Empire State (ESRT) Q1 2026 Earnings Transcript

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Date

April 30, 2026

Call participants

• Chairman, President, and Chief Executive Officer — Anthony E. Malkin
• Executive Vice President, Chief Financial Officer, and Chief Operating Officer — Christina Chiu
• Executive Vice President, Leasing — Ryan Kass
• Executive Vice President, Chief Accounting Officer, and Treasurer — Stephen V. Horn

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Takeaways

• Core FFO per diluted share -- $0.20, reported for the quarter.
• Same-store property cash NOI growth -- 5.5% increase year over year, primarily due to higher base rent, tenant reimbursement income, and approximately $3 million of nonrecurring items; adjusted increase was 1.3% excluding these items.
• Leased percentage — office portfolio -- 93% at quarter end, maintaining thirteen consecutive quarters above 90%.
• New and renewal office lease volume -- 113,000 square feet signed in the period with average term of ten years; average lease duration across the commercial portfolio reached 12.2 years.
• Manhattan office mark-to-market spreads -- 6.8% positive, representing nineteenth consecutive quarter of positive spreads in this segment.
• Leasing pipeline -- Approximately 280,000 square feet in negotiation, a sequential increase from 170,000 square feet at the prior quarter end.
• Key leasing transactions -- Included a thirteen-year, 60,000-square-foot new lease with Steve Madden and a twenty-year, 22,000-square-foot renewal with JPMorgan.
• Empire State Building Observatory NOI -- $10.6 million for the quarter, noted as the seasonally weakest period; NOI decreased by $3.5 million year over year excluding gift shop revenue.
• Observatory revenue per capita -- Grew approximately 1% year over year, excluding license fees from the gift shop.
• Retail asset acquisition — North 6th Street -- Acquired 4155 North 6th Street, a 22,000-square-foot vacant retail asset, for $46 million, completing the redeployment of proceeds from prior suburban property disposition.
• Loan refinancing -- Completed $184 million in financings, including a $130 million senior note at 5.99% due in 2032 and a $53.5 million, ten-year interest-only mortgage at 5.3% fixed for 10 Union Square East.
• Debt maturity profile -- No unaddressed debt maturities until January 2028 following refinancing actions.
• Net debt to adjusted EBITDA -- 6.3 times, lower than sector peers.
• Commercial portfolio leased percentage — start and end metrics -- Began the year at 93.6% leased with 210,000 square feet of known vacates through year end; leasing plan is set to offset these vacates, with anticipated year-end occupancy of 90%-92%.
• Same-store multifamily NOI growth -- Increased 9% year over year, with net rents up 6% and period-end occupancy at 96.4%, currently over 98% leased.
• Funds available for distribution (FAD) -- Core FAD reached approximately $33 million, significantly higher than $1 million the prior year's first quarter and above the $31 million in fourth quarter 2025, while FAD CapEx dropped to $22 million from $53 million a year prior.
• North 6th Street urban retail portfolio -- Assembled over roughly two and a half years to 124,000 square feet and approximately $300 million invested, currently fully controlled, with no leverage.
• Unchanged full year 2026 guidance -- Management affirmed all prior guidance metrics for the year.

Summary

Empire State Realty Trust (NYSE:ESRT) emphasized its proactive capital allocation by redeploying sales proceeds from suburban properties into prime urban retail and reinforcing its balance sheet with new long-term financings, resulting in no unaddressed maturities before 2028. Executed leasing activity outpaced sequential quarters, with robust renewals, new tenant commitments, and positive mark-to-market office rent spreads, while large-scale retail and office assets were highlighted as core growth platforms. Financial discipline translated into notable FAD and NOI gains, further enhanced by reduced capital expenditures and tightly managed leverage.

• Christina Chiu specified new retail acquisitions reflected a targeted capital recycling trade to avoid taxable gain recognition and boost long-term cash flow, particularly given Metro Center’s low rent growth profile.
• Ryan Kass noted that the proportion of office space held off-market for consolidation fell from roughly 20% to 15% after recent anchor leases, with expectations for additional large-block availabilities to come online in the coming weeks and months.
• Christina Chiu stated, "On North 6th Street, we have said for our portfolio—the other assets we acquired—we acquired at high 4s to 5%, and we expected to be around 6%," with future yields anticipated higher for the newest asset after lease-up.
• Steve Horn explained the first quarter's substantial FAD increase was due to "meaningful reduction in FAD CapEx," which had previously been elevated by large-scale lease-up investments.
• Management highlighted that approximately 85% of annual NOI and 60% of annual NOI typically accrue in the remainder of the year, underlining the seasonal concentration of results.
• Ryan Kass confirmed that recent leasing at 130 Mercer is "supportive of our underwriting," with better-than-projected transaction speed and free rent terms.
• Anthony E. Malkin emphasized prudence in not adjusting Observatory guidance, citing macro uncertainties, ongoing global conflicts, "reduced travel into the U.S," and aviation supply chain disruptions as monitoring areas.
• Tenant demand was broad-based by industry, including finance, professional services, TAMI, and consumer products.
• Anthony E. Malkin stated that the company is observing more capital structure distress and expects opportunities from maturities and end-of-fund-life situations, especially in the office sector.

