credit and Term Loan Facilities

On March 19, 2020, we entered into an amendment to an existing credit agreement with the lenders party thereto, Bank of America, N.A., as administrative agent, and Bank of America, Wells Fargo Bank, National Association and Capital One, National Association, as the letter of credit issuers party thereto. The amendment amends the amended and restated senior unsecured revolving credit and term loan facility, entered into as of August 29, 2017, with Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo, National Association and Capital One, National Association, as co-syndication agents, and the lenders party thereto.

This new amended and restated senior unsecured revolving credit and term loan facility (the "Credit Facility") is in the original principal amount of up to $1.315 billion, which consists of a $1.1 billion revolving credit facility and a $215.0 million term loan facility. We borrowed the term loan facility in full at closing. We may request the Credit Facility be increased through one or more increases in the revolving credit facility or one or more increases in the term loan facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $1.75 billion. As of March 31, 2020, our borrowings amounted to $550.0 million under the revolving credit facility and $215.0 million under the term loan facility.

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The initial maturity of the unsecured revolving credit facility is August 2021. We have the option to extend the initial term for up to two additional 6-month periods, subject to certain conditions, including the payment of an extension fee equal to 0.0625% and 0.075% of the then outstanding commitments under the unsecured revolving credit facility on the first and the second extensions, respectively. The term loan facility matures in March 2025. We may prepay the loans under the Credit Facility at any time in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar Rate borrowings.

On March 19, 2020, we entered into a senior unsecured term loan facility (the “Term Loan Facility”) with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC as sole bookrunner, Wells Fargo Securities, LLC, Capital One, National Association, U.S. Bank National Association and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers, Capital One, National Association, as syndication agent, U.S. Bank National Association and Trust Bank, as documentation agents, and the lenders party thereto.

The Term Loan Facility is in the original principal amount of $175 million which we borrowed in full at closing. We may request the Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $225 million. As of March 31, 2020, our borrowings amounted to $175.0 million under the Term Loan Facility.

The Term Loan Facility matures on December 31, 2026. We may prepay loans under the Term Loan Facility at any time in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar rate borrowings and, if the prepayment occurs on or before December 31, 2021, a prepayment fee. If the prepayment occurs on or prior to December 31, 2020, the prepayment fee is equal to 2.0% of the principal amount prepaid, and if the prepayment occurs after December 31, 2020 but on or prior to December 31, 2021, the prepayment fee is equal to 1.0% of the principal amount prepaid.

The terms of both the Credit Facility and the Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreement also contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control. As of March 31, 2020, we were in compliance with the covenants under the Credit Facility and the Term Loan Facility.

Senior Unsecured Notes

On March 17, 2020, we entered into an agreement to issue and sell an aggregate $175 million of senior unsecured notes, consisting of (a) $100 million aggregate principal amount of 3.61% Series G Senior Notes due March 17, 2032 (the “Series G Notes”) and (b) $75 million aggregate principal amount of 3.73% Series H Senior Notes due March 17, 2035 (the “Series H Notes”). The issue price for the Series G and H Notes was 100% of the aggregate principal amount thereof.

The terms of the Series G and H Notes agreement include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreement also contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification. As of March 31, 2020, we were in compliance with the covenants under the outstanding senior unsecured notes.

5. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

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	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	78,107	$	90,910
Accounts payable and accrued expenses	29,667		35,084
Interest rate swap agreements liability	30,387		13,330
Accrued interest payable	3,254		3,699
Due to affiliated companies	900		763
Total accounts payable and accrued expenses	$	142,315	$	143,786

6. Financial Instruments and Fair Values

Derivative Financial Instruments

We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations.

We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of March 31, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $30.8 million. If we had breached any of these provisions at March 31, 2020, we could have been required to settle our obligations under the agreements at their termination value of $30.8 million.

As of March 31, 2020 and December 31, 2019, we had interest rate LIBOR swaps with an aggregate notional value of $390.0 million and $390.0 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of March 31, 2020 and December 31, 2019, the fair value of our derivative instruments amounted to $(30.4) million and $(13.3) million, respectively, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities.

As of March 31, 2020 and 2019, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $(16.9) million and $(7.2) million for the three months ended March 31, 2020 and 2019, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $(10.9) million net loss of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months.

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):     

							March 31, 2020					December 31, 2019
Derivative	Notional Amount		Receive Rate	Pay Rate	Effective Date	Expiration Date	Asset		Liability			Asset		Liability
Interest rate swap	$	265,000	1 Month LIBOR	2.1485%	August 31, 2017	August 24, 2022	$	—	$	(11,888	)	$	—	$	(4,247	)
Interest rate swap	125,000		3 Month LIBOR	2.9580%	July 1, 2019	July 1, 2026	—		(18,499		)	—		(9,083		)
							$	—	$	(30,387	)	$	—	$	(13,330	)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 (amounts in thousands):    

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	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Amount of gain (loss) recognized in other comprehensive income (loss)	$	(17,695	)	$	(7,390	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of income for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Total interest (expense) presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded	$	(19,618	)	$	(20,689	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

Fair Valuation

The estimated fair values at March 31, 2020 and December 31, 2019 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy.

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

The following tables summarize the carrying and estimated fair values of our financial instruments as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	30,387	$	30,387	$	—	$	30,387	$	—
Mortgage notes payable	604,763		638,852		—		—		638,852
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,002		1,034,848		—		—		1,034,848
Unsecured term loan facilities	386,568		391,627		—		—		391,627
Unsecured revolving credit facility	546,436		550,000		—		—		550,000
Ground lease liabilities	29,256		34,564		—		—		34,564

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	December 31, 2019
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	13,330	$	13,330	$	—	$	13,330	$	—
Mortgage notes payable	605,542		629,609		—		—		629,609
Senior unsecured notes - Series A, B, C, D, E and F	798,392		843,394		—		—		843,394
Unsecured term loan facility	264,640		265,000		—		—		265,000
Ground lease liabilities	29,307		33,790		—		—		33,790

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of March 31, 2020 and December 31, 2019. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

7. Leases

Lessor

We lease various spaces to tenants over terms ranging from one to 21 years. Certain leases have renewal options for additional terms. The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation. Operating expense reimbursements are reflected in our March 31, 2020 and 2019 condensed consolidated statements of income as rental revenue.

Rental revenue includes fixed and variable payments. Fixed payments primarily relate to base rent and variable payments primarily relate to tenant expense reimbursements for certain property operating costs. The components of rental revenue for the three months ended March 31, 2020 and 2019 are as follows (amounts in thousands):

	Three months ended March 31, 2020		Three months ended March 31, 2019
Fixed payments	$	130,514	$	126,581
Variable payments	17,599		16,836
Total rental revenue	$	148,113	$	143,417

As of March 31, 2020, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):

Remainder of 2020	$	371,553
2021	484,524
2022	462,080
2023	435,217
2024	397,628
Thereafter	1,842,594
	$	3,993,596

The above future minimum lease payments exclude tenant recoveries, amortization of deferred rent receivables and the net accretion of above-below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised.

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Lessee

We determine if an arrangement is a lease at inception. Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $29.3 million and lease liabilities of $29.3 million in our consolidated balance sheet as of March 31, 2020. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

We make payments under ground leases related to three of our properties. The ground leases are due to expire between the years 2050 and 2077, inclusive of extension options, and have no variable payments or residual value guarantees. As our leases do not provide an implicit rate, we determined our incremental borrowing rate based on information available at the date of adoption of ASU No. 2016-02, Leases (Topic 842), in determining the present value of lease payments. The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of March 31, 2020 was 4.5%. Rent expense for lease payments related to our operating leases is recognized on a straight-line basis over the non-cancellable term of the leases. The weighted average remaining lease term as of March 31, 2020 was 50.1 years.

As of March 31, 2020, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2020	$	1,139
2021	1,518
2022	1,518
2023	1,518
2024	1,518
Thereafter	66,780
Total undiscounted cash flows	73,991
Present value discount	(44,735		)
Ground lease liabilities	$	29,256

8. Commitments and Contingencies

Legal Proceedings

Except as described below, as of March 31, 2020, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants. We believe that the costs and related liabilities, if any, which may result from such actions will not materially affect our condensed consolidated financial position, operating results or liquidity.    

As previously disclosed, in October 2014, 12 former investors in Empire State Building Associates L.L.C. (“ESBA”), which prior to the initial public offering of our company (the "Offering"), owned the fee title to the Empire State Building, filed an arbitration with the American Arbitration Association against Peter L. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our subsidiary ESRT MH Holdings LLC, the former supervisor of ESBA, as respondents. The statement of claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleges breach of fiduciary duty and related claims in connection with the Offering and formation transactions and seeks monetary damages and declaratory relief. These investors had opted out of a prior class action bringing similar claims that was settled with court approval. The respondents filed an answer and counterclaims. In March 2015, the federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings for a select number of sessions started in May 2016 and concluded in August 2018. Post-hearing briefing has been completed.

The respondents believe the allegations in the arbitration are entirely without merit, and they intend to continue to defend them vigorously.

     Pursuant to indemnification agreements which were made with our directors, executive officers and chairman emeritus as part of our formation transactions, Anthony E. Malkin, Peter L. Malkin and Thomas N. Keltner, Jr. have defense and indemnity rights from us with respect to this arbitration.

17

Unfunded Capital Expenditures

At March 31, 2020, we estimate that we will incur approximately $146.1 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements. We expect to fund these capital expenditures with operating cash flow, additional property level mortgage financings, our unsecured credit facility, cash on hand and other borrowings. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion.

Concentration of Credit Risk

Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, tenant and other receivables and deferred rent receivables. At March 31, 2020, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation.

Asset Retirement Obligations

We are required to accrue costs that we are legally obligated to incur on retirement of our properties which result from acquisition, construction, development and/or normal operation of such properties. Retirement includes sale, abandonment or disposal of a property. Under that standard, a conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control and a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties. As of March 31, 2020, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates. As such, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation. However, ongoing asbestos abatement, maintenance programs and other required documentation are carried out as required and related costs are expensed as incurred.

Other Environmental Matters

Certain of our properties have been inspected for soil contamination due to pollutants, which may have occurred prior to our ownership of these properties or subsequently in connection with its development and/or its use. Required remediation to such properties has been completed, and as of March 31, 2020, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents. All such maintenance costs are expensed as incurred. We expect that resolution of the environmental matters relating to the above will not have a material impact on our business, assets, consolidated financial condition, results of operations or liquidity. However, we cannot be certain that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that such environmental liabilities arise.

Insurance Coverage

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

9. Capital

As of March 31, 2020, there were 297,676,225 operating partnership units outstanding, of which 177,128,009, or 59.5%, were owned by ESRT and 120,548,216, or 40.5%, were owned by other partners, including ESRT directors, members of senior management and other employees.

On May 16, 2019, the Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan (“2019 Plan”) was approved by our shareholders.  The 2019 Plan provides for grants to directors, employees and consultants of ESRT and the Operating Partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards.  An aggregate of approximately 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan. We will not issue any new equity awards under the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, "the Plans"). The shares of ESRT Class A common stock underlying any awards under the 2019 Plan and the 2013 Plan that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.

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Shares tendered or held back upon exercise of a stock option or settlement of an award under the 2019 Plan or the 2013 Plan to cover the exercise price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. In addition, shares of ESRT Class A common stock repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.

Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Plans, reducing the availability for other equity awards on a one-for-one basis.

The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified events, and any increase in valuation from the time of grant until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into Series PR operating partnership units on a one-for-one basis.     

LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock. Performance based LTIP units receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors reauthorized the repurchase of up to $500 million of ESRT Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units through December 31, 2020.     Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

The following table summarizes ESRT's purchases of equity securities in each of the three months ended March 31, 2020 and the month of April 2020:

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)
March 2020	6,570,778	$	9.54	6,570,778	$	437,334
April 2020	2,345,129	$	8.66	2,345,129	$	417,023

Private Perpetual Preferred Units

As of March 31, 2020, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units"). The Series 2019 Preferred Units have a liquidation preference of $13.52 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.70 per unit payable in arrears on a quarterly basis. The Series 2019 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. The Series 2014 Preferred Units which have a liquidation preference of $16.62 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.60 per unit payable in arrears on a quarterly basis. The Series 2014 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events.

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Distributions

Total distributions paid to OP unitholders were $31.6 million and $31.7 million for the three months ended March 31, 2020 and 2019, respectively. Total distributions paid to preferred unitholders were $1.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

Incentive and Share-Based Compensation

The Plans provide for grants to directors, employees and consultants consisting of stock options, restricted stock, dividend equivalents, stock payments, performance shares, LTIP units, stock appreciation rights and other incentive awards. An aggregate of 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan, and as of March 31, 2020, 6.9 million shares of ESRT common stock remain available for future issuance.

In March 2020, we made grants of LTIP units to executive officers under the 2019 Plan. At such time, we granted to executive officers a total of 745,155 LTIP units that are subject to time-based vesting and 3,358,767 LTIP units that are subject to market-based vesting, with fair market values of $5.6 million for the time-based vesting awards and $14.0 million for the market-based vesting awards. In March 2020 we made grants of LTIP units and restricted stock to certain other employees under the 2019 Plan. At such time, we granted to certain other employees a total of 113,971 LTIP units and 158,806 shares of restricted stock that are subject to time-based vesting and 502,475 LTIP units that are subject to market-based vesting, with fair market values of $2.3 million for the time-based vesting awards and $2.3 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2020, subject generally to the grantee's continued employment. The first installment vests on January 1, 2021 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2020. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2023 and the second installment vesting on January 1, 2024, subject generally to the grantee's continued employment on those dates.

Our named executive officers can elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIP's at the face amount of such bonus or (ii) time-vesting LTIP's which would vest over three years, subject to continued employment, at 125% of such face amount. In March 2020, we made grants of LTIP units to executive officers under the 2019 Plan in connection with the 2019 bonus election program. We granted to executive officers a total of 624,380 LTIP units that are subject to time-based vesting with a fair market value of $4.4 million. Of these LTIP units, 23,049 LTIP units vested immediately on the grant date and 601,331 LTIP units vest ratably over three years from January 1, 2020, subject generally to the grantee's continued employment. The first installment vests on January 1, 2021 and the remainder will vest thereafter in two equal annual installments.

In March 2019, we made grants of LTIP units to executive officers under the 2013 Plan. At such time, we granted to executive officers a total of 461,693 LTIP units that are subject to time-based vesting and 1,806,520 LTIP units that are subject to market-based vesting, with fair market values of $6.4 million for the time-based vesting awards and $12.8 million for the market-based vesting awards. In March 2019, we made grants of LTIP units and restricted stock to certain other employees under the 2013 Plan. At such time, we granted to certain other employees a total of 61,432 LTIP units and 69,358 shares of restricted stock that are subject to time-based vesting and 113,383 LTIP units that are subject to market-based vesting, with fair market values of $2.0 million for the time-based vesting awards and $0.9 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2019, subject generally to the grantee's continued employment. The first installment vests on January 1, 2020 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2019. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2022 and the second installment vesting on January 1, 2023, subject generally to the grantee's continued employment on those dates.

Our named executive officers can elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIP's at the face amount of such bonus or (ii) time-vesting LTIP's which would vest over three years, subject to continued employment, at 125% of such face amount. In March 2019, we made grants of LTIP units to executive officers under the 2013

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Plan in connection with the 2018 bonus election program. We granted to executive officers a total of 334,952 LTIP units that are subject to time based vesting with a fair market value of $4.6 million. Of these LTIP units, 26,056 LTIP units vested immediately on the grant date and 308,896 LTIP units vest ratably over three years from January 1, 2019, subject generally to the grantee's continued employment. The first installment vests on January 1, 2020 and the remainder will vest thereafter in two equal annual installments.

In October 2019 and May 2019, we made grants of LTIP units to our non-employee directors under the 2019 Plan. In the aggregate, we granted a total of 76,718 LTIP units that are subject to time-based vesting with fair market values of $1.1 million. The awards vest ratably over three years from May 17, 2019, subject generally to the director's continued service on our Board of Directors. The first installment vests on May 17, 2020 and the remainder will vest thereafter in two equal annual installments.

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 or four years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant. An employee is retirement eligible when the employee attains the (i) age of 60 and (ii) the date on which the employee has first completed ten years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over three or four years depending on retirement eligibility.

For the market-based LTIP units, the fair value of the awards was estimated using a Monte Carlo Simulation model and discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units.  Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process.  Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case the stock price) to vary randomly from its current value and take any value greater than zero.  The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using a six-year look-back period.  The expected growth rate of the stock prices over the performance period is determined with consideration of the risk free rate as of the grant date.  For LTIP unit awards that are time-based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units.  For restricted stock awards that are time-based, we estimate the stock compensation expense based on the fair value of the stock at the grant date.

LTIP units and ESRT restricted stock issued during the three months ended March 31, 2020 were valued at $28.8 million. The weighted-average per unit or share fair value was $5.23 for grants issued in 2020. The per unit or share granted in 2020 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.3 years, a dividend rate of 3.70%, a risk-free interest rate from 0.37% to 0.50%, and an expected price volatility from 19.0% to 26.0%.

No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding in 2020.

The following is a summary of ESRT restricted stock and LTIP unit activity for the three months ended March 31, 2020:

	Restricted Stock		LTIP Units		Weighted Average Grant Fair Value
Unvested balance at December 31, 2019	118,918		5,986,569		$	9.73
Vested	(42,702	)	(638,907	)	15.54
Granted	158,806		5,344,748		5.23
Forfeited or unearned	—		(841,587	)	11.09
Unvested balance at March 31, 2020	235,022		9,850,823		$	6.76

The LTIP unit and ESRT restricted stock awards are treated for accounting purposes as immediately vested upon the later of (i) the date the grantee attains the age of 60 and (ii) the date on which grantee has first completed ten years of continuous service with our company or its affiliates. For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the performance-based awards, and accordingly, we recognized $1.6 million and $1.3 million for the three months ended March 31, 2020 and 2019, respectively.

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Unrecognized compensation expense was $2.3 million at March 31, 2020, which will be recognized over a weighted average period of 2.7 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $4.3 million and $4.1 million for the three months ended March 31, 2020 and 2019, respectively. Unrecognized compensation expense was $50.3 million at March 31, 2020, which will be recognized over a weighted average period of 2.6 years.

Earnings Per Unit

Earnings per unit for the three months ended March 31, 2020 and 2019 is computed as follows (amounts in thousands, except per share amounts):

	Three Months Ended
	March 31, 2020			March 31, 2019
Numerator:
Net income	$	8,288		$	9,856
Private perpetual preferred unit distributions	(1,050		)	(234		)
Earnings allocated to unvested units	(257		)	(153		)
Net income attributable to common unitholders - basic and diluted	$	6,981		$	9,469
Denominator:
Weighted average units outstanding - basic	292,645			298,049
Effect of dilutive securities:
Stock-based compensation plans	—			—
Weighted average units outstanding - diluted	292,645			298,049
Earnings per share:
Basic	$	0.02		$	0.03
Diluted	$	0.02		$	0.03

There were 399,894 antidilutive shares and LTIP units for the three months ended March 31, 2020 and 684 antidilutive shares and LTIP units for the three months ended March 31, 2019, respectively.

10. Related Party Transactions

Supervisory Fee Revenue

We earned supervisory fees from entities affiliated with Anthony E. Malkin, our Chairman and Chief Executive Officer, of $0.2 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. These fees are included within third-party management and other fees.

Property Management Fee Revenue

We earned property management fees from entities affiliated with Anthony E. Malkin of $0.1 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively. These fees are included within third-party management and other fees.

Other

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We receive rent generally at market rental rate for 5,447 square feet of leased space from entities affiliated with Anthony E. Malkin at one of our properties. Under the lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We also have a shared use agreement with such tenant, to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus and employee, utilizing approximately 15% of the space, for which we pay to such tenant an allocable pro rata share of the cost. We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support services. Total revenue aggregated $0.1 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

One of ESRT's directors, James D. Robinson IV, is a general partner in an investment fund, which owns more than a 10% economic and voting interest in one of our tenants, OnDeck Capital, with an annualized rent of $4.8 million as of March 31, 2020.

11. 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.

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The following tables provide components of segment profit for each segment for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended March 31, 2020
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	148,113		$	—		$	—		$	148,113
Intercompany rental revenue	11,536			—			(11,536		)	—
Observatory revenue	—			19,544			—			19,544
Lease termination fees	211			—			—			211
Third-party management and other fees	346			—			—			346
Other revenue and fees	2,010			—			—			2,010
Total revenues	162,216			19,544			(11,536		)	170,224
Operating expenses:
Property operating expenses	41,468			—			—			41,468
Intercompany rent expense	—			11,536			(11,536		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	15,951			—			—			15,951
Observatory expenses	—			8,154			—			8,154
Real estate taxes	29,254			—			—			29,254
Depreciation and amortization	46,085			8			—			46,093
Total operating expenses	135,089			19,698			(11,536		)	143,251
Total operating income	27,127			(154		)	—			26,973
Other income (expense):
Interest income	637			—			—			637
Interest expense	(19,618		)	—			—			(19,618		)
Loss on early extinguishment of debt	(86		)	—			—			(86		)
Income before income taxes	8,060			(154		)	—			7,906
Income tax (expense) benefit	(227		)	609			—			382
Net income	$	7,833		$	455		$	—		$	8,288
Segment assets	$	4,409,281		$	255,277		$	—		$	4,664,558
Expenditures for segment assets	$	26,570		$	1,237		$	—		$	27,807

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	Three Months Ended March 31, 2019
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	143,417		$	—		$	—		$	143,417
Intercompany rental revenue	14,021			—			(14,021		)	—
Tenant expense reimbursement	—			—			—			—
Observatory revenue	—			20,569			—			20,569
Lease termination fees	388			—			—			388
Third-party management and other fees	320			—			—			320
Other revenue and fees	2,599			—			—			2,599
Total revenues	160,745			20,569			(14,021		)	167,293
Operating expenses:
Property operating expenses	42,955			—			—			42,955
Intercompany rent expense	—			14,021			(14,021		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	14,026			—			—			14,026
Observatory expenses	—			7,575			—			7,575
Real estate taxes	28,232			—			—			28,232
Depreciation and amortization	46,091			7			—			46,098
Total operating expenses	133,635			21,603			(14,021		)	141,217
Total operating income	27,110			(1,034		)	—			26,076
Other income (expense):
Interest income	3,739			—			—			3,739
Interest expense	(20,689		)	—			—			(20,689		)
Income before income taxes	10,160			(1,034		)	—			9,126
Income tax (expense) benefit	(234		)	964			—			730
Net income	$	9,926		$	(70	)	$	—		$	9,856
Segment assets	$	3,930,697		$	261,743		$	—		$	4,192,440
Expenditures for segment assets	$	44,531		$	13,789		$	—		$	58,320

12. Subsequent Events

None.

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ITEM 2. 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. The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. 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. 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 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. 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).

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, political and social impact of, and uncertainty relating to, the COVID-19 pandemic, including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to businesses that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of the Company’s tenants, particularly retail, and the Observatory recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments, (d) international and national disruption of travel and tourism with a resulting decline in Observatory visitors, and (e) macroeconomic conditions, such as a disruption of, or lack of access to, the capital markets, and general volatility adversely impacting the market price of the Company’s Class A common stock and publicly-traded partnership units of the Operating Partnership; (ii) resolution of legal proceedings involving the Company; (iii) reduced demand for office or retail space; (iv)changes in our business strategy; (v) changes in technology and market competition that affect utilization of our broadcast or other facilities; (vi) changes in domestic or international tourism, including due to health crises such as the COVID-19 pandemic, geopolitical events and/or currency exchange rates, which may cause a decline in Observatory visitors; (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, including the potential phasing out of LIBOR after 2021; (ix) declining real estate valuations and impairment charges; (x) termination or expiration of our ground leases; (xi) 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; (xii) decreased rental rates or increased vacancy rates; (xiii) our failure to redevelop and reposition properties, or to execute any newly planned capital project successfully or on the anticipated timeline or at the anticipated costs; (xiv) difficulties in identifying properties to acquire and completing acquisitions; (xv) risks related to our development projects (including our Metro Tower development site) and capital projects, including the cost of construction delays and cost overruns; (xvi) impact of changes in governmental regulations, tax laws and rates and similar matters; (xvii) our failure to qualify as a REIT; and (xviii) environmental uncertainties and risks related to adverse weather conditions, rising sea levels and natural disasters. 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.

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While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. The risks set forth above are not exhaustive. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the sections entitled “Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019 which we filed with the SEC. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us.    

Overview

Empire State Realty OP, L.P. is the entity through which Empire State Realty Trust, Inc. (“ESRT”), a self-administered and self-managed real estate investment trust ("REIT"), conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We own, manage, operate, acquire and reposition office and retail properties in Manhattan and the greater New York metropolitan area.

Highlights for the three months ended March 31, 2020 included:

• Achieved net income of $7.2 million and Core Funds From Operations of $53.7 million.

• Fortified our already strong balance sheet with the completion of several financings that raised $300 million in net incremental proceeds.

• Bolstered our cash balance with $550 million drawn under our unsecured revolving credit facility.

• Repurchased 8.9 million shares at an average price of $9.31 per share, totaling $83.0 million in aggregate, through April 30, 2020.

• Occupancy and leased percentages at March 31, 2020:

• Total portfolio was 88.7% occupied; including signed leases not commenced (“SLNC”), the total portfolio was 91.1% leased.

• Manhattan office portfolio (excluding the retail component of these properties) was 90.0% occupied; including SLNC, the Manhattan office portfolio was 92.6% leased.

• Retail portfolio was 88.5% occupied; including SLNC, the retail portfolio was 94.0% leased.

• Empire State Building was 93.7% occupied; including SLNC, was 95.4% leased.

• Signed 35 leases, representing 149,143 rentable square feet across the total portfolio, and achieved a 3.4% increase in mark-to-market cash rent over previous fully escalated cash rents portfolio-wide on new, renewal, and expansion leases.

• Signed 12 new leases representing 63,153 rentable square feet for the Manhattan office portfolio (excluding the retail component of these properties) and achieved an increase of 19.4% in mark-to-market cash rent over previous fully escalated cash rents.

• Increased Empire State Building Observatory revenues during the first two months of 2020 by 13.2%, after adjusting for the 102nd floor observation deck, to $14.4 million from $12.7 million in the first two months of 2019. On March 16, 2020, the Company complied with the instructions of authorities related to COVID-19 and closed the Empire State Building Observatory.

• Declared a dividend of $0.105 per share.

As of March 31, 2020, our total portfolio contained 10.1 million rentable square feet of office and retail 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 509,244 rentable square feet of premier 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

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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 415,000 rentable square foot office building and garage. As of March 31, 2020, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 205,488 rentable square feet in the aggregate.

