Empire State Realty Trust, Inc.

Reported Q2 2026 core FFO was $0.21 per diluted share. Same-store property cash NOI, excluding lease termination fees, increased 3.3% year over year, but was down 3.2% after adjusting for nonrecurring items. The Observation Deck generated about $12.4 million of NOI, versus $24.1 million in the prior-year quarter, on revenue of $24.2 million and expenses of $11.8 million; visitation fell 28.5% year over year. Core FAD was about $16.2 million, up from $11.9 million a year ago. For 2026, management now expects core FFO of $0.75 to $0.79 per diluted share, assumes $55 million of Observatory NOI for the full year, keeps year-end commercial occupancy guidance at 90% to 92%, and leaves same-store property cash NOI guidance unchanged at negative 1.5% to positive 2%.

Tony Malkin said the portfolio continues to perform strongly, especially office leasing, retail leasing, and multifamily, but acknowledged that the Observatory business is under pressure from lower international budget travelers, weak pass-program traffic, and a shifting online search environment. He said management has begun a total reevaluation of the Observatory business model and marketing approach, including adapting to AI search, and emphasized that the brand remains powerful and long-term value remains intact. His tone was confident on the real estate portfolio and candid about near-term Observatory uncertainty.

Christina Chiu focused on disciplined capital allocation and balance-sheet flexibility. She highlighted the $275 million sale of 250 West 57th Street, including the buyer’s assumption of $180 million of mortgage debt, and the $110 million land acquisition under 111 West 33rd Street and 1400 Broadway, which carries $1.4 million of annual rent and was described as below-market. She also noted the new $245 million unsecured delayed-draw term loan maturing in 2032, leverage of about 6.6x net debt to trailing 12-month adjusted EBITDA, ample liquidity, and no unaddressed debt maturities until January 2028.

Analysts focused heavily on the Observatory decline, asking whether weakness was driven by international tourism, pass programs, pricing, weather, or competition. Management said the biggest issue is the mix shift away from international budget travelers and the sharp decline in pass-program visitors, while also pointing to changes in how the business is found and marketed online. On office, analysts asked why same-store cash NOI was still negative despite strong leasing; Steve Horn said free-rent burn-off, operating expense pressure, and FDIC-related downtime were still offsetting lease gains, with LinkedIn occupancy expected to begin cash flowing early next year.