Industry glossary

• TAMI: Technology, Advertising, Media, and Information sector, frequently cited as a demand driver for New York City commercial real estate.
• Mark-to-market lease spread: The percentage difference between the rent on recently executed leases and the rent on expiring leases for the same space.
• NOI: Net operating income, the company's operating income from property assets, excluding certain corporate or non-cash items.
• CapEx: Capital expenditures, funds spent to acquire or upgrade physical assets such as property.
• FAD: Funds available for distribution, a REIT-specific metric reflecting cash that can be distributed to shareholders after capital expenditures.

Full Conference Call Transcript

Anthony E. Malkin: Good afternoon, everyone. Yesterday, we reported Empire State Realty Trust, Inc.'s first quarter results. We began the year with solid earnings, steady execution across our portfolio, and continued contribution from the Observatory. We acquired a high-quality retail asset on North 6th Street with recycled investment as part of our concentrated effort to reallocate our balance sheet capacity towards growth, and completed financings which address our debt maturities all the way into 2028 and maintain balance sheet flexibility. Today's environment presents a wide range of macroeconomic outcomes, some of which could adversely affect our business. That said, as we have said consistently, we do not seek to predict the weather. We have an arc.

From that arc, we operate from a position of strength and with great latitude. We derive our revenue from diverse income streams and a broad tenant base. A substantial portion of our revenue is from long-term leases, and we maintain high leased percentages, all supported by our balance sheet. We navigate freely and act decisively when opportunities arise. Pages five through nine of our investor presentation available at esrtreit.com highlight our ongoing program to trade into opportunities which provide better prospects for growth at our desired capitalization and levels of risk. Cash flow growth is key to our focus. The Manhattan office leasing environment remained healthy and active for our top-of-tier product.

Tenant demand is strong and diverse, availability of high-quality space remains limited, and there is no new construction at our price point. Ryan will provide highlights on occupancy, leased percentage, and what we expect to achieve by year end. Much has been written about AI as a disruptor of office demand. In New York City, our leasing pipeline remains active, tour volume is strong, and tenants across industries continue to make long-term commitments to high-quality space. Office leases executed this quarter averaged over 10.5 years in term. Our commercial portfolio is 93.2% leased. Our leasing pipeline is healthy, and we expect occupancy gains for the full year.

We are delighted to have leased the first floor at our 130 Mercer Street acquisition and have a strong pipeline of leases in negotiation which will hit in February, about which Ryan will speak. We achieved our nineteenth consecutive quarter of positive mark-to-market rent spreads in our Manhattan office portfolio, which reflects sustained demand for our best-in-class buildings. We continue to see an upward trajectory in net effective rents, and our portfolio is well positioned to deliver strong operating performance. Our iconic Empire State Building Observatory deck remains a market leader and a meaningful contributor to cash flow. NOI was $10.6 million in the first quarter, our seasonally lightest quarter.

Revenue per capita increased approximately 1% year over year excluding gift shop license fees. Visitation from international and budget-conscious tourists, centric pass programs, remains soft and impacted our results. Against this backdrop, we focus on our domestic and direct sales program which support higher revenue per visitor and better margin performance while we await the return of our traditional international demand. Empire State Realty Trust, Inc. has been a leader in sustainability for more than a decade. The Empire State Building was the first building in New York State to achieve LEED version 5 Platinum status.

We focus on measurable business outcomes which drive energy savings, operational efficiency, and high-performance buildings for our tenants and reduce risk for our shareholders and stakeholders. Our sustainability leadership attracts tenants and is part of their satisfaction when they renew and/or expand. Our entire organization remains laser focused on the company's five priorities: lease space, sell tickets to our Empire State Building observation deck experience, manage our balance sheet, identify growth opportunities, and achieve our sustainability goals. These priorities are directly aligned with long-term shareholder value creation. Christina, Ryan, and Steve will provide more detail on our results and outlook. Christina?