The Empire State Building is our flagship property. The Empire State Building provides us with a diverse source of revenue through its office and retail leases, observatory operations and broadcasting licenses and related leased space. Our observatory operations are a separate reporting segment. Our observatory operations are subject to regular patterns of tourist activity in Manhattan. During the past ten years, 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. On March 16, 2020, we complied with governmental mandates regarding the closing of non-essential businesses in response to the COVID-19 pandemic and closed the Empire State Building Observatory.

The components of the Empire State Building revenue are as follows (dollars in thousands):

	Three Months Ended March 31,
	2020				2019
Office leases	$	37,083	53.3	%	$	35,412	51.2	%
Retail leases	1,616		2.3	%	1,820		2.6	%
Tenant reimbursements & other income	6,694		9.6	%	7,539		10.9	%
Observatory operations	19,544		28.0	%	20,569		29.8	%
Broadcasting licenses and leases	4,743		6.8	%	3,791		5.5	%
Total	$	69,680	100.0	%	$	69,131	100.0	%

We have been undertaking a comprehensive redevelopment and repositioning strategy of our Manhattan office properties. This strategy is designed to improve the overall value and attractiveness of our properties and has contributed significantly to our tenant repositioning efforts, which seek to increase our occupancy, raise our rental rates, increase our rentable square feet, increase our aggregate rental revenue, lengthen our average lease term, increase our average lease size, and improve our tenant credit quality. These improvements include restored, renovated and upgraded or new lobbies, elevator modernization, renovated public areas and bathrooms, refurbished or new windows, upgrade and standardization of retail storefront and signage, façade restorations, modernization of building-wide systems, and enhanced tenant amenities. We

have also aggregated smaller spaces in order to offer larger blocks of office space, including multiple floors, that are attractive to larger, higher credit-quality tenants as well as to offer new, pre-built suites with improved layouts. This strategy has shown what we believe to be attractive results to date, and we believe has the potential to improve our operating margins and cash flows in the future. From 2002 through March 31, 2020, we have invested a total of approximately $929.5 million (excluding tenant improvement costs and leasing commissions) in our Manhattan office properties pursuant to this program. We intend to fund these capital improvements through a combination of operating cash flow, cash on hand, and borrowings.

The Greater New York Metropolitan Area office market is soft, and we compete with properties that have been redeveloped recently or have planned redevelopment.  We expect to spend approximately $40 million over 2018 through 2020 on these well-maintained and our well-located properties’ common areas and amenities to ensure competitiveness and protect our market position. Expenditures, which began during the second quarter 2018, were $29.7 million through March 31, 2020.

As of March 31, 2020, excluding principal amortization, we have no debt maturing until 2021, which has two six- month extension options, and we had total debt outstanding of approximately $2.5 billion, with a weighted average interest rate of 3.60%, and a weighted average maturity of 7.2 years and 78.0% of which is fixed-rate indebtedness and 22.0% of which is variable-rate indebtedness. As of March 31, 2020, we had cash and cash equivalents of approximately $1.0 billion. Our consolidated net debt to total market capitalization was approximately 35.5% as of March 31, 2020.

Impact of COVID-19

In March 2020, the outbreak of the novel Coronavirus Disease 2019 ("COVID-19") was recognized as a pandemic by the World Health Organization. The spread of COVID-19 has created a global public health crisis that has resulted in unprecedented economic, social and political uncertainty, volatility and disruption in the United States and globally. We have taken the following actions in response to the impact of the COVID-19 pandemic impact on our business.

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Liquidity

In March 2020, we bolstered our balance sheet to ensure proper liquidity by raising $300.0 million in net proceeds in two financings and drawing down $550.0 million under our $1.1 billion unsecured revolving credit facility. We currently hold over $1.0 billion in cash on our balance sheet and have $550.0 million undrawn capacity under our credit facility.

Property Operations

All of our office buildings have remained open during the current COVID-19 pandemic to tenants that provide essential goods and services, as permitted by the authorities. We have scaled back certain building operations in cleaning, security, lobby concierge and recurring maintenance, which will reduce costs until buildings are repopulated. We estimate that these efforts will reduce operating expenses by approximately 25% from 2019 levels or approximately $40 to 45 million on an annualized basis. A portion of the reduction in operating expenses will be offset by a reduction in tenant expense recoveries.

Our operations team is hard at work to develop plans for when work from home orders are lifted and our tenants reoccupy our buildings to ensure a safe, clean and healthy work environment. These plans involve additional staffing, cleaning and maintenance, and changes to building operations for building access by tenants and their guests.

All New York State capital improvement work, except for essential work as defined by the authorities which includes safety-related work and work to demobilize previously started projects, has been stopped until such time that the government restrictions are lifted. The spend is significantly curtailed under the current restrictions. Work continues in Connecticut as permitted by the authorities.

We have reviewed all of our leases under which we have an obligation to complete capital improvement work. We have notified tenants where appropriate that under the force majeure event clause in our leases, completion deadlines will be extended without penalty.

Despite the challenge of the uncertain near-term environment, we continue to believe in the long-term demand for office space. Many have now experienced the inefficiencies of working from home and miss the connectivity and productivity that an office environment provides. That said, we believe the pandemic may cause some fundamental changes to how tenants use their office space in the future including less densification and smarter open floor plans with appropriate spacing. We also believe current co-working build-outs are too dense and will be poorly positioned for tenant demand in the new paradigm.

Leasing    

The economic uncertainty relating to the COVID-19 pandemic has slowed the pace our leasing activity and could result in higher vacancy than we otherwise would have experienced, a longer amount of time to fill vacancies and potentially lower rental rates. As of March 31, 2020, our portfolio was 91.1% leased, including SLNC, including 6.8% subject to leases scheduled to expire in 2020 and 6.6% subject to leases scheduled to expire in 2021.

Except for lease transactions that were in negotiation prior to New York’s order to shelter in place, as of April 30, 2020, in-person lease prospect tours have stopped but we remain fully engaged with the brokerage community to offer virtual space tours.

Rent Collections

As of April 30, 2020, we collected 72% of our total April rent charges with 78% for office tenants, and 46% for retail tenants. To the extent we apply the applicable portion of security deposits which we hold in the form of cash or letters of credit, we will have collected 79% of the total April rent charges with 86% for office tenants and 46% for retail tenants. Such application is currently in process and will require impacted tenants to restore their full security deposits. As of April 30, 2020, we have received requests for rent deferral from 186 office and retail tenants that represent approximately 32% of our annual rental revenue. Three tenants represent approximately 8.8% of annualized rent and have agreed to deferral terms in documentation.

Before any consideration to any tenant request for rent deferral, we request that the tenant provide:

• an explanation of the actions taken to mitigate the impacts of COVID-19 on their business,

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• current financial statements including recent monthly comparisons to prior year,

• proof that the tenant has applied for financial relief through the CARES Act if eligible, and

• verification that a claim under their insurance policy has been submitted, in the event that the federal government supplements the typical exclusions and limitations on business interruption insurance in response to the COVID-19 pandemic.

We then assess each request on an individual basis. Deferral requests to date have generally been for no more than three months. Our smaller food and service type retailers have been hit particularly hard. They provide critical amenities and services to our office tenants. Our plan is to convert their remaining 2020 fixed rent to a percentage rent structure, with a payback of the difference between current and percentage rent over a defined period. We intend to support our food and service retailers in re-opening so that they can service our office tenants when they re-occupy.

Observatory Operations

On March 16, 2020, we complied with governmental mandates regarding the closing of non-essential businesses in response to the COVID-19 pandemic and closed the Empire State Building Observatory. Due to the closure, we have reduced our annualized operating expense run-rate from $35 million in February 2020 to approximately $14 million, a 60% reduction. There have been certain wind down costs that have continued in April 2020, and we expect to reach this reduced run-rate in May 2020. Approximately two-thirds of the reduction is attributable to lower payroll expenses as we furloughed staff and the balance is due to lower operational and other costs. We anticipate we will initially reopen the Observatory on a reduced hours basis and most of these expenses will come back when we reopen. Our remaining costs relate to payroll for our management and sales staff, certain fixed operating costs, skeleton custodial and security crew, and other contracted costs.

With respect to our outlook for a reopening, our current base case for admissions ramp-up is as follows. We assume 2019 monthly levels as the baseline visitation comparison reference point and that we reopen on July 1st. We anticipate an opening of July 1 with admissions at 20% of the 2019 level and subsequently that admissions will ramp up to 40% for the August 2020 through March 2021 period. By Easter 2021, we expect admissions to be at 60% of the 2019 level. Admissions are then expected to ramp to 75% by June 2021 followed by 90% by August 2021 and hold for the remainder of 2021. We anticipate return to full admissions by January 2022. These estimated visitation levels are entirely of our own derivation and happen to align with certain independent consultant work of which we are aware that was prepared for other market participants. We anticipate that initially we will have a higher local visitor mix, followed by a ramp up of nationally sourced travel, which will then be followed by a restoration of our typical visitor mix that is approximately two-thirds international which we do not expect to be achieved until the broad resumption of international air travel some time in 2022.

Results of Operations

Overview

The discussion below relates to our financial condition and results of operations for the three months ended March 31, 2020 and 2019, respectively.

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Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

The following table summarizes our historical results of operations for the three months ended March 31, 2020 and 2019 (dollars in thousands):

	Three Months Ended March 31,
	2020			2019			Change			%
Revenues:
Rental revenue	$	148,113		$	143,417		$	4,696		3.3	%
Observatory revenue	19,544			20,569			(1,025		)	(5.0	)%
Lease termination fees	211			388			(177		)	(45.6	)%
Third-party management and other fees	346			320			26			8.1	%
Other revenues and fees	2,010			2,599			(589		)	(22.7	)%
Total revenues	170,224			167,293			2,931			1.8	%
Operating expenses:
Property operating expenses	41,468			42,955			1,487			3.5	%
Ground rent expenses	2,331			2,331			—			—	%
General and administrative expenses	15,951			14,026			(1,925		)	(13.7	)%
Observatory expenses	8,154			7,575			(579		)	(7.6	)%
Real estate taxes	29,254			28,232			(1,022		)	(3.6	)%
Depreciation and amortization	46,093			46,098			5			—	%
Total operating expenses	143,251			141,217			(2,034		)	(1.4	)%
Operating income	26,973			26,076			897			3.4	%
Other income (expense):
Interest income	637			3,739			(3,102		)	(83.0	)%
Interest expense	(19,618		)	(20,689		)	1,071			5.2	%
Loss on early extinguishment of debt	(86		)	—			(86		)	—	%
Income before income taxes	7,906			9,126			(1,220		)	(13.4	)%
Income tax expense	382			730			(348		)	47.7	%
Net income	8,288			9,856			(1,568		)	(15.9	)%
Private perpetual preferred unit distributions	(1,050		)	(234		)	(816		)	(348.7	)%
Net income attributable to common unitholders	$	7,238		$	9,622		$	(2,384	)	(24.8	)%

Rental Revenue

The increase in base rent revenue was attributable to increased rental rates.

 Observatory Revenue

Observatory revenues were lower primarily driven by the closure of the Observatory on March 16, 2020 due to the COVID-19 pandemic. Observatory revenues increased during the first two months of 2020 by 13.2%, after adjusting for the 102nd floor observation deck, to $14.4 million from $12.7 million in the first two months of 2019.

Lease Termination Fees

Lower termination fees were earned in the three months ended March 31, 2020 compared to the three months ended March 31, 2019.

Third-Party Management and Other Fees

Management fee income was consistent with prior year.

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Other Revenues and Fees

The decrease in other revenues and fees is primarily due to settlement income received in the three months ended March 31, 2019.

Property Operating Expenses

The decrease in property operating expenses was primarily due to lower repair and maintenance costs and lower utility costs.

Ground Rent Expenses

Ground rent expense was consistent with 2019.

General and Administrative Expenses

The increase in general and administrative expenses was primarily due to higher non-cash equity compensation expenses as well as higher cash compensation costs and legal fees.

Observatory Expenses

Observatory expenses increased primarily due to higher marketing and payroll costs.

Real Estate Taxes

The increase in real estate taxes was primarily due to higher assessed values for multiple properties.

Depreciation and Amortization

Depreciation and amortization was consistent with 2019.

Interest Income

The decrease in interest income was primarily due to lower interest rates and higher short-term investments in the prior year.

Interest Expense

Interest expense decreased due to the repayment of a $250.0 million exchangeable senior note in the third quarter 2019, partially offset by new financings entered into in March 2020 and a draw on our unsecured revolving credit facility.

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt was incurred in connection with the refinancing of the term loan in the first quarter 2020.

Income Taxes

The decrease in income tax benefit was attributable to lower net loss for the Observatory segment.

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. Based on the historical experience of our management and our business strategy, in the foreseeable future we anticipate we will generate positive cash flows from operations. In order for ESRT to qualify as a REIT, ESRT is required under the Internal Revenue Code of 1986 to distribute to its stockholders, on an annual basis, at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We expect to make quarterly distributions to our securityholders.

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While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial condition and results of operations. For example, we may be required to comply with new laws or regulations that cause us to incur unanticipated capital expenditures for our properties, thereby increasing our liquidity needs. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of cash on hand and cash generated from our operating activities, debt issuances and unused borrowing capacity under our unsecured revolving credit facility. 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 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 properties require periodic investments of capital for individual lease related tenant improvements allowances, general capital improvements and costs associated with capital expenditures. Our overall leverage will depend on our mix of investments and the cost of leverage. ESRT's charter does not restrict the amount of leverage that we may use.

At March 31, 2020, we had approximately $1,009.0 million available in cash and cash equivalents and there was $550.0 million available under our unsecured revolving credit facility.

Through August 2021, Q REIT Holding LLC, a Qatar Financial Centre limited liability company and a wholly owned

subsidiary of the Qatar Investment Authority, a governmental authority of the State of Qatar (“QREIT”, together with any eligible transferee, “QIA”) will have a right of first offer to co-invest with us as a joint venture partner in real estate investment opportunities initiated by us where we have elected, at our discretion, to seek out a joint venture partner in real estate investment opportunities. The right of first offer period will be extended for 30 months so long as at least one joint venture transaction is consummated by us and QIA during the initial term, and will be extended for a further 30-month term if at least one more joint venture transaction is consummated during such initial extension period.

As of March 31, 2020, we had approximately $2.5 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.60% and a weighted average maturity of 7.2 years. As of March 31, 2020, exclusive of principal amortization, we have no debt maturing until 2021, which has two six-month extension options. Our consolidated net debt to total market capitalization was approximately 35.5% as of March 31, 2020.

Unsecured Revolving Credit and Term Loan Facilities

During March 2020, we entered into an amendment to an existing credit agreement with the lenders party thereto, Bank of America, N.A., as administrative agent, and Bank of America, Wells Fargo Bank, National Association and Capital One, National Association, as the letter of credit issuers party thereto. The amendment amends the amended and restated senior unsecured revolving credit and term loan facility, entered into in August 2017, with Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo, National Association and Capital One, National Association, as co-syndication agents, and the lenders party thereto.

This new amended unsecured revolving credit and term loan facility is comprised of a $1.1 billion revolving credit facility and a $215 million term loan facility. We borrowed the term loan facility in full at closing. We also borrowed $550.0 million on the revolving credit facility. The amended unsecured revolving credit and term loan facility contains an accordion feature that would allow us to increase the maximum aggregate principal amount to $1.75 billion under specified circumstances. Certain of our subsidiaries are guarantors of our obligations under the amended unsecured revolving credit and term loan facility.

Amounts outstanding under the term loan facility bear interest at a floating rate equal to, at our election, (x) the Eurodollar rate, plus a spread that will range from 1.20% to 1.75% depending upon our leverage ratio, or (y) a base rate, plus a spread that will range from 0.20% to 0.75% depending upon our leverage ratio. If we achieve investment-grade ratings, subject to the terms of the amended unsecured revolving credit and term loan facility, we may elect for amounts outstanding to bear interest at a floating rate equal to, at our election, (x) the Eurodollar rate, plus a spread that will range from 0.85% to 1.65% depending upon our credit rating, or (y) a base rate, plus a spread that will range from 0.0% to 0.65% depending upon our credit rating. Amounts under the revolving credit facility bear interest at a floating rate equal to, at our election, (x) the Eurodollar rate, plus a spread that will range from 1.10% to 1.50% depending upon our leverage ratio or (y) a base rate, plus a spread that will range from 0.10% to 0.50% depending upon our leverage ratio. If we achieve investment-grade ratings, subject to the terms of the amended unsecured revolving credit and term loan facility, we may elect for the amounts

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outstanding to bear interest at a floating rate equal to, at our election, (x) the Eurodollar rate, plus a spread that will range from 0.825% to 1.55% depending upon our credit rating, or (y) a base rate, plus a spread that will range from 0.0% to 0.55% depending upon our credit rating.

We paid certain customary fees and expense reimbursements in connection with the amended unsecured revolving credit and term loan facility, including a facility fee on commitments under the revolving credit facility that range from 0.125% to 0.35%, subject to the terms of the amended unsecured revolving credit and term loan facility.

The initial maturity of the unsecured revolving credit facility is August 2021. We have the option to extend the initial term for up to two additional six-month periods, subject to certain conditions, including the payment of an extension fee equal to 0.0625% and 0.075% of the then outstanding commitments under the unsecured revolving credit facility on the first and the second extensions, respectively. The term loan facility matures on March 2025. We may prepay the loans under the amended unsecured revolving credit and term loan facility at any time in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar Rate borrowings.

Also during March 2020, we entered into a senior unsecured term loan facility (the “Term Loan Facility”) with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC as sole bookrunner, Wells Fargo Securities, LLC, Capital One, National Association, U.S. Bank National Association and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers, Capital One, National Association, as syndication agent, U.S. Bank National Association and Truist Bank, as documentation agents, and the lenders party thereto.

The Term Loan Facility is in the original principal amount of $175 million which we borrowed in full at closing. We may request the Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $225 million. Certain of our subsidiaries are guarantors of our obligations under the Term Loan Facility.

Amounts outstanding under the Term Loan Facility bear interest at a floating rate equal to, at our election, (x) the LIBOR rate, plus a spread that will range from 1.5% to 2.2% depending upon our leverage ratio, or (y) a base rate, plus a spread that will range from 0.5% to 1.2% depending upon our leverage ratio. If we achieve investment-grade ratings, subject to the terms of the Term Loan Facility, we may elect for amounts outstanding to bear interest at a floating rate equal to, at our election, (x) the LIBOR rate, plus a spread that will range from 1.4% to 2.25% depending upon our credit rating, or (y) a base rate, plus a spread that will range from 0.4% to 1.25% depending upon our credit rating.

The Term Loan Facility matures on December 31, 2026. We may prepay loans under the Term Loan Facility at any time, in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar rate borrowings and, if the prepayment occurs on or before December 31, 2021, a prepayment fee. If the prepayment occurs on or prior to December 31, 2020, the prepayment fee is equal to 2.0% of the principal amount prepaid, and if the prepayment occurs after December 31, 2020 but on or prior to December 31, 2021, the prepayment fee is equal to 1.0% of the principal amount prepaid.

Both the amended revolving credit and term loan facility and the Term Loan Facility (collectively, the "Credit Facilities") include the following financial covenants, subject to customary qualifications and cushions: (i) maximum leverage ratio of total indebtedness to total asset value of the loan parties and their consolidated subsidiaries will not exceed 60%, (ii) consolidated secured indebtedness will not exceed 40% of total asset value, (iii) adjusted EBITDA (as defined in the agreement) to consolidated fixed charges will not be less than 1.50x, (iv) the aggregate net operating income with respect to all unencumbered eligible properties to the portion of interest expense attributable to unsecured indebtedness will not be less than 1.75x, and (v) the ratio of total unsecured indebtedness to unencumbered asset value will not exceed 60%.

The Credit Facilities contain customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates, and requires certain customary financial reports.

The Credit Facilities contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control (as defined in the respective Credit Facilities). As of March 31, 2020, we were in compliance with the covenants.

Senior Unsecured Notes

On March 17, 2020, we entered into an agreement to issue and sell an aggregate $175 million of senior unsecured notes, consisting of (a) $100 million aggregate principal amount of 3.61% Series G Senior Notes due March 17, 2032 (the “Series G Notes”) and (b) $75 million aggregate principal amount of 3.73% Series H Senior Notes due March 17, 2035 (the

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“Series H Notes”), in a private placement to entities affiliated with Prudential Capital Group, AIG Asset Management and MetLife Investment Management, LLC. The issue price for the Series G Notes and Series H Notes was 100% of the aggregate principal amount thereof.

The senior unsecured notes are senior unsecured obligations and are unconditionally guaranteed by each of our subsidiaries that guarantees indebtedness under the unsecured revolving credit and term loan facility. Interest on the senior unsecured notes is payable quarterly.

The terms of the Series G Notes and Series H Notes agreement include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreement also contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification. As of March 31, 2020, we were in compliance with the covenants under the outstanding senior unsecured notes.

Financial Covenants

As of March 31, 2020, we were in compliance with the following financial covenants:

Financial covenant	Required	March 31, 2020		In Compliance
Maximum total leverage	< 60%	35.4	%	Yes
Maximum secured debt	< 40%	8.4	%	Yes
Minimum fixed charge coverage	> 1.50x	3.6x		Yes
Minimum unencumbered interest coverage	> 1.75x	6.9x		Yes
Maximum unsecured leverage	< 60%	30.7	%	Yes

Leverage Policies

We expect to employ leverage in our capital structure in amounts determined from time to time by ESRT's board of directors. Although ESRT's board of directors has not adopted a policy that limits the total amount of indebtedness that we may incur, we anticipate that ESRT's 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. ESRT's 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, however, we initially intend to maintain a level of indebtedness consistent with our plan to seek an investment grade credit rating. ESRT's 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 ESRT's common stock and our traded OP units, growth and acquisition opportunities and other factors.

Capital Expenditures

The following tables summarize our leasing commission costs, tenant improvement costs and our capital expenditures for each of the periods presented (dollars in thousands, except per square foot amounts).

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Office Properties⁽¹⁾

	Three Months Ended March 31
Total New Leases, Expansions, and Renewals	2020		2019
Number of leases signed(2)	31		32
Total square feet	117,481		300,408
Leasing commission costs(3)	$	1,546	$	4,342
Tenant improvement costs(3)	7,818		16,569
Total leasing commissions and tenant improvement costs(3)	$	9,364	$	20,911
Leasing commission costs per square foot(3)	$	13.16	$	14.45
Tenant improvement costs per square foot(3)	66.55		55.15
Total leasing commissions and tenant improvement costs per square foot(3)	$	79.71	$	69.60

Retail Properties⁽⁴⁾

	Three Months Ended March 31
Total New Leases, Expansions, and Renewals	2020		2019
Number of leases signed(2)	4		2
Total square feet	31,662		7,643
Leasing commission costs(3)	$	1,465	$	277
Tenant improvement costs(3)	7,215		401
Total leasing commissions and tenant improvement costs(3)	$	8,680	$	678
Leasing commission costs per square foot(3)	$	46.28	$	36.25
Tenant improvement costs per square foot(3)	227.86		52.44
Total leasing commissions and tenant improvement costs per square foot(3)	$	274.14	$	88.69

_______________

(1) Excludes an aggregate of 509,244 and 512,632 rentable square feet of retail space in our Manhattan office properties in 2020 and 2019, respectively. Includes the Empire State Building broadcasting licenses and observatory operations.

(2) Presents a renewed and expansion lease as one lease signed.

(3) Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid.

(4) Includes an aggregate of 509,244 and 512,632 rentable square feet of retail space in our Manhattan office properties in 2020 and 2019, respectively. Excludes the Empire State Building broadcasting licenses and observatory operations.

	Three Months Ended March 31
	2020		2019
Total Portfolio
Capital expenditures (1)	$	13,933	$	30,149

_______________

(1) Excludes tenant improvements and leasing commission costs.

As of March 31, 2020, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $146.1 million for tenant improvements and leasing commissions. We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand, additional property level mortgage financings and borrowings under the unsecured revolving credit facility.

Capital expenditures are considered part of both our short-term and long-term liquidity requirements. We intend to fund capital improvements through a combination of operating cash flow, cash on hand and borrowings under the unsecured revolving credit facility.

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Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of our contractual obligations. There have been no material changes, outside the ordinary course of business, to these contractual obligations during the three months ended March 31, 2020.

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements.

Distribution Policy

In order for ESRT to qualify as a REIT, it must distribute to its securityholders, on an annual basis, at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. In addition, it will be subject to U.S. federal income tax at regular corporate rates to the extent that it distributes less than 100% of its net taxable income (including net capital gains) and will be subject to a 4% nondeductible excise tax on the amount, if any, by which its distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. We intend to distribute our net income to our securityholders in a manner intended to allow ESRT to satisfy its REIT 90% distribution requirement and to allow ESRT to avoid U.S. federal income tax liability on its income and the 4% nondeductible excise tax.

Before we pay any distribution, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and obligations to make payments of principal and interest, if any. However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our units in order to allow ESRT to satisfy its REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax in that year.

Distributions to Securityholders

Distributions and dividends amounting to $32.7 million and $31.9 million have been made to securityholders for the three months ended March 31, 2020 and 2019, respectively.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors reauthorized the repurchase of up to $500 million of ESRT Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units through December 31, 2020.     Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

The following table summarizes ESRT's purchases of equity securities in each of the three months ended March 31, 2020 and the month of April 2020:

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)
March 2020	6,570,778	$	9.54	6,570,778	$	437,334
April 2020	2,345,129	$	8.66	2,345,129	$	417,023

Cash Flows

Comparison of Three Months Ended March 31, 2020 to the Three Months Ended March 31, 2019

Net cash. Cash and cash equivalents and restricted cash were $1,045.9 million and $304.7 million, respectively, as of March 31, 2020 and 2019. The increase was primarily due to the issuance of financings and draws on the unsecured revolving credit facility, partially offset by capital improvements and expenditures during the three months ended March 31, 2020.

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Operating activities. Net cash provided by operating activities decreased by $13.1 million to $64.8 million for the three months ended March 31, 2020 compared to $77.9 million for the three months ended March 31, 2019, primarily due to changes in working capital.

Investing activities. Net cash used in investing activities increased by $29.4 million to $40.6 million used in investing activities for the three months ended March 31, 2020 compared to $11.2 million net cash used in investing activities for the three months ended March 31, 2019, due to redeeming short-term time deposits and adding to cash and cash equivalents in the three months ended March 31, 2019.

Financing activities. Net cash provided by financing activities increased by $783.0 million to $750.1 million provided by financing activities for the three months ended March 31, 2020 compared to $32.9 million used in financing activities for the three months ended March 31, 2019, primarily due the net proceeds from issuance of debt and a draw on our unsecured revolving credit facility in the three months ended March 31, 2020 compared to none for the three months ended March 31, 2019.

