ESR Trust (ESRT) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Nov. 3, 2026

CALL PARTICIPANTS

• Senior Vice President, Chief Counsel, Real Estate - Susanne J. Lieu
• Chairman and Chief Executive Officer - Anthony Malkin
• President - Christina Chiu
• Executive Vice President, Leasing - Ryan Kass
• Executive Vice President and Chief Financial Officer - Stephen Horn

TAKEAWAYS

• Core FFO -- $0.20 per diluted share, reflecting property portfolio performance and the impact of recent capital markets activity.
• Net Income -- $0.02 per diluted share, representing the results of operations and disposition-related adjustments.
• Observation Deck NOI -- $15.6 million, compared to $26.5 million in the prior year period due to a significant decrease in visitor traffic.
• Observation Deck Revenue -- $26.8 million, driven by a 26% year-over-year decline in visitation volumes.
• Leasing Volume -- 189,477 rentable square feet, including 170,608 rentable square feet of office leases across the commercial portfolio.
• Portfolio Lease Percentage -- 95.6%, an increase from 95% in the second quarter when excluding the impact of the 1359 Broadway sale.
• Mark-to-Market Rent Spreads -- 9.9% in the Manhattan office portfolio, marking the 21st consecutive quarter of positive leasing spreads.
• Asset Disposition -- $217.5 million, representing the gross proceeds from the sale of 1359 Broadway completed on Oct. 29, 2026.
• Share Repurchases -- $85.8 million, executed since July 30, 2026, at a weighted average price of $4.56 per share.
• Cumulative Repurchases -- $388 million, representing the total amount of common stock repurchased by the company since 2020.
• Core FFO Guidance -- $0.77 to $0.80 per fully diluted share for 2026, an upward revision from the previous range of $0.75 to $0.79 per share.
• General and Administrative Expenses -- $17 million for the quarter, supporting the target of a 5% to 10% run rate reduction by year-end.
• Net Debt to Adjusted EBITDA -- 6.7x, reflecting the company's focus on maintaining a flexible balance sheet.
• Total Liquidity -- $600 million, comprised of $85 million in cash and $520 million available under the revolving credit facility.
• Same-Store Property Cash NOI -- 0.5% growth year over year, or 1.9% when adjusted for the FDIC lease expiration and nonrecurring items.
• Observation Deck Revenue Per Capita -- 2% increase year over year, partially offsetting the decline in total visitor numbers.
• Multifamily Occupancy -- 97%, with net rents increasing nearly 6% due to strong residential demand.
• Lease Pipeline -- 250,000 square feet, indicating healthy interest from finance and professional services tenants.
• Average Lease Duration -- 9.5 years for new leases, demonstrating long-term tenant commitments to the portfolio.
• 2027 G&A Efficiency Target -- 2% additional reduction, representing further cost-saving initiatives planned beyond the 2026 year-end run rate.

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RISKS

• Malkin stated, "New York City's destination attraction game has changed and we have work to do," acknowledging increased competition and shifting consumer dynamics in the observatory market.
• Horn noted, "Visitation was lower by approximately 26% year-over-year," highlighting a material negative impact on the performance of the Observation Deck.
• Malkin warned that the decline in visitor volumes at the Observation Deck represents a long-term challenge that requires a gradual recovery process rather than an immediate fix.

SUMMARY

Empire State Realty Trust, Inc. (NYSE:ESRT) reported a third quarter focused on capital recycling, operational efficiency, and executive transition. Management highlighted the completion of the $217.5 million sale of 1359 Broadway, utilizing proceeds to fund share repurchases and strengthen the balance sheet. While the commercial office and retail portfolio maintained high occupancy and positive rent spreads, the Observation Deck segment faced significant headwinds from declining visitation. To address this, the company appointed new leadership to modernize customer acquisition through digital and AI-driven platforms. Financial results were supported by disciplined expense management, with the company remaining on track to meet its multiyear general and administrative cost reduction targets.

• Management appointed Andy Giancamilli as President of the Empire State Building Observation Deck, citing his experience scaling digital platforms and monetizing consumer relationships.
• The company achieved its 21st consecutive quarter of positive mark-to-market spreads in the Manhattan office portfolio, indicating sustained pricing power despite broader market volatility.
• CEO Malkin emphasized that the company's priorities include optimizing the Empire State Building brand and generating long-term value through strategic capital allocation.
• The company earned the highest management score for all corporate filers in the Americas from GRESB for the second consecutive year, reinforcing its leadership in sustainability.
• CFO Horn reported that the company has no unaddressed debt maturities until March 2029, following the closure of a $245 million unsecured delayed draw term loan.
• Management noted that recent share repurchases were driven by the view that the current stock price does not fully reflect the underlying value of the company's real estate assets.

