Empire State Realty OP Reports $40.6 Million Net Loss in Q2 2026 Amid Goodwill Impairment

Empire State Realty OP, L.P. reported a net loss of $40.6 million for the second quarter of 2026, a significant decline compared to a net income of $10.3 million during the same period in 2025. The loss was primarily attributed to a non-cash goodwill impairment charge of $166.1 million related to the company's Observatory reporting unit, alongside a $124.6 million gain from the sale of the property at 250 West 57th Street. Total revenues for the quarter increased slightly to $196.9 million, up from $191.3 million a year earlier, driven by a 7.6% rise in rental revenue, which reached $165.2 million.

In the first half of 2026, Empire State Realty OP's total revenues rose to $387.2 million, compared to $371.3 million in the same period of 2025. The increase was largely due to higher rental income, which grew by 7.5% to $331.3 million. However, Observatory revenue fell by 25.1% to $42.7 million, reflecting a decline in visitor numbers and performance of the pass program. Operating expenses surged to $496.5 million, up from $310.4 million, primarily due to the aforementioned goodwill impairment and increased general and administrative costs, including $5.5 million in severance expenses.

Strategically, the company made significant acquisitions, including the purchase of land at 111 West 33rd Street and 1400 Broadway for $110 million in May 2026, and a retail property in Williamsburg, Brooklyn for $46 million in March 2026. These acquisitions are part of Empire State Realty's ongoing efforts to enhance its portfolio, which now includes approximately 7.5 million rentable square feet of office space and 0.8 million square feet of retail space in New York City.

Operationally, the company signed a total of 381,799 square feet in new, renewal, and expansion leases during the quarter. As of June 30, 2026, the company had approximately 1.0 million rentable square feet available, representing 12.1% of its commercial portfolio. The Observatory segment hosted 800,000 visitors in the first half of 2026, a decrease of 24.3% from the previous year, which has raised concerns about future revenue from this segment.

Looking ahead, Empire State Realty OP anticipates challenges due to economic uncertainties, including inflation and interest rate fluctuations, which could impact visitor numbers and rental rates. However, the company believes its diversified portfolio and strong liquidity position will support its operations and growth strategies. As of June 30, 2026, the company had $85.6 million in cash and cash equivalents and $445 million available under its unsecured revolving credit facility, positioning it well to navigate potential market fluctuations.