Net Operating Income ("NOI")

Our internal financial reports include a discussion of property net operating income. NOI is a non-GAAP financial measure of performance. 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 instruments, or (iv) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from net operating income because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is also 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. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our office or retail properties that result from use of the properties or changes in market conditions. 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. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly-timed purchases or sales. We believe that eliminating these costs from net income is useful 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.

However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. 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. Other companies may use different methods for calculating NOI or similarly titled measures and, accordingly, our NOI may not be comparable to similarly titled measures reported by other companies that do not define the measure exactly as we do.

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):

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	Three Months Ended March 31,
	2020			2019
	(unaudited)
Net income	$	8,288		$	9,856
Add:
General and administrative expenses	15,951			14,026
Depreciation and amortization	46,093			46,098
Interest expense	19,704			20,689
Income tax expense (benefit)	(382		)	(730		)
Less:
Third-party management and other fees	(346		)	(320		)
Interest income	(637		)	(3,739		)
Net operating income	$	88,671		$	85,880
Other Net Operating Income Data
Straight-line rental revenue	$	8,193		$	5,404
Net increase in rental revenue from the amortization of above- and below-market lease assets and liabilities	$	908		$	2,354
Amortization of acquired below-market ground leases	$	1,958		$	1,958

Funds from Operations ("FFO")

We present below a discussion of FFO. 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-downs 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. FFO is a widely recognized non-GAAP financial measure for REITs that we believe, when considered with financial statements determined in accordance with GAAP, is useful to investors in understanding financial performance and providing a relevant basis for comparison among REITs. 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. 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. 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. There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs. 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. FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Although FFO is a measure used for comparability in assessing the performance of REITs, as the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one company to another.

Modified Funds From Operations ("Modified FFO")

Modified FFO adds back an adjustment for any above or below-market ground lease amortization to traditionally defined FFO. 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 as they carry significantly below market ground leases, the amortization of which is material to our overall results. 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. Modified FFO does not represent cash generated from operating

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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. Modified FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.

Core Funds From Operations ("Core FFO")

Core FFO adds back to Modified FFO the following items: deferred tax asset write-off, loss on early extinguishment of debt and acquisition expenses. The Company presents Core FFO because it considers it an important supplemental measure of its operating performance in that it excludes non-recurring items. 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. 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.

The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands):

	Three Months Ended March 31,
	2020			2019
	(unaudited)
Net income	$	8,288		$	9,856
Private perpetual preferred unit distributions	(1,050		)	(234		)
Real estate depreciation and amortization	44,430			45,092
FFO attributable to common stockholders	51,668			54,714
Amortization of below-market ground leases	1,958			1,958
Modified FFO attributable to common stockholders	53,626			56,672
Loss on early extinguishment of debt	86			—
Core FFO attributable to common stockholders	$	53,712		$	56,672
Weighted average Operating Partnership units
Basic	292,645			298,049
Diluted	292,645			298,049

Factors That May Influence Future Results of Operations

Impact of COVID-19

See "Overview" section.

Leasing

We signed 1.3 million rentable square feet of new leases, expansions and lease renewals for the year ended December 31, 2019. During the three months ended March 31, 2020, we signed 0.1 million rentable square feet of new leases, expansions and renewals.

Due to the relatively small number of leases that are signed in any particular quarter, one or more larger leases may have a disproportionately positive or negative impact on average rent, tenant improvement and leasing commission costs for that period. As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years. Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant. 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.

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As of March 31, 2020, there were approximately 0.9 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 8.9% of the net rentable square footage of the properties in our portfolio. In addition, leases representing 6.8% and 6.6% of net rentable square footage of the properties in our portfolio will expire in 2020 and in 2021, respectively. These leases are expected to represent approximately 6.8% and 6.9%, respectively, of our annualized rent for such periods. Our revenues and results of operations can be impacted by expiring leases that are not renewed or re-leased or that are renewed or re-leased at base rental rates equal to, above or below the current average base rental rates. Further, our revenues and results of operations can also be affected by the costs we incur to re-lease available space, including payment of leasing commissions, redevelopments and build-to-suit remodeling that may not be borne by the tenant.

Despite the challenge of the uncertain near-term environment, we continue to believe that as we complete the redevelopment and repositioning of our properties we will, over the long-term, experience increased occupancy levels and rents. Over the short term, as we renovate and reposition our properties, which includes aggregating smaller spaces to offer large blocks of space, we may experience lower occupancy levels as a result of having to relocate tenants to alternative space and the strategic expiration of existing leases. We believe that despite the short-term lower occupancy levels we may experience, we will continue to experience increased rental revenues as a result of the increased rents which we expect to obtain following the redevelopment and repositioning of our properties.

Observatory Operations

On March 16, 2020, we complied with governmental mandates regarding the closing of non-essential businesses in response to the COVID-19 pandemic and closed the Empire State Building Observatory. Observatory revenues for the first two months of 2020 increased by 13.2%, after adjusting the for the 102nd observation deck which was closed during the first quarter of 2019.

The Empire State Building Observatory revenue for the first quarter 2020 was $19.5 million, a 5.0% decrease from $20.6 million for the first quarter 2019. The Observatory hosted approximately 422,000 visitors in the first quarter 2020 versus 601,000 visitors in the first quarter 2019, a decrease of 29.8%. The Observatory revenue decline was primarily attributable to the 15 days the Observatory was closed in the quarter due to COVID-19 pandemic. In the first quarter 2020, while open, there were 15 bad weather days compared to 15 bad weather days in the first quarter 2019.

Observatory revenues and admissions are dependent upon the following: (i) the number of tourists (domestic and international) that come to New York City and visit the observatory, as well as any related tourism trends; (ii) the prices per admission that can be charged; (iii) seasonal trends affecting the number of visitors to the observatory; (iv) competition, in particular from other new and existing observatories; and (v) weather trends.

Critical Accounting Estimates

Refer to our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of our critical accounting estimates. There were no material changes to our critical accounting estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. One of the principal market risks facing us is interest rate risk on our variable rate indebtedness. As of March 31, 2020, our floating rate debt represented 10.4% of our total enterprise value. This floating rate debt consist of $550 million of borrowings under the unsecured revolving credit facility. As of March 31, 2020, we had no other variable rate debt as the LIBOR rates on our unsecured term loan facilities of $390.0 million were fixed at 2.1485% and 2.958% under variable to fixed interest rate swap agreements.

Subject to maintaining ESRT's qualification as a REIT for U.S. federal income tax purposes, we may mitigate the risk of interest rate volatility through the use of hedging instruments, such as interest rate swap agreements and interest rate cap agreements. Our primary objectives when undertaking hedging transactions and derivative positions will be to reduce our floating rate exposure and to fix a portion of the interest rate for anticipated financing and refinancing transactions. This in turn will reduce the risk that the variability of cash flows will impose on floating rate debt. However, we can provide no assurances that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility on our portfolio. We are not subject to foreign currency risk.

We are exposed to interest rate changes primarily on our unsecured revolving credit facility and debt refinancings. Our objectives with respect to interest rate risk are to limit the impact of interest rate changes on operations and cash flows, and to lower our overall borrowing costs. To achieve these objectives, we may borrow at fixed rates and may enter into derivative financial instruments such as interest rate swaps or caps in order to mitigate our interest rate risk on a related floating rate financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes.

We entered into interest rate LIBOR swap agreements with an aggregate notional value of $390.0 million, which fix LIBOR interest rates between 2.1485% and 2.9580% and mature between August 24, 2022 and July 1, 2026. All interest rate swaps as of March 31, 2020 have been designated as cash flow hedges and are deemed highly effective with a fair value of ($30.4 million) which is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.

As of March 31, 2020, the weighted average interest rate on the $2.0 billion of fixed-rate indebtedness outstanding was 3.60% per annum, with maturities at various dates through March 17, 2035.

As of March 31, 2020, the fair value of our outstanding debt was approximately $2.6 billion, which was approximately $104.6 million more 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. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change.

However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure. In the event that LIBOR is discontinued, the interest rates for our unsecured revolving credit facility and our unsecured term loan facility and the swap rate for our interest rate swaps following such event will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon with our bankers. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or our ability to maintain our outstanding swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021 but may be discontinued or otherwise become unavailable thereafter.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including ESRT's Chief Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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As of March 31, 2020, the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of ESRT management, including ESRT's Chief Executive Officer and Principal Financial Officer, regarding the effectiveness of our disclosure controls and procedures at the end of the period covered by this report. Based on the foregoing, ESRT's Chief Executive Officer and Principal Financial Officer concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including ESRT's Chief Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.     

Changes in Internal Control over Financial Reporting

No changes to our internal control over financial reporting were identified in connection with the evaluation referenced above that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 8 to the Notes to Condensed Consolidated Financial Statements for a description of legal proceedings.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors included in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, except as disclosed below.

The current COVID-19 pandemic and any future pandemics, epidemics or other public health crises could have a material adverse effect on our and our tenants’ business, results of operations, cash flow and financial condition.

The COVID-19 pandemic has had, and another pandemics, epidemics and other public health care crises in the future could have, repercussions across regional, national and global economies and financial markets. The spread of COVID-19 in many countries, including the United States, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the pandemic has been rapidly evolving and many countries, including the United States, have reacted by instituting “stay-at-home” or “shelter-in-place” orders, mandating business and school closures and restricting travel.

Certain U.S. states, including New York and Connecticut where we own assets and operate the Observatory, have reacted by instituting quarantines, restrictions on travel, “stay-at-home” or “shelter-in-place” orders, social distancing practices, restrictions on types of business that may continue to operate and/or restrictions on the types of construction projects that may continue. We cannot predict when restrictions currently in place will expire. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including industries in which we and our tenants operate, particularly retail tenants. A number of our tenants have requested rent relief during this pandemic. In addition, many of our employees are currently working remotely. An extended period of remote work arrangements could strain our business strategy, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

The COVID-19 pandemic, or any future pandemic, epidemic and other public health care crisis, could also have a material adverse effect on our ability to successfully operate and on our results of operations, cash flows and financial condition due to, among other factors:

• the complete or partial closure or restriction of operating capacity of our Observatory resulting from government actions, including limits on public assembly,

• international and national disruption of travel and tourism, geopolitical events, and/or currency exchange rates which may cause a decline in Observatory visitors,

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• prolonged reduction in general economic activity, which could severely impact our tenants’ businesses, financial condition and liquidity and cause one or more of them to default in obligations to us, and/or press for modification of such obligations;

• prolonged reduction in business vitality which could impair our prospects for new and renewal leases, decrease demand for office and retail space, decrease rental rates, and/or increase lease terminations and vacancy rates-all with an adverse impact on the value or market price of our assets;

• new obstacles to our plans to redevelop and reposition properties, or to execute any newly planned capital project, successfully or on the anticipated timeline or at the anticipated costs;

• impairment of our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due, to comply with covenants in existing credit agreements, to borrow additional funds in compliance with drawdown conditions of existing facilities, or to enter into new financings;

• volatility and downward pressure on the market price of our Class A common stock and publicly traded partnership units of the Operating Partnership which also reduces our access to capital;

• sickness and fear of sickness for our employees, which carries a human cost and also affects productivity and business continuity;

• reduction of our cash flows and diminished ability to pay dividends at expected levels or at all.

The full extent of the foregoing risks and related consequences will depend on future developments, which cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain or mitigate its impact, and the direct and indirect economic effects.

The COVID-19 pandemic has had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located and could further trigger a period of sustained global and U.S. economic downturn or recession. While the rapid developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations. Many risk factors which were described in our 2019 Annual Report, prior to the emergence of the pandemic, now should be considered to have heightened significance as a result of the COVID-19 pandemic.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None

Recent Purchases of Equity Securities

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors reauthorized 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, 2020.     Under the program, ESRT may purchase our Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

The following table summarizes ESRT's purchases of equity securities in each of the three months ended March 31, 2020 and the month of April 2020:

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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)
March 2020	6,570,778	$	9.54	6,570,778	$	437,334
April 2020	2,345,129	$	8.66	2,345,129	$	417,023

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

As previously reported, on April 21, 2020 the board of directors appointed Christina Chiu as Executive Vice President, Chief Financial Officer and principal financial officer of ESRT and the Operating Partnership, effective as of a date to be later decided by the Company and Ms. Chiu. The effective date for the appointments was subsequently agreed upon as May 7, 2020. 

Andrew J. Prentice, the Chief Accounting Officer and Treasurer of ESRT and the Operating Partnership, who had assumed the role of acting chief financial officer on August 1, 2019, and John B. Kessler, the President and Chief Operating Officer of ESRT and the Operating Partnership, who had assumed the role of principal financial officer on August 1, 2019, will each relinquish these responsibilities to Ms. Chiu as of May 7, 2020. 

The information regarding Ms. Chiu required by Item 5.02(c)(3) of Form 8-K, and Items 401(b), (d), (e) and Item 404(a) of Regulation S-K in connection with her assumption of the role of principal financial officer was previously provided in our Current Report on Form 8-K filed with the SEC on April 23, 2020. 

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ITEM 6. EXHIBITS

    

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.1	Empire State Realty OP, L.P.,Empire State Realty Trust, Inc. $100,000,000 3.61% Series G Senior Notes due March 17, 2032, $75,000,000 3.73% Series H Senior Notes due March 17, 2035 Note Purchase Agreement dated March 17, 2020 incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 23, 2020.
10.2	Credit Agreement Dated as of March 19, 2020 among Empire State Realty OP, L.P., as Borrower, Empire State Realty Trust, Inc., Wells Fargo Bank, National Association, as Administrative Agent, and The Lenders Party Hereto, Capital One, National Association, as Syndication Agent, U.S. Bank National Association and Truist Bank as Documentation Agents, Wells Fargo Securities, LLC, as Sole Bookrunner, Wells Fargo Securities, LLC, Capital One, National Association, U.S. Bank National Association and Suntrust Robinson Humphrey, Inc., as Joint Lead Arrangers incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on March 23, 2020.
10.3	First Amendment to Credit Agreement, dated as of March 19, 2020 (this “Amendment”), to that certain Amended and Restated Credit Agreement referenced below, is among Empire State Realty Trust, Inc., a Maryland corporation (the “Parent”), Empire State Realty OP, L.P. (the “Borrower”), the Subsidiary Guarantors party hereto, the Lenders party hereto, Bank of America, N.A. (“Bank of America”), as Administrative Agent, and Bank of America, Wells Fargo Bank, National Association and Capital One, National Association, as L/C Issuers incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 23, 2020.
10.4*	Indemnification Agreement among Empire State Realty Trust, Inc. and Christina Chiu, dated April 20, 2020.
10.5*	Change in Control Severance Agreement between Empire State Realty Trust, Inc. and Christina Chiu, dated April 13, 2020.
101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Document
101.DEF*	XBRL Taxonomy Extension Definitions Document
101.LAB*	XBRL Taxonomy Extension Labels Document
101.PRE*	XBRL Taxonomy Extension Presentation Document
Notes:
* Filed herewith.

46

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EMPIRE STATE REALTY OP, L.P.

By: Empire State Realty Trust, Inc., its general partner

Date: May 6, 2020                             By:/s/ John B. Kessler

John B. Kessler

President and Chief Operating Officer

(Principal Financial Officer)

Date: May 6, 2020                             By:/s/ Andrew J. Prentice    

Andrew J. Prentice

Acting Chief Financial Officer and Chief Accounting Officer

(Principal Accounting Officer)

47

EX-10.4

Exhibit 10.4

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT ("Agreement") is made and entered into as of the 20^th day of April 2020, by and among EMPIRE STATE REALTY TRUST, INC., a Maryland corporation (the "Company"), EMPIRE STATE REALTY OP, L.P., a Delaware limited partnership (the "Partnership" and together with the Company, the "Indemnitors"), and Christina Chiu (the "Indemnitee").

WHEREAS, the Indemnitee is an officer of the Company and/or the Partnership and in such capacity is performing a valuable service for the Company and/or the Partnership;

WHEREAS, to induce the Indemnitee to provide services to the Company and/or the Partnership as an officer, and to provide the Indemnitee with specific contractual assurance that indemnification will be available to the Indemnitee regardless of, among other things, any amendment to or revocation of the Charter of the Company (the "Charter") or the Bylaws of the Company (the "Bylaws"), the Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"), or any acquisition transaction relating to the Company or the Partnership, the Indemnitors desire to provide the Indemnitee with protection against personal liability as set forth herein; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Indemnitors and the Indemnitee do hereby covenant and agree as follows:

Section 1.Definitions. For purposes of this Agreement:

(a)"Board of Directors" means the Board of Directors of the Company.

(b)"Change in Control" means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date:

(1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of all of the Company's then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person's attaining such percentage interest;

(2) the consummation by the Company, directly or indirectly, of a merger or consolidation, other than a transaction upon the completion of which 50% or more of the beneficial ownership of the voting power of the Company, the surviving entity or entity directly or indirectly controlling the Company or the surviving entity, as the case may be, is held by the same persons, in substantially the same proportion, as held the "beneficial ownership" (as defined in Rule 13(d)(3) under the Exchange Act) of the voting power of the Company immediately prior to the transaction (except that upon the completion thereof, employees or employee benefit plans of the Company may be a new holder of such beneficial ownership); or

(3) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.

(c)"Corporate Status" means the status of a person (i) as a present or former director, officer, employee, agent or controlling person of the Company and/or the Partnership or (ii) as a director, trustee, officer, partner (limited or general), manager, managing member, fiduciary, employee, agent or controlling person of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and/or the Partnership. As a clarification and without limiting the circumstances in which the Indemnitee may be serving at the request of the Company or the Partnership, service by the Indemnitee shall be deemed to be at the request of the Company or the Partnership if the Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise (i) of which a majority of the voting power or equity interest is owned directly or indirectly by the Company or (ii) the management of which is controlled directly or indirectly by the Company. The Company shall be deemed to have requested the Indemnitee to serve on an employee benefit plan where the performance of the Indemnitee's duties to the Company also imposes or imposed duties on, or otherwise involves or involved services by, the Indemnitee to the plan or participants or beneficiaries of the plan.

(d)"Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by the Indemnitee.

(e)"Effective Date" means the date set forth in the first paragraph of this Agreement.

(f)"ERISA" means the Employee Retirement Income SecurityAct of 1974, as amended.

(g)"Expenses" means any and all reasonable and out-of-pocket attorneys' fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

(h)"Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company, Malkin Holdings LLC and/or its affiliates , any entity that owned an interest in one of the 18 real properties or two acres of land that were contributed to the Company, the Partnership or their subsidiaries in the Company's initial public offering, or the Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or

participant or witness in the Proceeding giving rise to a claim for indemnification or advancement of Expenses hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement. If a Change in Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of the Indemnitee, which approval shall not be unreasonably withheld. If a Change in Control has occurred, Independent Counsel shall be selected by the Indemnitee, with the approval of the Board of Directors, which approval shall not be unreasonably withheld.

(i)"Proceeding" means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation (including an internal investigation), inquiry, administrative hearing or any other proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom in which the Indemnitee was, is or will be involved as a party by reason of the Indemnitee's Corporate Status and, whether or not Indemnitee is an employee of the Company at the time a Proceeding arises, except one initiated by the Indemnitee pursuant to Section 12 of this Agreement to enforce such Indemnitee's rights under this Agreement. If the Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

Section 2.Services by the Indemnitee. The Indemnitee serves as an officer, of the Company and/or the Partnership. However, this Agreement shall not impose any independent obligation on the Indemnitee, the Company or the Partnership to continue the Indemnitee's service to the Company and/

or the Partnership. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and the Indemnitee.

Section 3.General. The Indemnitors shall, jointly and severally, indemnify, and advance Expenses to, the Indemnitee (a) as provided in this Agreement, (b) as provided in the Charter and Bylaws and (c) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to the Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of the Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the "MGCL").

Section 4.Standard for Indemnification. The Indemnitee shall be entitled to the rights of indemnification provided in this Agreement, including Section 3 and this Section 4 and under applicable law, the Charter, the Bylaws, the Partnership Agreement, any other agreement, or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise if, by reason of the Indemnitee's Corporate Status, the Indemnitee is, or is threatened to be, made a party to or a witness in any Proceeding. Notwithstanding the preceding sentence, the indemnification provided for in this Section 4 shall not cover any Indemnitee's personal tax liabilities (federal, state, foreign or other) resulting from such Indemnitee's Corporate Status as described in (iii) of the definition thereof. For the avoidance of doubt, the rights of indemnification provided in this Agreement in favor of the Indemnitee shall protect the acts performed by such Indemnitee (by reason of such Indemnitee's Corporate Status or by reason of being named as a person who is about to become a director) prior to or on the Effective Date, including acts performed, or omissions taking place, prior

to the formation of the Company. Pursuant to this Section 4, the Indemnitee shall be indemnified hereunder, to the maximum extent permitted by Maryland law in effect from time to time (provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to the Indemnitee hereunder based on Maryland law as in effect on the Effective Date), against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by him or on his behalf in connection with a Proceeding by reason of his Corporate Status unless it is established that (i) the act or omission of the Indemnitee was material to the matter giving rise to the Proceeding and (x) was committed in bad faith or (y) was the result of active and deliberate dishonesty, (ii) the Indemnitee actually received an improper personal benefit in money, property or services or (iii) in the case of any criminal Proceeding, the Indemnitee had reasonable cause to believe that his conduct was unlawful.

Section 5.Certain Limits on Indemnification. Notwithstanding any other provision of this Agreement (other than Section 6), the Indemnitee shall not be entitled to:

(a)indemnification hereunder if the Proceeding was one by or in the right of the Company and the Indemnitee is adjudged in a final, non-appealable judgment by a court of appropriate jurisdiction to be liable to the Company;

(b)indemnification hereunder if the Indemnitee is adjudged to be liable on the basis that personal benefit was improperly received by such Indemnitee in any Proceeding charging improper personal benefit to the Indemnitee, whether or not involving action in the Indemnitee's Corporate Status; or

(c)indemnification or advance of Expenses hereunder if the Proceeding was brought by the Indemnitee unless: (i) the Proceeding was brought to enforce indemnification under this Agreement,

and then only to the extent in accordance with and as authorized by Section 12 of this Agreement or, (ii) the Charter or the Bylaws or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors expressly provides otherwise.

Section 6.Court-Ordered Indemnification. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of the Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:

(a)if such court determines that the Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case the Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

(b)if such court determines that the Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses.

Section 7.Indemnification for Expenses of an Indemnitee Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, and in addition to any right to payment of expenses under any such provision, to the extent that the Indemnitee was or is, by reason of his Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such

Proceeding, the Indemnitee shall be indemnified for all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Indemnitors shall, jointly and severally, indemnify the Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by him or on his behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis.

Section 8.Advance of Expenses for an Indemnitee. Notwithstanding anything in this Agreement to the contrary, and in addition to any right under any other provision of this Agreement, if the Indemnitee is or was or becomes a party to or is otherwise involved in any Proceeding, or is or was threatened to be made a party to or a participant in any Proceeding, by reason of the Indemnitee's Corporate Status, or by reason of (or arising in part out of) any actual or alleged event or occurrence related to the Indemnitee's Corporate Status, or by reason of any actual or alleged act or omission on the part of the Indemnitee taken or omitted in or relating to the Indemnitee's Corporate Status, then the Indemnitors shall, without requiring a preliminary determination of the Indemnitee's ultimate entitlement to indemnification hereunder, advance all reasonable Expenses incurred by or on behalf of the Indemnitee in connection with such Proceeding within ten (10) days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by the Indemnitee and shall include or be preceded or accompanied by a written affirmation by the Indemnitee of the Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Indemnitors as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of the Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable

law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to the Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established that the standard of conduct has not been met by the Indemnitee and which have not been successfully resolved as described in Section 7 of this Agreement. To the extent that Expenses advanced to the Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of the Indemnitee and shall be accepted without reference to the Indemnitee's financial ability to repay such advanced Expenses and without any requirement to post security therefor.

Section 9.Indemnification and Advance of Expenses as a Witness or Other Participant. Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee is or may be, by reason of his Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which the Indemnitee is not a party, he shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith within ten (10) days after the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by the Indemnitee.

Section 10.Procedure for Determination of Entitlement to Indemnification.

(a)To obtain indemnification under this Agreement, the Indemnitee shall submit to the Indemnitors a written request, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to

what extent the Indemnitee is entitled to indemnification. The Indemnitee may submit one or more such requests from time to time and at such time(s) as the Indemnitee deems appropriate in his sole discretion. The officer of the Company receiving any such request from the Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification.

(b)Upon written request by the Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to the Indemnitee's entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors or, if such a quorum cannot be obtained, then by a majority vote of a duly authorized committee of the Board of Directors consisting solely of one or more Disinterested Directors, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten (10) days after such determination. The Indemnitee shall cooperate with the person, persons or entity making such determination with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from

disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by the Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Indemnitors (irrespective of the determination as to the Indemnitee's entitlement to indemnification) and the Indemnitors shall indemnify and hold the Indemnitee harmless therefrom.

(c)The Indemnitors shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.

Section 11.Presumptions and Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Indemnitors shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.

(b)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, entry of an order of probation prior to judgment, or by dismissal, with or without prejudice, does not create a presumption that the Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

(c)The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member,

fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to the Indemnitee for purposes of determining any other right to indemnification under this Agreement.

Section 12.Remedies of the Indemnitee.

(a)If (i) a determination is made pursuant to Section 10(b) of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the Charter or the Bylaws of the Company is not made within ten (10) days after a determination has been made that the Indemnitee is entitled to indemnification, the Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses. Alternatively, the Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by the Indemnitee to enforce his rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard to its conflict of laws rules) shall

apply to any such arbitration. The Indemnitors shall not oppose the Indemnitee's right to seek any such adjudication or award in arbitration.

(b)In any judicial proceeding or arbitration commenced pursuant to this Section 12, the Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement or otherwise and the Indemnitors shall have the burden of proving that the Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. If the Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, the Indemnitee shall not be required to reimburse the Indemnitors for any advances pursuant to Section 8 of this Agreement until a final non-appealable judgment by a court of appropriate jurisdiction is made with respect to the Indemnitee's entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed). The Indemnitors shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Indemnitors are bound by all of the provisions of this Agreement.

(c)If a determination shall have been made pursuant to Section 10(b) of this Agreement that the Indemnitee is entitled to indemnification, the Indemnitors shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee's statement not materially misleading, in connection with the request for indemnification.

(d)In the event that the Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages

for breach of, this Agreement or otherwise, the Indemnitee shall be entitled to recover from the Indemnitors, and shall be indemnified by the Indemnitors for, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

(e)Interest shall be paid by the Indemnitors to the Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Indemnitors pay or are obligated to pay for the period (i) commencing with either the tenth day after the date on which the Indemnitors were requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) above and (ii) ending on the date such payment is made to the Indemnitee by the Indemnitors.

Section 13.Defense of the Underlying Proceeding.

