# Empire State Realty OP, L.P.: Form 10-Q for the period ended Sep 30, 2020

- Company: [Empire State Realty OP, L.P.](/companies/esba.md) (CIK 1553079)
- Form: 10-Q
- Filed: 2020-11-05
- Accepted by EDGAR: Nov 5, 2020, 14:21 ET
- Period: 2020-09-30
- Accession: 0001628280-20-015680
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1553079/000162828020015680/esrop9-30x2010xq.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1553079/000162828020015680/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-07-01 to 2020-09-30 | $146.6m | us-gaap:Revenues |
| Revenue | 9 months, 2020-01-01 to 2020-09-30 | $457.8m | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2020-07-01 to 2020-09-30 | $14.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2020-01-01 to 2020-09-30 | $48.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2020-07-01 to 2020-09-30 | $11.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2020-01-01 to 2020-09-30 | $39.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2020-07-01 to 2020-09-30 | $23.4m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2020-01-01 to 2020-09-30 | $66.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2020-07-01 to 2020-09-30 | $38.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2020-01-01 to 2020-09-30 | −$2.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 9 months, 2020-01-01 to 2020-09-30 | −$23.6m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2020-07-01 to 2020-09-30 | −$0.05 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2020-01-01 to 2020-09-30 | −$0.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2020-07-01 to 2020-09-30 | −$0.05 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2020-01-01 to 2020-09-30 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2020-07-01 to 2020-09-30 | 280,940,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2020-01-01 to 2020-09-30 | 285,640,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2020-01-01 to 2020-09-30 | $163.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2020-07-01 to 2020-09-30 | $31.3m | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 9 months, 2020-01-01 to 2020-09-30 | $80.3m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2020-01-01 to 2020-09-30 | $65.4m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2020-01-01 to 2020-09-30 | $122.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2020-09-30 | $373.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2020-09-30 | $4.01bn | us-gaap:Assets |
| Total liabilities | at 2020-09-30 | $2.27bn | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 75,606 characters.

*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, including such tenants’ ability to pay rent following the termination of temporary governmental assistance and benefits programs, (d) the potential impact on the Company’s human capital management, including potential reductions in productivity associated with work-from-home and risks associated with employees returning to the office, (e) international and national disruption of travel and tourism with a resulting decline in Observatory visitors, and (f) 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, including as a result of the COVID-19 pandemic; (iv) changes in our business strategy; (v) changes in technology and market competition that affect utilization of our office, retail, 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) changes in 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 this Quarterly Report on Form 10-Q, 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.*

*While forward-looking statements reflect the Company's good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, 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. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company.*

### 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 September 30, 2020 included:

- Incurred net loss of $13.3 million and achieved Core Funds From Operations of $34.9 million.
- Same-Store Property Cash NOI excluding lease termination fees was up 9.3% from the third quarter of 2019 primarily driven by lower property operating expenses and free rent burn-off, partially offset by lower revenue.
- Strong liquidity position of $1.5 billion as of September 30, 2020, comprised of $373.0 million of cash plus an additional $1.1 billion available under our revolving credit facility. Moreover, we have no debt maturity until 2024.
- In the third quarter and through October 30, 2020, we repurchased $19.5 million of our common stock at a weighted average price of $6.31 per share, which brings the year-to-date total to $134.1 million at a weighted average price of $8.30 per share.
- For the total portfolio in the third quarter, we signed 18 new, renewal, and expansion leases, representing 247,449 rentable square feet.
- Collected 94% of third quarter 2020 total billings with 96% for office tenants and 84% for retail tenants. Through October 31, 2020, collected 93% of October total billings, with 94% for office tenants and 86% for retail tenants.
- Year-to-date through September 30th, we reduced property operating expenses by $26 million compared to the prior year, driven by reduced tenant utilization and our cost reduction initiatives.
- On July 13, 2020, we announced the appointment of R. Paige Hood to our Board of Directors, effective August 1, 2020, and the departure of William H. Berkman, effective July 31, 2020.

