Empire State Cuts Guidance to $0.75–$0.79 per Share After Second-Quarter Loss
Key Facts
Empire State Realty Trust reported a net loss of $0.15 per fully diluted share, while Core FFO was about $0.21 per share in the second quarter of 2026, according to the company’s filing with the U.S. Securities and Exchange Commission. The figures came in a period marked by significant items that affected net income, as well as one-time severance expenses. For comparable properties, the cash measure showed year-over-year growth before turning negative when nonrecurring items were excluded. In July, the company cut its annual Core FFO outlook from the range it announced in February. Weak observatory performance was among the factors the company linked to the revised outlook.
The quarter’s results included a noncash impairment of goodwill of $166.1 million, related to the observatory reporting unit, and a separate gain of $124.6 million from the disposition of 250 West 57th Street. The company also recorded $5.5 million in one-time severance expenses, an item excluded in calculating Core FFO. The company completed the property sale in June for $275 million, with the buyer assuming $180 million of mortgage debt. The company said the transaction recycled capital into its acquisition of 130 Mercer Street in December 2025, without recognizing a taxable gain. These items provide context for the difference between the net loss and the core funds from operations measure.
Comparable-property cash net operating income rose 3.3% year over year in the second quarter, excluding lease termination fees. The company attributed the increase mainly to about $4.0 million in nonrecurring real estate tax abatements related to prior periods. After adjusting for the impact of nonrecurring items, the measure fell 3.2% year over year. The company said the adjusted decline was linked to higher free rent and operating expenses, partly offset by an increase in tenant reimbursement income. The difference between the two results shows that prior-period abatements lifted the reported growth reading during the period.
In leasing, blended office portfolio leasing spreads were positive 17.8% in the second quarter, marking the twentieth consecutive quarter of positive spreads. The commercial portfolio was 94.9% leased and 89.4% occupied as of June 30, 2026. The respective rates were 93.2% and 88.2% on March 31, reflecting improvement during the quarter. The company also signed commercial leases covering 381,799 square feet, including 363,968 square feet of office leases. These figures reflect continued new leasing alongside improved leasing and occupancy rates.
At the observatory, the Empire State Building Observatory generated net operating income of $12.4 million in the second quarter. The company said the business continued to be affected by a decline in international tourism and weakness in the multi-attraction pass channel. In May, the company purchased the land beneath 111 West 33rd Street and 1400 Broadway for a total of $110 million. The remaining terms of the ground leases before the purchase were about 51 years and 38 years, respectively. The transaction was part of the company’s real estate asset moves during the quarter, alongside the sale of 250 West 57th Street.
In July, the company cut its 2026 Core FFO guidance to $0.75–$0.79 per fully diluted share, from $0.85–$0.89 in its February outlook. The updated range was based on an assumed observatory net operating income of $55 million, with no improvement in current visitation levels assumed. The February outlook had included an observatory net operating income range of $87 million to $92 million, while actual Core FFO for 2025 was about $0.87 per share. As of June 30, available cash was $85.6 million, with an additional $445 million available under the revolving credit facility. Total debt was about $2.2 billion, with a weighted average interest rate of 4.70% and a weighted average maturity of 4.5 years.