(a)The Indemnitee shall notify the Indemnitors promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify the Indemnitee from the right, or otherwise affect in any manner any right of the Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Indemnitors' ability to defend in such

Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b)Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Indemnitors shall have the right to defend the Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify the Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above. The Indemnitors shall not, without the prior written consent of the Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against the Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of the Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of the Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to the Indemnitee or (iii) would impose any Expense, judgment, fine, penalty or limitation on the Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by the Indemnitee under Section 12 of this Agreement.

(c)Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which the Indemnitee is a party by reason of the Indemnitee's Corporate Status, (i) the Indemnitee reasonably concludes, based upon the advice of counsel approved by the Company, which approval shall not be unreasonably withheld, that he may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) the Indemnitee reasonably concludes, based upon the advice of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between the Indemnitee and the Indemnitors, or (iii) if the Indemnitors fail to assume the defense of such Proceeding in a timely manner, the Indemnitee shall be entitled to be represented

by separate legal counsel of the Indemnitee's choice, subject to the prior approval of the Indemnitors of the choice of such counsel, which approval shall not be unreasonably withheld, at the expense of the Indemnitors. In addition, if the Indemnitors fail to comply with any of their obligations under this Agreement or in the event that the Indemnitors or any other person takes any action to declare this Agreement void or unenforceable, or institute any Proceeding to deny or to recover from the Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the Indemnitee shall have the right to retain counsel of the Indemnitee's choice, subject to the prior approval of the Indemnitors, which approval shall not be unreasonably withheld, at the expense of the Indemnitors (subject to Section 12(d) of this Agreement), to represent the Indemnitee in connection with any such matter.

Section 14.Non-Exclusivity; Survival of Rights; Subrogation.

(a)The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Charter or the Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. Unless consented to in writing by the Indemnitee, no amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of the Indemnitee under this Agreement in respect of any action taken or omitted by such the Indemnitee in his Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

(b)In the event of any payment under this Agreement, the Indemnitors shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Indemnitors to bring suit to enforce such rights.

Section 15.Insurance.

(a)The Company will use its reasonable best efforts to acquire and maintain directors and officers liability insurance ("D&O Insurance"), on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, that includes coverage for the Indemnitee or any claim made against the Indemnitee by reason of his Corporate Status and coverage for the Indemnitors for any indemnification or advance of Expenses made by the Indemnitors to the Indemnitee for any claims made against the Indemnitee by reason of his Corporate Status. Without in any way limiting any other obligation under this Agreement, the Indemnitors shall indemnify the Indemnitee for any payment by the Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by the Indemnitee in connection with a Proceeding over the coverage of any D&O Insurance. The purchase, establishment and maintenance of any D&O Insurance shall not in any way limit or affect the rights or obligations of the Indemnitors or the Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Indemnitors and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Indemnitors receive notice from any source of a Proceeding to which the Indemnitee is a party or a participant (as a witness or otherwise) and the Company has D&O Insurance in effect, the Indemnitors shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

(b)For a period of six (6) years and one (1) month after the date of termination of the Indemnitee's employment, the Company shall maintain in effect a "tail" directors' and officers' liability insurance policy with coverage in an amount and scope at least as favorable as the Company's existing coverage on the date of termination of the Indemnitee's employment and with at least as highly-rated an insurer; provided, that, in no event shall the Company be required to expend in the aggregate in excess of 200% of the ratable portion of the annual premium paid by the Company for such insurance in effect on the date of termination of the Indemnitee's employment. In the event that 200% of the ratable portion of the annual premium paid by the Company for such existing insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount.

Section 16.Coordination of Payments. The Indemnitors shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 17.Reports to Stockholders. To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amount for indemnification of, or advance of Expenses to, the Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Indemnitors with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

Section 18.Duration of Agreement; Binding Effect.

(a)The Indemnitors' obligations under this Agreement with respect to a Proceeding shall continue until and terminate on the date that the Indemnitee is no longer subject to that Proceeding (including any rights of appeal thereto and any Proceeding commenced by the Indemnitee pursuant to Section 12 of this Agreement).

(b)The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or, substantially all or a substantial part, of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of the Indemnitee and his spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(c)The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(d)The Indemnitors and the Indemnitee agree hereby that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further

agree that such breach may cause the Indemnitee irreparable harm. Accordingly, the parties hereto agree that the Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, the Indemnitee shall not be precluded from seeking or obtaining any other relief to which he may be entitled. The Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Indemnitors acknowledge that, in the absence of a waiver, a bond or undertaking may be required of the Indemnitee by a court, and the Indemnitors hereby waive any such requirement of such a bond or undertaking.

Section 19.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 20.Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 21.Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 22.Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 23.Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed on the day of such delivery or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to the Indemnitee, to the address set forth on the signature page hereto.

(b)If to the Indemnitors to:

111 W. 33^rd Street

New York, New York 10120

Attn: General Counsel

or to such other address as may have been furnished in writing to the Indemnitee by the Indemnitors or to the Indemnitors by the Indemnitee, as the case may be.

Section 24.Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

Section 25.Time of the Essence. Time is of the essence regarding all dates and time periods set forth or referred to in this Agreement.

Section 26.Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

COMPANY:

EMPIRE STATE REALTY TRUST, INC.

By: /s/ Thomas N. Keltner

Name: Thomas N. Keltner

Title: Executive Vice President and General Counsel

INDEMNITEE:

/s/ Christina Chiu

Name: Christina Chiu

111 W. 33^rd Street

12^th Floor

New York, NY 10120

EXHIBIT A

FORM OF AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of EMPIRE STATE REALTY TRUST, Inc.

Re: Affirmation and Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

This affirmation and undertaking is being provided pursuant to that certain Indemnification Agreement dated the 20^th day of April, 2020, by and among EMPIRE STATE REALTY TRUST, Inc., a Maryland corporation (the "Company"), EMPIRE STATE REALTY OP, L.P., a Delaware limited partnership (the "Partnership" and, together with the Company, or the "Indemnitor") and the undersigned Indemnitee (the "Indemnification Agreement"), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the "Proceeding").

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

I am subject to the Proceeding by reason of my actual or alleged Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as a member, an officer, a director, an employee, a partner, and/or an agent of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

In consideration of the advance of Expenses by the Indemnitors for reasonable attorneys' fees and related Expenses incurred by me in connection with the Proceeding (the "Advanced Expenses"), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established without interest.

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this ___ day of ____________________, 20____.

_____________________________

EX-10.5

Exhibit 10.5

CHANGE IN CONTROL

SEVERANCE AGREEMENT

This CHANGE IN CONTROL SEVERANCE AGREEMENT(this “Agreement”) is made and entered into as of this thirteenth day of April, 2020, by and between Empire State Realty Trust, Inc., a Maryland corporation (the “Company”), and Christina Chiu (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders; and

WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change of control may arise and that such possibility may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Company desires to ensure Executive’s continued and undivided dedication to Executive’s duties in the event of any threat or occurrence of, or negotiation or other action that could lead to, or create the possibility of, a Change in Control (as defined in Section 1).

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and Executive hereby agree as follows:

Section 1.    Definitions.

(a) “Accounting Firm” shall have the meaning set forth in Section 7 hereof.

(b) “Accrued Obligations” shall mean (i) all accrued but unpaid base salary through the Termination Date, (ii) any unpaid or unreimbursed expenses incurred through the Termination Date in accordance with Company policy, subject to submission of written documentation substantiating such expenses, in a form reasonably acceptable to the Company, (iii) any accrued but unused vacation time through the Termination Date in accordance with the applicable Company Group policy and (iv) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms contained therein.

(c) “Agreement” shall have the meaning set forth in the preamble.

(d) “Board” shall mean the Board of Directors of the Company.

(e) “Cause” shall mean (i) fraudulent actions by Executive in the conduct of his/her duties for the Company or the conviction of Executive of a felony, (ii) Executive’s gross neglect of, or willful refusal or failure to perform, the duties assigned to him/her (other than by reason of physical or mental incapacity), (iii) Executive’s willful and material breach of any written agreement with the Company where such breach results in material economic injury or reputational harm to the Company, or (iv) Executive’s willful and material breach of the Code of Business Conduct and Ethics of the Company or any member of the Company Group where such breach results in material economic injury or reputational harm to the Company. Any such occurrence described in clause (ii), (iii) or (iv) in the preceding sentence that is curable shall constitute “Cause” only after the Company has given Executive sixty (60) days written notice of such violation, and then only if such occurrence is not cured; provided, however, that Executive shall be provided such additional time as is reasonably necessary to cure if Executive has, within such sixty (60) day period, taken reasonable steps designed to cure such violation. Cause shall not exist without (A) advance written notice provided to Executive of not less than fourteen (14) days prior to the Termination Date setting forth the Company’s intention to consider terminating Executive for Cause including a statement of the anticipated date of termination and the basis for such termination for Cause, (B) an opportunity for Executive, together with Executive’s counsel, to be heard before the Board during the fourteen (14) day period preceding the anticipated date of termination, (C) a duly adopted resolution of the Board stating that the actions of Executive constituted Cause and the basis for such termination for Cause, and (D) a written determination provided by the Board setting forth the acts and/or omissions that form the basis of such termination for Cause. Any resolution or determination made by the Board described in the immediately preceding sentence shall require an affirmative vote of at least a two-thirds majority of the members of the Board (other than Executive if Executive is a Board member) and shall be subject to de novo review by an arbitrator. Any purported termination of employment of Executive by the Company which does not meet each requirement described herein shall be treated for all purposes as a termination by the Company other than by reason of a Nonqualifying Termination.

(f) “Change in Control” shall have the meaning set forth in the Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan.

(g) “Change in Control Termination Period” shall mean the period of time beginning with a Change in Control following April 13, 2020 and ending two (2) years following such Change in Control.

(h) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

(i) “Company” shall have the meaning set forth in the preamble hereto.

(j) “Company Group” shall mean the Company together with any direct or indirect subsidiaries of the Company.

(k) “Compensation Committee” shall mean the Compensation Committee of the Board.

(l) “Confidential Information” shall have the meaning set forth in Section 6(b) hereof.

(m) “Delay Period” shall have the meaning set forth in Section 11(a) hereof.

(n) “Disability” shall mean any physical or mental disability or infirmity of Executive that prevents the performance of Executive’s duties for a period of (i) ninety (90) consecutive days or (ii) one hundred eighty (180) non-consecutive days during any twelve (12) month period. Any question as to the existence, extent, or potentiality of Executive’s Disability upon which Executive and the Company cannot agree shall be determined by a qualified, independent physician mutually agreed to by the Company and Executive. The determination of any such physician shall be final and conclusive for all purposes of this Agreement.

(o) “Earned Bonus” shall have the meaning set forth in Section 2(b) hereof.

(p) “Excise Tax” shall have the meaning set forth in Section 7 hereof.

(q) “Executive” shall have the meaning set forth in the preamble hereto.

(r) “Good Reason” shall mean, without Executive’s written consent, (i) a material breach by the Company of this Agreement, any agreement evidencing an equity grant or other long-term incentive award, or any other written agreement between the Company and Executive, (ii) a diminution of, or reduction or adverse alteration of, Executive’s titles, duties, authorities or responsibilities or reporting lines, (iii) any requirement by the Company that Executive relocate to a principal place of business outside of the New York City metropolitan area, or (iv) a material reduction in Executive’s base salary or target annual bonus opportunity. Good Reason shall not exist without Executive providing thirty (30) days’ written notice of termination to the Company setting forth in reasonable specificity the event that constitutes Good Reason, which written notice to be effective, must be provided to the Company within ninety (90) days of the occurrence of such event. During such thirty (30) day notice period, the Company shall have the right to cure (if curable) the event that constitutes Good Reason.

(s) “Nonqualifying Termination” shall mean a termination of Executive’s employment with the Company (i) by the Company for Cause, (ii) by Executive for any reason other than for Good Reason, (iii) as a result of Executive’s death or (iv) by the Company as a result of Executive’s Disability.

(t) “Partnership” shall mean the Company’s operarting partnership, Empire State Realty OP, L.P.

(u) “Payment” shall have the meaning set forth in Section 7 hereof.

(v) “Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint‑stock company, trust (charitable or non-charitable), unincorporated organization, or other form of business entity.

(w) “Proceeding” shall mean any threatened or actual action, suit or proceeding, whether civil, criminal, administrative, investigative, appellate or other.

(x) “Release of Claims” shall mean the Release of Claims in the form attached hereto as Exhibit A.

(y) “Restricted Period” shall have the meaning set forth in Section 6(c) hereof.

(z) “Safe Harbor Amount” shall have the meaning set forth in Section 7 hereof.

(aa) “Severance Benefits” shall have the meaning set forth in Section 4 hereof.

(ab) “Termination Date” shall mean the date Executive’s employment with the Company terminates.

Section 2.    Severance Payments.

If Executive’s employment with the Company is terminated during the Change in Control Termination Period other than by reason of a Nonqualifying Termination, then the Company shall pay or provide Executive with the following payments or benefits:

(a)The Accrued Obligations;

(b)Any earned but unpaid annual bonus with respect to any completed fiscal year that has ended prior to the Termination Date, which amount shall be paid at such time annual bonuses are generally paid to other senior executives of the Company Group, but in no event later than March 15^th following the end of the fiscal year to which such annual bonus relates (“Earned Bonus”);

(c)Subject to achievement of the applicable performance conditions for the fiscal year of the Company in which Executive’s termination occurs (disregarding any subjective performance goals and any other exercise by the Compensation Committee of negative discretion), payment of the annual bonus that would otherwise have been earned in respect of the fiscal year in which such termination occurred, pro-rated to reflect the number of days Executive was employed during such fiscal year, which amount shall be paid at such time annual bonuses are generally paid to other senior executives of the Company Group, but in no event later than March 15^th following the last day of the fiscal year in which the Termination Date occurred;

(d)Any service-based vesting or service requirements with respect to any equity grant and other long-term incentive award previously granted to Executive and then outstanding shall become vested and non-forfeitable as of the Termination Date and any performance-based equity grant and other long-term incentive award previously granted to Executive and then outstanding that has not been earned as of the Termination Date shall be earned at a pro-rata amount based on the actual performance for the performance period as of the Termination Date, and, in other respects, such awards shall be governed by the plans, programs, agreements, or other documents, as applicable, pursuant to which such awards were granted;

(e)An amount equal to two hundred percent (200%) of the sum of (i) Executive’s then-current base salary and (ii) the average annual cash bonus paid to Executive over the most recently completed three (3) fiscal years (or if Executive was not eligible to receive an annual cash bonus with respect to any of the three (3) fiscal years immediately preceding the fiscal year in which the Termination Date occurs, the average shall be determined for that period of fiscal years, if any, for which Executive was eligible to receive an annual cash bonus), which amount shall be paid in a lump-sum on the sixtieth (60^th) day following the Termination Date; and

(f)To the extent permitted by applicable law and without penalty to the Company, subject to Executive’s election of COBRA continuation coverage under the Company’s group health plan, on the first regularly scheduled payroll date of each month for the eighteen (18)-month period commencing after the Termination Date, the Company will pay Executive an amount equal to the difference between Executive’s monthly COBRA premium cost and the premium cost to Executive as if Executive were an employee of the Company (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars); provided, that any payments described herein shall cease in the event that Executive becomes eligible to receive health benefits from another employer that are substantially similar to those Executive was entitled to receive immediately prior to the Termination Date.

Section 3.    Payments Upon Nonqualifying Termination of Employment. 

If Executive’s employment with the Company shall terminate during the Change in Control Termination Period by reason of a Nonqualifying Termination, then Executive (or Executive’s beneficiary or estate) shall be entitled to the Accrued Obligations and, unless Executive is terminated by the Company for Cause, the Earned Bonus.

Section 4.    Release.

Notwithstanding any provision herein to the contrary, the payment of any amount or provision of any benefit pursuant to Section 2 hereof (other than the Accrued Obligations) (collectively, the “Severance Benefits”) shall be conditioned upon Executive’s execution, delivery to the Company, and non-revocation of the Release of Claims (and the expiration of any revocation period contained in such Release of Claims) within sixty (60) days following the Termination Date. If Executive fails to execute the Release of Claims in such a timely manner so as to permit any revocation period to expire prior to the end of such sixty (60) day period, or timely revokes his/her acceptance of such release following its execution, Executive shall not be entitled to any of the Severance Benefits. Further, to the extent that any of the Severance

Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Code, any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60th) day following the Termination Date, but for the condition on executing the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day, after which any remaining Severance Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein.

Section 5.    Resignations.

Upon any termination of Executive’s employment with the Company, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, Executive shall resign from any and all directorships, committee memberships, and any other positions Executive holds with the Company or any other member of the Company Group.

Section 6.    Restrictive Covenants.

(a)General. Executive acknowledges and agrees that (i) the agreements and covenants contained in this Section 6 are (A) reasonable and valid in geographical and temporal scope and in all other respects and (B) essential to protect the value of the Company Group’s business and assets, and (ii) by Executive’s employment with the Company, Executive will obtain knowledge, contacts, know-how, training, and experience, and there is a substantial probability that such knowledge, know-how, contacts, training, and experience could be used to the substantial advantage of a competitor of the Company Group and to the Company Group’s substantial detriment.

(b)Confidential Information. Except as directed or authorized by the Company, Executive agrees that he/she will not, at any time during his/her employment with the Company or thereafter, make use of or divulge to any other Person any trade or business secret, process, method, or means, or any other confidential information concerning the business or policies of the Company Group that he/she may have learned in connection with his/her employment and that he/she knows to be confidential or proprietary (“Confidential Information”). Executive’s obligation under this Section 6(b) shall not apply to any information that (i) is known publicly without the fault of Executive, (ii) is in the public domain or hereafter enters the public domain without the fault of Executive, (iii) is known to Executive prior to his/her receipt of such information from the Company Group, (iv) is hereafter disclosed to Executive by a third party not under an obligation of confidence to the Company Group, or (v) is required to be disclosed by Executive to, or by, any governmental or judicial authority (provided that Executive provides the Company Group with prior notice of the contemplated disclosure and reasonably cooperates with the Company Group at its expense in seeking a protective order or other appropriate protection of such information). Executive agrees not to remove from the premises of any member of the Company Group, except as an employee, officer or director of the Company Group in pursuit of the business of the Company Group or except as specifically permitted in writing by the Board, any document or other object containing or reflecting any such Confidential Information. Executive recognizes that all such documents and objects, whether developed by him/her or by someone else, will be the sole exclusive property of the Company Group. Upon termination of Executive’s employment, Executive shall forthwith deliver to the

Company Group all such Confidential Information, including, without limitation, all lists of customers, correspondence, accounts, records, and any other documents or property made or held by him/her or under his/her control in relation to the business or affairs of the Company Group, and no copy of any such Confidential Information shall be retained by him/her.

(c)Non-Competition. Executive covenants and agrees that during the period commencing on April 13, 2020 and ending on the six (6) month anniversary of the Termination Date (the “Restricted Period”), Executive shall not, directly or indirectly (individually, or through or on behalf of another entity as owner, partner, agent, employee, consultant, or in any other capacity), engage, participate or assist, as an owner, partner, employee, consultant, director, officer, trustee or agent in any element of the Business (as defined below). Notwithstanding anything herein to the contrary, this Section 6(c) shall not prevent Executive from (i) acquiring as an investment securities representing not more than one percent (1%) of the outstanding voting securities of any publicly held corporation engaged in the Business or from indirectly acquiring securities of any company engaged in the Business as a result of being a passive investor in any mutual fund, hedge fund, private equity fund, or similar pooled account so long as Executive’s interest therein is less than one percent (1%) and he/she has no role in selecting, managing or advising with respect to investments thereof, or (ii) providing services to any entity whose primary business activity is not an element of the Business or a subsidiary, division or unit of any entity that engages in the Business so long as Executive and such subsidiary, division or unit does not engage in the Business so long as Executive provides written notice to the Company at least ten (10) business days prior to the commencement of providing any services to such subsidiary, division or unit. For the purposes of this Section 6(c), the “Business” shall mean the acquisition, development, management, leasing or financing of any office or retail real estate property located in New York County, New York, Fairfield County, Connecticut, Westchester County, New York, and any other geographic area in which the Company engages in such activities and any business activity that represents a significant portion of the business activity of the Company (measured as at least ten percent (10%) of the Company’s revenues on a trailing 12-month basis).

(d)Non-Interference. During the period commencing on April 13, 2020 and ending on the twenty-four (24) month anniversary of the Termination Date , Executive shall not, directly or indirectly, for his/her own account or for the account of any other Person, (i) encourage, solicit or induce, or in any manner attempt to encourage, solicit or induce, any Person employed by, or providing consulting services to the Company Group to terminate such Person’s employment or services (or, in the case of a consultant, to materially reduce such services) with the Company Group, (ii) hire any Person who was employed by the Company Group within the twelve (12) month period prior to the date of such hiring, or (iii) encourage, solicit or induce, or in any manner attempt to encourage, solicit or induce any tenant, customer, supplier, licensee or other business relation to cease doing business with or reduce the amount of business conducted with the Company Group, or in any way interfering with the relationship of any such tenant, customer, supplier, licensee, or other business relation and the Company Group.

(e)Mutual Non-Disparagement. During Executive’s employment with the Company and at all times following Executive’s termination of employment for any reason, (i) Executive

covenants and agrees that he/she will not, nor induce others to, disparage any member of the Company Group, its past and present officers, directors, employees, products or services and (ii) the Company shall not, and shall instruct members of its Board and the senior executives of the Company Group not to, disparage Executive. Nothing herein shall prohibit any party (i) from disclosing that Executive is no longer employed by the Company, (ii) from responding truthfully to any governmental investigation, legal process or inquiry related thereto, (iii) from making a good faith rebuttal of the other party’s untrue or misleading statement. For purposes of this Agreement, the term “disparage” means any statements, whether orally, in writing or through any medium (including, but not limited to, the press or other media, computer networks or bulletin boards, or any other form of communication), that intentionally disparage, defame, or otherwise damage or assail the reputation, integrity or professionalism of the other party.

(f)Post-Termination Cooperation. Executive agrees that following the termination of his/her employment, he/she will continue to provide reasonable cooperation to the Company and/or any other member of the Company Group and its or their respective counsel in connection with any Proceeding relating to any matter that occurred during Executive’s employment in which Executive was involved or of which Executive has knowledge. The Company shall pay Executive at an hourly rate based upon Executive’s Base Salary as of the Termination Date and reimburse Executive for reasonable out-of-pocket expenses incurred with respect to his/her compliance with this Section 6(f). Executive also agrees that, in the event that he/she is subpoenaed by any Person (including, but not limited to, any government agency) to give testimony or provide documents (in a deposition, court proceeding, or otherwise) that in any way relates to his/her employment by the Company and/or any other member of the Company Group, he/she will give prompt notice of such request to the Company and will make no disclosure until the Company Group has had a reasonable opportunity to contest the right of the requesting Person. Without limiting the generality of the foregoing, to the extent any member of the Company Group seeks Executive’s assistance, the Company Group will use reasonable commercial efforts, whenever possible, to provide Executive with reasonable advance notice of its need for him/her and will attempt to coordinate with Executive the time and place at which Executive’s assistance will be provided with the goal of minimizing the impact of such assistance on any other material pre-scheduled business commitment that Executive may have. Executive’s cooperation described in this Section 6(f) shall be subject to the term of the indemnification agreement between Executive, the Company and the Partnership and the indemnification provisions under the Company’s by-laws.

(g)Blue Pencil. If any court of competent jurisdiction shall at any time deem the duration or the geographic scope of any of the provisions of this Section 6 unenforceable, the other provisions of this Section 6 shall nevertheless stand, and the duration and/or geographic scope set forth herein shall be deemed to be the longest period and/or greatest size permissible by law under the circumstances, and the parties hereto agree that such court shall reduce the time period and/or geographic scope to permissible duration or size.

(h)Breach of Restrictive Covenants. Without limiting the remedies available to the Company Group, Executive acknowledges that a breach of any of the covenants contained in Section 6 hereof may result in material irreparable injury to the Company Group for which there

is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely, and that in the event of such a breach or threat thereof, the Company Group shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction, without the necessity of proving irreparable harm or injury as a result of such breach or threatened breach of Section 6 hereof, restraining Executive from engaging in activities prohibited by Section 6 hereof or such other relief as may be required specifically to enforce any of the covenants in Section 6 hereof.

Section 7.    Golden Parachute Tax Provisions.

If there is a change in ownership or control of the Company that would cause any payment or distribution by the Company or any other Person or entity to Executive or for Executive’s benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) to be subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest or penalties incurred by Executive with respect to such excise tax, the “Excise Tax”), then Executive will receive the greatest of the following, whichever gives Executive the highest net after-tax amount (after taking into account federal, state, local and social security taxes): (a) the Payments or (b) one dollar less than the amount of the Payments that would subject Executive to the Excise Tax (the “Safe Harbor Amount”). If a reduction in the Payments is necessary so that the Payments equal the Safe Harbor Amount and none of the Payments constitutes nonqualified deferred compensation, then the reduction shall occur in the manner Executive elects in writing prior to the date of payment. If any Payment constitutes nonqualified deferred compensation (within the meaning of Section 409A of the Code) or if Executive fails to elect an order, then the Payments to be reduced will be determined in a manner which has the least economic cost to Executive and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when payment would have been made to Executive, until the reduction is achieved. All determinations required to be made under this Section 7, including whether and when the Safe Harbor Amount is required and the amount of the reduction of the Payments and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Company (the “Accounting Firm”). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon Company and Executive.

Section 8.    Taxes.

The Company may withhold from any payments made under this Agreement all applicable taxes, including but not limited to income, employment, and social insurance taxes, as shall be required by law. Executive acknowledges and represents that the Company has not provided any tax advice to him/her in connection with this Agreement and that Executive has been advised by the Company to seek tax advice from his/her own tax advisors regarding this Agreement and payments that may be made to him/her pursuant to this Agreement, including specifically, the application of the provisions of Section 409A of the Code to such payments.

Section 9.    Scope of Agreement.

Nothing in this Agreement shall be deemed to alter the “at-will” nature of Executive’s employment or entitle Executive to continued employment with the Company.

Section 10.    Set Off; Mitigation.

The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall not be subject to set-off, counterclaim, or recoupment of amounts owed by Executive to the Company or its affiliates. Executive shall not be required to mitigate the amount of any payment provided pursuant to this Agreement by seeking other employment or otherwise, and except as provided in Section 2(f), the amount of any payment provided for pursuant to this Agreement shall not be reduced by any compensation earned as a result of Executive’s other employment or otherwise

Section 11.    Additional Section 409A Provisions.

Notwithstanding any provision in this Agreement to the contrary-

(a)Any payment otherwise required to be made hereunder to Executive at any date as a result of the termination of Executive’s employment shall be delayed for such period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”). On the first business day following the expiration of the Delay Period, Executive shall be paid, in a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence, and any remaining payments not so delayed shall continue to be paid pursuant to the payment schedule set forth herein.

