ESRT Raises 2026 Core FFO Outlook Amid Strong Office Leasing

Empire State Realty Trust (ESRT) increased its 2026 Core FFO guidance after a third quarter marked by positive office leasing spreads and modest same-store cash NOI growth, even as continued weakness at the Empire State Building Observation Deck weighed on operating results.

The New York-focused real estate investment trust now expects 2026 Core FFO of $0.77 to $0.80 per share, up from its previous range of $0.75 to $0.79. The outlook incorporates share repurchases completed to date and the sale of 1359 Broadway. ESRT also raised its same-store property cash NOI growth forecast to 1.75% to 2.25%, from a prior range of negative 1.5% to positive 2.0%.

Core FFO was $0.20 per share in the third quarter. Same-store property cash NOI increased 0.5% from a year earlier to $66.7 million. Excluding non-recurring items and the previously disclosed expiration of an FDIC lease in space that has been pre-leased, growth was 1.9%.

Net income declined to $5.9 million from $13.6 million a year earlier, while adjusted EBITDA fell to $83.4 million from $88.1 million. Total cash NOI, including the Observation Deck and lease termination fees, was $92.1 million, compared with $101.7 million in the third quarter of 2025.

Office leasing maintains momentum

ESRT’s commercial portfolio was 95.6% leased and 92.3% occupied at quarter-end. The company signed 189,000 square feet of leases during the quarter, with new leases carrying an average term of 9.5 years.

Office leasing spreads were positive 9.9%, marking the 21st consecutive quarter of positive mark-to-market rent growth. The company left its year-end occupancy expectation unchanged at 90% to 92%, a range that incorporates temporary downtime for space that has already been pre-leased.

Office properties account for about 60% of ESRT’s pro forma NOI. The company’s Manhattan office portfolio totals 6.6 million square feet and is concentrated near mass transit, with tenant amenities including lounges, conference facilities, fitness centers and rooftop spaces.

Management continues to focus on lowering operating overhead. ESRT expects its run-rate general and administrative expenses at the end of 2026 to be 5% to 10% below the 2025 level and said additional cost-reduction initiatives are underway.

Observation Deck remains under pressure

The Empire State Building Observation Deck generated third-quarter NOI of $15.6 million, down from $26.5 million a year earlier. ESRT described performance as continuing to show weakness and said New York City’s destination-attraction market has changed, requiring work to diversify the customer base and redefine the revenue model.

The company maintained the $55 million annual Observation Deck NOI framework introduced with its second-quarter results. The attraction represents about 16% of pro forma NOI, making its performance a significant variable for ESRT’s overall cash flow.

Retail contributes approximately 18% of pro forma NOI, while multifamily properties account for 6%. The retail portfolio totals about 700,000 square feet across Manhattan and North 6th Street in Williamsburg, Brooklyn. ESRT’s multifamily portfolio comprises 743 units, primarily in Manhattan and mostly at free-market rents.

Asset sales and share repurchases shape capital allocation

After the quarter ended, ESRT completed the sale of 1359 Broadway for $217.5 million. The company said part of the proceeds would be used to repay debt and preserve balance-sheet strength and flexibility.

ESRT repurchased $85.8 million of common stock through Nov. 2, 2026, at a weighted average price of $4.56 per share. Its 2026 capital activity also included the sale of 250 West 57th Street, a tax-efficient reinvestment into 130 Mercer Street and the acquisition of land beneath 1.7 million square feet of property that had previously been subject to ground leases.

Net debt was 6.7 times adjusted EBITDA at the end of the quarter. ESRT reported approximately $600 million of liquidity and no unaddressed debt maturity before March 2029, after accounting for a $245 million delayed-draw term loan expected in January 2027.

The company’s outlook remains subject to leasing and occupancy trends, tenant defaults, interest-rate and capital-markets conditions, and changes in New York’s office, retail, multifamily and tourism markets. Observation Deck results may also be affected by tourism levels, foreign exchange movements, geopolitical conditions, weather and competition. ESRT additionally cited real estate valuation risk, refinancing conditions and environmental requirements, including New York City’s Local Law 97, among its principal uncertainties.