Empire State Realty Trust (ESRT) risk factors, FY2025 10-K

Risks Relating to Portfolio Concentration

1. 01Our properties are geographically concentrated in New York, and adverse state or local economic or regulatory developments could have a material adverse effect on our business and financial condition
2. 02We rely on three properties, in particular the Empire State Building and its Observatory, for a significant portion of our revenue44% rewritten
3. 03Our five largest tenants represented approximately 17.4% of our total commercial portfolio’s annualized rent as of December 31, 202537% rewritten
4. 04A terrorist event in New York City, particularly at a high-profile property such as the Empire State Building, could materially disrupt our operations, reduce demand for our properties and Observatory, and negatively affect occupancy and rental ratesNew

Risks Relating to the Real Estate Market

1. 05Adverse economic and geopolitical conditions impacting the industries of our tenants could cause reduced demand, rental rates and occupancy for our office, multifamily, and retail space
2. 06The bankruptcy or insolvency of any tenant could result in the termination of such tenant’s lease and material losses to us
3. 07Competition may impede our ability to attract or retain tenants or re-lease space and we may be required to make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants
4. 08As of December 31, 2025, we had approximately 0.7 million rentable square feet of vacant space in our office andNew
5. 09The short-term nature of multifamily leases exposes us more quickly to the effects of declining market rents, potentially making our revenue more volatile33% rewritten

Risks Relating to Our Properties

1. 10We face various risks related to our ground leases, including those arising from breach, expiration and eminent domain proceedings, and we have no permanent economic interest in the land or improvements at such properties
2. 11We are exposed to risks associated with property development
3. 12Significant inflation could adversely affect our business and financial results
4. 13We may not be able to control our operating costs, or our expenses may remain constant or increase even if income from our properties decreases
5. 14We are exposed to risks from third-party property management services

Risks Related to Our Non-Real Estate Operations

1. 15The Observatory operations at the Empire State Building may be negatively impacted by geopolitical factors, competition, adverse weather, and changes in tourist trends98% rewritten
2. 16The broadcasting operations at the Empire State Building are not traditional real estate operations, and competition and changes in the broadcasting of signals over air may subject us to additional risks
3. 17The impairment of a significant portion of goodwill could negatively affect our results of operations and financial condition

Risks Relating to Acquisitions and Dispositions

1. 18We may be unable to identify and successfully complete acquisitions, and completed acquisitions may expose us to additional risks20% rewritten
2. 19We may acquire properties through tax deferred contribution transactions, which could result in securityholder dilution and limit our ability to sell such assetsNew
3. 20If we are unable to sell, dispose of or refinance one or more properties in the future, we may be unable to realize our investment objectives
4. 21We may incur taxable capital gain on the disposition of assets due to the failure to comply with Section 1031 of the Code

Risks Relating to Our Indebtedness and Liquidity

1. 22Our debt, the cost of our debt and limitations in our loan documents could adversely affect us
2. 23Our debt includes restrictions on our financial and operational flexibility and distributions
3. 24Mortgages expose us to foreclosure and loss of our investment in a mortgaged property
4. 25High mortgage rates and/or unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our net income and the amount of cash distributions
5. 26Our growth depends on external sources of capital that are outside of our control

Risks Relating to Disaster Recovery and Business Continuity

1. 27Natural disasters and physical climate risk could adversely impact our area and business
2. 28Some of our potential losses may not be covered by insurance
3. 29We may incur significant costs to comply with environmental laws, and environmental contamination may impair our ability to lease and/or sell real estate
4. 30We may incur significant costs to comply with environmental laws, for example New York City’s Local Law 9779% rewritten

Risks Relating to Human Capital Management

1. 31The departure of any of our key personnel could materially and adversely affect us
2. 32Our Chairman and Chief Executive Officer has outside business interests that take his time and attention away from us, which could materially and adversely affect us
3. 33Our failure to maintain satisfactory labor relations could materially and adversely affect us56% rewritten

Risks Relating to Legal Compliance, Sustainability and Cybersecurity

1. 34Failure to maintain effective internal control over financial reporting could result in loss of investor confidence and adversely impact our stock price89% rewritten
2. 35We face risks associated with our tenants being designated “Prohibited Persons” by OFAC and similar requirements
3. 36We may incur significant costs to comply with the ADA and similar laws
4. 37We may become subject to litigation, which could have a material adverse effect on our financial condition
5. 38Stakeholder attention to sustainability matters may impact our business100% rewritten
6. 39Sustainability-related disclosure standards and expectations continue to evolve and may differ across jurisdictions and stakeholders. Our selection and application of disclosure frameworks involve judgment, and future changes in standards or interpretation could require revisions to previously disclosed informationNew
7. 40Cyberattacks and any failure to comply with related laws could negatively impact us31% rewritten
8. 41The adoption of or changes in rent regulation, tenant protection and eviction laws in New York could adversely affect our residential operations and property valuesNew
9. 42Government housing regulations may limit opportunities at the multifamily properties in which we invest, and failure to comply with resident qualification requirements or to extend such programs upon expiration may result in financial penalties or loss of benefits

Risks Related to Our Organization and Structure

1. 43If our board revokes our REIT election or we fail to remain qualified as a REIT, we may be required to pay U.S. federal income taxes at corporate rates, which may cause adverse consequences to our securityholders
2. 44Complying with the REIT requirements may cause us to forego and/or liquidate otherwise attractive investments or borrow funds and we may be subject to tax
3. 45If our operating partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to qualify as a REIT
4. 46If we are unable to continue to lease the Empire State Building Observatory to a TRS or to maintain our broadcast licenses, in each case in a manner consistent with the IRS ruling that we have received, we would be required to restructure our operations in a manner that could adversely affect the value of our stock
5. 47Our TRSs are subject to U.S. federal, state and local income tax, there are limits on our ability to own TRSs, and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax
6. 48Our state and local taxes could increase due to property tax rate changes, reassessment and/or changes in state and local tax laws, which could materially and adversely affect us
7. 49U.S. federal, state and local legislative, judicial or regulatory tax changes could have a material adverse effect on our shareholders and us
8. 50Tax consequences to holders of our operating partnership units and tax protection agreements triggered upon a sale or refinancing of our properties could limit our ability either to sell certain properties or engage in a strategic transaction65% rewritten
9. 51Holders of our Class B common stock have a significant vote in matters submitted to a vote of our securityholders
10. 52The concentration of our voting power may adversely affect the ability of new investors to influence our policies
11. 53Conflicts of interest exist or could arise in the future between the interests of our securityholders and OP unit holders
12. 54Our rights and the rights of our securityholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interest
13. 55Limits on changes in control may discourage takeover attempts beneficial to securityholders

Risks Related to our Common Stock and Traded OP Units

1. 56Our cash available for distribution may not be sufficient to make distributions at expected levels, and the market price of shares of our common stock and traded OP units could be adversely affected by our level of cash distributions
2. 57Changes in market conditions could adversely affect the market price of our Common Stock and traded OP Units
3. 58The future exercise of registration rights may adversely affect the market price of our common stock
4. 59Future issuances of debt or equity securities or preferred units may be dilutive to current securityholders and may materially adversely affect the market price of our traded securities