Christina Chiu: Thanks, Jane. I will provide an update on our Observatory business and capital markets activity, which includes a high-quality retail acquisition on North 6th Street as part of our capital recycling and $184 million of financings that result in no unaddressed debt maturities until 2028. Our iconic Empire State Building Observatory continues to be a highly differentiated component of our platform, characterized by low capital intensity, strong operating margin, and dynamic pricing capability that helps mitigate inflationary pressures over time. We recognize we are in a period of heightened uncertainty with the potential for macro risks and geopolitical tensions to weigh on economic growth and tourism.

As Tony mentioned, the first quarter is historically our seasonally lightest, which makes it difficult to draw meaningful conclusions from results this early in the year. The balance of the year typically represents approximately 85% of our annual NOI, with approximately 60% coming from the second half of the year. Our focus remains on the levers within our control: run the operations well, cultivate our brand, enhance the guest experience, broaden our marketing reach, control expenses, and be transparent with the market as external factors play out. Longer term, the Observatory has proven resilient through cycles and has attractive cash flow characteristics. CapEx is low, and a high proportion of NOI flows directly to our bottom line.

Shifting to our investment activity, at the end of the first quarter, we acquired 4155 North 6th Street, a newly constructed, currently vacant prime retail asset at the corner of 10th and North 6th Street in Williamsburg, for $46 million, comprising approximately 22,000 square feet. This acquisition, together with our purchase of 80–90 North 6th Street in mid-2025, completed the redeployment of investment capacity from the December 2025 disposition of Metro Center without recognition of a taxable gain.

In aggregate, we exited our last suburban commercial property and reinvested in approximately 37,000 square feet of prime retail on North 6th Street: one redevelopment asset on a strategic corner anchored by a key long-term lease we executed last year and one newly developed asset ready for lease. Our North 6th Street portfolio now totals 124,000 square feet and continues to perform strongly and in line with our expectations. These transactions reflect our strategy, as outlined on pages five through nine of our investor presentation, to rotate capital into opportunities with stronger growth prospects at our desired capitalization and risk profile.

We built this position over approximately 2.5 years for roughly $300 million, all without leverage, which uniquely positions us to curate tenant mix, drive leasing momentum, and enhance long-term value across our holding. We built on Empire State Realty Trust, Inc.'s core strength in urban retail and achieved meaningful scale. We now own a dominant position and control four key street-corner locations in a sought-after, supply-constrained, and otherwise fragmented ownership market with a premium mix of tenants and significant mark-to-market opportunity over time. On our balance sheet, year to date, we have executed $184 million of financing.

In mid-April, we announced the issuance of $130 million of senior notes in a private placement at a rate of 5.99% which will fund in mid-July and mature in 2032. Proceeds will be used toward paydown of existing debt, including our line of credit. We also closed on a $53.5 million mortgage refinancing for 10 Union Square East. The 10-year interest-only loan carries a fixed interest rate of 5.3% and replaces a $50 million loan that matured on April 1, 2026. With these financings, we have no unaddressed debt maturity until January 2028. Our balance sheet is a key strength.

From our continued proactive approach to balance sheet management, we have enhanced flexibility and durability, reduced risk, and are in a position to capitalize on attractive investment opportunities as they emerge. We maintain ample liquidity, lower leverage versus sector peers at 6.3 times net debt to adjusted EBITDA, and a well-laddered debt maturity schedule providing significant financial flexibility. Our 100% owned asset portfolio with limited secured debt also provides capital structure optionality. We continue to underwrite new investments across New York City office, retail, and multifamily, evaluate strategic capital recycle opportunities that are accretive to long-term cash flow growth, and assess opportunistic share repurchases.

New York City's strength is its underlying property fundamentals, and Empire State Realty Trust, Inc. is a pure-play New York City REIT aligned with live, work, play, and visit demand drivers. We continue to look for ways to further enhance the quality of our portfolio and grow cash flows through disciplined, value-driven capital allocation. I will now turn the call over to Ryan to review our leasing activity.

