Empire State Realty OP Reports Q2 2025 Financial Results with Decreased Net Income

Empire State Realty OP, L.P. reported its financial results for the second quarter of 2025, revealing a net income attributable to common unitholders of $10.3 million, a significant decrease from $27.5 million in the same period last year. Total revenues for the quarter reached $191.3 million, up from $189.5 million in the prior year, driven primarily by a slight increase in rental revenue, which rose to $153.5 million from $152.5 million. However, the company experienced a decline in observatory revenue, which fell to $33.9 million from $34.1 million, reflecting lower visitor numbers attributed to adverse weather conditions and reduced international tourism.

In comparison to the previous fiscal period, Empire State Realty's operating income decreased to $35.1 million from $39.4 million, largely due to increased operating expenses, which rose to $156.1 million from $150.2 million. The rise in expenses was primarily linked to higher property operating costs and general administrative expenses. The company also reported a net income of $27.2 million for the six months ended June 30, 2025, down from $38.8 million in the same period of 2024, with total revenues slightly increasing to $371.3 million from $370.7 million.

Strategically, Empire State Realty OP completed the acquisition of two retail properties on North 6th Street in Williamsburg, Brooklyn, for $31 million in June 2025. This acquisition is part of the company's ongoing efforts to expand its portfolio, which now includes approximately 7.8 million rentable square feet of office space and 0.8 million rentable square feet of retail space. The company also executed a buyout of a 10% non-controlling interest in two multifamily properties for $14.2 million in cash and the assumption of $18 million in debt.

Operationally, the company reported a total of 232,108 square feet of new, renewal, and expansion leases signed during the quarter. However, the overall occupancy rate and rental rates are under scrutiny due to the potential impact of expiring leases and the current economic climate. As of June 30, 2025, Empire State Realty OP had approximately $94.6 million in cash and cash equivalents, with $620 million available under its unsecured revolving credit facility, indicating a solid liquidity position.

Looking ahead, the company remains cautious about the economic environment, particularly concerning inflation, interest rates, and the overall demand for office space. Despite these challenges, Empire State Realty OP believes it is well-positioned due to its diversified portfolio and strong balance sheet, which provides flexibility for future acquisitions and capital investments. The company aims to continue generating positive cash flows from operations while adhering to its distribution policy to meet REIT requirements.