Segment Reporting

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

    We have identified two reportable segments: (1) Real Estate and (2) Observatory. Our real estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of our real estate assets. Our observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. These two lines of businesses are managed separately because each business requires different support infrastructures, provides different services and has dissimilar economic characteristics such as investments needed, stream of revenues and different marketing strategies. We account for intersegment sales and rents as if the sales or rents were to third parties, that is, at current market prices.

    The following tables provide components of segment profit for each segment for the years ended December 31, 2020, 2019 and 2018, as reviewed by management (amounts in thousands):

	2020
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	563,071	$	—	$	—	$	563,071
Intercompany rental revenue	17,827		—		(17,827)		—
Observatory revenue	—		29,057		—		29,057
Lease termination fees	9,416		—		—		9,416
Third-party management and other fees	1,225		—		—		1,225
Other revenue and fees	6,459		—		—		6,459
Total revenues	597,998		29,057		(17,827)		609,228
Operating expenses:
Property operating expenses	136,141		—		—		136,141
Intercompany rent expense	—		17,827		(17,827)		—
Ground rent expense	9,326		—		—		9,326
General and administrative expenses	62,244		—		—		62,244
Observatory expenses	—		23,723		—		23,723
Real estate taxes	121,923		—		—		121,923
Impairment charges	6,204		—		—		6,204
Depreciation and amortization	190,863		143		—		191,006
Total operating expenses	526,701		41,693		(17,827)		550,567
Total operating income (loss)	71,297		(12,636)		—		58,661
Other income (expense):
Interest income	2,542		95		—		2,637
Interest expense	(89,907)		—		—		(89,907)
Loss on early extinguishment of debt	(86)		—		—		(86)
IPO litigation expense	(1,165)		—		—		(1,165)
Loss before income taxes	(17,319)		(12,541)		—		(29,860)
Income tax (expense) benefit	(843)		7,814		—		6,971
Net loss	$	(18,162)	$	(4,727)	$	—	$	(22,889)
Segment assets	$	3,903,884	$	246,811	$	—	$	4,150,695
Expenditures for segment assets	$	101,306	$	2,754	$	—	$	104,060

	2019
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	586,414	$	—	$	—	$	586,414
Intercompany rental revenue	82,469		—		(82,469)		—
Observatory revenue	—		128,769		—		128,769
Lease termination fees	4,352		—		—		4,352
Third-party management and other fees	1,254		—		—		1,254
Other revenue and fees	10,554		—		—		10,554
Total revenues	685,043		128,769		(82,469)		731,343
Operating expenses:
Property operating expenses	174,977		—		—		174,977
Intercompany rent expense	—		82,469		(82,469)		—
Ground rent expense	9,326		—		—		9,326
General and administrative expenses	61,063		—		—		61,063
Observatory expenses	—		33,767		—		33,767
Real estate taxes	115,916		—		—		115,916
Depreciation and amortization	181,558		30		—		181,588
Total operating expenses	542,840		116,266		(82,469)		576,637
Total operating income	142,203		12,503		—		154,706
Other income (expense):
Interest income	11,259		—		—		11,259
Interest expense	(79,246)		—		—		(79,246)
Income before income taxes	74,216		12,503		—		86,719
Income tax expense	(896)		(1,533)		—		(2,429)
Net income	$	73,320	$	10,970	$	—	$	84,290
Segment assets	$	3,671,211	$	260,623	$	—	$	3,931,834
Expenditures for segment assets	$	191,630	$	64,294	$	—	$	255,924

	2018
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	493,231	$	—	$	—	$	493,231
Intercompany rental revenue	79,954		—		(79,954)		—
Tenant expense reimbursement	72,372		—		—		72,372
Observatory revenue	—		131,227		—		131,227
Lease termination fees	20,847		—		—		20,847
Third-party management and other fees	1,440		—		—		1,440
Other revenue and fees	12,394		—		—		12,394
Total revenues	680,238		131,227		(79,954)		731,511
Operating expenses:
Property operating expenses	167,379		—		—		167,379
Intercompany rent expense	—		79,954		(79,954)		—
Ground rent expense	9,326		—		—		9,326
General and administrative expenses	52,674		—		—		52,674
Observatory expenses	—		32,767		—		32,767
Real estate taxes	110,000		—		—		110,000
Depreciation and amortization	168,430		78		—		168,508
Total operating expenses	507,809		112,799		(79,954)		540,654
Total operating income	172,429		18,428		—		190,857
Other income (expense):
Interest income	10,661		—		—		10,661
Interest expense	(79,623)		—		—		(79,623)
Income before income taxes	103,467		18,428		—		121,895
Income tax expense	(1,114)		(3,528)		—		(4,642)
Net income	$	102,353	$	14,900	$	—	$	117,253
Segment assets	$	3,930,330	$	265,450	$	—	$	4,195,780
Expenditures for segment assets	$	201,685	$	54,811	$	—	$	256,496

During the second quarter 2020, we wrote-off $4.1 million of prior expenditures on a potential energy efficiency project in our real estate segment that is not economically feasible in today's regulatory environment. During the third quarter 2020, we also wrote off $2.1 million of prior expenditures on a build-to-suit development project in our real estate segment that was halted due to reconsideration by the user driven by the COVID-19 pandemic. For the year ended December 31, 2020, the total $6.2 million write-off is shown as Impairment charges in the consolidated statement of operations.