Ryan Kass: Thanks, Christina. Good afternoon, everyone. In the first quarter, we signed 113,000 square feet of new and renewal leases. The average lease term for office transactions during the quarter was 10 years. We currently have approximately 280,000 square feet of leases in negotiation, up from the 170,000 square feet we cited in our fourth quarter call, and tour activity continues to be robust. In today's bifurcated market of haves and have-nots, Empire State Realty Trust, Inc. firmly is in the have category. Demand continues to concentrate in high-quality, modernized, amenitized, transit-oriented buildings owned by well-capitalized landlords with proven operating platforms. Our best-in-class portfolio enables us to capture this demand as reflected in our leasing pipeline.

Last quarter, we highlighted that we will see fluctuations in our lease percentage during the year due to known move-outs. We also said that due to our number of larger space availabilities—we have 29 spaces to lease today, of which 16 are full floor—our lease percentage changes will likely be lumpy. Importantly, we remain confident in our year-end occupancy guidance of 90% to 92%. We started the year at 93.6% leased. We have approximately 210,000 square feet of known vacates through the balance of the year, and our present leasing plan will more than cover those vacates, and we will end the year above the year's starting number.

Our office portfolio is currently 93% leased, which marks the thirteenth consecutive quarter above 90%. As of today, approximately 15% of our available office space is held off market for consolidation into larger availabilities. The first quarter marked our nineteenth consecutive quarter of positive mark-to-market lease spreads in our Manhattan office portfolio, underscoring our sustained pricing power. We achieved mark-to-market spreads of 6.8% in Manhattan office, which demonstrates our ability to grow rents and lock in long-term cash flow. Average lease duration was 12.2 years across the commercial portfolio.

Notable leases signed during the quarter include a 13-year, 60,000-square-foot new office lease with Steve Madden for the entire third and fourth floors at 501 Seventh Avenue, and a 20-year, 22,000-square-foot retail renewal lease with JPMorgan at 1 Grand Place. New York City's leasing market remains strong and provides a favorable backdrop for execution. Demand is broad-based across industries, including finance, professional services, TAMI, and consumer products. Subsequent to quarter end, in April, we signed a 10.5-year, 38,000-square-foot new office lease for the entire third floor at 130 Mercer with a financial services tenant. This brings our lease percentage from 70% at acquisition to 80%, and we have two full floors left to lease.

We launched our marketing campaign in January and are encouraged by the early traction, which supports our underwriting and is ahead of completion of our planned capital improvement. Activity remains strong, supported by the scarcity of institutional-quality space in the supply-constrained submarket. We are pleased to see our business plan take hold. Lastly, our multifamily portfolio continues to deliver solid performance. Same-store NOI increased 9% year over year, and net rents increased 6%. We ended the quarter at 96.4% occupied due to the vacancies in units which rolled out of 421a at Hudson Landing during the slower winter months, and we are now over 98% leased. Thank you. I will now turn the call over to Steve. Steve?

Stephen V. Horn: Thanks, Ryan. For the first quarter of 2026, we reported core FFO of $0.20 per diluted share. Same-store property cash NOI, excluding lease termination fees, increased 5.5% year over year. The increase was primarily attributed to growth in base rent and tenant reimbursement income, as well as approximately $3 million of nonrecurring items recognized in the first quarter of 2026, which predominantly consisted of lease modification revenue and insurance recoveries. These increases were partially offset by operating expense growth. Adjusted for these nonrecurring items, same-store property cash NOI increased 1.3%. Our observation deck generated approximately $10.6 million of NOI in the first quarter, which is generally our lightest quarter.

Excluding the gift shop, this represents a year-over-year decline of approximately $3.5 million. As discussed last quarter, the timing of gift shop revenue will be more heavily weighted to the fourth quarter due to a COVID-era license amendment that both reduced our fixed payments and lowered the thresholds for percentage-based payments to us. This provides us with upside tied to the recovery of international visitation. Revenue per capita increased by approximately 1% year over year excluding the aforementioned gift shop revenue.

Turning to funds available for distribution, core FAD for the first quarter was approximately $33 million, up significantly from approximately $1 million in the first quarter of 2025 and above the $31 million we generated in the fourth quarter of 2025, despite the first quarter being seasonally light for the observation deck. This improvement reflects our meaningful reduction in FAD CapEx, which was approximately $22 million this quarter as compared to $53 million in the first quarter of 2025. As a reminder, the elevated levels of CapEx in 2024 and early 2025 reflected spend related to a significant lease-up we executed since 2021, which drove our commercial portfolio to over 93% leased today.

Lastly, our guidance for full year 2026 remains unchanged. This concludes our prepared remarks. We will now open the call for questions.

Operator: We will now be conducting a question and answer session. One moment please while we poll for your questions. Our first questions come from the line of Manus Ibekwe with Evercore. Please proceed with your questions.