As of September 30, 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 approximately 0.5 million 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 these five properties is located in densely populated metropolitan communities with immediate access to mass transportation. Additionally, we have entitled land at the Stamford Transportation Center in Stamford, Connecticut, adjacent to one of our office properties, that will support the development of an approximately 0.4 million rentable square foot office building and garage. As of September 30, 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 approximately 0.2 million 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 and currently impacted by the COVID-19 pandemic. Historically, 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 Observatory reopened on July 20, 2020.

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

|  | Nine Months Ended September 30, 2020 |  | 2019 |  |
| --- | ---: | ---: | ---: | ---: |
| Office leases | $106,774 | 63.9% | $106,848 | 45.1% |
| Retail leases | 5,177 | 3.1% | 5,566 | 2.4% |
| Tenant reimbursements & other income | 16,358 | 9.8% | 21,356 | 9.0% |
| Observatory operations | 24,049 | 14.4% | 91,039 | 38.5% |
| Broadcasting licenses and leases | 14,793 | 8.8% | 11,945 | 5.0% |
| Total | $167,151 | 100.0% | $236,754 | 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 September 30, 2020, we have invested a total of approximately $942.1 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 $35.0 million through September 30, 2020.

As of September 30, 2020, excluding principal amortization, we had no debt maturing until 2024. As of September 30, 2020, we had total debt outstanding of approximately $2.0 billion, with a weighted average interest rate of 4.0%, and a weighted average maturity of 8.3 years. 93.7% of our total debt outstanding is fixed-rate indebtedness and 6.3% is variable-rate indebtedness. As of September 30, 2020, we had cash and cash equivalents of approximately $373.1 million. Our consolidated net debt to total market capitalization was approximately 46.3% as of September 30, 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 on our business.

#### 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. In September 2020, we repaid the $550.0 million draw on our revolving credit facility. We currently hold $373.1 million in cash on our balance sheet and have $1.1 billion undrawn capacity under our revolving credit facility.

#### Property Operations

All of our office buildings have remained open during the 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. A portion of the reduction in operating expenses will be offset by a reduction in tenant expense recoveries.

Our operations team worked diligently to develop plans for tenants reoccupation of 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 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, was stopped in March 2020 until June 8, 2020, when government restrictions were lifted. The spend was significantly curtailed under the restrictions.

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 of 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 September 30, 2020, our portfolio was 89.7% leased, including SLNC, including 2.6% subject to leases scheduled to expire in 2020 and 6.2% subject to leases scheduled to expire in 2021.

New leasing activity was impacted during the third quarter by the pandemic and shelter-in-place rules that were in effect for much of the period. During this time period, we instituted a number of online measures to maintain our relationships with brokers and expose our availabilities to the market. While physical tours resumed on June 22, 2020 and coincided with Phase 2 reopening, we expect lower leasing volumes for the third and fourth quarters based on current tenant activity.

#### Rent Collections

As of October 31, 2020, we have experienced steady improvement in the collection of our property billings. The following table reflects the percentages of rent collected from total billings.

| Collections as of October 30, 2020 | Second Quarter 2020 | Third Quarter 2020 | October 2020 |
| --- | ---: | ---: | ---: |
| Total billings collected | 85% | 94% | 93% |
| Rent deferrals | 4% | —% | —% |
| Security deposits collected | 8% | 1% | —% |
| Uncollected - covered by security deposit | 1% | 2% | 3% |
| Uncollected | 2% | 3% | 4% |
| Total | 100% | 100% | 100% |

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 some of their 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 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. While closed, we reduced our annualized operating expense run-rate from $35 million in February 2020 to approximately $14 million in May 2020, a 60% reduction. Approximately two-thirds of the reduction was attributable to lower payroll expenses as we furloughed staff and the balance is due to lower operational and other costs.

The Observatory reopened under New York State's Phase 4 guidelines, Low-Risk Outdoor Arts and Entertainment, on July 20, 2020. The 102nd observation deck was reopened on August 24, 2020. 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.

With the Observatory reopened, for the balance of 2020, we will operate with reduced hours, staffing, services, operating costs, credit card fees and marketing expenses. We project we can operate at this level until we reach 60% of 2019 attendance, after which expenses will ramp up.