INDUSTRY GLOSSARY

• FFO: Funds from operations, a non-GAAP financial measure used by REITs to define cash flow from their operations by adding back depreciation and amortization.
• NOI: Net operating income, the total income from a property after deducting operating expenses but before deducting taxes and interest.
• GRESB: Global Real Estate Sustainability Benchmark, an industry standard for assessing the ESG performance of real estate and infrastructure companies.
• TAMI: An acronym referring to the technology, advertising, media, and information sectors.
• FAD: Funds available for distribution, representing the cash a REIT has available to pay out to its shareholders after recurring capital expenditures.
• Mark-to-Market: A measure of the difference between the current market rent and the previous rent on the same space when a lease expires or is renewed.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Empire State Realty Trust Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Susanne J. Lieu, Senior Vice President, Chief Counsel, Real Estate. Thank you. You may begin.

Susanne Lieu: Good afternoon. Welcome to Empire State Realty Trust's Third Quarter 2026 Earnings Conference Call. In addition to the press release distributed yesterday, a quarterly supplemental package with further detail on our results and our latest investor presentation were posted in the Investors section of the company's website at esrtreit.com. During today's call, management's prepared remarks and responses to questions may include forward-looking statements within the meaning of applicable securities laws. These statements reflect management's current views and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Empire State Realty Trust assumes no obligation to update any forward-looking statement in the future.

We encourage listeners to review the more detailed discussions related to these forward-looking statements in the company's filings with the SEC. During today's call, we will discuss certain non-GAAP financial measures such as FFO, modified and core FFO, NOI, same-store property cash NOI, EBITDA, and adjusted EBITDA, which we believe are meaningful in evaluating the company's performance. The definitions and reconciliations of these measures to the most directly comparable GAAP measures are included in the earnings release and supplemental package, each available on the company's website. Now I will turn the call over to Tony Malkin, our Chairman and Chief Executive Officer.

Anthony Malkin: Thanks, Susanne. Good afternoon, everyone. Yesterday, we reported ESRT's third quarter results. Through disposition and acquisition, we have focused our portfolio on properties and locations, which the market wants. Our decisions to exit the properties we disposed of has proven to be [ present. ] We had a strong quarter across our property portfolio, and our property portfolio represents close to 85% of our NOI. Leasing progress has been good in our office and retail, and we have continued with high occupancy in our residential properties. Our office retail property type at our quality level is limited with no new supply. Our portfolio from office to retail to multifamily, delivered strong operating results.

We achieved our 21st consecutive quarter of positive mark-to-market rent spreads within our Manhattan office portfolio as our commercial portfolio reached 95.6% leased at quarter end. On October 29, we completed the sale of 1359 Broadway. And starting in late July, redeployed the proceeds towards the repurchase of shares, which we believe to be a highly compelling investment. We will also utilize sale of proceeds to pay down debt and maintain balance sheet strength, [indiscernible] remains weak [indiscernible] in conclusion of the search we began in the second quarter. On October 1, Andy Giancamilli joined us as President of Empire State Building Observation Deck in that position he manages the commercialization of the Empire State Building brand as well.

We conducted a comprehensive search with active direct involvement of our Board. Andy's early career between his University of Michigan under-graduate business degree and MBA from Kellogg was at McKinsey and he rejoined McKinsey after his MBA. Andy's last role was at FanDuel, where he served as a central pillar of the leadership team for over a decade. He was VP of Revenue then Chief Financial Officer; and ultimately Chief Operating Officer. He scaled digital consumer platforms, drove customer engagement and monetized customer relationships. During Andy's executive operational watch, annual revenue increased from $490 million in 2019 to $6.96 billion by the end of 2025.

The company also captured and maintained over 40% market share and secured its position as the undisputed #1 sports book in North America. At ESRT, Andy now oversees all aspects, operations, marketing, strategy, brand growth, and monetization for the Observation Deck and Empire State Building brand and reports directly to Christina and me. The Empire State Building is a globally recognized brand with a top-of-tier office building and an iconic visitor experience. We have been clear in prior calls, New York City's destination attraction game has changed and we have work to do.