Manus Ibekwe: Yes, great. Thanks for taking the question. Christina, maybe starting with you. If you could touch a little bit on the opportunities you see in the market for 2026 that you are currently looking at underwriting. Obviously, I understand you cannot talk about details, but would be interested to get an update with a little bit more detail on the opportunity set that you are observing right now.

Anthony E. Malkin: Could you repeat that question? We did not understand.

Christina Chiu: 2026. Okay.

Anthony E. Malkin: Yeah.

Christina Chiu: Yeah. I think one thing that we have long discussed is we have been surprised by the lack of distress. We were hoping for more of a basis reset. We do sense that more recap opportunities may come online. A lot of the extensions of loans have already taken place, and the question will be, at some point, you have to deal with the maturity wall and predominant extension. So that can be a source. And in other instances, we look for opportunities where people are either at the end of fund life, want to wrap up their investment, and we can be part of the solution. As I mentioned, we continue to actively look at office, retail, and multifamily.

And we will look for situations where we can extract and add value and be able to generate good return.

Manus Ibekwe: Got it. Perfect. Thank you. And maybe one follow-up question on an item that was mentioned in the prepared remarks in terms of the 15% of space that is available that is held back for further consolidation of space. I was wondering if you could clarify a little on the leasing strategy there and how we should think about timing.

Ryan Kass: When we spoke previously, that number was actually higher at roughly 20%. Because of the success of the Steve Madden transaction, and also we have been able to bring the portion of the One Grand Central large-block space online, we have been able to bring that down to 15%. There are four or five large blocks and full floors that we work to create over the next weeks to months, and that space will come online as quickly as possible.

Manus Ibekwe: Okay. Thank you. That is it for me.

Operator: Our next questions come from the line of Blaine Matthew Heck with Wells Fargo. Please proceed with your questions.

Blaine Matthew Heck: You all have done a particularly good job of leasing spec or prebuilt suites within your portfolio over the past few years. So I wanted to ask whether there was a significant difference in demand for that type of space versus full floors. It just seems as though you are leaning a little bit more towards full floors with your existing vacancy, but maybe I am reading that wrong.

Ryan Kass: The prebuilt portion of our portfolio is doing extremely well. Right now, we have single-digit prebuilt available, and we are actively showing it, in offers, and continuing to negotiate on those plans. What we do is, for every space, every floor, we have a master plan for the building and the floor, and we evaluate everything on a case-by-case basis—what will yield the best ROI for the portfolio. What we have found is right now, based on the current market demands and the conditions of the spaces, it makes sense to move forward with some of the consolidations that we spoke about previously.

Christina Chiu: And I think I would not read too much into the commentary. At 130 Mercer, we happen to have three full floors, one of which we executed on leasing a full floor. So we seek to optimize availability. The common link in our leasing activity is we provide top-tier space in our price point and emphasize service, quality, and the experience at this segment of the market, and we provide that whether it is full floor or in prebuilt spaces.

Ryan Kass: Agreed. And when we look at it, it is a healthy mix within our current pipeline of that 280,000 square feet. The prebuilts also act as a great opportunity to build a relationship and work with our tenants long term to renew and expand them, and that is a testament to the over 3 million square feet of expansions that we have done in the portfolio over time.

Blaine Matthew Heck: Got it. Thanks. That is very helpful commentary. And then second, can you just talk a little bit more about the strategic rationale of buying a vacant retail property at this point versus maybe continuing to reinvest in your existing portfolio through share buybacks? Was that just more of a function of needing to reinvest your proceeds for the 1031 exchange?

Christina Chiu: Yeah, sure. As we have mentioned, in our capital allocation, buybacks are definitely a part of the consideration. Very specifically, on the last two North 6th Street acquisitions, that represented a deployment of the Metro Center assets. If you think about it, we wanted to avoid recognition of gain, which would be leakage of proceeds. We wanted to exit out of a market where, although there can be rental and tenant demand, it requires meaningful CapEx and fundamentally does not have rent growth.

In contrast, North 6th Street provides a combination of both current yield as well as outlook for continued cash flow growth over time, especially as that corridor continues to strengthen amid strong underlying property fundamentals and great demographics. So for us, that was a very specific capital recycling trade. It does not mean we will no longer do share buybacks. It is something that is most beneficial for shareholders if we were to deploy in that manner. And, separately, we have great liquidity where we can also do share buybacks over time.