The closure of our Observatory caused us during the quarter to choose to perform an impairment test related to goodwill. We engaged a third-party valuation consulting firm to perform the valuation process. Based upon the results of the goodwill impairment test of the stand-alone Observatory reporting unit, which is after the intercompany rent expense paid to the Real Estate reporting unit, we determined that the fair value of the Observatory reporting unit exceeded its carrying value by less than 5.0%. Many of the factors employed in determining whether or not goodwill is impaired are outside of our control and it is reasonably likely that assumptions and estimates will change in future periods. We will continue to assess the impairment of the Observatory reporting unit goodwill going forward and that continued assessment may again utilize a third-party valuation consulting firm. Goodwill allocated to the Observatory reporting unit was $227.5 million at September 30, 2020.

#### Expense Reductions

We have undertaken meaningful cost reduction measures to ensure our ongoing strength and position the business optimally through the current environment broken down as follows:

- Named Executive Officer compensation:
- ($0.4) million from reduction in annual base salary for Anthony E. Malkin, our Chairman, President and Chief Executive Officer, and Thomas P. Durels, our Executive Vice President, Real Estate, through December 31, 2020;
- ($1.2) million from the change in age requirement from 60 to 65 for the accounting vesting period for time-based equity compensation; and
- ($2.7) million from the departure of our former Chief Operating Officer.
- Other corporate overhead:
- ($1.5) million of net changes from the addition of investment personnel and reductions in executive and corporate staff, and temporary corporate salary reductions through December 31, 2020; and
- Balance from department budget cuts and lower anticipated spending due to the COVID-19 pandemic.
- In addition, we announced a $3.9 million reduction in 2021 NEO annual equity compensation, comprised of a $2.7 million reduction for Mr. Malkin and $1.2 million reduction for Mr. Durels.
- Property operating expenses
- Year-to-date through September 30th, we reduced property operating expenses by $26 million compared to the prior year period, driven by reduced tenant utilization and our cost reduction initiatives.
- $4 million on an annualized basis of permanent cost reductions due to staffing and other reductions.
- Capital expenditures
- $24 million in lower planned 2020 capital expenditures for building improvements compared to 2019 due to focus only on mandatory spending and work previously commenced.

### Results of Operations

### Overview

The discussion below relates to our financial condition and results of operations for the three and nine months ended September 30, 2020 and 2019, respectively.

### Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019

The following table summarizes our historical results of operations for the three months ended September 30, 2020 and 2019 (dollars in thousands):

| Revenues: | Three Months Ended September 30, 2020 | 2019 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Rental revenue | $139,909 | $150,225 | $(10,316) | (6.9)% |
| Observatory revenue | 4,419 | 37,575 | (33,156) | (88.2)% |
| Lease termination fees | 331 | 2,361 | (2,030) | (86.0)% |
| Third-party management and other fees | 283 | 304 | (21) | (6.9)% |
| Other revenues and fees | 1,633 | 2,408 | (775) | (32.2)% |
| Total revenues | 146,575 | 192,873 | (46,298) | (24.0)% |
| Operating expenses: |  |  |  |  |
| Property operating expenses | 33,836 | 47,894 | 14,058 | 29.4% |
| Ground rent expenses | 2,331 | 2,331 | — | —% |
| General and administrative expenses | 14,517 | 14,421 | (96) | (0.7)% |
| Observatory expenses | 5,931 | 9,089 | 3,158 | 34.7% |
| Real estate taxes | 31,196 | 29,599 | (1,597) | (5.4)% |
| Impairment charge | 2,103 | — | (2,103) | (100.0)% |
| Depreciation and amortization | 44,733 | 44,260 | (473) | (1.1)% |
| Total operating expenses | 134,647 | 147,594 | 12,947 | 8.8% |
| Operating income (loss) | 11,928 | 45,279 | (33,351) | (73.7)% |
| Other income (expense): |  |  |  |  |
| Interest income | 366 | 2,269 | (1,903) | (83.9)% |
| Interest expense | (23,360) | (19,426) | (3,934) | (20.3)% |
| IPO litigation expense | (1,165) | — | (1,165) | (100.0)% |
| Income (loss) before income taxes | (12,231) | 28,122 | (40,353) | (143.5)% |
| Income tax benefit (expense) | (38) | (1,338) | 1,300 | 97.2% |
| Net income (loss) | (12,269) | 26,784 | (39,053) | (145.8)% |
| Private perpetual preferred unit distributions | (1,050) | (234) | (816) | (348.7)% |
| Net income (loss) attributable to common unitholders | $(13,319) | $26,550 | $(39,869) | (150.2)% |

### Rental Revenue

The decrease in rental revenue was attributable to the write-off of straight-line receivables and uncollectible tenant receivables and lower tenant expense reimbursements, consistent with lower expenses.