There's clear opportunity through integrated efforts to maintain the successes of the office building, generate more revenue from the brand, and build back our visitor volumes through new sources. We want to see improved operating performance and cash flow and will update shareholders on our progress. ESRT has achieved a leadership position in and differentiated ourselves through sustainability for nearly 2 decades. Our focus remains on measurable business outcomes, which make money and attract better credit tenants at higher rents. In the process, we reduced energy consumption, improve operational efficiency, support high-performance workplaces for our tenants, and mitigate risk for our stakeholders. ESRT for the second year in a row was the highest-rated GRESB corporate filer.

Hats off to our team for our continued leadership and excellence of our integration of sustainability into all aspects of the tenant experience and property operations. The leadership changes we have implemented are nearly complete. We are already and will be leaner, more agile, and more efficient. For 2026, we remain on track to reduce run rate G&A by approximately 5% to 10% by year-end, consistent with our prior guidance. We will remain on our front foot in all respects. Our current priorities are clear: lease space, optimize Empire State Building observation Deck and brand cash flow drive long-term value through strategic capital allocation and operational efficiency, maintain our balance sheet and achieve our sustainability goals.

These priorities guide every decision we make and align directly with our objectives to drive long-term cash flow growth and value creation. Christina, Ryan, and Steve will provide a little details on our results and outlook. Christina?

Christina Chiu: Thanks, Tony. Following our second quarter earnings call and upon execution of an agreement to sell 1359 Broadway in August, we began to repurchase shares. On October 29, we closed on the sale of 1359 Broadway for $217.5 million. Since July 30, 2026, as of November 2, we have repurchased $85.8 million shares at an average cost of $4.56 per share. We will also utilize sale proceeds to pay down debt such that we maintain balance sheet strength. We have no unaddressed debt maturity until, March 2029.

These capital allocation decisions are consistent with our view that our current share price is not reflective of the value of our assets which has been reinforced by discussions with our investors over the past quarters. Over 5 years ago, Tony, our Board, and I began to execute on a strategy to reposition our property portfolio and allocate capital to enhance long-term growth in cash flow and value per share. Our planned exit from suburban markets and weaker New York City properties resulted in redeployment of capital into higher quality properties. Further, we consolidated building and land ownership at 2 properties, which total approximately 1.7 million square feet and executed substantial share repurchases.

We maintained the strength and flexibility of our balance sheet and implement leadership succession plan and G&A reduction. Inclusive of the year-to-date share repurchases, the company has repurchased approximately $388 million of its common stock since 2020. We also maintain 100% ownership of our assets, which provides substantial optionality. We have spoken for years about how we are on our front foot, and we will continue to find ways to grow portfolio cash flow and quality, maintain a strong and flexible balance sheet, and generate long-term value per share. And with that, I'll turn the call over to Ryan to review our leasing activity.

Ryan Kass: Thanks, Christina, and good afternoon, everyone. In the third quarter, leasing performance remained strong, with volume of 189,000 square feet which includes over 130,000 square feet of new leases. Year-to-date, we have leased 685,000 square feet with 460,000 square feet of new Manhattan office leases, and we continued to grow our lease percentage. Our lease percentage increased to 95.6%, up from 95% in the second quarter on a comparable basis, excluding 1359 Broadway from both periods. This demonstrates strong tenant demand for our top-of-tier portfolio. In this quarter, we achieved mark-to-market spreads of 9.9% in office, our 21st consecutive quarter of positive spreads, which underscores our sustained pricing power.

Tenants continue to expand with us and make long-term commitments, highlighted by our average lease duration on new leases of 9.5 years. Notable leases signed during the quarter include a 29,000 square foot full floor new office lease with Octaura Holdings at 111 West 33rd Street, a 15,000 square foot expansion office lease with Corgan Associates at the Empire State Building, and a 13,000 square foot new office lease with Zenith Advisors at the Empire State Building. Our pipeline of leases and negotiation remains healthy at 250,000 square feet. New York City's leasing market remains strong and provides a favorable backdrop for execution with demand broad based across finance, professional services, TAMI, and consumer products.

Lastly, our multifamily portfolio continues to perform well. Net rents increased by nearly 6%, and our portfolio is approximately 97% occupied. Thank you. I will now turn the call over to Steve. Steve?