(b)Each payment in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code.

(c)To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided,that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.

(d)The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in accordance with such intent.

Section 12.    Successors and Assigns; No Third-Party Beneficiaries.

(a)The Company.This Agreement shall inure to the benefit of the Company and its respective successors and assigns. Neither this Agreement nor any of the rights, obligations, or interests arising hereunder may be assigned by the Company to a Person (other than another member of the Company Group, or its or their respective successors) without Executive’s prior written consent (which shall not be unreasonably withheld, delayed, or conditioned); provided, however, that in the event of a sale of all or substantially all of the assets of the Company or any direct or indirect division or subsidiary thereof to which Executive’s employment primarily relates, the Company will provide that this Agreement will be assigned to, and assumed by, the acquiror of such assets, it being agreed that in such circumstances, Executive’s consent will not be required in connection therewith.

(b)Executive.Executive’s rights and obligations under this Agreement shall not be transferable by Executive by assignment or otherwise, without the prior written consent of the Company; provided, however, that if Executive shall die, all amounts then payable to Executive hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or if there be no such designee, to Executive’s estate.

(c)No Third-Party Beneficiaries.Except as otherwise set forth in Section 12(b) hereof, nothing expressed or referred to in this Agreement will be construed to give any Person other than the Company, the other members of the Company Group, and Executive any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

Section 13.    Waiver and Amendments.

Any waiver, alteration, amendment, or modification of any of the terms of this Agreement shall be valid only if made in writing and signed by each of the parties hereto; provided, however, that any such waiver, alteration, amendment, or modification must be consented to on the Company’s behalf by the Board. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

Section 14.    Severability.

If any covenants or such other provisions of this Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof

Section 15.    Governing Law; Interpretation.

This Agreement shall be construed in accordance with and governed for all purposes by the laws and public policy (other than conflict of laws principles) of the State of New York applicable to contracts executed and to be wholly performed therein.

Section 16.Dispute Resolution.

Except to the extent necessary for the Company or any member of the Company Group or their successors or assigns to seek injunctive relief or other equitable relief described in Section 6(h), arbitration will be the method of resolving disputes under this Agreement. Notwithstanding the foregoing, the parties agree that before proceeding to arbitration, they will attempt in good faith to promptly resolve such dispute by mediation in New York, New York. The mediation will commence within forty-five (45) days of request therefore and will be before a single mediator selected by the Company and Executive from a list provided by Judicial Arbitration and Mediation Services, Inc. (“JAMS”). If the parties are unable to mutually select a mediator, then the mediator shall be appointed by JAMS. If any dispute is not resolved to the satisfaction of the parties in mediation or, unless the parties mutually agree otherwise, the dispute remains unresolved following thirty (30) days after the commencement of the mediation, the arbitration shall be held before a single arbitrator selected by the Company and Executive from a list provided by JAMS. All arbitrations arising out of this Agreement shall be conducted in New York, New York in accordance with the JAMS rules then in effect for executive employment disputes and arbitrations. If the Company and Executive cannot agree on a single arbitrator, the arbitration shall be conducted before a panel of three arbitrators, one selected by each party hereto and the third arbitrator selected by the parties’ two arbitrators from a list provided by JAMS. Any award entered by the arbitrator shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of this Agreement. The Company shall be responsible for paying the fees and costs of the mediator and arbitrator along with other mediation or arbitration-specific fees (except, if applicable, Executive’s petitioner’s filing fees) and its own expenses and Executive shall be responsible for his/her own expenses relating to the conduct of the mediation or arbitration (including reasonable attorneys’ fees and expenses), provided, however, the Company shall reimburse Executive for his/her costs and expenses in connection with such contest or dispute in the event Executive prevails, as determined by the arbitrator.

Section 17.    Notices.

(a)Place of Delivery. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all notices and communications by Executive to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices and communications

by the Company to Executive may be given to Executive personally or may be mailed to Executive at Executive’s last known address, as reflected in the Company’s records

(b)Date of Delivery. Any notice so addressed shall be deemed to be given or received (i) if delivered by hand, on the date of such delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.

Section 18.    Section Headings.

The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision hereof.

Section 19.    Entire Agreement.

This Agreement, together with any exhibits attached hereto, constitutes the entire understanding and agreement of the parties hereto regarding the employment of Executive. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings, and agreements between the parties relating to the subject matter of this Agreement.

Section 20.    Survival of Operative Sections.

Upon any termination of Executive’s employment, the provisions of Section 2 through Section 22 of this Agreement (together with any related definitions set forth in Section 1 hereof) shall survive to the extent necessary to give effect to the provisions thereof.

Section 21.    Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual signature or by signature delivered by facsimile or by e-mail as a portable data format (.pdf) file or image file attachment.

Section 22.    Termination.

(a)This Agreement shall terminate two (2) years after the date of any written notification from the Company to Executive terminating this Agreement; provided, however, that if a Change in Control occurs while this Agreement is still operative, any written notification to Executive terminating this Agreement (including any written notification given prior to such Change in Control), shall not be effective prior to the end of the Change in Control Termination Period; and provided, further, that this Agreement shall continue in effect following any termination of employment that is not a Nonqualifying Termination which occurs prior to such termination with respect to all rights and obligations accruing as a result of such termination.

*    *    *

[Signatures to appear on the following page.]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

EMPIRE STATE REALTY TRUST, INC.
By:	/s/ Jacqueline Burns
	Name:		Jacqueline Burns
	Title:		SVP, Chief Talent Officer
EXECUTIVE
/s/ Christina Chiu
Name:		Christina Chiu

Exhibit A

RELEASE OF CLAIMS

In consideration of the promises set forth in that certain Change in Control Severance Agreement between Christina Chiu (hereinafter referred to as “you” or “your”) and Empire State Realty Trust, Inc., a Maryland Corporation (the “Company”), dated as of April 13, 2020 (the “Change in Control Severance Agreement”), you agree as follows in this General Release of Claims (this “Release”), dated as of _______, 20__:

Section 1.    Opportunity for Review and Revocation. You have [twenty-one (21)][forty-five (45)] days to review and consider this Release. Notwithstanding anything contained herein to the contrary, this Release will not become effective or enforceable for a period of seven (7) calendar days following the date of its execution, during which time you may revoke your acceptance of this Release by notifying Jacqueline Burns, in writing. To be effective, such revocation must be received by the Company no later than 5:00 p.m. on the seventh calendar day following its execution. Provided that this Release is executed and you do not revoke it, the eighth (8^th) day following the date on which this Release is executed shall be its effective date (the “Effective Date”). In the event of your revocation of this Release pursuant to this Section 1, this Release will be null and void and of no effect, and the Company will have no obligations hereunder.

Section 2.    Release and Waiver of Claims.

(a)As used in this Release, the term “claims” will include all claims, covenants, warranties, promises, undertakings, actions, suits, causes of action, obligations, debts, accounts, attorneys’ fees, judgments, losses and liabilities, of whatsoever kind or nature, in law, in equity, or otherwise.

(b)For and in consideration of the Severance Benefits (as defined in the Change in Control Severance Agreement), and other good and valuable consideration, you, for and on behalf of yourself and your heirs, administrators, executors, and assigns, effective as of the Effective Date, do fully and forever release, remise, and discharge the Company, its direct and indirect parents, subsidiaries and affiliates, and their respective successors and assigns, together with their respective officers, directors, partners, stockholders, employees, and agents (collectively, the “Group”), from any and all claims whatsoever up to the date hereof which you had, may have had, or now have against the Group, whether known or unknown, for or by reason of any matter, cause or thing whatsoever, including any claim arising out of or attributable to your employment or the termination of your employment with the Company, whether for tort, breach of express or implied employment contract, intentional infliction of emotional distress, wrongful termination, unjust dismissal, defamation, libel or slander, or under any federal, state or local law dealing with discrimination based on age, race, sex, national origin, handicap, religion, disability or sexual orientation. This release of claims includes, but is not limited to, all claims arising under the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the Family Medical Leave Act, and the Equal Pay Act, each as may be amended from time to time, and all other federal, state and local laws, the common law and any other purported restriction on an employer’s right to terminate the employment of employees.

(c)You acknowledge and agree that as of the date you execute this Release, you have no knowledge of any facts or circumstances that give rise or could give rise to any claims under any of the laws listed in the preceding paragraph.

(d)You specifically release all claims relating to your employment and its termination under ADEA, a United States federal statute that, among other things, prohibits discrimination on the basis of age in employment and employee benefit plans.

(e)Notwithstanding any provision of this Release to the contrary, by executing this Release, you are not releasing any claims relating to: (i) your rights with respect to the Severance Benefits and any other rights under your Change in Control Severance Agreement or any other written agreement by and between you and the Company that survive the termination of your employment; (ii) any rights to accrued, vested benefits that you have under the employee benefit and fringe benefit plans, programs and arrangements of the Group; (iii) any claims that cannot be waived by law and any claims that may arise after the date on which you sign this Release; (iv) any rights that you have as a stockholder of the Company or an equity holder of any member of the Group; or (v) any indemnification rights (including advancement and reimbursement of legal fees and expenses) you may have as a former officer or director of the Company or its subsidiaries or affiliates or coverage under directors and officers liability insurance.

Section 3.    Knowing and Voluntary Waiver. You expressly acknowledge and agree that you:

(a)Are able to read the language, and understand the meaning and effect, of this Release;

(b)Have no physical or mental impairment of any kind that has interfered with your ability to read and understand the meaning of this Release or its terms, and that you’re not acting under the influence of any medication, drug, or chemical of any type in entering into this Release;

(c)Are specifically agreeing to the terms of the release contained in this Release because the Company has agreed to pay you the Severance Benefits in consideration for your agreement to accept it in full settlement of all possible claims you might have or ever have had, and because of your execution of this Release;

(d)Acknowledge that, but for your execution of this Release, you would not be entitled to the Severance Benefits;

(e)Understand that, by entering into this Release, you do not waive rights or claims under ADEA that may arise after the date you execute this Release;

(f)Had or could have had [twenty-one (21)][forty-five (45)] days from the date of your termination of employment (the “Release Expiration Date”) in which to review and consider this Release and that if I execute this Release prior to the Release Expiration Date, you have voluntarily and knowingly waived the remainder of the review period;

(g)Have not relied upon any representation or statement not set forth in this Release or the Change in Control Severance Agreement made by the Company or any of its representatives;

(h)Were advised to consult with your attorney regarding the terms and effect of this Release; and

(i)Have signed this Release knowingly and voluntarily.

Section 4.     No Suit. You represent and warrant that you have not previously filed, and to the maximum extent permitted by law agree that you will not file, a complaint, charge, or lawsuit against any member of the Group regarding any of the claims released herein. If, notwithstanding this representation and warranty, you have filed or file such a complaint, charge, or lawsuit, you agree that you shall cause such complaint, charge, or lawsuit to be dismissed with prejudice and you shall pay any and all costs required in obtaining a dismissal of such complaint, charge, or lawsuit, including without limitation the attorneys’ fees of any member of the Group against whom I have filed such a complaint, charge, or lawsuit. This paragraph shall not apply, however, to a claim of age discrimination under ADEA or to any non-waivable right to file a charge with the United States Equal Employment Opportunity Commission (the “EEOC”); provided, however, that if the EEOC were to pursue any claims relating to your employment with the Company, you agree that you shall not be entitled to recover any monetary damages or any other remedies or benefits as a result and that this Release and Section 2 of the Change in Control Severance Agreement will control as the exclusive remedy and full settlement of all such claims by you. You hereby agree to waive any and all claims to re-employment with the Company or any other member of the Group and affirmatively agree not to seek further employment with the Company or any other member of the Group.

Section 5.     Successors and Assigns. The provisions hereof shall inure to the benefit of your heirs, executors, administrators, legal personal representatives and assigns and shall be binding upon your heirs, executors, administrators, legal personal representatives and assigns.

Section 6.    Severability. If any provision of this Release shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect. The illegality or unenforceability of such provision, however, shall have no effect upon and shall not impair the enforceability of any other provision of this Release.

Section 7.    Governing Law. This Release shall be governed by and construed in accordance with Federal law and the laws of the State of New York, applicable to releases made and to be performed in that State.

IN WITNESS WHEREOF, this Release has been executed as of the date first written above.

_________________________________

Christina Chiu

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Anthony E. Malkin, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Empire State Realty OP, L.P.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2020 By: /s/ Anthony E. Malkin 
Anthony E. Malkin Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John B. Kessler, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Empire State Realty OP, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 6, 2020 By: /s/ John B. Kessler 
John B. Kessler President, Chief Operating Officer and Principal Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Empire State Realty OP, L.P. (the "Company"), hereby certifies, to his knowledge that the Quarterly Report on Form 10-Q for the period ended March 31, 2020 (the "Report"), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2020 By: /s/ Anthony E. Malkin 
Anthony E. Malkin Chairman and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, the undersigned, President, Chief Operating Officer and Principal Financial Officer of Empire State Realty OP, L.P. (the "Company"), hereby certifies, to his knowledge that the Quarterly Report on Form 10-Q for the period ended March 31, 2020 (the "Report"), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2020 By: /s/ John B. Kessler 
John B. Kessler President, Chief Operating Officer and Principal Financial Officer

XML

Accounts Payable and Accrued Expenses

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	78,107	$	90,910
Accounts payable and accrued expenses	29,667		35,084
Interest rate swap agreements liability	30,387		13,330
Accrued interest payable	3,254		3,699
Due to affiliated companies	900		763
Total accounts payable and accrued expenses	$	142,315	$	143,786

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Capital

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Capital

Capital

As of March 31, 2020, there were 297,676,225 operating partnership units outstanding, of which 177,128,009, or 59.5%, were owned by ESRT and 120,548,216, or 40.5%, were owned by other partners, including ESRT directors, members of senior management and other employees.

On May 16, 2019, the Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2019 Equity Incentive Plan (“2019 Plan”) was approved by our shareholders.  The 2019 Plan provides for grants to directors, employees and consultants of ESRT and the Operating Partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards.  An aggregate of approximately 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan. We will not issue any new equity awards under the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2013 Equity Incentive Plan ("2013 Plan", and collectively with the 2019 Plan, "the Plans"). The shares of ESRT Class A common stock underlying any awards under the 2019 Plan and the 2013 Plan that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.

Shares tendered or held back upon exercise of a stock option or settlement of an award under the 2019 Plan or the 2013 Plan to cover the exercise price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan. In addition, shares of ESRT Class A common stock repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for issuance under the 2019 Plan.

Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Plans, reducing the availability for other equity awards on a one-for-one basis.

The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified events, and any increase in valuation from the time of grant until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into Series PR operating partnership units on a one-for-one basis.     

LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock. Performance based LTIP units receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

ESRT's Board of Directors reauthorized the repurchase of up to $500 million of ESRT Class A common stock and the Operating Partnership’s Series ES, Series 250 and Series 60 operating partnership units through December 31, 2020.     Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

The following table summarizes ESRT's purchases of equity securities in each of the three months ended March 31, 2020 and the month of April 2020:

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)
March 2020	6,570,778	$	9.54	6,570,778	$	437,334
April 2020	2,345,129	$	8.66	2,345,129	$	417,023

Private Perpetual Preferred Units

As of March 31, 2020, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units"). The Series 2019 Preferred Units have a liquidation preference of $13.52 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.70 per unit payable in arrears on a quarterly basis. The Series 2019 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. The Series 2014 Preferred Units which have a liquidation preference of $16.62 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.60 per unit payable in arrears on a quarterly basis. The Series 2014 Preferred Units are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events.

Distributions

Total distributions paid to OP unitholders were $31.6 million and $31.7 million for the three months ended March 31, 2020 and 2019, respectively. Total distributions paid to preferred unitholders were $1.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

Incentive and Share-Based Compensation

The Plans provide for grants to directors, employees and consultants consisting of stock options, restricted stock, dividend equivalents, stock payments, performance shares, LTIP units, stock appreciation rights and other incentive awards. An aggregate of 11.0 million shares of ESRT common stock is authorized for issuance under awards granted pursuant to the 2019 Plan, and as of March 31, 2020, 6.9 million shares of ESRT common stock remain available for future issuance.

In March 2020, we made grants of LTIP units to executive officers under the 2019 Plan. At such time, we granted to executive officers a total of 745,155 LTIP units that are subject to time-based vesting and 3,358,767 LTIP units that are subject to market-based vesting, with fair market values of $5.6 million for the time-based vesting awards and $14.0 million for the market-based vesting awards. In March 2020 we made grants of LTIP units and restricted stock to certain other employees under the 2019 Plan. At such time, we granted to certain other employees a total of 113,971 LTIP units and 158,806 shares of restricted stock that are subject to time-based vesting and 502,475 LTIP units that are subject to market-based vesting, with fair market values of $2.3 million for the time-based vesting awards and $2.3 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2020, subject generally to the grantee's continued employment. The first installment vests on January 1, 2021 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2020. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2023 and the second installment vesting on January 1, 2024, subject generally to the grantee's continued employment on those dates.

Our named executive officers can elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIP's at the face amount of such bonus or (ii) time-vesting LTIP's which would vest over three years, subject to continued employment, at 125% of such face amount. In March 2020, we made grants of LTIP units to executive officers under the 2019 Plan in connection with the 2019 bonus election program. We granted to executive officers a total of 624,380 LTIP units that are subject to time-based vesting with a fair market value of $4.4 million. Of these LTIP units, 23,049 LTIP units vested immediately on the grant date and 601,331 LTIP units vest ratably over three years from January 1, 2020, subject generally to the grantee's continued employment. The first installment vests on January 1, 2021 and the remainder will vest thereafter in two equal annual installments.

In March 2019, we made grants of LTIP units to executive officers under the 2013 Plan. At such time, we granted to executive officers a total of 461,693 LTIP units that are subject to time-based vesting and 1,806,520 LTIP units that are subject to market-based vesting, with fair market values of $6.4 million for the time-based vesting awards and $12.8 million for the market-based vesting awards. In March 2019, we made grants of LTIP units and restricted stock to certain other employees under the 2013 Plan. At such time, we granted to certain other employees a total of 61,432 LTIP units and 69,358 shares of restricted stock that are subject to time-based vesting and 113,383 LTIP units that are subject to market-based vesting, with fair market values of $2.0 million for the time-based vesting awards and $0.9 million for the market-based vesting awards. The awards subject to time-based vesting vest ratably over four years from January 1, 2019, subject generally to the grantee's continued employment. The first installment vests on January 1, 2020 and the remainder will vest thereafter in three equal annual installments. The vesting of the LTIP units subject to market-based vesting is based on the achievement of relative total stockholder return hurdles over a three-year performance period, commencing on January 1, 2019. Following the completion of the three-year performance period, our compensation committee will determine the number of LTIP units to which the grantee is entitled based on our performance relative to the performance hurdles set forth in the LTIP unit award agreements the grantee entered into in connection with the award grant. These units then vest in two installments, with the first installment vesting on January 1, 2022 and the second installment vesting on January 1, 2023, subject generally to the grantee's continued employment on those dates.

Our named executive officers can elect to receive their annual incentive bonus in any combination of (i) cash or vested LTIP's at the face amount of such bonus or (ii) time-vesting LTIP's which would vest over three years, subject to continued employment, at 125% of such face amount. In March 2019, we made grants of LTIP units to executive officers under the 2013

Plan in connection with the 2018 bonus election program. We granted to executive officers a total of 334,952 LTIP units that are subject to time based vesting with a fair market value of $4.6 million. Of these LTIP units, 26,056 LTIP units vested immediately on the grant date and 308,896 LTIP units vest ratably over three years from January 1, 2019, subject generally to the grantee's continued employment. The first installment vests on January 1, 2020 and the remainder will vest thereafter in two equal annual installments.

In October 2019 and May 2019, we made grants of LTIP units to our non-employee directors under the 2019 Plan. In the aggregate, we granted a total of 76,718 LTIP units that are subject to time-based vesting with fair market values of $1.1 million. The awards vest ratably over three years from May 17, 2019, subject generally to the director's continued service on our Board of Directors. The first installment vests on May 17, 2020 and the remainder will vest thereafter in two equal annual installments.

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 or four years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible, which may occur upon grant. An employee is retirement eligible when the employee attains the (i) age of 60 and (ii) the date on which the employee has first completed ten years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over three or four years depending on retirement eligibility.

For the market-based LTIP units, the fair value of the awards was estimated using a Monte Carlo Simulation model and discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units.  Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process.  Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case the stock price) to vary randomly from its current value and take any value greater than zero.  The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using a six-year look-back period.  The expected growth rate of the stock prices over the performance period is determined with consideration of the risk free rate as of the grant date.  For LTIP unit awards that are time-based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units.  For restricted stock awards that are time-based, we estimate the stock compensation expense based on the fair value of the stock at the grant date.

LTIP units and ESRT restricted stock issued during the three months ended March 31, 2020 were valued at $28.8 million. The weighted-average per unit or share fair value was $5.23 for grants issued in 2020. The per unit or share granted in 2020 was estimated on the respective dates of grant using the following assumptions: an expected life from 2.0 to 5.3 years, a dividend rate of 3.70%, a risk-free interest rate from 0.37% to 0.50%, and an expected price volatility from 19.0% to 26.0%.

No other stock options, dividend equivalents, or stock appreciation rights were issued or outstanding in 2020.

The following is a summary of ESRT restricted stock and LTIP unit activity for the three months ended March 31, 2020:

	Restricted Stock		LTIP Units		Weighted Average Grant Fair Value
Unvested balance at December 31, 2019	118,918		5,986,569		$	9.73
Vested	(42,702	)	(638,907	)	15.54
Granted	158,806		5,344,748		5.23
Forfeited or unearned	—		(841,587	)	11.09
Unvested balance at March 31, 2020	235,022		9,850,823		$	6.76

The LTIP unit and ESRT restricted stock awards are treated for accounting purposes as immediately vested upon the later of (i) the date the grantee attains the age of 60 and (ii) the date on which grantee has first completed ten years of continuous service with our company or its affiliates. For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the performance-based awards, and accordingly, we recognized $1.6 million and $1.3 million for the three months ended March 31, 2020 and 2019, respectively.

Unrecognized compensation expense was $2.3 million at March 31, 2020, which will be recognized over a weighted average period of 2.7 years.

For the remainder of the LTIP unit and ESRT restricted stock awards, we recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $4.3 million and $4.1 million for the three months ended March 31, 2020 and 2019, respectively. Unrecognized compensation expense was $50.3 million at March 31, 2020, which will be recognized over a weighted average period of 2.6 years.

Earnings Per Unit

Earnings per unit for the three months ended March 31, 2020 and 2019 is computed as follows (amounts in thousands, except per share amounts):

	Three Months Ended
	March 31, 2020			March 31, 2019
Numerator:
Net income	$	8,288		$	9,856
Private perpetual preferred unit distributions	(1,050		)	(234		)
Earnings allocated to unvested units	(257		)	(153		)
Net income attributable to common unitholders - basic and diluted	$	6,981		$	9,469
Denominator:
Weighted average units outstanding - basic	292,645			298,049
Effect of dilutive securities:
Stock-based compensation plans	—			—
Weighted average units outstanding - diluted	292,645			298,049
Earnings per share:
Basic	$	0.02		$	0.03
Diluted	$	0.02		$	0.03

There were 399,894 antidilutive shares and LTIP units for the three months ended March 31, 2020 and 684 antidilutive shares and LTIP units for the three months ended March 31, 2019, respectively.

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Financial Instruments and Fair Values - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap agreements liability	$ 30,387,000		$ 13,330,000
Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap agreements liability	30,800,000
Designated as Hedging Instrument | Cash Flow Hedging
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net loss to be reclassified into interest expense within the next 12 months	(10,900,000)
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Aggregate notional value	390,000,000.0		390,000,000.0
Net unrealized gain (loss)	(16,900,000)	$ (7,200,000)
Accounts payable and accrued expenses | Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap agreements liability	$ 30,400,000		$ 13,300,000

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Debt - Deferred Financing Costs, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Financing costs	$ 28,839		$ 25,315
Less: accumulated amortization	(14,757)		(13,863)
Total deferred financing costs, net	14,082		11,452
Amortization expense related to deferred financing costs	$ 900	$ 1,000
Revolving credit facility | Unsecured revolving credit facility
Debt Instrument [Line Items]
Net deferred financing costs			$ 4,200

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Deferred Costs, Acquired Lease Intangibles and Goodwill - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Deferred Costs [Line Items]
Amortization expense related to deferred leasing costs	$ 5,900
Amortization expense related to deferred leasing costs		$ 6,200
Rental revenue related to amortization of below-market leases, net of above-market leases	908	2,354
Goodwill	491,479		$ 491,479
Lease agreements
Deferred Costs [Line Items]
Amortization expense related to acquired lease intangibles	2,000	$ 3,200
Observatory
Deferred Costs [Line Items]
Goodwill	227,500
Real estate
Deferred Costs [Line Items]
Goodwill	$ 264,000
Revolving credit facility | Unsecured revolving credit facility
Deferred Costs [Line Items]
Net deferred financing costs			$ 4,200

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Capital - Equity Securities Repurchased (Details) - USD ($)	1 Months Ended
	Apr. 30, 2020	Mar. 31, 2020
Equity [Abstract]
Stock repurchase authorized amount		$ 500,000,000
Equity, Class of Treasury Stock [Line Items]
Total Number of Shares Purchased (in shares)		6,570,778
Average Price Paid per Share (in usd per share)		$ 9.54
Maximum Approximate Dollar Value Available for Future Purchase		$ 437,334,000
Subsequent Event
Equity, Class of Treasury Stock [Line Items]
Total Number of Shares Purchased (in shares)	2,345,129
Average Price Paid per Share (in usd per share)	$ 8.66
Maximum Approximate Dollar Value Available for Future Purchase	$ 417,023,000

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Capital - Earnings Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income	$ 8,288	$ 9,856
Private perpetual preferred unit distributions	(1,050)	(234)
Earnings allocated to unvested units	(257)	(153)
Net income attributable to common unitholders - basic and diluted	$ 6,981	$ 9,469
Denominator:
Weighted average units outstanding - basic (in units)	292,645,000	298,049,000
Effect of dilutive securities:
Stock-based compensation plans (in units)	0	0
Weighted average units outstanding - diluted (in units)	292,645,000	298,049,000
Earnings per share:
Basic (in USD per unit)	$ 0.02	$ 0.03
Diluted (in USD per unit)	$ 0.02	$ 0.03
Antidilutive securities (in units)	399,894	684

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Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 8,288	$ 9,856
Other comprehensive income (loss):
Unrealized gain (loss) on valuation of interest rate swap agreements	(17,695)	(7,390)
Less: amount reclassified into interest expense	796	149
Other comprehensive income (loss)	(16,899)	(7,241)
Comprehensive income (loss)	$ (8,611)	$ 2,615

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Cover Page - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-36106
Entity Registrant Name	EMPIRE STATE REALTY OP, L.P.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-4685158
Entity Address, Address Line One	111 West 33rd Street
Entity Address, Address Line Two	12th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10120
City Area Code	212
Local Phone Number	687-8700
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001553079
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Series ES operating partnership units
Title of 12(b) Security	Series ES operating partnership units
Trading Symbol	ESBA
Security Exchange Name	NYSEArca
Entity Common Stock, Shares Outstanding		25,007,880
Series 60 operating partnership units
Title of 12(b) Security	Series 60 operating partnership units
Trading Symbol	OGCP
Security Exchange Name	NYSEArca
Entity Common Stock, Shares Outstanding		6,817,297
Series 250 operating partnership units
Title of 12(b) Security	Series 250 operating partnership units
Trading Symbol	FISK
Security Exchange Name	NYSEArca
Entity Common Stock, Shares Outstanding		3,421,700

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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, 2019 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, 2019 contained in our Annual Report 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. During the past ten years, 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. We had no VIEs as of March 31, 2020 and December 31, 2019.