Blaine Matthew Heck: Okay. Great. Thank you.

Operator: Our next questions come from the line of Seth Eugene Bergey with Citi. Please proceed with your questions.

Seth Eugene Bergey: I just wanted to go back to the Observatory. With visitation trends down about 18% for the first quarter, I understand it is a seasonally weakest quarter, but what gives you confidence to achieve the guide for the rest of the year, and any color you can add on what you are seeing in April?

Anthony E. Malkin: Of course, we update by quarter, so we appreciate your question for April. What we have seen to date is, in our slowest period, an impact from factors which are, we believe, significant to the market in general. We are aware that other attractions have done poorly in the first quarter. We have folks who disclose, and we have other folks through whom we have either information sharing or access to information. As we go forward, 85% of the year is in front of us, and so that is really where we hang our hat. Let us see what happens in this quarter.

If you recall last year, we did look at things after the second quarter on the basis of what was accomplished there. What we see at this point is we still have a war on. We still have reduced travel into the U.S. We still have significant disruption in delivery of things like aviation fuel and gasoline and diesel for both people to travel internationally and locally. We are keeping a close eye on things. We think that changes there could drive changes in general for the year. It is not correct for us to make a change based on 15% of the year to date. We will keep a strong weather eye.

Seth Eugene Bergey: Great. And then maybe just as a follow-up on 130 Mercer, now that you have executed some additional leasing on the building, how does the project compare to your initial underwriting?

Ryan Kass: Overall, the lease is supportive of our underwriting. Net effective rents are in the high 90s for the transaction that we just completed. TIs are consistent, and the free rent is a little bit better. The transaction occurred faster than we had underwritten, and it is before the start of our capital improvement program. We launched the marketing in June. We are encouraged by the early traction and, again, completing a transaction ahead of our planned capital improvements. Activity is strong. There is scarcity of institutional-quality space down there. We are a differentiator for our large floor plate, the amenities, our financial stability, and our service. So, excited.

Seth Eugene Bergey: Great. Thank you.

Operator: Our next questions come from the line of Dylan Robert Burzinski with Green Street. Please proceed with your questions.

Dylan Robert Burzinski: Hi, guys. I joined late, so I might have missed it. But did you share the yield-on-cost estimates for the recent retail acquisition?

Christina Chiu: You missed it because we did not say it. On North 6th Street, we have said for our portfolio—the other assets we acquired—we acquired at high 4s to 5%, and we expected to be around 6%. That includes lease-up of some vacancy and delivery of storefronts under development. Given this is a lease-up—newly built, newly constructed, and ready for lease—we would expect yields higher than that, and we will provide more as we continue to make more progress. This is more of a value-add as compared to other existing income properties.

Dylan Robert Burzinski: And just maybe going back to you being opportunistic on acquisitions in terms of property type. As you look at the market today, are you seeing more opportunities within any given property type? I know in the past it was likely office, but given office fundamentals in New York continue to be very strong, is that changing at all? Just trying to get your sense for what you are seeing in terms of opportunities out there today.

Anthony E. Malkin: What we hear more about today is different capital structures have begun to reach the end of the road. There was the wall of maturities, there were extensions—kick the can down the road—and now we hear more about situations where the capital structure is broken, people do not want to put more money in, and they look to resolution. Most of what we hear about is in office. Different situations which we have seen and on which we have passed have come back. We will keep our eyes open.

Interestingly enough, there is really more debt out there than there is equity, and the debt tends to end up getting involved or needing to be involved at more of equity-type returns and equity-type risks. We do not think that really works for a lot of these assets. So again, we keep our eyes open and remain omnivorous opportunivores.

Dylan Robert Burzinski: Great. Thanks for the color, Tony.

Operator: We will now turn the call back over to Anthony E. Malkin, Chairman and CEO, for closing remarks.

Anthony E. Malkin: Thanks, everybody, for joining us today. At Empire State Realty Trust, Inc., we remain focused on a clear and consistent set of priorities: lease our space, drive Observatory performance, maintain a strong and flexible balance sheet, reallocate capital towards growth, and maintain our leadership in sustainability. These priorities keep the organization focused and aligned as we drive the business forward. With our high-quality portfolio and strong financial foundation, we are well positioned to execute in the quarters ahead and create long-term value for our stakeholders. Again, thanks for your participation in the call today. We look forward to the chance to meet with many of you at non-deal road shows, conferences, and property tours in the months ahead.

Onward and upward.

Operator: Ladies and gentlemen, thank you so much. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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