### Observatory Revenue

Observatory revenues were lower driven by the closure of the Observatory on March 16, 2020 due to the COVID-19 pandemic. The Observatory reopened on July 20, 2020 but New York tourism continues to be impacted by international, national, and local travel restrictions and quarantines. Observatory revenue included $2.0 million of deferred revenue from unused tickets and earned income from tour and travel partners, as well as $1.2 million of fixed license fee for the gift shop.

### Lease Termination Fees

Lower termination fees were earned in the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

### Third-Party Management and Other Fees

Management fee income was consistent with prior year.

### Other Revenues and Fees

The decrease in other revenues and fees was due to lower food and beverage sales and lower parking income due to the COVID-19 pandemic, partially offset by a $0.8 million development project reimbursement.

### Property Operating Expenses

The decrease in property operating expenses was primarily due to lower repair and maintenance costs, lower payroll costs, lower utility costs and lower professional fees. The lower costs are primarily due to lower tenant utilization in our buildings.

### 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 equity compensation expense, partially offset by lower legal leasing costs.

### Observatory Expenses

Lower Observatory expenses were driven by the closure and then limited operations of the Observatory during the three months ended September 30, 2020.

### Real Estate Taxes

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

### Impairment charge

Reflects a $2.1 million write-off of prior expenditures on a development project that is unlikely to continue. There was an $0.8 million development project reimbursement reflected in Other Revenues and Fees.

### Depreciation and Amortization

The increase in depreciation and amortization was consistent with 2019.

### Interest Income

The decrease in interest income was primarily due to lower interest rates.

### Interest Expense

Interest expense increased due to new financings entered into in March 2020 and a draw on our unsecured revolving credit facility. The draw on our credit facility was fully repaid on September 1, 2020.

### IPO Litigation Expense

Represents an accrued expense which reflects an estimated liability associated with the Initial Public Offering-related litigation.

### Income Taxes

The increase in income tax benefit was attributable to higher net loss for the Observatory segment.

### Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

The following table summarizes our historical results of operations for the nine months ended September 30, 2020 and 2019 (dollars in thousands):

| Revenues: | Nine Months Ended September 30, 2020 | 2019 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Rental revenue | $426,021 | $434,713 | $(8,692) | (2.0)% |
| Observatory revenue | 24,049 | 91,039 | (66,990) | (73.6)% |
| Lease termination fees | 1,575 | 3,112 | (1,537) | (49.4)% |
| Third-party management and other fees | 930 | 955 | (25) | (2.6)% |
| Other revenues and fees | 5,254 | 6,591 | (1,337) | (20.3)% |
| Total revenues | 457,829 | 536,410 | (78,581) | (14.6)% |
| Operating expenses: |  |  |  |  |
| Property operating expenses | 105,054 | 131,076 | 26,022 | 19.9% |
| Ground rent expenses | 6,994 | 6,994 | — | —% |
| General and administrative expenses | 48,617 | 44,445 | (4,172) | (9.4)% |
| Observatory expenses | 18,087 | 25,024 | 6,937 | 27.7% |
| Real estate taxes | 90,029 | 86,098 | (3,931) | (4.6)% |
| Impairment charges | 6,204 | — | (6,204) | (100.0)% |
| Depreciation and amortization | 143,609 | 135,179 | (8,430) | (6.2)% |
| Total operating expenses | 418,594 | 428,816 | 10,222 | 2.4% |
| Operating income (loss) | 39,235 | 107,594 | (68,359) | (63.5)% |
| Other income (expense): |  |  |  |  |
| Interest income | 2,529 | 9,907 | (7,378) | (74.5)% |
| Interest expense | (66,906) | (60,712) | (6,194) | (10.2)% |
| Loss on early extinguishment of debt | (86) | — | (86) | (100.0)% |
| IPO litigation expense | (1,165) | — | (1,165) | (100.0)% |
| Income (loss) before income taxes | (26,393) | 56,789 | (83,182) | (146.5)% |
| Income tax benefit | 2,794 | (1,219) | 4,013 | 329.2% |
| Net income (loss) | (23,599) | 55,570 | (79,169) | (142.5)% |
| Private perpetual preferred unit distributions | (3,147) | (702) | (2,445) | (348.3)% |
| Net income (loss) attributable to common unitholders | $(26,746) | $54,868 | $(81,614) | (148.7)% |