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 income 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 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.

Revenue Recognition

For Coronavirus 2019 (“COVID-19”) pandemic related rent deferral agreements, we will generally elect to record rental revenue and a receivable during the deferral period.

Recently Issued or Adopted Accounting Standards

During April 2020, the Financial Accounting Standards Board ("FASB") staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease.

During March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the

presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

During January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which contain amendments that modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. ASU No. 2017-04 should be applied on a prospective basis and the amendments adopted for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this standard and related amendments on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

During June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which contains amendments that replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted in accordance with ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-13 and ASU No. 2018-19 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier adoption as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, is permitted. The amendments must be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified retrospective approach). We adopted these standards on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

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Capital - Additional Information and Private Perpetual Preferred Units (Details) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	May 16, 2019
Shares and Units [Abstract]
OP units outstanding (in shares)	297,676,225
Dividends on common stock received until performance criteria met for LTIP units (as a percent)	10.00%
Dividends on common stock received after performance criteria met for LTIP units (as a percent)	90.00%
Dividends on common stock received in periods after performance criteria met for LTIP units (as a percent)	100.00%
Dividends declared (in USD per share)	$ 0.105	$ 0.105
2019 Plan
Shares and Units [Abstract]
Number of shares authorized under the plan (in shares)	11,000,000.0			11,000,000.0
Empire State Realty Trust
Shares and Units [Abstract]
OP units owned by the Company (in shares)	177,128,009
Other Partners, Certain Directors, Officers And Other Members Of Executive Management
Shares and Units [Abstract]
OP units not owned by the Company (in shares)	120,548,216
Empire State Realty OP | Empire State Realty Trust
Shares and Units [Abstract]
OP units owned by the Company (as a percent)	59.50%
Empire State Realty OP | Other Partners, Certain Directors, Officers And Other Members Of Executive Management
Shares and Units [Abstract]
OP units not owned by the Company (as a percent)	40.50%
Private Perpetual Preferred Units, Series 2019
Shares and Units [Abstract]
Private perpetual preferred units, issued (in shares)	4,664,038		4,610,383
Private perpetual preferred units, liquidation preference (in USD per share)	$ 13.52		$ 13.52
Preferred units cumulative cash distributions (in USD per share)	$ 0.70
Private Perpetual Preferred Units, Series 2014
Shares and Units [Abstract]
Private perpetual preferred units, issued (in shares)	1,560,360		1,560,360
Private perpetual preferred units issued during period (in shares)	1,560,360
Private perpetual preferred units, liquidation preference (in USD per share)	$ 16.62		$ 16.62
Dividends declared (in USD per share)	$ 0.60

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Leases - Future Contractual Minimum Lease Payments On Non-Cancellable Operating Leases To Be Received (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
Remainder of 2020	$ 371,553
2021	484,524
2022	462,080
2023	435,217
2024	397,628
Thereafter	1,842,594
Total future minimum lease payments on non-cancellable operating leases to be received	$ 3,993,596

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Financial Instruments and Fair Values - Effect of Derivative Financial Instruments Designated as Cash Flow Hedges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in other comprehensive income (loss)	$ (17,695)	$ (7,390)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796)	(149)
Interest expense	(19,618)	(20,689)
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in other comprehensive income (loss)	(17,695)	(7,390)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796)	(149)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated other comprehensive income (loss) | Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Interest expense	$ (796)	$ (149)

XML

Label	Element	Value
Derivative Financial Instruments Included in Accounts Payable and Accrued Expense	esrt_DerivativeFinancialInstrumentsIncludedinAccountsPayableandAccruedExpense	$ 10,336,000
Derivative Financial Instruments Included in Accounts Payable and Accrued Expense	esrt_DerivativeFinancialInstrumentsIncludedinAccountsPayableandAccruedExpense	30,387,000
Derivative Financial Instruments Included in Prepaid Expenses and Other Assets	esrt_DerivativeFinancialInstrumentsIncludedinPrepaidExpensesandOtherAssets	0
Derivative Financial Instruments Included in Prepaid Expenses and Other Assets	esrt_DerivativeFinancialInstrumentsIncludedinPrepaidExpensesandOtherAssets	$ 3,000

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Quarterly Presentation

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.

Principles of Consolidation

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, 2019 contained in our Annual Report 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.

Principles of Consolidation for Variable Interest Entities

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. We had no VIEs as of March 31, 2020 and December 31, 2019.

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 income 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 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.

Revenue Recognition

For Coronavirus 2019 (“COVID-19”) pandemic related rent deferral agreements, we will generally elect to record rental revenue and a receivable during the deferral period.

Recently Issued or Adopted Accounting Standards

During April 2020, the Financial Accounting Standards Board ("FASB") staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease.

During March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the

presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

During January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which contain amendments that modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. ASU No. 2017-04 should be applied on a prospective basis and the amendments adopted for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this standard and related amendments on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

During June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which contains amendments that replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted in accordance with ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-13 and ASU No. 2018-19 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Earlier adoption as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, is permitted. The amendments must be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified retrospective approach). We adopted these standards on January 1, 2020 and such adoption did not have a material impact our consolidated financial statements.

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Financial Instruments and Fair Values (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Summary of the Terms of Agreements and the Fair Value of Derivative Financial Instruments

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):     

							March 31, 2020					December 31, 2019
Derivative	Notional Amount		Receive Rate	Pay Rate	Effective Date	Expiration Date	Asset		Liability			Asset		Liability
Interest rate swap	$	265,000	1 Month LIBOR	2.1485%	August 31, 2017	August 24, 2022	$	—	$	(11,888	)	$	—	$	(4,247	)
Interest rate swap	125,000		3 Month LIBOR	2.9580%	July 1, 2019	July 1, 2026	—		(18,499		)	—		(9,083		)
							$	—	$	(30,387	)	$	—	$	(13,330	)

Effect of Derivative Financial Instruments Designated as Cash Flow Hedges

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 (amounts in thousands):    

	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Amount of gain (loss) recognized in other comprehensive income (loss)	$	(17,695	)	$	(7,390	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of income for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Total interest (expense) presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded	$	(19,618	)	$	(20,689	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

Summary of the Carrying and Estimated Fair Values of Financial Instruments

The following tables summarize the carrying and estimated fair values of our financial instruments as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	30,387	$	30,387	$	—	$	30,387	$	—
Mortgage notes payable	604,763		638,852		—		—		638,852
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,002		1,034,848		—		—		1,034,848
Unsecured term loan facilities	386,568		391,627		—		—		391,627
Unsecured revolving credit facility	546,436		550,000		—		—		550,000
Ground lease liabilities	29,256		34,564		—		—		34,564

	December 31, 2019
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	13,330	$	13,330	$	—	$	13,330	$	—
Mortgage notes payable	605,542		629,609		—		—		629,609
Senior unsecured notes - Series A, B, C, D, E and F	798,392		843,394		—		—		843,394
Unsecured term loan facility	264,640		265,000		—		—		265,000
Ground lease liabilities	29,307		33,790		—		—		33,790

XML

Description of Business and Organization (Details)	3 Months Ended
	Mar. 31, 2020 ft² parcel office_and_property
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	10,100,000
Office Building
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	9,400,000
Number of properties | office_and_property	14
Office Building | Manhattan
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	7,600,000
Number of properties | office_and_property	9
Office Building | Fairfield County, Connecticut and Westchester County, New York
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	1,800,000
Number of properties | office_and_property	5
Development Parcel
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of properties | parcel	3
Retail Site | Manhattan and Westport, Connecticut
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	205,488
Retail Site | Manhattan
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	509,244
Number of properties | office_and_property	4
Retail Site | Westport, Connecticut
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of properties | office_and_property	2
Other Property | Stamford, Connecticut
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Area of real estate property (in square feet)	415,000
Empire State Realty OP | Empire State Realty Trust
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
OP units owned by the Company (as a percent)	59.50%

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Leases - Components of Rental Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Fixed payments	$ 130,514	$ 126,581
Variable payments	17,599	16,836
Total rental revenue	$ 148,113	$ 143,417

XML

Financial Instruments and Fair Values - Summary of the Terms of Agreements and the Fair Value of Derivative Financial Instruments (Details) - Cash Flow Hedging - Designated as Hedging Instrument - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Asset	$ 0	$ 0
Liability	(30,387,000)	(13,330,000)
LIBOR | Interest Rate Swap, One Month LIBOR, 2.1485%
Derivatives, Fair Value [Line Items]
Notional Amount	$ 265,000,000
Pay Rate	2.1485%
Asset	$ 0	0
Liability	(11,888,000)	(4,247,000)
LIBOR | Interest Rate Swap, Three Month LIBOR, 2.9580%
Derivatives, Fair Value [Line Items]
Notional Amount	$ 125,000,000
Pay Rate	2.958%
Asset	$ 0	0
Liability	$ (18,499,000)	$ (9,083,000)

XML

Commitments and Contingencies - Unfunded Capital Expenditures (Details) $ in Millions	Mar. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Estimated capital expenditures to be incurred	$ 146.1

XML

Summary of Significant Accounting Policies (Details)	Mar. 31, 2020
Minimum
Accounting Policies [Line Items]
Observatory revenue realized during the first quarter, previous ten years (as a percent)	16.00%
Observatory revenue realized during the second quarter, previous ten years (as a percent)	26.00%
Observatory revenue realized during the third quarter, previous ten years (as a percent)	31.00%
Observatory revenue realized during the fourth quarter, previous ten years (as a percent)	23.00%
Maximum
Accounting Policies [Line Items]
Observatory revenue realized during the first quarter, previous ten years (as a percent)	18.00%
Observatory revenue realized during the second quarter, previous ten years (as a percent)	28.00%
Observatory revenue realized during the third quarter, previous ten years (as a percent)	33.00%
Observatory revenue realized during the fourth quarter, previous ten years (as a percent)	25.00%

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Deferred Costs, Acquired Lease Intangibles and Goodwill (Tables)

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Deferred Costs, Net

Deferred costs, net, consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):  

	March 31, 2020			December 31, 2019
Leasing costs	$	200,792		$	199,033
Acquired in-place lease value and deferred leasing costs	193,478			200,296
Acquired above-market leases	44,813			49,213
	439,083			448,542
Less: accumulated amortization	(220,505		)	(224,598		)
Total deferred costs, net, excluding net deferred financing costs	$	218,578		$	223,944

Deferred financing costs, net, consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Financing costs	$	28,839		$	25,315
Less: accumulated amortization	(14,757		)	(13,863		)
Total deferred financing costs, net	$	14,082		$	11,452

Amortizing Acquired Intangible Assets and Liabilities

Amortizing acquired intangible assets and liabilities consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Acquired below-market ground leases	$	396,916		$	396,916
Less: accumulated amortization	(46,307		)	(44,350		)
Acquired below-market ground leases, net	$	350,609		$	352,566

	March 31, 2020			December 31, 2019
Acquired below-market leases	$	(97,101	)	$	(100,472	)
Less: accumulated amortization	59,478			60,793
Acquired below-market leases, net	$	(37,623	)	$	(39,679	)

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Schedule of Components of Rental Revenue

The components of rental revenue for the three months ended March 31, 2020 and 2019 are as follows (amounts in thousands):

	Three months ended March 31, 2020		Three months ended March 31, 2019
Fixed payments	$	130,514	$	126,581
Variable payments	17,599		16,836
Total rental revenue	$	148,113	$	143,417

Schedule of Future Contractual Minimum Lease Payments On Non-Cancellable Operating Leases To Be Received

As of March 31, 2020, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):

Remainder of 2020	$	371,553
2021	484,524
2022	462,080
2023	435,217
2024	397,628
Thereafter	1,842,594
	$	3,993,596

Schedule of Future Minimum Lease Payments

Remainder of 2020	$	1,139
2021	1,518
2022	1,518
2023	1,518
2024	1,518
Thereafter	66,780
Total undiscounted cash flows	73,991
Present value discount	(44,735		)
Ground lease liabilities	$	29,256

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Financial Instruments and Fair Values

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Values

Financial Instruments and Fair Values

Derivative Financial Instruments

We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations.

We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of March 31, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $30.8 million. If we had breached any of these provisions at March 31, 2020, we could have been required to settle our obligations under the agreements at their termination value of $30.8 million.

As of March 31, 2020 and December 31, 2019, we had interest rate LIBOR swaps with an aggregate notional value of $390.0 million and $390.0 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of March 31, 2020 and December 31, 2019, the fair value of our derivative instruments amounted to $(30.4) million and $(13.3) million, respectively, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities.

As of March 31, 2020 and 2019, our cash flow hedges are deemed highly effective and a net unrealized gain (loss) of $(16.9) million and $(7.2) million for the three months ended March 31, 2020 and 2019, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the condensed consolidated statements of comprehensive income. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $(10.9) million net loss of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months.

The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):     

							March 31, 2020					December 31, 2019
Derivative	Notional Amount		Receive Rate	Pay Rate	Effective Date	Expiration Date	Asset		Liability			Asset		Liability
Interest rate swap	$	265,000	1 Month LIBOR	2.1485%	August 31, 2017	August 24, 2022	$	—	$	(11,888	)	$	—	$	(4,247	)
Interest rate swap	125,000		3 Month LIBOR	2.9580%	July 1, 2019	July 1, 2026	—		(18,499		)	—		(9,083		)
							$	—	$	(30,387	)	$	—	$	(13,330	)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019 (amounts in thousands):    

	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Amount of gain (loss) recognized in other comprehensive income (loss)	$	(17,695	)	$	(7,390	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the condensed consolidated statements of income for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended
Effects of Cash Flow Hedges	March 31, 2020			March 31, 2019
Total interest (expense) presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded	$	(19,618	)	$	(20,689	)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense	(796		)	(149		)

Fair Valuation

The estimated fair values at March 31, 2020 and December 31, 2019 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy.

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

The following tables summarize the carrying and estimated fair values of our financial instruments as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	30,387	$	30,387	$	—	$	30,387	$	—
Mortgage notes payable	604,763		638,852		—		—		638,852
Senior unsecured notes - Series A, B, C, D, E, F, G and H	973,002		1,034,848		—		—		1,034,848
Unsecured term loan facilities	386,568		391,627		—		—		391,627
Unsecured revolving credit facility	546,436		550,000		—		—		550,000
Ground lease liabilities	29,256		34,564		—		—		34,564

	December 31, 2019
			Estimated Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Interest rate swaps included in accounts payable and accrued expenses	$	13,330	$	13,330	$	—	$	13,330	$	—
Mortgage notes payable	605,542		629,609		—		—		629,609
Senior unsecured notes - Series A, B, C, D, E and F	798,392		843,394		—		—		843,394
Unsecured term loan facility	264,640		265,000		—		—		265,000
Ground lease liabilities	29,307		33,790		—		—		33,790

Disclosure about the fair value of financial instruments is based on pertinent information available to us as of March 31, 2020 and December 31, 2019. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Supervisory Fee Revenue

We earned supervisory fees from entities affiliated with Anthony E. Malkin, our Chairman and Chief Executive Officer, of $0.2 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. These fees are included within third-party management and other fees.

Property Management Fee Revenue

We earned property management fees from entities affiliated with Anthony E. Malkin of $0.1 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively. These fees are included within third-party management and other fees.

Other

We receive rent generally at market rental rate for 5,447 square feet of leased space from entities affiliated with Anthony E. Malkin at one of our properties. Under the lease, the tenant has the right to cancel such lease without special payment on 90 days’ notice. We also have a shared use agreement with such tenant, to occupy a portion of the leased premises as the office location for Peter L. Malkin, our chairman emeritus and employee, utilizing approximately 15% of the space, for which we pay to such tenant an allocable pro rata share of the cost. We also have agreements with these entities and excluded properties and businesses to provide them with general computer-related support services. Total revenue aggregated $0.1 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

One of ESRT's directors, James D. Robinson IV, is a general partner in an investment fund, which owns more than a 10% economic and voting interest in one of our tenants, OnDeck Capital, with an annualized rent of $4.8 million as of March 31, 2020.

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Debt - Aggregate Required Principal Payments (Details) - Mortgages - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Amortization
2019	$ 2,967
2020	4,090
2021	5,628
2022	7,876
2023	7,958
Thereafter	25,909
Total	54,428
Maturities
2019	0
2020	550,000
2021	0
2022	0
2023	77,675
Thereafter	1,842,748
Total	2,470,423
Total
2019	2,967
2020	554,090
2021	5,628
2022	7,876
2023	85,633
Thereafter	1,868,657
Total	$ 2,524,851	$ 1,675,821

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Deferred Costs, Acquired Lease Intangibles and Goodwill - Deferred Costs, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Leasing costs	$ 200,792	$ 199,033
Deferred costs, gross	439,083	448,542
Less: accumulated amortization	(220,505)	(224,598)
Total deferred costs, net, excluding net deferred financing costs	218,578	223,944
Acquired in-place lease value and deferred leasing costs
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets	193,478	200,296
Acquired above-market leases
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets	$ 44,813	$ 49,213

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Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued capital expenditures	$ 78,107	$ 90,910
Accounts payable and accrued expenses	29,667	35,084
Interest rate swap agreements liability	30,387	13,330
Accrued interest payable	3,254	3,699
Due to affiliated companies	900	763
Total accounts payable and accrued expenses	$ 142,315	$ 143,786

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Capital - Distributions (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Equity [Abstract]
Distributions paid to OP unitholders	$ 31.6	$ 31.7
Distributions paid to preferred unitholders	$ 1.1	$ 0.2

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Related Party Transactions (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) ft² property director	Mar. 31, 2019 USD ($)
Related Party Transaction [Line Items]
Area of real estate property (in square feet) | ft²	10,100,000
Number of directors | director	1
Affliliated entity | Supervisory fee revenue
Related Party Transaction [Line Items]
Revenue from related parties	$ 0.2	$ 0.2
Affliliated entity | Property management fee revenue
Related Party Transaction [Line Items]
Revenue from related parties	0.1	0.1
Affliliated entity | Leased space rental
Related Party Transaction [Line Items]
Revenue from related parties	$ 0.1	$ 0.1
Number of properties | property	1
Lease cancellation, notice period (in days)	90 days
Affliliated entity | Annualized rent revenue
Related Party Transaction [Line Items]
Revenue from related parties	$ 4.8
Undivided Interest
Related Party Transaction [Line Items]
Area of real estate property (in square feet) | ft²	5,447
Chairman emeritus | Leased space rental
Related Party Transaction [Line Items]
Percentage of lease space occupied by Chairman emeritus and employee	15.00%

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Description of Business and Organization

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Organization

Description of Business and Organization

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

Empire State Realty OP, L.P. (the "Operating Partnership") is the entity through which Empire State Realty Trust, Inc. (“ESRT”), a self-administered and self-managed real estate investment trust ("REIT"), conducts all of its business and owns (either directly or through subsidiaries) substantially all of its assets. We own, manage, operate, acquire and reposition office and retail properties in Manhattan and the greater New York metropolitan area. As of March 31, 2020, our total portfolio contained 10.1 million rentable square feet of office and retail 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 509,244 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 415,000 rentable square foot office building and garage. As of March 31, 2020, our portfolio included four standalone retail properties located in Manhattan and two standalone retail properties located in the city center of Westport, Connecticut, encompassing 205,488 rentable square feet in the aggregate.

We were organized as a Delaware limited partnership on November 28, 2011 and operations commenced upon completion of the initial public offering of ESRT’s Class A common stock and related formation transactions on October 7, 2013. ESRT, as the sole general partner in our company, has responsibility and discretion in the management and control of our company, and our limited partners, in such capacity, have no authority to transact business for, or participate in the management activities, of our company. As of March 31, 2020, ESRT owned approximately 59.5% of our operating partnership units.

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Condensed Consolidated Statements of Income (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Rental revenue	$ 148,113	$ 143,417
Observatory revenue	19,544	20,569
Lease termination fees	211	388
Third-party management and other fees	346	320
Other revenue and fees	2,010	2,599
Total revenues	170,224	167,293
Operating expenses:
Property operating expenses	41,468	42,955
Ground rent expenses	2,331	2,331
General and administrative expenses	15,951	14,026
Observatory expenses	8,154	7,575
Real estate taxes	29,254	28,232
Depreciation and amortization	46,093	46,098
Total operating expenses	143,251	141,217
Total operating income	26,973	26,076
Other income (expense):
Interest income	637	3,739
Interest expense	(19,618)	(20,689)
Loss on early extinguishment of debt	(86)	0
Income before income taxes	7,906	9,126
Income tax expense	382	730
Net income	8,288	9,856
Private perpetual preferred unit distributions	(1,050)	(234)
Net income attributable to common unitholders	$ 7,238	$ 9,622
Total weighted average units:
Basic (in units)	292,645	298,049
Diluted (in units)	292,645	298,049
Earnings per unit attributable to common unitholders:
Basic (in USD per unit)	$ 0.02	$ 0.03
Diluted (in USD per unit)	0.02	0.03
Dividends per unit (in USD per unit)	$ 0.105	$ 0.105

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Leases - Future Minimum Lease Payments on Ground Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Remainder of 2020	$ 1,139
2021	1,518
2022	1,518
2023	1,518
2024	1,518
Thereafter	66,780
Total undiscounted cash flows	73,991
Present value discount	(44,735)
Ground lease liabilities	$ 29,256	$ 29,307

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Financial Instruments and Fair Values - Summary of the Carrying and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	$ 30,387	$ 13,330
Ground lease liabilities	29,256	29,307
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ground lease liabilities	29,256	29,307
Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ground lease liabilities	34,564	33,790
Mortgages | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	604,763	605,542
Mortgages | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	638,852	629,609
Senior unsecured notes - Series A, B, C, D, E, F, G and H | Senior notes | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	973,002
Senior unsecured notes - Series A, B, C, D, E, F, G and H | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	1,034,848
Senior unsecured notes - Series A, B, C, D, E and F | Senior notes | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value		798,392
Senior unsecured notes - Series A, B, C, D, E and F | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value		843,394
Fair Value, Inputs, Level 1 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ground lease liabilities	0	0
Fair Value, Inputs, Level 1 | Mortgages | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0	0
Fair Value, Inputs, Level 1 | Senior unsecured notes - Series A, B, C, D, E, F, G and H | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0
Fair Value, Inputs, Level 1 | Senior unsecured notes - Series A, B, C, D, E and F | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value		0
Fair Value, Inputs, Level 2 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ground lease liabilities	0	0
Fair Value, Inputs, Level 2 | Mortgages | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0	0
Fair Value, Inputs, Level 2 | Senior unsecured notes - Series A, B, C, D, E, F, G and H | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0
Fair Value, Inputs, Level 2 | Senior unsecured notes - Series A, B, C, D, E and F | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value		0
Fair Value, Inputs, Level 3 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Ground lease liabilities	34,564	33,790
Fair Value, Inputs, Level 3 | Mortgages | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	638,852	629,609
Fair Value, Inputs, Level 3 | Senior unsecured notes - Series A, B, C, D, E, F, G and H | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	1,034,848
Fair Value, Inputs, Level 3 | Senior unsecured notes - Series A, B, C, D, E and F | Senior notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value		843,394
Revolving Credit Facility | Unsecured term loan facilities | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	386,568	264,640
Revolving Credit Facility | Unsecured term loan facilities | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	391,627	265,000
Revolving Credit Facility | Unsecured revolving credit facility | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	546,436
Revolving Credit Facility | Unsecured revolving credit facility | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	550,000
Revolving Credit Facility | Fair Value, Inputs, Level 1 | Unsecured term loan facilities | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0	0
Revolving Credit Facility | Fair Value, Inputs, Level 1 | Unsecured revolving credit facility | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0
Revolving Credit Facility | Fair Value, Inputs, Level 2 | Unsecured term loan facilities | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0	0
Revolving Credit Facility | Fair Value, Inputs, Level 2 | Unsecured revolving credit facility | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	0
Revolving Credit Facility | Fair Value, Inputs, Level 3 | Unsecured term loan facilities | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	391,627	265,000
Revolving Credit Facility | Fair Value, Inputs, Level 3 | Unsecured revolving credit facility | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	550,000
Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	30,800
Interest Rate Swap | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	30,387	13,330
Interest Rate Swap | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	30,387	13,330
Interest Rate Swap | Fair Value, Inputs, Level 1 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	0	0
Interest Rate Swap | Fair Value, Inputs, Level 2 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	30,387	13,330
Interest Rate Swap | Fair Value, Inputs, Level 3 | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps included in accounts payable and accrued expenses	$ 0	$ 0

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Accounts Payable and Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020		December 31, 2019
Accrued capital expenditures	$	78,107	$	90,910
Accounts payable and accrued expenses	29,667		35,084
Interest rate swap agreements liability	30,387		13,330
Accrued interest payable	3,254		3,699
Due to affiliated companies	900		763
Total accounts payable and accrued expenses	$	142,315	$	143,786

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Components of Segment Profit for Each Segment

The following tables provide components of segment profit for each segment for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended March 31, 2020
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	148,113		$	—		$	—		$	148,113
Intercompany rental revenue	11,536			—			(11,536		)	—
Observatory revenue	—			19,544			—			19,544
Lease termination fees	211			—			—			211
Third-party management and other fees	346			—			—			346
Other revenue and fees	2,010			—			—			2,010
Total revenues	162,216			19,544			(11,536		)	170,224
Operating expenses:
Property operating expenses	41,468			—			—			41,468
Intercompany rent expense	—			11,536			(11,536		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	15,951			—			—			15,951
Observatory expenses	—			8,154			—			8,154
Real estate taxes	29,254			—			—			29,254
Depreciation and amortization	46,085			8			—			46,093
Total operating expenses	135,089			19,698			(11,536		)	143,251
Total operating income	27,127			(154		)	—			26,973
Other income (expense):
Interest income	637			—			—			637
Interest expense	(19,618		)	—			—			(19,618		)
Loss on early extinguishment of debt	(86		)	—			—			(86		)
Income before income taxes	8,060			(154		)	—			7,906
Income tax (expense) benefit	(227		)	609			—			382
Net income	$	7,833		$	455		$	—		$	8,288
Segment assets	$	4,409,281		$	255,277		$	—		$	4,664,558
Expenditures for segment assets	$	26,570		$	1,237		$	—		$	27,807

