Empire State Realty OP, L.P.

ESBA ·Real Estate, REIT - Diversified, United States

Business Overview: Empire State Realty OP, L.P. (NYSE Arca: ESBA)

Executive Summary: Empire State Realty OP, L.P. (the "Operating Partnership" or "OP") is the Delaware limited partnership through which Empire State Realty Trust, Inc. ("ESRT") conducts substantially all of its business under an UPREIT structure, owning and operating a New York City-concentrated portfolio of 7.9 million square feet of office space, 0.8 million square feet of retail, and 743 residential units, plus the iconic Empire State Building Observatory. ESRT, as sole general partner, held approximately 61.4% of OP units as of December 31, 2025, with the remainder held by outside limited partners and publicly traded OP unit classes — including the Series ES units that trade under ticker ESBA on NYSE Arca. The OP's business mixes stable, tenant-driven commercial real estate income with a high-margin, high-visibility Observatory and broadcasting business anchored by the Empire State Building itself.

1. Core Business Model & How They Work

The Operating Partnership is the actual property-owning and operating entity beneath ESRT's public REIT structure (a standard "UPREIT" design). ESRT contributes capital and serves as sole general partner with full management control; limited partners — including holders of publicly traded Series ES (ESBA), Series 60 (OGCP), and Series 250 (FISK) units — hold economic interests in the OP without day-to-day operating authority. The OP generates income from leasing Manhattan office and retail space, multifamily rents, and — uniquely among most REIT operating partnerships — from running the Empire State Building's 86th- and 102nd-floor Observatory and leasing the building's broadcasting mast to television and radio licensees.

            ESRT (General Partner, ~61.4% of OP)
                          |
                          v
   ===================================================
   =        EMPIRE STATE REALTY OP, L.P.              =
   =  (owns/operates the properties; issues OP units,  =
   =   incl. publicly traded Series ES / ESBA)         =
   ===================================================
        |                  |                  |
        v                  v                  v
  OFFICE & RETAIL     MULTIFAMILY         OBSERVATORY &
  LEASING (NYC)        (743 units)        BROADCASTING
  7.9M sq ft office                       86th/102nd floor
  0.8M sq ft retail                       observatory ($128.3M
  10 Manhattan                            2025 revenue) +
  properties                              broadcast mast leases
                                           (~$15.4M 2025 revenue)
        |                  |                  |
        +----- Rental income + tenant reimbursements + visitor/license fees -----+
                                   |
                                   v
                      Distributions to OP unitholders
                      (incl. ESBA, OGCP, FISK holders)

2. Business Segments

The OP reports two segments:

Real Estate: All activities related to ownership, management, operation, acquisition, repositioning, and disposition of office, retail, and multifamily assets, substantially all located in Manhattan, plus entitled land held for development in Stamford, Connecticut.
Observatory: Operation of the Empire State Building's 86th- and 102nd-floor observation decks, one of New York City's leading paid tourist attractions (ranked the #1 Top Attraction in NYC for the fourth consecutive year per Tripadvisor's 2025 Travelers' Choice Awards), generating roughly $128.3 million in 2025 revenue, plus ancillary broadcasting-license income (~$15.4 million in 2025) from the building's transmission mast.

3. Product Portfolio

The OP's "product" is a portfolio of ten Manhattan office properties (including three ground-leasehold interests), retail space within and adjacent to those properties, 743 multifamily residential units, and the Empire State Building Observatory experience itself. Leasing strategy targets a "flight to quality" among tenants seeking fully modernized, transit-proximate, well-amenitized, and energy-efficient space; in 2025 the OP leased over 1,009,000 square feet and achieved 89.9% occupancy in its Manhattan office portfolio (excluding redevelopment assets). The three largest properties represent approximately 55.6% of portfolio rental revenue, and the five largest tenants represent about 17.4% of commercial annualized rent — indicating meaningful but not extreme asset and tenant concentration.

4. Competitive Landscape

The OP competes with numerous other acquirers, developers, owners, and operators of commercial real estate in New York City — other REITs, private real estate funds, financial institutions, and insurance companies, many with greater financial resources. Competitive factors include rental rates, location, building amenities, physical condition, and sustainability/energy-efficiency credentials, an area where management positions the portfolio (particularly the modernized Empire State Building) as a leader. The Observatory business, by contrast, competes more with other NYC tourist attractions than with real estate peers, and benefits from the singular, non-replicable brand identity of the Empire State Building.

5. Strategic Strengths & Risks

Strengths

Irreplaceable, globally recognized flagship asset (the Empire State Building) that anchors both the real estate and Observatory businesses with brand equity no competitor can replicate.
Diversified revenue mix across office/retail leasing, multifamily, observatory admissions, and broadcasting licenses, reducing pure office-market cyclicality.
High-margin Observatory segment ($128.3 million in 2025 revenue) functions as a tourism/consumer business layered on top of a real estate portfolio, improving overall cash flow diversification.
Strong, improving Manhattan office occupancy (89.9%, excluding redevelopment) and over 1 million square feet leased in 2025 suggest "flight to quality" tenant demand is benefiting the modernized portfolio.
UPREIT structure provides tax-efficient acquisition currency (OP units) and flexibility for ESRT.

Risks

Concentrated, single-market (Manhattan) exposure to NYC office and tourism dynamics, including remote-work trends affecting office demand.
Governance structure subordinates OP limited partners (including ESBA holders) to ESRT's control as sole general partner, with Class B voting concentration at the ESRT level limiting outside influence.
Tax protection agreements tied to certain legacy contributed properties could constrain the OP's ability to sell or refinance those assets.
Significant leverage, with approximately $2.4 billion of total debt outstanding (including ~$629 million of mortgage debt) as of December 31, 2025.
Asset concentration: three largest properties account for ~55.6% of rental revenue.
Labor relations exposure, with roughly 63% of the OP's approximately 642 employees covered by collective bargaining agreements.
Observatory revenue is sensitive to tourism cycles, global travel disruptions, and discretionary visitor spending.

6. Financial Overview

Portfolio: 7.9 million rentable sq. ft. office, 0.8 million rentable sq. ft. retail, 743 residential units, all in New York City; entitled land held in Stamford, CT.
Manhattan Office Occupancy: 89.9% (excluding redevelopment/storage/broadcasting assets).
2025 Leasing Volume: 1,009,009 square feet leased.
Observatory Revenue (2025): ~$128.3 million.
Broadcasting Revenue (2025): ~$15.4 million.
Total Debt (as of 12/31/2025): ~$2.4 billion, including ~$629 million in mortgage debt.
Employees: 642 (approximately 63% covered by collective bargaining agreements).
GP Ownership: ESRT owned ~61.4% of OP units as of December 31, 2025; publicly traded unit classes include Series ES (ESBA), Series 60 (OGCP), and Series 250 (FISK) on NYSE Arca.

7. Summary Conclusion

Empire State Realty OP, L.P. is best understood as the operating engine beneath ESRT's public REIT, combining a concentrated but high-quality Manhattan commercial real estate portfolio with a uniquely branded, high-margin tourism and broadcasting business tied to the Empire State Building. The irreplaceable nature of its flagship asset provides real competitive insulation for the Observatory business, while the office/retail/multifamily portfolio remains subject to ordinary competitive dynamics among well-capitalized NYC landlords. Leverage, single-market concentration, and a governance structure that subordinates OP unitholders to ESRT's control temper an otherwise differentiated asset base.