### Rental Revenue

The decrease in rental revenue was attributable to the write-off of straight-line receivables and uncollectible tenant receivables and lower tenant expense reimbursements, consistent with lower expenses.

### Observatory Revenue

Observatory revenues were lower driven by the closure of the Observatory on March 16, 2020 due to the COVID-19 pandemic. The Observatory reopened on July 20, 2020 but New York tourism continues to be impacted by international, national, and local travel restrictions and quarantines. 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 nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

### Third-Party Management and Other Fees

Management fee income was consistent with prior year.

### Other Revenues and Fees

The decrease in other revenues and fees was due to lower food and beverage sales and lower parking income due to the COVID-19 pandemic.

### Property Operating Expenses

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

### 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 severance costs and equity compensation expense, partially offset by lower legal leasing costs.

### Observatory Expenses

Lower Observatory expenses were driven by the closure of the Observatory due to the COVID-19 pandemic.

### Real Estate Taxes

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

### Impairment charges

Reflects a $4.1 million write-off of prior expenditures on a potential energy efficiency project that is not economically feasible in today's regulatory environment and a $2.1 million write-off of prior expenditures on a development project that is unlikely to continue.

### Depreciation and Amortization

The increase in depreciation and amortization reflects tenant improvement write-offs due to the early termination of a tenant.

### Interest Income

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

### Interest Expense

Interest expense increased due to new financings entered into in March 2020 and a draw on our unsecured revolving credit facility. The draw on our credit facility was fully repaid on September 1, 2020.

### 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.

### IPO Litigation Expense

Represents an accrued expense which reflects an estimated liability associated with the Initial Public Offering-related litigation.

### Income Taxes

The increase in income tax benefit was attributable to higher 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.

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 September 30, 2020, we had approximately $373.1 million available in cash and cash equivalents, and $1.1 billion 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 September 30, 2020, we had approximately $2.0 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 4.0% and a weighted average maturity of 8.3 years. As of September 30, 2020, excluding principal amortization, we had no debt maturing until 2024. Our consolidated net debt to total market capitalization was 46.3% as of September 30, 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 in March 2020 which we repaid in September 2020. 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 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 September 30, 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 “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 September 30, 2020, we were in compliance with the covenants under the outstanding senior unsecured notes.

### Financial Covenants

As of September 30, 2020, we were in compliance with the following financial covenants:

| Financial covenant | Required | September 30, 2020 | In Compliance |
| --- | --- | ---: | --- |
| Maximum total leverage | \< 60% | 33.2% | Yes |
| Maximum secured debt | \< 40% | 10.2% | Yes |
| Minimum fixed charge coverage | \> 1.50x | 2.8x | Yes |
| Minimum unencumbered interest coverage | \> 1.75x | 5.2x | Yes |
| Maximum unsecured leverage | \< 60% | 28.2% | 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).

### Office Properties(1)

| Total New Leases, Expansions, and Renewals | Nine Months Ended September 30, 2020 | 2019 |
| --- | ---: | ---: |
| Number of leases signed(2) | 64 | 106 |
| Total square feet | 459,033 | 903,010 |
| Leasing commission costs(3) | $4,356 | $16,071 |
| Tenant improvement costs(3) | 20,486 | 52,533 |
| Total leasing commissions and tenant improvement costs(3) | $24,842 | $68,604 |
| Leasing commission costs per square foot(3) | $9.49 | $17.80 |
| Tenant improvement costs per square foot(3) | 44.63 | 58.18 |
| Total leasing commissions and tenant improvement costs per square foot(3) | $54.12 | $75.98 |