	Three Months Ended March 31, 2019
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	143,417		$	—		$	—		$	143,417
Intercompany rental revenue	14,021			—			(14,021		)	—
Tenant expense reimbursement	—			—			—			—
Observatory revenue	—			20,569			—			20,569
Lease termination fees	388			—			—			388
Third-party management and other fees	320			—			—			320
Other revenue and fees	2,599			—			—			2,599
Total revenues	160,745			20,569			(14,021		)	167,293
Operating expenses:
Property operating expenses	42,955			—			—			42,955
Intercompany rent expense	—			14,021			(14,021		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	14,026			—			—			14,026
Observatory expenses	—			7,575			—			7,575
Real estate taxes	28,232			—			—			28,232
Depreciation and amortization	46,091			7			—			46,098
Total operating expenses	133,635			21,603			(14,021		)	141,217
Total operating income	27,110			(1,034		)	—			26,076
Other income (expense):
Interest income	3,739			—			—			3,739
Interest expense	(20,689		)	—			—			(20,689		)
Income before income taxes	10,160			(1,034		)	—			9,126
Income tax (expense) benefit	(234		)	964			—			730
Net income	$	9,926		$	(70	)	$	—		$	9,856
Segment assets	$	3,930,697		$	261,743		$	—		$	4,192,440
Expenditures for segment assets	$	44,531		$	13,789		$	—		$	58,320

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Debt - Unsecured Revolving Credit and Term Loan Facilities (Details) - Revolving Credit Facility		12 Months Ended
	Mar. 19, 2020 USD ($) option	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2020 USD ($)
Unsecured Revolving Credit Facility and Term Loan
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 1,315,000,000
Unsecured revolving credit facility, higher borrowing capacity option	1,750,000,000
Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 1,100,000,000
Outstanding borrowings				$ 550,000,000.0
Number of options to extend maturity | option	2
Extension period (in months)	6 months
Term loan facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 215,000,000.0
Outstanding borrowings				215,000,000.0
Unsecured term loan facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	175,000,000
Unsecured revolving credit facility, higher borrowing capacity option	$ 225,000,000
Outstanding borrowings				$ 175,000,000.0
Minimum | Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Extension fee, as a percent of outstanding commitments under revolving credit facility (percentage)	0.0625%
Maximum | Unsecured revolving credit facility
Line of Credit Facility [Line Items]
Extension fee, as a percent of outstanding commitments under revolving credit facility (percentage)	0.075%
Forecast | Unsecured term loan facility
Line of Credit Facility [Line Items]
Prepayment fee, percent of principal amount prepaid		1.00%	2.00%

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Deferred Costs, Acquired Lease Intangibles and Goodwill - Amortizing Acquired Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Acquired below-market ground leases
Acquired below-market ground leases, gross	$ 396,916	$ 396,916
Less: accumulated amortization	(46,307)	(44,350)
Acquired below-market ground leases, net	350,609	352,566
Acquired below-market leases
Acquired below-market leases, gross	(97,101)	(100,472)
Less: accumulated amortization	59,478	60,793
Acquired below-market leases, net	$ (37,623)	$ (39,679)

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Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	Principal Balance						As of March 31, 2020
	March 31, 2020			December 31, 2019			Stated Rate		Effective Rate(1)		Maturity Date(2)
Mortgage debt collateralized by:
Fixed rate mortgage debt
Metro Center	$	89,090		$	89,650		3.59	%	3.68	%	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	%	4.75	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	38,061			38,251			4.01	%	4.23	%	1/5/2028
10 Bank Street	32,700			32,920			4.23	%	4.36	%	6/1/2032
383 Main Avenue	30,000			30,000			4.44	%	4.55	%	6/30/2032
1333 Broadway	160,000			160,000			4.21	%	4.29	%	2/5/2033
Total mortgage debt	609,851			610,821
Senior unsecured notes:(4)
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			—			3.61	%	4.90	%	3/17/2032
Series H	75,000			—			3.73	%	5.00	%	3/17/2035
Unsecured revolving credit facility (4)	550,000			—			LIBOR plus 1.10%		3.48	%	8/29/2021
Unsecured term loan facility (4)	215,000			265,000			LIBOR plus 1.20%		3.39	%	3/19/2025
Unsecured term loan facility (4)	175,000			—			LIBOR plus 1.50%		3.87	%	12/31/2026
Total principal	2,524,851			1,675,821
Deferred financing costs, net	(14,082		)	(7,247		)
Total	$	2,510,769		$	1,668,574

______________

(1) The effective rate is the yield as of March 31, 2020 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2) Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.

(3) Represents a $164 million mortgage loan bearing interest at 4.09% and a $16 million loan bearing interest at 6.25%.

(4) At March 31, 2020, we were in compliance with all debt covenants.

Principal Payments

Aggregate required principal payments at March 31, 2020 are as follows (amounts in thousands):

Year	Amortization		Maturities		Total
2020	$	2,967	$	—	$	2,967
2021	4,090		550,000		554,090
2022	5,628		—		5,628
2023	7,876		—		7,876
2024	7,958		77,675		85,633
Thereafter	25,909		1,842,748		1,868,657
Total	$	54,428	$	2,470,423	$	2,524,851

Deferred Financing Costs

Deferred financing costs, net, consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Financing costs	$	28,839		$	25,315
Less: accumulated amortization	(14,757		)	(13,863		)
Total deferred financing costs, net	$	14,082		$	11,452

At December 31, 2019, $4.2 million of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheet. At March 31, 2020, the net deferred financing costs associated with the unsecured revolving credit facility were included as a reduction of debt.

Amortization expense related to deferred financing costs was $0.9 million and $1.0 million for the three months ended March 31, 2020 and 2019, respectively.

Unsecured Revolving Credit and Term Loan Facilities

On March 19, 2020, we entered into an amendment to an existing credit agreement with the lenders party thereto, Bank of America, N.A., as administrative agent, and Bank of America, Wells Fargo Bank, National Association and Capital One, National Association, as the letter of credit issuers party thereto. The amendment amends the amended and restated senior unsecured revolving credit and term loan facility, entered into as of August 29, 2017, with Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo, National Association and Capital One, National Association, as co-syndication agents, and the lenders party thereto.

This new amended and restated senior unsecured revolving credit and term loan facility (the "Credit Facility") is in the original principal amount of up to $1.315 billion, which consists of a $1.1 billion revolving credit facility and a $215.0 million term loan facility. We borrowed the term loan facility in full at closing. We may request the Credit Facility be increased through one or more increases in the revolving credit facility or one or more increases in the term loan facility or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $1.75 billion. As of March 31, 2020, our borrowings amounted to $550.0 million under the revolving credit facility and $215.0 million under the term loan facility.

The initial maturity of the unsecured revolving credit facility is August 2021. We have the option to extend the initial term for up to two additional 6-month periods, subject to certain conditions, including the payment of an extension fee equal to 0.0625% and 0.075% of the then outstanding commitments under the unsecured revolving credit facility on the first and the second extensions, respectively. The term loan facility matures in March 2025. We may prepay the loans under the Credit Facility at any time in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar Rate borrowings.

On March 19, 2020, we entered into a senior unsecured term loan facility (the “Term Loan Facility”) with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC as sole bookrunner, Wells Fargo Securities, LLC, Capital One, National Association, U.S. Bank National Association and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers, Capital One, National Association, as syndication agent, U.S. Bank National Association and Trust Bank, as documentation agents, and the lenders party thereto.

The Term Loan Facility is in the original principal amount of $175 million which we borrowed in full at closing. We may request the Term Loan Facility be increased through one or more increases or the addition of new pari passu term loan tranches, for a maximum aggregate principal amount not to exceed $225 million. As of March 31, 2020, our borrowings amounted to $175.0 million under the Term Loan Facility.

The Term Loan Facility matures on December 31, 2026. We may prepay loans under the Term Loan Facility at any time in whole or in part, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar rate borrowings and, if the prepayment occurs on or before December 31, 2021, a prepayment fee. If the prepayment occurs on or prior to December 31, 2020, the prepayment fee is equal to 2.0% of the principal amount prepaid, and if the prepayment occurs after December 31, 2020 but on or prior to December 31, 2021, the prepayment fee is equal to 1.0% of the principal amount prepaid.

The terms of both the Credit Facility and the Term Loan Facility include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreement also contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, invalidity of loan documents, loss of real estate investment trust qualification, and occurrence of a change of control. As of March 31, 2020, we were in compliance with the covenants under the Credit Facility and the Term Loan Facility.

Senior Unsecured Notes

On March 17, 2020, we entered into an agreement to issue and sell an aggregate $175 million of senior unsecured notes, consisting of (a) $100 million aggregate principal amount of 3.61% Series G Senior Notes due March 17, 2032 (the “Series G Notes”) and (b) $75 million aggregate principal amount of 3.73% Series H Senior Notes due March 17, 2035 (the “Series H Notes”). The issue price for the Series G and H Notes was 100% of the aggregate principal amount thereof.

The terms of the Series G and H Notes agreement include customary covenants, including limitations on liens, investment, distributions, debt, fundamental changes, and transactions with affiliates and require certain customary financial reports. It also requires compliance with financial ratios including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a minimum unencumbered interest coverage ratio, and a maximum unsecured leverage ratio. The agreement also contains customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification. As of March 31, 2020, we were in compliance with the covenants under the outstanding senior unsecured notes.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

Except as described below, as of March 31, 2020, we were not involved in any material litigation, nor, to our knowledge, was any material litigation threatened against us or our properties, other than routine litigation arising in the ordinary course of business such as disputes with tenants. We believe that the costs and related liabilities, if any, which may result from such actions will not materially affect our condensed consolidated financial position, operating results or liquidity.    

As previously disclosed, in October 2014, 12 former investors in Empire State Building Associates L.L.C. (“ESBA”), which prior to the initial public offering of our company (the "Offering"), owned the fee title to the Empire State Building, filed an arbitration with the American Arbitration Association against Peter L. Malkin, Anthony E. Malkin, Thomas N. Keltner, Jr., and our subsidiary ESRT MH Holdings LLC, the former supervisor of ESBA, as respondents. The statement of claim (also filed later in federal court in New York for the expressed purpose of tolling the statute of limitations) alleges breach of fiduciary duty and related claims in connection with the Offering and formation transactions and seeks monetary damages and declaratory relief. These investors had opted out of a prior class action bringing similar claims that was settled with court approval. The respondents filed an answer and counterclaims. In March 2015, the federal court action was stayed on consent of all parties pending the arbitration. Arbitration hearings for a select number of sessions started in May 2016 and concluded in August 2018. Post-hearing briefing has been completed.

The respondents believe the allegations in the arbitration are entirely without merit, and they intend to continue to defend them vigorously.

     Pursuant to indemnification agreements which were made with our directors, executive officers and chairman emeritus as part of our formation transactions, Anthony E. Malkin, Peter L. Malkin and Thomas N. Keltner, Jr. have defense and indemnity rights from us with respect to this arbitration.

Unfunded Capital Expenditures

At March 31, 2020, we estimate that we will incur approximately $146.1 million of capital expenditures (including tenant improvements and leasing commissions) on our properties pursuant to existing lease agreements. We expect to fund these capital expenditures with operating cash flow, additional property level mortgage financings, our unsecured credit facility, cash on hand and other borrowings. Future property acquisitions may require substantial capital investments for refurbishment and leasing costs. We expect that these financing requirements will be met in a similar fashion.

Concentration of Credit Risk

Financial instruments that subject us to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, tenant and other receivables and deferred rent receivables. At March 31, 2020, we held on deposit at various major financial institutions cash and cash equivalents and restricted cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation.

Asset Retirement Obligations

We are required to accrue costs that we are legally obligated to incur on retirement of our properties which result from acquisition, construction, development and/or normal operation of such properties. Retirement includes sale, abandonment or disposal of a property. Under that standard, a conditional asset retirement obligation represents a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within a company’s control and a liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments and investigations have identified asbestos or asbestos-containing building materials in certain of our properties. As of March 31, 2020, management has no plans to remove or alter these properties in a manner that would trigger federal and other applicable regulations for asbestos removal, and accordingly, the obligations to remove the asbestos or asbestos-containing building materials from these properties have indeterminable settlement dates. As such, we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligation. However, ongoing asbestos abatement, maintenance programs and other required documentation are carried out as required and related costs are expensed as incurred.

Other Environmental Matters

Certain of our properties have been inspected for soil contamination due to pollutants, which may have occurred prior to our ownership of these properties or subsequently in connection with its development and/or its use. Required remediation to such properties has been completed, and as of March 31, 2020, management believes that there are no obligations related to environmental remediation other than maintaining the affected sites in conformity with the relevant authority’s mandates and filing the required documents. All such maintenance costs are expensed as incurred. We expect that resolution of the environmental matters relating to the above will not have a material impact on our business, assets, consolidated financial condition, results of operations or liquidity. However, we cannot be certain that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties or that we will be indemnified, in full or at all, in the event that such environmental liabilities arise.

Insurance Coverage

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

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

None.

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Condensed Consolidated Statements of Capital (unaudited) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2020	Mar. 31, 2019
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance		$ 1,947,913	$ 1,991,109
Issuance of private perpetual preferred in exchange for common units		0
Conversion of operating partnership units to ESRT Partner's Capital		0	0
Repurchases of common units (in units)	(6,570,778)
Repurchases of common units		(62,666)
Equity compensation		5,891	5,419
Distributions		(32,651)	(31,942)
Net income		8,288	9,856
Other comprehensive income (loss)		(16,899)	(7,241)
Ending balance	$ 1,849,876	$ 1,849,876	$ 1,967,201
General Partner | Series PR Operating Partnership Units
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		181,894,000	174,912,000
Beginning balance		$ 1,228,520	$ 1,238,482
Conversion of operating partnership units to ESRT Partner's Capital (in units)		1,659,000	1,622,000
Conversion of operating partnership units to ESRT Partner's Capital		$ 7,562	$ 3,282
Repurchases of common units (in units)		(6,571,000)
Repurchases of common units		$ (62,666)
Equity compensation (in units)		146,000	59,000
Equity compensation		$ 154	$ 40
Distributions		(18,987)	(18,520)
Net income		4,495	5,677
Other comprehensive income (loss)		$ (10,494)	$ (4,272)
Ending balance (in units)	177,128,000	177,128,000	176,593,000
Ending balance	$ 1,148,584	$ 1,148,584	$ 1,224,689
Limited Partners | Series PR Operating Partnership Units
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		81,388,000	86,202,000
Beginning balance		$ 680,580	$ 725,108
Issuance of private perpetual preferred in exchange for common units (in units)		(97,000)
Issuance of private perpetual preferred in exchange for common units		$ (800)
Conversion of operating partnership units to ESRT Partner's Capital (in units)		(894,000)	(318,000)
Conversion of operating partnership units to ESRT Partner's Capital		$ (7,416)	$ (2,674)
Equity compensation (in units)		4,503,000	1,440,000
Equity compensation		$ 5,737	$ 5,379
Distributions		(8,849)	(8,882)
Net income		1,852	2,607
Other comprehensive income (loss)		$ (4,326)	$ (1,962)
Ending balance (in units)	84,900,000	84,900,000	87,324,000
Ending balance	$ 666,778	$ 666,778	$ 719,576
Limited Partners | Series ES Operating Partnership Units Limited Partners
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		25,810,000	30,129,000
Beginning balance		$ 7,262	$ 14,399
Issuance of private perpetual preferred in exchange for common units (in units)		43,000
Issuance of private perpetual preferred in exchange for common units		$ 11
Conversion of operating partnership units to ESRT Partner's Capital (in units)		(494,000)	(1,081,000)
Conversion of operating partnership units to ESRT Partner's Capital		$ (104)	$ (514)
Distributions		(2,677)	(3,059)
Net income		630	953
Other comprehensive income (loss)		$ (1,470)	$ (717)
Ending balance (in units)	25,359,000	25,359,000	29,048,000
Ending balance	$ 3,652	$ 3,652	$ 11,062
Limited Partners | Series 60 Operating Partnership Units Limited Partners
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		7,025,000	8,020,000
Beginning balance		$ 1,593	$ 3,385
Conversion of operating partnership units to ESRT Partner's Capital (in units)		(201,000)	(145,000)
Conversion of operating partnership units to ESRT Partner's Capital		$ (31)	$ (61)
Distributions		(723)	(829)
Net income		174	260
Other comprehensive income (loss)		$ (406)	$ (196)
Ending balance (in units)	6,824,000	6,824,000	7,875,000
Ending balance	$ 607	$ 607	$ 2,559
Limited Partners | Series 250 Operating Partnership Units Limited Partners
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		3,535,000	4,064,000
Beginning balance		$ 807	$ 1,731
Conversion of operating partnership units to ESRT Partner's Capital (in units)		(70,000)	(78,000)
Conversion of operating partnership units to ESRT Partner's Capital		$ (11)	$ (33)
Distributions		(365)	(418)
Net income		87	125
Other comprehensive income (loss)		$ (203)	$ (94)
Ending balance (in units)	3,465,000	3,465,000	3,986,000
Ending balance	$ 315	$ 315	$ 1,311
Private Perpetual Preferred Units
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in units)		6,170,000	1,560,000
Beginning balance		$ 29,151	$ 8,004
Issuance of private perpetual preferred in exchange for common units (in units)		54,000
Issuance of private perpetual preferred in exchange for common units		$ 789
Distributions		(1,050)	(234)
Net income		$ 1,050	$ 234
Ending balance (in units)	6,224,000	6,224,000	1,560,000
Ending balance	$ 29,940	$ 29,940	$ 8,004

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Commercial real estate properties, at cost:
Land	$ 201,196	$ 201,196
Development costs	8,800	7,989
Building and improvements	2,913,312	2,900,248
Commercial real estate properties, at cost	3,123,308	3,109,433
Less: accumulated depreciation	(886,822)	(862,534)
Commercial real estate properties, net	2,236,486	2,246,899
Cash and cash equivalents	1,008,983	233,946
Restricted cash	36,881	37,651
Tenant and other receivables	22,549	25,423
Deferred rent receivables	229,154	220,960
Prepaid expenses and other assets	40,583	65,453
Deferred costs, net	218,578	228,150
Acquired below-market ground leases, net	350,609	352,566
Right of use assets	29,256	29,307
Goodwill	491,479	491,479
Total assets	4,664,558	3,931,834
Liabilities:
Mortgage notes payable, net	604,763	605,542
Senior unsecured notes, net	973,002	798,392
Unsecured term loan facilities, net	386,568	264,640
Unsecured revolving credit facility, net	546,436	0
Accounts payable and accrued expenses	142,315	143,786
Acquired below-market leases, net	37,623	39,679
Ground lease liabilities	29,256	29,307
Deferred revenue and other liabilities	64,176	72,015
Tenants’ security deposits	30,543	30,560
Total liabilities	2,814,682	1,983,921
Commitments and contingencies
Capital:
Total capital	1,849,876	1,947,913
Total liabilities and capital	4,664,558	3,931,834
Private Perpetual Preferred Units, Series 2019
Capital:
Private perpetual preferred units	21,936	21,147
Private Perpetual Preferred Units, Series 2014
Capital:
Private perpetual preferred units	8,004	8,004
Series PR Operating Partnership Units
Capital:
ESRT partner's capital (2,976,762 and 2,996,520 general partner operating partnership units and 174,151,247 and 178,897,876 limited partner operating partnership units outstanding in 2020 and 2019, respectively)	1,148,584	1,228,520
Limited partner operating partnership units	666,778	680,580
Series ES operating partnership units
Capital:
Limited partner operating partnership units	3,652	7,262
Series 60 operating partnership units
Capital:
Limited partner operating partnership units	607	1,593
Series 250 operating partnership units
Capital:
Limited partner operating partnership units	$ 315	$ 807

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Capital - Summary of ESRT Restricted Stock and LTIP Unit Activity (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Weighted Average Grant Fair Value
Beginning balance, Unvested (in USD per share) | $ / shares	$ 9.73
Vested (in USD per share) | $ / shares	15.54
Granted (in USD per share) | $ / shares	5.23
Forfeited or unearned (in USD per share) | $ / shares	11.09
Ending balance, Unvested (in USD per share) | $ / shares	$ 6.76
Restricted Stock
Restricted Stock and LTIP Units
Beginning balance, Unvested (in shares)	118,918
Vested (in shares)	(42,702)
Granted (in shares)	158,806
Forfeited or unearned (in shares)	0
Ending balance, Unvested (in shares)	235,022
LTIP Units
Restricted Stock and LTIP Units
Beginning balance, Unvested (in shares)	5,986,569
Vested (in shares)	(638,907)
Granted (in shares)	5,344,748
Forfeited or unearned (in shares)	(841,587)
Ending balance, Unvested (in shares)	9,850,823

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Segment Reporting - Components of Segment Profit for Each Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Revenues:
Rental revenue	$ 148,113	$ 143,417
Intercompany rental revenue	0	0
Tenant expense reimbursement		0
Observatory revenue	19,544	20,569
Lease termination fees	211	388
Third-party management and other fees	346	320
Other revenue and fees	2,010	2,599
Total revenues	170,224	167,293
Operating expenses:
Property operating expenses	41,468	42,955
Intercompany rent expense	0	0
Ground rent expense	2,331	2,331
General and administrative expenses	15,951	14,026
Observatory expenses	8,154	7,575
Real estate taxes	29,254	28,232
Depreciation and amortization	46,093	46,098
Total operating expenses	143,251	141,217
Total operating income	26,973	26,076
Other income (expense):
Interest income	637	3,739
Interest expense	(19,618)	(20,689)
Loss on early extinguishment of debt	(86)	0
Income before income taxes	7,906	9,126
Income tax (expense) benefit	382	730
Net income	8,288	9,856
Segment assets	4,664,558	4,192,440	$ 3,931,834
Expenditures for segment assets	27,807	58,320
Intersegment Elimination
Revenues:
Rental revenue	0	0
Intercompany rental revenue	(11,536)	(14,021)
Tenant expense reimbursement		0
Observatory revenue	0	0
Lease termination fees	0	0
Third-party management and other fees	0	0
Other revenue and fees	0	0
Total revenues	(11,536)	(14,021)
Operating expenses:
Property operating expenses	0	0
Intercompany rent expense	(11,536)	(14,021)
Ground rent expense	0	0
General and administrative expenses	0	0
Observatory expenses	0	0
Real estate taxes	0	0
Depreciation and amortization	0	0
Total operating expenses	(11,536)	(14,021)
Total operating income	0	0
Other income (expense):
Interest income	0	0
Interest expense	0	0
Loss on early extinguishment of debt	0
Income before income taxes	0	0
Income tax (expense) benefit	0	0
Net income	0	0
Segment assets	0	0
Expenditures for segment assets	0	0
Real Estate | Operating Segments
Revenues:
Rental revenue	148,113	143,417
Intercompany rental revenue	11,536	14,021
Tenant expense reimbursement		0
Observatory revenue	0	0
Lease termination fees	211	388
Third-party management and other fees	346	320
Other revenue and fees	2,010	2,599
Total revenues	162,216	160,745
Operating expenses:
Property operating expenses	41,468	42,955
Intercompany rent expense	0	0
Ground rent expense	2,331	2,331
General and administrative expenses	15,951	14,026
Observatory expenses	0	0
Real estate taxes	29,254	28,232
Depreciation and amortization	46,085	46,091
Total operating expenses	135,089	133,635
Total operating income	27,127	27,110
Other income (expense):
Interest income	637	3,739
Interest expense	(19,618)	(20,689)
Loss on early extinguishment of debt	(86)
Income before income taxes	8,060	10,160
Income tax (expense) benefit	(227)	(234)
Net income	7,833	9,926
Segment assets	4,409,281	3,930,697
Expenditures for segment assets	26,570	44,531
Observatory | Operating Segments
Revenues:
Rental revenue	0	0
Intercompany rental revenue	0	0
Tenant expense reimbursement		0
Observatory revenue	19,544	20,569
Lease termination fees	0	0
Third-party management and other fees	0	0
Other revenue and fees	0	0
Total revenues	19,544	20,569
Operating expenses:
Property operating expenses	0	0
Intercompany rent expense	11,536	14,021
Ground rent expense	0	0
General and administrative expenses	0	0
Observatory expenses	8,154	7,575
Real estate taxes	0	0
Depreciation and amortization	8	7
Total operating expenses	19,698	21,603
Total operating income	(154)	(1,034)
Other income (expense):
Interest income	0	0
Interest expense	0	0
Loss on early extinguishment of debt	0
Income before income taxes	(154)	(1,034)
Income tax (expense) benefit	609	964
Net income	455	(70)
Segment assets	255,277	261,743
Expenditures for segment assets	$ 1,237	$ 13,789

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Debt - Senior Unsecured Notes (Details) - Senior notes - USD ($)	Mar. 17, 2020	Mar. 31, 2020
Series G and Series H Senior Unsecured Notes
Debt Instrument [Line Items]
Face amount	$ 175,000,000
Issue price, as a percent of aggregate principal amount	100.00%
Senior unsecured notes, Series G
Debt Instrument [Line Items]
Face amount	$ 100,000,000
Stated rate (as a percent)	3.61%	3.61%
Senior unsecured notes, Series H
Debt Instrument [Line Items]
Face amount	$ 75,000,000
Stated rate (as a percent)	3.73%	3.73%

