Deferred Costs, Acquired Lease Intangibles and Goodwill

12 Months Ended

Dec. 31, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Deferred Costs, Acquired Lease Intangibles and Goodwill

Deferred costs, net, consisted of the following:


(amounts in thousands)	December 31, 2024		December 31, 2023
Deferred leasing costs	$	230,836	$	224,295
Acquired in-place lease value, acquired deferred leasing costs and deferred acquisition costs	137,580		158,267
Acquired above-market leases	19,636		23,918
Total deferred costs, excluding deferred financing costs	388,052		406,480
Less: accumulated amortization	(212,972)		(236,900)
Total deferred costs, net, excluding net deferred financing costs	175,080		169,580
Deferred financing costs associated with the unsecured revolving credit facility, net of accumulated amortization of $7,783 and $5,709, respectively (See Note 5) and other deferred financing costs	8,907		2,877
Total deferred costs, net	$	183,987	$	172,457

Acquired below-market ground leases, net, consisted of the following:


(amounts in thousands)	December 31, 2024		December 31, 2023
Acquired below-market ground leases	$	396,916	$	396,916
Less: accumulated amortization	(83,506)		(75,675)
Acquired below-market ground leases, net	$	313,410	$	321,241

Acquired below-market leases, net, consisted of the following:


(amounts in thousands)	December 31, 2024		December 31, 2023
Acquired below-market leases	$	(56,359)	$	(55,155)
Less: accumulated amortization	36,862		41,405
Acquired below-market leases, net	$	(19,497)	$	(13,750)

The total amortization related to deferred costs and acquired lease intangibles consisted of the following:


	Year Ended December 31,
(amounts in thousands)	2024		2023		2022
Rental revenue:
Amortization of below-market leases, net of above-market leases	$	2,177	$	2,415	$	4,759
Depreciation and amortization:
Amortization of deferred leasing costs and acquired deferred leasing costs	22,469		23,612		25,448
Amortization related to acquired in-place lease value	5,196		7,421		11,839

The remaining weighted-average amortization periods as of December 31, 2024 are:


			Weighted-average amortization period
Below-market ground leases			42.6 years
Above-market leases			5.8 years
In-place leases and deferred leasing costs			5.8 years
Below-market leases			6.0 years

We expect to recognize amortization expense and rental revenue from the acquired intangible assets and liabilities as follows (amounts in thousands):


For the year ending:	Future Ground Rent Amortization		Future Amortization Expense		Future Rental Revenue
2025	$	7,831	$	8,159	$	3,513
2026	7,831		6,999		2,110
2027	7,831		6,057		1,551
2028	7,831		5,265		1,360
2029	7,831		3,172		516
Thereafter	274,255		4,395		3,389
	$	313,410	$	34,047	$	12,439

As of December 31, 2024, we had goodwill of $491.5 million. In 2013, we acquired the interests in Empire State Building Company, L.L.C. and 501 Seventh Avenue Associates, L.L.C. for an amount in excess of their net tangible and identified intangible assets and liabilities and as a result we recorded goodwill related to the transaction. Goodwill was allocated $227.5 million to the Observatory operations of the Empire State Building, $250.8 million to Empire State Building, and $13.2 million to 501 Seventh Avenue.

We performed our annual goodwill testing in October 2024, where we bypassed the optional qualitative goodwill impairment assessment and proceeded directly to a quantitative assessment of the Observatory reportable segment and engaged a third-party valuation consulting firm to perform the valuation process. The quantitative analysis used a combination of the discounted cash flow method (a form of the income approach) utilizing Level 3 unobservable inputs and the guideline company method (a form of the market approach). Significant assumptions under the former included revenue and cost projections, weighted average cost of capital, long-term growth rate and income tax considerations while the latter included guideline company enterprise values, revenue multiples, EBITDA multiples and control premium rates. Our methodology to review goodwill impairment, which included a significant amount of judgment and estimates, provided a reasonable basis to determine whether impairment had occurred. The quantitative analysis performed concluded the fair value of the reporting unit exceeds its carrying value. Many of the factors employed in determining whether or not goodwill is impaired are outside of our control, and it is reasonably likely that assumptions and estimates will change in future periods.