### Retail Properties(4)

| Total New Leases, Expansions, and Renewals | Nine Months Ended September 30, 2020 | 2019 |
| --- | ---: | ---: |
| Number of leases signed(2) | 7 | 8 |
| Total square feet | 50,990 | 54,779 |
| Leasing commission costs(3) | $1,997 | $1,856 |
| Tenant improvement costs(3) | 7,345 | 2,214 |
| Total leasing commissions and tenant improvement costs(3) | $9,342 | $4,070 |
| Leasing commission costs per square foot(3) | $39.16 | $33.88 |
| Tenant improvement costs per square foot(3) | 144.04 | 40.42 |
| Total leasing commissions and tenant improvement costs per square foot(3) | $183.20 | $74.30 |

(1) Excludes an aggregate of 506,453 and 511,755 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 506,453 and 511,755 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.

| Total Portfolio | Nine Months Ended September 30, 2020 | 2019 |
| --- | ---: | ---: |
| Capital expenditures (1) | $35,618 | $99,266 |

(1) Excludes tenant improvements and leasing commission costs.

As of September 30, 2020, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $130.1 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.

### 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 nine months ended September 30, 2020.

### Off-Balance Sheet Arrangements

As of September 30, 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.

During August 2020, we announced the suspension of our third and fourth quarter 2020 dividends to holders of ESRT's Class A common stock and Class B common stock and to holders of our Series ES, Series 250 and Series 60 operating partnership units and Series PR operating partnership units. We expect to have no taxable income in 2020, and therefore no requirement to pay any dividend on our common stock in either the third or fourth quarter of 2020. We and our Board believe that payment of a dividend is currently not the highest and best use of our balance sheet.

### Distributions to Securityholders

Distributions and dividends amounting to $65.4 million and $96.4 million have been made to securityholders for the nine months ended September 30, 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 September 30, 2020 and the month of October 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) |
| --- | ---: | ---: | ---: | ---: |
| July 2020 | 656,318 | $6.72 | 656,318 | $380,982 |
| August 2020 | — | $— | — | $380,982 |
| September 2020 | 477,620 | $6.14 | 477,620 | $378,050 |
| October 2020 | 1,952,013 | $6.21 | 1,952,013 | $365,934 |

### Cash Flows

### Comparison of Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019

*Net cash*. Cash and cash equivalents and restricted cash were $428.0 million and $330.3 million, respectively, as of September 30, 2020 and 2019. The increase was primarily due to the issuance of financings, partially offset by the repurchase of common shares during the nine months ended September 30, 2020.

*Operating activities*. Net cash provided by operating activities decreased by $34.8 million to $163.6 million for the nine months ended September 30, 2020 compared to $198.4 million for the nine months ended September 30, 2019, primarily due to changes in working capital and settlement of derivative contracts.

*Investing activities*. Net cash provided by investing activities decreased by $323.7 million to $113.4 million used in investing activities for the nine months ended September 30, 2020 compared to $210.3 million net cash provided by investing activities for the nine months ended September 30, 2019, due to proceeds from maturing short-term investments in 2019.

*Financing activities*. Net cash provided by financing activities increased by $455.4 million to $106.2 million provided by financing activities for the nine months ended September 30, 2020 compared to $349.2 million used in financing activities for the nine months ended September 30, 2019, primarily due to the net proceeds from issuance of debt in the nine months ended September 30, 2020 compared to the payment of debt in the nine months ended September 30, 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, impairment charges 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):

*(unaudited)*

*(unaudited)*

|  | Three Months Ended September 30, 2020 | 2019 | Nine Months Ended September 30, 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $(12,269) | $26,784 | $(23,599) | $55,570 |
| Add: |  |  |  |  |
| General and administrative expenses | 14,517 | 14,421 | 48,617 | 44,445 |
| Depreciation and amortization | 44,733 | 44,260 | 143,609 | 135,179 |
| Interest expense | 23,360 | 19,426 | 66,992 | 60,712 |
| Income tax expense (benefit) | 38 | 1,338 | (2,794) | 1,219 |
| Impairment charges | 1,259 | — | 5,360 | — |
| IPO litigation expense | 1,165 | — | 1,165 | — |
| Less: |  |  |  |  |
| Third-party management and other fees | (283) | (304) | (930) | (955) |
| Interest income | (366) | (2,269) | (2,529) | (9,907) |
| **Net operating income** | $72,154 | $103,656 | $235,891 | $286,263 |
| **Other Net Operating Income Data** |  |  |  |  |
| Straight-line rental revenue | $395 | $5,174 | $5,878 | $13,781 |
| Net increase in rental revenue from the amortization of above-and below-market lease assets and liabilities | $679 | $1,682 | $2,953 | $5,781 |
| Amortization of acquired below-market ground leases | $1,957 | $1,957 | $5,873 | $5,783 |