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Debt - Long-Term Debt (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 17, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Unsecured facility	$ 546,436,000		$ 0
Deferred financing costs, net	(14,082,000)		(11,452,000)
Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	609,851,000		610,821,000
Total	2,510,769,000		1,668,574,000
Total principal	2,524,851,000		1,675,821,000
Deferred financing costs, net	(14,082,000)		(7,247,000)
Metro Center | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 89,090,000		89,650,000
Stated rate (as a percent)	3.59%
Effective Rate (as a percentage)	3.68%
10 Union Square | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 50,000,000		50,000,000
Stated rate (as a percent)	3.70%
Effective Rate (as a percentage)	3.97%
1542 Third Avenue | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 30,000,000		30,000,000
Stated rate (as a percent)	4.29%
Effective Rate (as a percentage)	4.53%
First Stamford Place | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 180,000,000		180,000,000
Stated rate (as a percent)	4.28%
Effective Rate (as a percentage)	4.75%
First Stamford Place - First Lien | Mortgages
Debt Instrument [Line Items]
Face amount	$ 164,000,000
Stated rate (as a percent)	4.09%
First Stamford Place - Second Lien | Mortgages
Debt Instrument [Line Items]
Face amount	$ 16,000,000
Stated rate (as a percent)	6.25%
1010 Third Avenue and 77 West 55th Street | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 38,061,000		38,251,000
Stated rate (as a percent)	4.01%
Effective Rate (as a percentage)	4.23%
10 Bank Street | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 32,700,000		32,920,000
Stated rate (as a percent)	4.23%
Effective Rate (as a percentage)	4.36%
383 Main Avenue | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 30,000,000		30,000,000
Stated rate (as a percent)	4.44%
Effective Rate (as a percentage)	4.55%
1333 Broadway | Mortgages
Debt Instrument [Line Items]
Fixed rate mortgage debt	$ 160,000,000		160,000,000
Stated rate (as a percent)	4.21%
Effective Rate (as a percentage)	4.29%
Senior unsecured notes, Series A | Senior notes
Debt Instrument [Line Items]
Total	$ 100,000,000		100,000,000
Stated rate (as a percent)	3.93%
Effective Rate (as a percentage)	3.96%
Senior unsecured notes, Series B | Senior notes
Debt Instrument [Line Items]
Total	$ 125,000,000		125,000,000
Stated rate (as a percent)	4.09%
Effective Rate (as a percentage)	4.12%
Senior unsecured notes, Series C | Senior notes
Debt Instrument [Line Items]
Total	$ 125,000,000		125,000,000
Stated rate (as a percent)	4.18%
Effective Rate (as a percentage)	4.21%
Senior unsecured notes, Series D | Senior notes
Debt Instrument [Line Items]
Total	$ 115,000,000		115,000,000
Stated rate (as a percent)	4.08%
Effective Rate (as a percentage)	4.11%
Senior unsecured notes, Series E | Senior notes
Debt Instrument [Line Items]
Total	$ 160,000,000		160,000,000
Stated rate (as a percent)	4.26%
Effective Rate (as a percentage)	4.27%
Senior unsecured notes, Series F | Senior notes
Debt Instrument [Line Items]
Total	$ 175,000,000		175,000,000
Stated rate (as a percent)	4.44%
Effective Rate (as a percentage)	4.45%
Senior unsecured notes, Series G | Senior notes
Debt Instrument [Line Items]
Total	$ 100,000,000		0
Face amount		$ 100,000,000
Stated rate (as a percent)	3.61%	3.61%
Effective Rate (as a percentage)	4.90%
Senior unsecured notes, Series H | Senior notes
Debt Instrument [Line Items]
Total	$ 75,000,000		0
Face amount		$ 75,000,000
Stated rate (as a percent)	3.73%	3.73%
Effective Rate (as a percentage)	5.00%
Unsecured revolving credit facility | Revolving credit facility
Debt Instrument [Line Items]
Total	$ 550,000,000.0
Unsecured facility	$ 550,000,000		0
Effective Rate (as a percentage)	3.48%
Unsecured revolving credit facility | Revolving credit facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	1.10%
Unsecured term loan facilities | Revolving credit facility
Debt Instrument [Line Items]
Total	$ 215,000,000.0
Unsecured facility	$ 215,000,000		265,000,000
Effective Rate (as a percentage)	3.39%
Unsecured term loan facilities | Revolving credit facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	1.20%
Unsecured term loan facility | Revolving credit facility
Debt Instrument [Line Items]
Total	$ 175,000,000.0
Unsecured facility	$ 175,000,000		$ 0
Effective Rate (as a percentage)	3.87%
Unsecured term loan facility | Revolving credit facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as a percentage)	1.50%

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Segment Reporting

3 Months Ended

Mar. 31, 2020

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 profit for each segment for the three months ended March 31, 2020 and 2019 (amounts in thousands):

	Three Months Ended March 31, 2020
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	148,113		$	—		$	—		$	148,113
Intercompany rental revenue	11,536			—			(11,536		)	—
Observatory revenue	—			19,544			—			19,544
Lease termination fees	211			—			—			211
Third-party management and other fees	346			—			—			346
Other revenue and fees	2,010			—			—			2,010
Total revenues	162,216			19,544			(11,536		)	170,224
Operating expenses:
Property operating expenses	41,468			—			—			41,468
Intercompany rent expense	—			11,536			(11,536		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	15,951			—			—			15,951
Observatory expenses	—			8,154			—			8,154
Real estate taxes	29,254			—			—			29,254
Depreciation and amortization	46,085			8			—			46,093
Total operating expenses	135,089			19,698			(11,536		)	143,251
Total operating income	27,127			(154		)	—			26,973
Other income (expense):
Interest income	637			—			—			637
Interest expense	(19,618		)	—			—			(19,618		)
Loss on early extinguishment of debt	(86		)	—			—			(86		)
Income before income taxes	8,060			(154		)	—			7,906
Income tax (expense) benefit	(227		)	609			—			382
Net income	$	7,833		$	455		$	—		$	8,288
Segment assets	$	4,409,281		$	255,277		$	—		$	4,664,558
Expenditures for segment assets	$	26,570		$	1,237		$	—		$	27,807

	Three Months Ended March 31, 2019
	Real Estate			Observatory			Intersegment Elimination			Total
Revenues:
Rental revenue	$	143,417		$	—		$	—		$	143,417
Intercompany rental revenue	14,021			—			(14,021		)	—
Tenant expense reimbursement	—			—			—			—
Observatory revenue	—			20,569			—			20,569
Lease termination fees	388			—			—			388
Third-party management and other fees	320			—			—			320
Other revenue and fees	2,599			—			—			2,599
Total revenues	160,745			20,569			(14,021		)	167,293
Operating expenses:
Property operating expenses	42,955			—			—			42,955
Intercompany rent expense	—			14,021			(14,021		)	—
Ground rent expense	2,331			—			—			2,331
General and administrative expenses	14,026			—			—			14,026
Observatory expenses	—			7,575			—			7,575
Real estate taxes	28,232			—			—			28,232
Depreciation and amortization	46,091			7			—			46,098
Total operating expenses	133,635			21,603			(14,021		)	141,217
Total operating income	27,110			(1,034		)	—			26,076
Other income (expense):
Interest income	3,739			—			—			3,739
Interest expense	(20,689		)	—			—			(20,689		)
Income before income taxes	10,160			(1,034		)	—			9,126
Income tax (expense) benefit	(234		)	964			—			730
Net income	$	9,926		$	(70	)	$	—		$	9,856
Segment assets	$	3,930,697		$	261,743		$	—		$	4,192,440
Expenditures for segment assets	$	44,531		$	13,789		$	—		$	58,320

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Deferred Costs, Acquired Lease Intangibles and Goodwill

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):  

	March 31, 2020			December 31, 2019
Leasing costs	$	200,792		$	199,033
Acquired in-place lease value and deferred leasing costs	193,478			200,296
Acquired above-market leases	44,813			49,213
	439,083			448,542
Less: accumulated amortization	(220,505		)	(224,598		)
Total deferred costs, net, excluding net deferred financing costs	$	218,578		$	223,944

At December 31, 2019, $4.2 million of net deferred financing costs associated with the unsecured revolving credit facility was included in deferred costs, net on the condensed consolidated balance sheet. At March 31, 2020, the net deferred financing costs associated with the unsecured revolving credit facility were included as a reduction of debt.

Amortization expense related to deferred leasing costs and acquired deferred leasing costs was $5.9 million and $6.2 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense related to acquired lease intangibles was $2.0 million and $3.2 million for the three months ended March 31, 2020 and 2019, respectively.

Amortizing acquired intangible assets and liabilities consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Acquired below-market ground leases	$	396,916		$	396,916
Less: accumulated amortization	(46,307		)	(44,350		)
Acquired below-market ground leases, net	$	350,609		$	352,566

	March 31, 2020			December 31, 2019
Acquired below-market leases	$	(97,101	)	$	(100,472	)
Less: accumulated amortization	59,478			60,793
Acquired below-market leases, net	$	(37,623	)	$	(39,679	)

Rental revenue related to the amortization of below-market leases, net of above-market leases, was $0.9 million and $2.4 million for the three months ended March 31, 2020 and 2019, respectively.

As of March 31, 2020, 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 segment.

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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Leases

Lessor

We lease various spaces to tenants over terms ranging from one to 21 years. Certain leases have renewal options for additional terms. The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation. Operating expense reimbursements are reflected in our March 31, 2020 and 2019 condensed consolidated statements of income as rental revenue.

Rental revenue includes fixed and variable payments. Fixed payments primarily relate to base rent and variable payments primarily relate to tenant expense reimbursements for certain property operating costs. The components of rental revenue for the three months ended March 31, 2020 and 2019 are as follows (amounts in thousands):

	Three months ended March 31, 2020		Three months ended March 31, 2019
Fixed payments	$	130,514	$	126,581
Variable payments	17,599		16,836
Total rental revenue	$	148,113	$	143,417

As of March 31, 2020, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):

Remainder of 2020	$	371,553
2021	484,524
2022	462,080
2023	435,217
2024	397,628
Thereafter	1,842,594
	$	3,993,596

The above future minimum lease payments exclude tenant recoveries, amortization of deferred rent receivables and the net accretion of above-below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised.

Lessee

We determine if an arrangement is a lease at inception. Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $29.3 million and lease liabilities of $29.3 million in our consolidated balance sheet as of March 31, 2020. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

We make payments under ground leases related to three of our properties. The ground leases are due to expire between the years 2050 and 2077, inclusive of extension options, and have no variable payments or residual value guarantees. As our leases do not provide an implicit rate, we determined our incremental borrowing rate based on information available at the date of adoption of ASU No. 2016-02, Leases (Topic 842), in determining the present value of lease payments. The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of March 31, 2020 was 4.5%. Rent expense for lease payments related to our operating leases is recognized on a straight-line basis over the non-cancellable term of the leases. The weighted average remaining lease term as of March 31, 2020 was 50.1 years.

As of March 31, 2020, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2020	$	1,139
2021	1,518
2022	1,518
2023	1,518
2024	1,518
Thereafter	66,780
Total undiscounted cash flows	73,991
Present value discount	(44,735		)
Ground lease liabilities	$	29,256

Leases

Leases

Lessor

We lease various spaces to tenants over terms ranging from one to 21 years. Certain leases have renewal options for additional terms. The leases provide for base monthly rentals and reimbursements for real estate taxes, escalations linked to the consumer price index or common area maintenance known as operating expense escalation. Operating expense reimbursements are reflected in our March 31, 2020 and 2019 condensed consolidated statements of income as rental revenue.

Rental revenue includes fixed and variable payments. Fixed payments primarily relate to base rent and variable payments primarily relate to tenant expense reimbursements for certain property operating costs. The components of rental revenue for the three months ended March 31, 2020 and 2019 are as follows (amounts in thousands):

	Three months ended March 31, 2020		Three months ended March 31, 2019
Fixed payments	$	130,514	$	126,581
Variable payments	17,599		16,836
Total rental revenue	$	148,113	$	143,417

As of March 31, 2020, we were entitled to the following future contractual minimum lease payments (excluding operating expense reimbursements) on non-cancellable operating leases to be received which expire on various dates through 2038 (amounts in thousands):

Remainder of 2020	$	371,553
2021	484,524
2022	462,080
2023	435,217
2024	397,628
Thereafter	1,842,594
	$	3,993,596

The above future minimum lease payments exclude tenant recoveries, amortization of deferred rent receivables and the net accretion of above-below-market lease intangibles. Some leases are subject to termination options generally upon payment of a termination fee. The preceding table is prepared assuming such options are not exercised.

Lessee

We determine if an arrangement is a lease at inception. Our operating lease agreements relate to three ground lease assets and are reflected in right-of-use assets of $29.3 million and lease liabilities of $29.3 million in our consolidated balance sheet as of March 31, 2020. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

We make payments under ground leases related to three of our properties. The ground leases are due to expire between the years 2050 and 2077, inclusive of extension options, and have no variable payments or residual value guarantees. As our leases do not provide an implicit rate, we determined our incremental borrowing rate based on information available at the date of adoption of ASU No. 2016-02, Leases (Topic 842), in determining the present value of lease payments. The weighted average incremental borrowing rate used to calculate the right-of-use assets and lease liabilities as of March 31, 2020 was 4.5%. Rent expense for lease payments related to our operating leases is recognized on a straight-line basis over the non-cancellable term of the leases. The weighted average remaining lease term as of March 31, 2020 was 50.1 years.

As of March 31, 2020, the following table summarizes our future minimum lease payments discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (amounts in thousands):

Remainder of 2020	$	1,139
2021	1,518
2022	1,518
2023	1,518
2024	1,518
Thereafter	66,780
Total undiscounted cash flows	73,991
Present value discount	(44,735		)
Ground lease liabilities	$	29,256

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows From Operating Activities
Net income	$ 8,288	$ 9,856
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	46,093	46,098
Amortization of non-cash items within interest expense	1,052	2,074
Amortization of acquired above- and below-market leases, net	(908)	(2,354)
Amortization of acquired below-market ground leases	1,958	1,958
Straight-lining of rental revenue	(8,193)	(5,404)
Equity based compensation	5,891	5,419
Increase (decrease) in cash flows due to changes in operating assets and liabilities:
Security deposits	(17)	(1,243)
Tenant and other receivables	2,874	7,385
Deferred leasing costs	(4,118)	(3,270)
Prepaid expenses and other assets	24,869	24,046
Accounts payable and accrued expenses	(5,261)	(5,192)
Deferred revenue and other liabilities	(7,840)	(1,471)
Loss on early extinguishment of debt	86	0
Net cash provided by operating activities	64,774	77,902
Cash Flows From Investing Activities
Short-term investments	0	50,000
Development costs	(811)	0
Additions to building and improvements	(39,799)	(61,163)
Net cash used in investing activities	(40,610)	(11,163)
Cash Flows From Financing Activities
Repayment of mortgage notes payable	(970)	(934)
Proceeds from unsecured senior notes	175,000	0
Repayment of unsecured term loan	(50,000)	0
Proceeds from unsecured term loan	175,000	0
Proceeds from unsecured revolving credit facility	550,000	0
Repurchases of common units	(62,666)	0
Deferred financing costs	(3,610)	0
Distributions	(32,651)	(31,942)
Net cash provided by (used in) financing activities	750,103	(32,876)
Net increase in cash and cash equivalents and restricted cash	774,267	33,863
Cash and cash equivalents and restricted cash—beginning of period	271,597	270,813
Cash and cash equivalents and restricted cash—end of period	1,045,864	304,676
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	233,946	204,981
Restricted cash at beginning of period	37,651	65,832
Cash and cash equivalents at end of period	1,008,983	242,910
Restricted cash at end of period	36,881	61,766
Cash and cash equivalents and restricted cash	1,045,864	270,813
Supplemental disclosures of cash flow information:
Cash paid for interest	17,081	20,768
Cash paid for income taxes	898	1,075
Non-cash investing and financing activities:
Building and improvements included in accounts payable and accrued expenses	78,107	82,399
Write-off of fully depreciated assets	13,932	6,126
Conversion of limited partners' operating partnership units to ESRT partner's capital	7,562	3,282
Issuance of Series 2019 private perpetual preferred in exchange for common units	789	0
Right of use assets	0	29,452
Ground lease liabilities	$ 0	$ 29,452

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Private Perpetual Preferred Units, Series 2019
Capital
Private perpetual preferred units, liquidation preference (in USD per share)	$ 13.52	$ 13.52
Private perpetual preferred units, issued (in shares)	4,664,038	4,610,383
Private perpetual preferred units, outstanding (in shares)	4,664,038	4,610,383
Private Perpetual Preferred Units, Series 2014
Capital
Private perpetual preferred units, liquidation preference (in USD per share)	$ 16.62	$ 16.62
Private perpetual preferred units, issued (in shares)	1,560,360	1,560,360
Private perpetual preferred units, outstanding (in shares)	1,560,360	1,560,360
Series PR Operating Partnership Units
Capital
Limited partner operating partnership units, outstanding (in shares)	84,899,960	81,387,763
Series ES operating partnership units
Capital
Limited partner operating partnership units, outstanding (in shares)	25,359,132	25,809,604
Series 60 operating partnership units
Capital
Limited partner operating partnership units, outstanding (in shares)	6,824,249	7,025,089
Series 250 operating partnership units
Capital
Limited partner operating partnership units, outstanding (in shares)	3,464,875	3,535,197
ESRT | Series PR Operating Partnership Units
Capital
General partner operating partnership units, outstanding (in shares)	2,976,762	2,996,520
Limited partner operating partnership units, outstanding (in shares)	174,151,247	178,897,876

XML

Capital - Incentive and Share-based Compensation (Details) $ / shares in Units, $ in Millions	1 Months Ended		3 Months Ended		6 Months Ended
	Mar. 31, 2020 USD ($) vesting_installment shares	Mar. 31, 2019 USD ($) vesting_installment shares	Mar. 31, 2020 USD ($) $ / shares shares	Mar. 31, 2019 USD ($)	Oct. 31, 2019 USD ($) vesting_installment shares	May 16, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility rate look-back period (in years)			6 years
Weighted-average per unit or share fair value (in USD per share) | $ / shares			$ 5.23
Age of grantee at which LTIP unit and restricted stock awards immediately vest			60 years
Period of service, upon completion of which, grantee's LTIP unit and restricted stock awards will immediately vest (in years)			10 years
Awards that meet age and service requirements for vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Noncash share-based compensation expense recognized | $			$ 1.6	$ 1.3
Unrecognized compensation expense | $	$ 2.3		$ 2.3
Unrecognized compensation expense, period for recognition			2 years 8 months 12 days
Awards that do not meet age and service requirements for vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Noncash share-based compensation expense recognized | $			$ 4.3	$ 4.1
Unrecognized compensation expense | $	$ 50.3		$ 50.3
Unrecognized compensation expense, period for recognition			2 years 7 months 6 days
Long-Term Incentive Plan Units and Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of share-based awards granted in period | $			$ 28.8
Weighted-average per unit or share fair value (in USD per share) | $ / shares			$ 5.23
Dividend rate (as a percent)			3.70%
Risk free interest rate, minimum (as a percent)			0.37%
Risk free interest rate, maximum (as a percent)			0.50%
Expected price volatility, minimum (as a percent)			19.00%
Expected price volatility, maximum (as a percent)			26.00%
Time Based Long-Tern Incentive Plan Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Threshold of continuous service for retirement eligibility (in years)			10 years
Time Based Long-Tern Incentive Plan Unit | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	113,971
Fair value of share-based awards granted in period | $	$ 2.3
Award vesting period	4 years
Number of vesting installments | vesting_installment	3
Time Based Long-Tern Incentive Plan Unit | 2013 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		61,432
Fair value of share-based awards granted in period | $		$ 2.0
Award vesting period		4 years
Number of vesting installments | vesting_installment		3
Market Based Long-Term Incentive Plan Unit | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	502,475
Fair value of share-based awards granted in period | $	$ 2.3
Award vesting period	3 years
Number of vesting installments | vesting_installment	2
Market Based Long-Term Incentive Plan Unit | 2013 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		113,383
Fair value of share-based awards granted in period | $		$ 0.9
Award vesting period		3 years
Number of vesting installments | vesting_installment		2
Time Restricted Shares | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	158,806
Time Restricted Shares | 2013 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		69,358
Executive Officer | Time Based Long-Tern Incentive Plan Unit | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	745,155
Fair value of share-based awards granted in period | $	$ 5.6
Executive Officer | Time Based Long-Tern Incentive Plan Unit | 2019 Plan Units, Connected With Bonus Program
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	624,380
Fair value of share-based awards granted in period | $	$ 4.4
Award vesting period			3 years
Vesting percentage of award face amount	125.00%		125.00%
Executive Officer | Time Based Long-Tern Incentive Plan Unit | 2013 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		461,693
Fair value of share-based awards granted in period | $		$ 6.4
Executive Officer | Time Based Long-Tern Incentive Plan Unit | 2013 Plan Units, connected with bonus program
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		334,952
Fair value of share-based awards granted in period | $		$ 4.6
Award vesting period			3 years
Vesting percentage of award face amount	125.00%		125.00%
Executive Officer | Time Based Long-Tern Incentive Plan Unit | Vesting immediately
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	23,049	26,056
Executive Officer | Time Based Long-Tern Incentive Plan Unit | Vest ratably over three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	601,331	308,896
Award vesting period	3 years	3 years
Executive Officer | Time Based Long-Tern Incentive Plan Unit | Vest in two equal annual installments
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting installments | vesting_installment	2	2
Executive Officer | Market Based Long-Term Incentive Plan Unit | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)	3,358,767
Fair value of share-based awards granted in period | $	$ 14.0
Executive Officer | Market Based Long-Term Incentive Plan Unit | 2013 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)		1,806,520
Fair value of share-based awards granted in period | $		$ 12.8
Director | Time Based Long-Tern Incentive Plan Unit | 2019 Plan Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)					76,718
Fair value of share-based awards granted in period | $					$ 1.1
Award vesting period					3 years
Number of vesting installments | vesting_installment					2
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under the plan (in shares)	11,000,000.0		11,000,000.0			11,000,000.0
Number of shares that remain available for future issuance (in shares)	6,900,000		6,900,000
Minimum | Long-Term Incentive Plan Units and Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term			2 years
Minimum | Time Based Long-Tern Incentive Plan Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Maximum | Long-Term Incentive Plan Units and Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term			5 years 3 months 18 days
Maximum | Time Based Long-Tern Incentive Plan Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			4 years

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Segment Reporting - Narrative (Details)	3 Months Ended
	Mar. 31, 2020 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Commitments and Contingencies - Legal Proceedings (Details)	1 Months Ended
	Oct. 31, 2014 participant
New York State Supreme Court, New York County
Loss Contingencies [Line Items]
Number of participants opting out of settlement	12

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Leases - Narrative (Details) $ in Thousands	Mar. 31, 2020 USD ($) property	Dec. 31, 2019 USD ($)
Operating Leases [Line Items]
Number of properties subject to ground leases | property	3
Right-of-use assets	$ 29,256	$ 29,307
Lease liabilities	$ 29,256	$ 29,307
Weighted average discount rate	4.50%
Weighted average remaining lease term (in years)	50 years 1 month 6 days
Minimum
Operating Leases [Line Items]
Term of lease	1 year
Maximum
Operating Leases [Line Items]
Term of lease	21 years

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Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Debt consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):

	Principal Balance						As of March 31, 2020
	March 31, 2020			December 31, 2019			Stated Rate		Effective Rate(1)		Maturity Date(2)
Mortgage debt collateralized by:
Fixed rate mortgage debt
Metro Center	$	89,090		$	89,650		3.59	%	3.68	%	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	%	4.75	%	7/1/2027
1010 Third Avenue and 77 West 55th Street	38,061			38,251			4.01	%	4.23	%	1/5/2028
10 Bank Street	32,700			32,920			4.23	%	4.36	%	6/1/2032
383 Main Avenue	30,000			30,000			4.44	%	4.55	%	6/30/2032
1333 Broadway	160,000			160,000			4.21	%	4.29	%	2/5/2033
Total mortgage debt	609,851			610,821
Senior unsecured notes:(4)
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			—			3.61	%	4.90	%	3/17/2032
Series H	75,000			—			3.73	%	5.00	%	3/17/2035
Unsecured revolving credit facility (4)	550,000			—			LIBOR plus 1.10%		3.48	%	8/29/2021
Unsecured term loan facility (4)	215,000			265,000			LIBOR plus 1.20%		3.39	%	3/19/2025
Unsecured term loan facility (4)	175,000			—			LIBOR plus 1.50%		3.87	%	12/31/2026
Total principal	2,524,851			1,675,821
Deferred financing costs, net	(14,082		)	(7,247		)
Total	$	2,510,769		$	1,668,574

______________

(1) The effective rate is the yield as of March 31, 2020 and includes the stated interest rate, deferred financing cost amortization and interest associated with variable to fixed interest rate swap agreements.

(2) Pre-payment is generally allowed for each loan upon payment of a customary pre-payment penalty.

(3) Represents a $164 million mortgage loan bearing interest at 4.09% and a $16 million loan bearing interest at 6.25%.

(4)

At March 31, 2020, we were in compliance with all debt covenants.

Aggregate Required Principal Payments

Aggregate required principal payments at March 31, 2020 are as follows (amounts in thousands):

Year	Amortization		Maturities		Total
2020	$	2,967	$	—	$	2,967
2021	4,090		550,000		554,090
2022	5,628		—		5,628
2023	7,876		—		7,876
2024	7,958		77,675		85,633
Thereafter	25,909		1,842,748		1,868,657
Total	$	54,428	$	2,470,423	$	2,524,851

Deferred Costs, Net

Deferred costs, net, consisted of the following as of March 31, 2020 and December 31, 2019 (amounts in thousands):  

	March 31, 2020			December 31, 2019
Leasing costs	$	200,792		$	199,033
Acquired in-place lease value and deferred leasing costs	193,478			200,296
Acquired above-market leases	44,813			49,213
	439,083			448,542
Less: accumulated amortization	(220,505		)	(224,598		)
Total deferred costs, net, excluding net deferred financing costs	$	218,578		$	223,944

Deferred financing costs, net, consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands):

	March 31, 2020			December 31, 2019
Financing costs	$	28,839		$	25,315
Less: accumulated amortization	(14,757		)	(13,863		)
Total deferred financing costs, net	$	14,082		$	11,452

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Capital (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Equity Securities Repurchased

The following table summarizes ESRT's purchases of equity securities in each of the three months ended March 31, 2020 and the month of April 2020:

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)
March 2020	6,570,778	$	9.54	6,570,778	$	437,334
April 2020	2,345,129	$	8.66	2,345,129	$	417,023

Summary of ERST Restricted Stock and LTIP Unit

The following is a summary of ESRT restricted stock and LTIP unit activity for the three months ended March 31, 2020:

	Restricted Stock		LTIP Units		Weighted Average Grant Fair Value
Unvested balance at December 31, 2019	118,918		5,986,569		$	9.73
Vested	(42,702	)	(638,907	)	15.54
Granted	158,806		5,344,748		5.23
Forfeited or unearned	—		(841,587	)	11.09
Unvested balance at March 31, 2020	235,022		9,850,823		$	6.76

Earnings Per Unit

Earnings per unit for the three months ended March 31, 2020 and 2019 is computed as follows (amounts in thousands, except per share amounts):

	Three Months Ended
	March 31, 2020			March 31, 2019
Numerator:
Net income	$	8,288		$	9,856
Private perpetual preferred unit distributions	(1,050		)	(234		)
Earnings allocated to unvested units	(257		)	(153		)
Net income attributable to common unitholders - basic and diluted	$	6,981		$	9,469
Denominator:
Weighted average units outstanding - basic	292,645			298,049
Effect of dilutive securities:
Stock-based compensation plans	—			—
Weighted average units outstanding - diluted	292,645			298,049
Earnings per share:
Basic	$	0.02		$	0.03
Diluted	$	0.02		$	0.03