Segment Reporting

9 Months Ended

Sep. 30, 2023

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, redevelopment, repositioning and disposition of our traditional real estate assets. Our observatory segment includes the operation of 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 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 net income for each segment for the three and nine months ended September 30, 2023 and 2022 (amounts in thousands):

	Three Months Ended September 30, 2023
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	151,458	$	—	$	—	$	151,458
Intercompany rental revenue	22,113		—		(22,113)		—
Observatory revenue	—		37,562		—		37,562
Third-party management and other fees	268		—		—		268
Other revenue and fees	2,238		—		—		2,238
Total revenues	176,077		37,562		(22,113)		191,526
Operating expenses:
Property operating expenses	42,817		—		—		42,817
Intercompany rent expense	—		22,113		(22,113)		—
Ground rent expenses	2,331		—		—		2,331
General and administrative expenses	16,012		—		—		16,012
Observatory expenses	—		9,471		—		9,471
Real estate taxes	32,014		—		—		32,014
Depreciation and amortization	46,593		31		—		46,624
Total operating expenses	139,767		31,615		(22,113)		149,269
Total operating income	36,310		5,947		—		42,257
Other income (expense):
Interest income	4,410		52		—		4,462
Interest expense	(25,382)		—		—		(25,382)
Income before income taxes	15,338		5,999		—		21,337
Income tax expense	(146)		(1,263)		—		(1,409)
Net income	$	15,192	$	4,736	$	—	$	19,928
Segment assets	$	3,959,249	$	257,298	$	—	$	4,216,547
Expenditures for segment assets	$	56,227	$	—	$	—	$	56,227

	Three Months Ended September 30, 2022
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	148,290	$	—	$	—	$	148,290
Intercompany rental revenue	19,072		—		(19,072)		—
Observatory revenue	—		33,051		—		33,051
Third-party management and other fees	389		—		—		389
Other revenue and fees	1,982		—		—		1,982
Total revenues	169,733		33,051		(19,072)		183,712
Operating expenses:
Property operating expenses	42,798		—		—		42,798
Intercompany rent expense	—		19,072		(19,072)		—
Ground rent expenses	2,331		—		—		2,331
General and administrative expenses	15,725		—		—		15,725
Observatory expenses	—		8,516		—		8,516
Real estate taxes	31,831		—		—		31,831
Depreciation and amortization	46,933		51		—		46,984
Total operating expenses	139,618		27,639		(19,072)		148,185
Total operating income	30,115		5,412		—		35,527
Other income (expense):
Interest income	1,530		34		—		1,564
Interest expense	(25,516)		—		—		(25,516)
Income before income taxes	6,129		5,446		—		11,575
Income tax expense	(359)		(1,098)		—		(1,457)
Net income	$	5,770	$	4,348	$	—	$	10,118
Segment assets	$	3,950,883	$	250,257	$	—	$	4,201,140
Expenditures for segment assets	$	18,686	$	24	$	—	$	18,710

	Nine Months Ended September 30, 2023
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	446,152	$	—	$	—	$	446,152
Intercompany rental revenue	58,969		—		(58,969)		—
Observatory revenue	—		93,149		—		93,149
Third-party management and other fees	1,076		—		—		1,076
Other revenue and fees	6,313		—		—		6,313
Total revenues	512,510		93,149		(58,969)		546,690
Operating expenses:
Property operating expenses	124,380		—		—		124,380
Intercompany rent expense	—		58,969		(58,969)		—
Ground rent expenses	6,994		—		—		6,994
General and administrative expenses	47,795		—		—		47,795
Observatory expenses	—		25,983		—		25,983
Real estate taxes	95,292		—		—		95,292
Depreciation and amortization	140,194		118		—		140,312
Total operating expenses	414,655		85,070		(58,969)		440,756
Total operating income	97,855		8,079		—		105,934
Other income (expense):
Interest income	10,257		139		—		10,396
Interest expense	(76,091)		—		—		(76,091)
Gain on disposition of property	29,261		—		—		29,261
Income before income taxes	61,282		8,218		—		69,500
Income tax expense	(541)		(382)		—		(923)
Net income	$	60,741	$	7,836	$	—	$	68,577
Expenditures for segment assets	$	123,671	$	58	$	—	$	123,729

	Nine Months Ended September 30, 2022
	Real Estate		Observatory		Intersegment Elimination		Total
Revenues:
Rental revenue	$	445,143	$	—	$	—	$	445,143
Intercompany rental revenue	46,801		—		(46,801)		—
Observatory revenue	—		73,660		—		73,660
Lease termination fees	20,032		—		—		20,032
Third-party management and other fees	1,025		—		—		1,025
Other revenue and fees	5,908		—		—		5,908
Total revenues	518,909		73,660		(46,801)		545,768
Operating expenses:
Property operating expenses	118,875		—		—		118,875
Intercompany rent expense	—		46,801		(46,801)		—
Ground rent expenses	6,994		—		—		6,994
General and administrative expenses	45,287		—		—		45,287
Observatory expenses	—		22,507		—		22,507
Real estate taxes	91,637		—		—		91,637
Depreciation and amortization	172,258		136		—		172,394
Total operating expenses	435,051		69,444		(46,801)		457,694
Total operating income (loss)	83,858		4,216		—		88,074
Other income (expense):
Interest income	2,105		39		—		2,144
Interest expense	(75,572)		—		—		(75,572)
Gain on disposition of property	27,170		—		—		27,170
Income (loss) before income taxes	37,561		4,255		—		41,816
Income tax (expense) benefit	(541)		317		—		(224)
Net income	$	37,020	$	4,572	$	—	$	41,592
Expenditures for segment assets	$	70,795	$	315	$	—	$	71,110