### 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 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, acquisition expenses, severance expenses and IPO litigation expense. 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):

*(unaudited)*

*(unaudited)*

|  | Three Months Ended September 30, 2020 | 2019 | Nine Months Ended September 30, 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $(12,269) | $26,784 | $(23,599) | $55,570 |
| Private perpetual preferred unit distributions | (1,050) | (234) | (3,147) | (702) |
| Real estate depreciation and amortization | 43,029 | 43,303 | 138,555 | 132,217 |
| Impairment charges | 1,259 | — | 5,360 | — |
| **FFO attributable to common stockholders** | 30,969 | 69,853 | 117,169 | 187,085 |
| Amortization of below-market ground leases | 1,957 | 1,957 | 5,873 | 5,873 |
| **Modified FFO attributable to common stockholders** | 32,926 | 71,810 | 123,042 | 192,958 |
| Loss on early extinguishment of debt | — | — | 86 | — |
| Severance expenses | 805 | — | 3,813 | — |
| IPO litigation expense | 1,165 | — | 1,165 | — |
| **Core FFO attributable to common stockholders** | $34,896 | $71,810 | $128,106 | $192,958 |
| **Weighted average Operating Partnership units** |  |  |  |  |
| Basic | 280,940 | 298,151 | 285,640 | 298,117 |
| Diluted | 280,940 | 298,151 | 285,640 | 298,117 |

### 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 nine months ended September 30, 2020, we signed 0.5 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.

As of September 30, 2020, there were approximately 1.0 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 10.3% of the net rentable square footage of the properties in our portfolio. In addition, leases representing 2.6% and 6.2% 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 2.7% and 6.6%, 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, including 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. The Observatory was closed for the entirety of the second quarter 2020 and reopened the 86th floor observation deck on July 20, 2020 with new protocols and processes under New York State's Phase 4's Low-Risk Outdoor Arts and Entertainment guidelines. The 102nd floor observation deck reopened on August 24, 2020.

Observatory revenues for the first two months of 2020 increased by 13.2%, after adjusting the for the 102nd floor observation deck which was closed during the first quarter of 2019.

The Observatory hosted approximately 30,000 visitors in the third quarter of 2020, compared to 1,042,000 visitors in the third quarter of 2019, a decrease of 97.1%. In spite of the ongoing nature of international, national, and local travel restrictions and quarantines, the Observatory has seen steady, weekly increases in visitors. Our return of attendance to pre- COVID-19 levels is closely tied to national and international travel trends and these remain adversely impacted by developments around the COVID-19 pandemic.

Observatory revenues for the three months ended September 30, 2020 were $4.4 million, driven by low visitation levels and less days of operation in the quarter. Observatory revenue included $2.0 million of deferred revenue from unused tickets and earned income from tour and travel partners, as well as $1.2 million of fixed license fee for the gift shop.

Observatory revenues and admissions are dependent upon the following: (i) the number of tourists (domestic and international) who 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.

## Market risk

As filed, 4,202 characters.

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 September 30, 2020, our floating rate debt of $125.0 million represented 3.3% of our total enterprise value.

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 an interest rate LIBOR swap agreement with an aggregate notional value of $265.0 million, which fixes the LIBOR interest rate at 2.1485% and matures on August 24, 2022. This interest rate swap as of September 30, 2020 has been designated as a cash flow hedge and is deemed highly effective with a fair value of $(10.2) million which is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.

Based on our variable balances, interest expense would have increased by approximately $1.3 million for the nine months ended September 30, 2020, if short-term interest rates had been 1% higher. As of September 30, 2020, the weighted average interest rate on the $1.8 billion of fixed-rate indebtedness outstanding was 4.02% per annum, with maturities at various dates through March 17, 2035.