Stephen Horn: Thanks, Ryan. For the third quarter of 2026, we reported core FFO of $0.20 per diluted share. Same-store property cash NOI, excluding lease termination fees, increased 50 basis points year-over-year. The improvement is primarily attributed to increases in tenant reimbursement income and insurance recoveries. This was partially offset by operating expense growth and the approximate $2 million year-over-year revenue decline from the previously disclosed FDIC expiration which was pre-leased. Adjusted for FDIC and $1.2 million of positive nonrecurring items this quarter, same-store property cash NOI increased by 1.9%.

Our Observation Deck generated approximately $15.6 million of net operating income during the third quarter as compared to $26.5 million of NOI in the prior year period, with revenue of $26.8 million and expenses of $11.2 million. Our results are consistent with the revised framework we provided last quarter. Visitation was lower by approximately 26% year-over-year and revenue per capita, excluding license fees, increased by approximately 2% year-over-year. We remain committed to a strong and flexible balance sheet. At the end of the third quarter, our net debt to adjusted EBITDA was approximately 6.7x. We maintain ample liquidity of $600 million at a well-lettered debt maturity schedule with no unaddressed debt maturities until March 2029.

We also maintain a predominantly unencumbered portfolio to provide substantial optionality. We reported G&A of approximately $17 million in the third quarter, which is consistent with our prior guidance of a 5% to 10% reduction in run rate G&A by year-end. We remain committed to further reducing G&A and maintaining disciplined cost management across the organization. We have additional cost reduction initiatives underway that could yield at least a further 2% reduction in G&A relative to our year-end 2026 run rate that will benefit from throughout 2027.

Lastly, with no change to our Observation Deck framework we shared in our 2Q earnings release, we increased our 2026 core FFO per share guidance that now stands at $0.77 to $0.80 per fully diluted share. This reflects higher-than-expected year-to-date results from our property portfolio, driven primarily by nonrecurring items which we have explained in our prior 2 earnings calls. In addition to our capital markets activity, which included share repurchases and the sale of 1359 Broadway. This concludes our prepared remarks. I'll now turn the call back to the operator to begin the Q&A session.

Operator: [Operator Instructions] Our first questions come from the line of Manus Ebbecke with Evercore ISI.

Manus Ebbecke: I just wanted to ask if you can touch on your further advertising capacity for additional share repurchases beyond kind of like the 1359 Broadway sales proceeds?

Christina Chiu: Sure. Thanks, Manus. As we mentioned, share buybacks continue to be a strategic part of our capital allocation. So we would certainly evaluate that, and we have been active with the portfolio. As mentioned over the last 5 years, have sold out of suburbs began to look at Manhattan assets on where we've executed the business plan and look at sales and we'll continue to be active. The key objective is cash flow per share as well as value per share. So all those items are on the table, including share buybacks.

Manus Ebbecke: Great. Great. And then I just wanted to touch on 1 of the comments that was just made at the end in terms of further expense reductions on the G&A side. If you could just expand on that a little bit as you go kind of like bridging into '27.

Stephen Horn: Yes. So similar to what we've gone through as far as succession planning in 2026, we'll continue down that path as we look forward to 2027, and also remain committed to reducing this organizational costs and increase efficiency. So we'll look to do more there. It's where the 2% figure comes from. We'll keep the market updated as we continue to execute along those plans.

Operator: Our next question is come from the line of Seth Bergey with Citi.

Seth Bergey: Just maybe following up on those comments, can you just kind of touch on maybe some of the transaction market and how you're seeing that evolve and appreciate kind of the focus on the share opportunities, but maybe just touch on maybe the transaction market and some of the -- what's most attractive to you between kind of the office, multifamily, and retail, if you're looking at anything there?

Anthony Malkin: Well, thanks for your question. We are and continue to be [ nervous opportunivores ] within our food groups of office, retail, and residential, and of course, importantly, share repurchase. I'll let Christina cover any comment with regard to share repurchase. Our view of the market is, transactions are down and cap rates are up. And relative to where any other market would have been 6 years after the commencement of a recovery. That said, we've been able to execute good exits with the right properties to the right buyer profiles at 250 and at 1359. And we will continue to test the market where it's appropriate. And then we look to redeploy as makes sense for growth.

What's the best bargain, what's the best value. So we have 4 very good options. And they're driven by the fact as to whether or not within this lower-volume transaction market, can we continue to do things which we are sensible. And if not, we'll -- we're happy with what we have and we'll move forward. Christina, do you want to make any additional comment there on share buybacks?

