Empire State cut guidance to $0.75–$0.79 a share in July as observatory weakened
Key Facts
Empire State Realty Trust cut its 2026 core funds from operations guidance per diluted share to a range of $0.75 to $0.79, according to its second-quarter earnings release issued on July 29, 2026. The previous range was $0.85 to $0.89 per diluted share, before the revision announced during the company's presentation of results for the period. The July update included a reduction in the assumed annual net operating income for the observatory segment amid weaker visitor activity. The company's revised guidance assumed the observatory would generate $55 million in net operating income for the year. That compared with its previous assumption of $87 million to $92 million, a change that incorporated estimates for the tourism business into its annual outlook. For the second quarter itself, core funds from operations per diluted share were $0.21, according to the company's release.
The observatory welcomed 800,000 visitors in the first half of 2026, according to the company's filing with the U.S. Securities and Exchange Commission. Visitor numbers fell 24.3% from the same period a year earlier, a decline that also affected the business's revenue. Observatory revenue fell 25.1% year on year in the first half, exceeding the decline in visitor numbers. The company attributed weaker visits to "underperformance of the tourist pass program and continued declines in international visitors," according to its filing. The reduction in the observatory's projected performance and cash flows also affected the carrying value of goodwill associated with the segment. The company recorded a $166.1 million impairment charge against that goodwill in the second quarter. It classified the charge as a non-cash impairment related to a reassessment of the segment's outlook and future performance.
The company had maintained its 2026 annual guidance when it reported first-quarter results, before cutting it alongside second-quarter results. At the time, its earnings release described its position as "2026 guidance unchanged," despite a decline in observatory income during the period. The observatory generated net operating income of $10.6 million in the first quarter, which the company described as seasonally weak. That represented a year-on-year decline of about $3.5 million, according to the comparison provided in that earnings release. The company excluded gift shop licensing revenue when calculating the annual decline, presenting the observatory's performance comparison on that basis.
The commercial real estate portfolio was 94.9% leased at the end of June 2026, according to the company's release on its investor relations website. Actual occupancy for the same portfolio was 89.4% at the end of the period, below the proportion of space leased under contract. For same-property performance in the second quarter, the company reported a 3.2% year-on-year decline in cash net operating income. That figure reflected adjustments for non-recurring items, according to the adjusted comparison in the earnings release. In trading following the second-quarter earnings announcement, the shares fell 14.4% to $4.97 after hours, according to Investing.com.
The company plans to report third-quarter results on November 2, 2026, according to a separate announcement on its investor relations website. It scheduled the release for after the market closes that day. A call to discuss the results will follow on November 3, 2026, according to the company's announced schedule. The call is scheduled to begin at 12:00 noon U.S. Eastern time. The third-quarter earnings release and subsequent discussion therefore fall within the announced November schedule, following the annual guidance update that accompanied second-quarter results in July.