As of September 30, 2020, the fair value of our outstanding debt was approximately $2.1 billion, which was approximately $118.4 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 swap 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.

## Controls and procedures

As filed, 2,333 characters.

### 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 Chief 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.

As of September 30, 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 Chief 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 Chief 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 Chief 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.

## Risk factors

As filed, 6,140 characters.

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 has had, and any future public health crisis could have, serious adverse effects on our and our tenants’ businesses, operations, and financial condition, on local, national, and global economic activity, and on volatility and negative pressure in financial markets.**

The COVID-19 pandemic has impacted the entire U.S., including the states of New York and Connecticut where we own office and retail property assets and operate the Observatory. Measures taken by local, state and federal authorities to prevent, remediate or limit the impact of COVID-19, including quarantines, restrictions on travel, “stay-at-home” or “shelter-in-place” orders, social distancing practices, restrictions on business operations, construction projects and certain contract and judicial remedies, have had adverse effects on us and our tenants, which are largely continuing. As a result of such restrictions, we had to close the Observatory to the public on March 16, 2020 until its re-opening as an Outdoor Attraction (excluding the 102nd Floor) on July 20, 2020, and during such closure all Observatory revenue was discontinued. Since then, with continued international and national travel restrictions, visitor volume has lagged our earlier expectations, and we cannot predict when we may achieve Observatory revenues comparable to 2019 when approximately 64% of our visitors were from other countries.

The COVID-19 pandemic and the measures taken to limit its spread have adversely impacted and may continue to adversely impact adversely some or all of our tenants regarding, among other things, their ability or willingness to pay rent in full, or at all, or on a timely basis, and our ability to collect rent from them. A number of our tenants across various industries have announced temporary closures of their leased premises and requested rent deferral or abatement. For the second and third quarters of 2020, we collected a lower percentage of billings than in comparable periods in prior years across both our office and retail portfolios, and we have made rent deferral agreements with certain tenants. We have seen, and may continue to see, circumstances in which tenants request rent deferral, rent abatement or early lease termination and/or default in lease obligations. Additionally, we have seen, and may continue to see, certain tenants challenge the existence of such obligations and/or close temporarily or permanently and/or declare bankruptcy, all of which individually or collectively reduce our revenue and such reduction could be material. While some of our tenants have been able to qualify for COVID-related temporary government assistance, the termination of such assistance programs may increase the severity of the pandemic’s economic damage. Backlogs and obstacles from government moratoriums and/or limits (including temporary closure of certain court systems) which directly or indirectly abridge the enforcement of lease obligations and related guarantees may also affect our ability to collect rent or enforce related remedies. The scope and duration of the foregoing events are uncertain and unpredictable.

In addition, the COVID-19 pandemic, and any future public health crisis, could have a material adverse effect on our human capital management. While we have implemented enhanced health and safety protocols in accordance with New York State guidelines, our employees, including our senior management team, remain subject to risk of illness, which would create new challenges in leadership and execution. Although the majority of our corporate employees have returned to the office, certain employees continue to work remotely, which could strain our team efficiencies, collaboration culture, cybersecurity, employee morale, and management’s ability to supervise our employees and manage our business.

Moreover, real estate companies like us may be subject to claims from employees, tenants, vendors, visitors or the public that they were exposed to COVID-19 by our inadequate protective measures or were unnecessarily inconvenienced or damaged by our excessive protective measures.

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

- 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;
- temporary or long-term reduction in demand for commercial office space based on new acceptance of employees’ remote work from home;
- 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 would also reduce our access to capital and/or our equity currency for new acquisitions; and
- reduction of our cash flows and our ability to pay dividends.

The rapid developments regarding the COVID-19 pandemic preclude reliable predictions as to its ultimate adverse impact, which largely arises from factors beyond our control. Many risk factors which were described in our 2019 Annual Report, prior to the emergence of the pandemic, should now be considered to have heightened significance as a result of the COVID-19 pandemic.

Filed Nov 5, 2020.
Source: SEC EDGAR, the filing index for accession 0001628280-20-015680. Last ingested by Listed: Oct 24, 2026, 15:13 ET. No prices; not investment advice.