Christina Chiu: Sure. As I mentioned earlier, share buybacks are definitely part of the equation. And just to underscore, we have consistently mentioned keeping an eye and prioritizing the flexibility and strength of our balance sheet is key, so that we can operate, invest capital recycle accordingly. So it's both looking at the opportunities and cash flow and value per share as well as having the balance sheet that allows us to navigate all sorts of markets.

Seth Bergey: And then just maybe as a follow-up with the kind of observatory traffic. How much of that do you view as kind of macroeconomic or increased competition from similar Observatory Decks versus levers you can pull? And when do you kind of expect to get more visibility into kind of the progress that you're making on improving performance at the Observatory.

Anthony Malkin: Well, look, this problem did not happen overnight, and it will not be fixed overnight. And so you can be certain we will be transparent with the market and keep you updated on our progress. With regard to our overall perspective. We know how to run an attraction and get reviews, which make us the #1 reviewed transaction in the United States, according to TripAdvisor. With new competition, there are changes in the geopolitical environment, K-shaped economy. We recognize the need to reinvent our customer acquisition program. We need to reexamine our experience and focus on new on the monetization of our brand. Customer acquisition is now largely and will soon be all digital and AI driven.

So I think we just want to point to Andy Giancamilli. We conducted a thorough process with meaningful direct Board involvement and has the right experience and leadership chops for this dynamic environment to diversify our customer base, redefine the revenue model and translate our strengths into improved operating performance and cash flow. So we look forward to the future. We've got opportunity, and we need to go out and monetize on it.

Operator: Our next questions come from the line of John Kim with BMO Capital Markets.

John Kim: I wanted to ask if you can elaborate on what drove the decision to sell 1359 Broadway? I think your other office sales were in slower growth suburban markets. This asset is in place rent of $61. So it seems like there would have been some upside potential as you mark-to-market those rents. But yes, again, if you could talk about why that asset and the exit cap rate that you achieved?

Anthony Malkin: So Christina and I will take that on. I'll say that, look, the sale of 250 West 57th Street was logical to us. as was 1359. We appreciate that they are different from the exits in the suburbs. We also had different outcomes and results. We had very unique opportunity to reinvest in an outstanding asset, which will prove to be very, very good for us at 130 Mercer. We had a unique opportunity to buy the land 111 West 33rd Street and 1400 Broadway and to do so -- and create tremendous value for our stakeholders and shareholders.

So when we look at the choices we made and the choices we make, we try to just determine is there a better for the money for us? Is there a better use for the property for somebody else? And can we make those 2 equations work in a way that with what we do with the proceeds, it's logical. So pay down debt, repurchase shares, these are all part of the mix. Christina, what would you like to add on?

Christina Chiu: I think that covers it. 1359 executed on the business plan, compelling use of proceeds. And this reiterates all the points that we have made if we can recycle towards assets with better cash flow growth prospects or add value if we can buy back shares, if we can maintain a strong balance sheet, all to generate shareholder value, that's exactly what we'll do, and you'll continue to see us actively review the portfolio in that light.

John Kim: Any commentary on cap rate?

Christina Chiu: If you look at the supp, roughly 7%, you can go through that. But I think a lot of assets in the market. It's very bespoke to the specific situation and tendency in place. So as we've mentioned, a lot of times, the market reverts to per pound and the cap rate do vary quite a bit across the market.

John Kim: Okay. And then as you have improved and repositioned the portfolio, I guess my question is, when do you think we'll see that in improved cash same-store NOI? This quarter, you mentioned it's 1.9% if you exclude the FDIC lease overall, up [ 50 ] basis points. But when can we see that kind of trend closer to some of your peers?

Stephen Horn: Yes. Thanks, John. So we continue to execute leases with that strong mark-to-market growth. And also you saw posting our continued occupancy gains. In isolation, those will generate positive cash NOI returns as free rent periods to amortize. And as you know, we continue to sign leases with shorter periods of free rent, which only help in that regard. So our progress to quickly bring up occupancy and efforts to shave free rent and increased term as benefits outside of cash NOI, and that's within FAD. If you look at our trailing 12-month basis, our FAD increased $64 million or 114% year-over-year. That's on the back of a 5% decline in FFO over that same period.

We see a similar framework, if you look year-to-date, it's a $36 million increase in FAD over a 5% decline in FFO. As said 4 consecutive quarters now of positive FFO to FAD conversion or improvement in FFO to FAD conversion. So it's important to keep in mind that all of these are positive. Those stats are going to ebb and flow as we move through periods of rollover, but the focus on increasing term and reducing concessions has allowed us to benefit further from those positive trends.

Anthony Malkin: And I would just add to that, but we recognize that current investors look for short-term signals. Our actions may take longer and still, they will result in the changes for which investors look, and our focus is cash flow. We can't eat FFO. We can eat cash flow.

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

Blaine Heck: Ryan, the supplemental now shows about 174,000 square feet of expected vacates and 68,000 square feet unknowns for 2027. And I think that forecast excludes 1359 Broadway. So can you talk about how much of the improvement reflects good leasing progress or retention progress versus removing that building, and whether any particular tenants or blocks in the remaining rollover could meaningfully change the occupancy trajectory for next year?

Ryan Kass: Blaine, yes, absolutely. So let me start with -- the team has really done a great job throughout the year. They've proactively managed the rent roll. We've been marketing and opportunistically have pre-leased a lot of the 2027 known availabilities. So we'll continue to engage with those tenants, talk about early renewals and market those known vacates to minimize downtime and manage our rent roll. 1359 specifically, roughly 88,000 square feet was removed from a 2027 expiration. Would actually flag in terms of large block, no single tenant within that is greater than 60,000 square feet. And of the unknowns, only 2 tenants are over 6,000 square feet, and lastly, roughly half of our known vacate expires December of 2027.

Blaine Heck: Great. That's helpful. And just to clarify, that 88,000 came out of expected vacates, is that right?

Ryan Kass: The 88,000 came out of a few areas, 30,000 was removed from the tenant vacate, 25,000 from new leases, 24,000 from unknown and 10,000 from renewal and revocations.

Blaine Heck: Great. Very helpful. Second question, Tony. There have been reports of an activist investor taking a position in the company, recognizing you might be limited in what you could share. Can you talk about whether you've had any dialogue with that investor how constructive those conversations have been and whether those conversations led you to executing on any of the transactions during the quarter? Or could, in the future, lead you to consider any changes to capital allocation or a broader strategy?

Anthony Malkin: So first, I'll tell you that all of the actions we took through the quarter going back to the end of the June 30, were already in place and taken without regard to anyone's input. I think importantly, just we note, we have a consistent active engagement with our shareholders and welcome their views on our strategy, performance, and business objectives. Board members participate proactively and in response requests and conversations with meaningful shareholders. Beyond that, we won't comment today on specific discussions or interactions with investors. I would merely say that everything then which we've reported today, began and was put in place and conceived before we had any outreach by this particular investor.

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

Dylan Burzinski: Maybe going back to, I think, a question that was asked earlier about sort of the Observatory, and Tony, you mentioned the problem with what's happening didn't happen overnight. It won't be fixed overnight. And you sort of laid out some things that you guys are looking at. I guess as you guys sit there and evaluate all those things that you guys are looking at to improve on, I mean, is there a time line in mind as to where you guys will evaluate that and be satisfied or dissatisfied with how long it took to sort of roll out some of these things that you guys are looking at?

Anthony Malkin: So I really appreciate that question. It's super helpful. Andy began on October 1. And he -- well, he definitely did a lot of reading and a lot of awareness building before October 1. He began October 1. We actually look forward to the execution of his plan. He has a process, and he's in his process now. Christina and I, in fact, just met with him yesterday and he gave us the first 1 month update. So from a practical perspective, we have to understand that there are already changes that we have put in place before Andy's arrival.

And through that process, which we began and through Andy's involvement and interaction, we anticipate that we'll begin to see the first opportunities for improvement in the high season in the summer of '27. We may see something before then. And we and he have worked together to prioritize and we start -- at the bottom, we work our way up the tree as far as opportunity.

Operator: Thank you. That does now conclude our question-and-answer session. I would now like to hand the call back over to Anthony Malkin for any closing comments.

Anthony Malkin: Thanks, everybody, very much. Great work ESRT team. At ESRT, we remain focused on a clear and consistent set of priorities, lease space optimize Empire State Building Observation Deck and brand cash flow, drive long-term value through strategic capital allocation and operational efficiency, manage our balance sheet, and achieve our sustainability goals. We look forward to the opportunity to meet with you, our investors and on the sell side in the months to come, and we'll continue, as always, to engage with and listen to our investors. The organization is focused and aligned to drive the business forward. Our high-quality portfolio and strong financial foundation position us to execute in the quarters ahead.

We will continue to take steps to drive long-term growth in cash flow and value per share. Thanks very much.

Operator: Ladies and gentlemen, thank you. This does now 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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