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Capital | 6 Months Ended
--- | ---
Jun. 30, 2025
Equity [Abstract] |
Capital | Capital As of June 30, 2025, there were 168,301,105 shares of Class A common stock, 974,628 shares of Class B common stock and 109,308,532 operating partnership units outstanding. The controlling interest of 60.8% is owned by ESRT. The other 39.2% non-controlling interest in the OP is diversified among various limited partners, some of whom include Company directors, senior management and employees. ESRT has two classes of common stock as a means to give its OP Unit holders voting rights in the public company that correspond to their economic interest in the combined entity. A one-time option was created at our formation transactions for any pre-Offering OP Unit holder to exchange one OP Unit out of every 50 OP Units they owned for one ESRT Class B share, and such ESRT Class B share carries 50 votes per share. Stock and Publicly Traded Operating Partnership Unit Repurchase Program ESRT's Board of Directors authorized the repurchase of up to $500.0 million of ESRT Class A common stock and our Series ES, Series 250 and Series 60 operating partnership units from January 1, 2024 through December 31, 2025. Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws. The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT's and our discretion without prior notice. The following table summarizes ESRT's repurchases of equity securities in each of the three months ended June 30, 2025 under the repurchase program described above:
Period | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plan |  | Maximum Approximate Dollar Value Available for Future Purchase (in thousands)
April 1 - April 30, 2025 | 310,415 |  |  | $ | 6.92 |  |  | 310,415 |  |  | $ | 497,852 |
May 1 - May 31, 2025 | — |  |  | $ | — |  |  | — |  |  | $ | 497,852 |
June 1 - June 30, 2025 | — |  |  | $ | — |  |  | — |  |  | $ | 497,852 |
Private Perpetual Preferred Units As of June 30, 2025, there were 4,664,038 Series 2019 Preferred Units ("Series 2019 Preferred Units") and 1,560,360 Series 2014 Private Perpetual Preferred Units ("Series 2014 Preferred Units") outstanding. The Series 2019 Preferred Units have a liquidation preference of $13.52 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.70 per unit payable in arrears on a quarterly basis. The Series 2014 Preferred Units which have a liquidation preference of $16.62 per unit and are entitled to receive cumulative preferential annual cash distributions of $0.60 per unit payable in arrears on a quarterly basis. Both series are not redeemable at the option of the holders and are redeemable at our option only in the case of specific defined events. Distributions The following is a summary of distribution activity:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(amounts in thousands) |  | 2025 |  | 2024 |  | 2025 |  | 2024
Distributions paid to OP unitholders |  | $ | (9,755) |  |  | $ | (9,596) |  |  | $ | (19,488) |  |  | $ | (19,098) |
Distributions paid to preferred unitholders |  | (1,051) |  |  | (1,051) |  |  | (2,101) |  |  | (2,101) |
Incentive and Share-Based Compensation On May 9, 2024, the Empire State Realty Trust, Inc. Empire State Realty OP, L.P. 2024 Equity Incentive Plan (the “2024 Plan”) was approved by our shareholders. The 2024 Plan provides for grants to directors, employees and consultants of ESRT and the Operating Partnership, including options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents and other equity-based awards, and replaced the First Amended and Restated Empire State Realty Trust, Inc. and Empire State Realty OP, L.P. 2019 Equity Incentive Plan ("2019 Plan", and collectively with the 2024 Plan, the "Plans"). The shares of ESRT Class A common stock underlying any awards under the Plans that are forfeited, canceled or otherwise terminated, other than by exercise, will be added back to the shares of ESRT Class A common stock available for issuance under the 2024 Plan. Shares tendered or held back upon exercise of a stock option or settlement of an award under the Plans to cover the exercise price or tax withholding and shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise thereof, will not be added back to the shares of ESRT Class A common stock available for issuance under the 2024 Plan. In addition, shares of ESRT Class A common stock repurchased on the open market will not be added back to the shares of ESRT Class A common stock available for issuance under the 2024 Plan. An aggregate of 11.0 million shares of ESRT common stock was authorized for issuance under awards granted pursuant to the 2024 Plan, and as of June 30, 2025, 6.0 million shares of common stock remain available for future issuance. Long-term incentive plan ("LTIP") units are a special class of partnership interests. Each LTIP unit awarded will be deemed equivalent to an award of one share of ESRT stock under the Plans, reducing the availability for other equity awards on a one-for-one basis. The vesting period for LTIP units, if any, will be determined at the time of issuance. Under the terms of the LTIP units, we will revalue for tax purposes its assets upon the occurrence of certain specified events, and any increase in valuation from the time of one such event to the next such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with unitholders, LTIP units are convertible into Series PR operating partnership units on a one-for-one basis. LTIP units subject to time-based vesting, whether vested or not, receive the same per unit distributions as operating partnership units, which equal per share dividends (both regular and special) on our common stock. Market and performance-based LTIPs receive 10% of such distributions currently, unless and until such LTIP units are earned based on performance, at which time they will receive the accrued and unpaid 90% and will commence receiving 100% of such distributions thereafter.
In May 2025, we made grants of 185,280 LTIP units to our non-employee directors that are subject to time-based vesting with fair market values of $1.3 million. Share-based compensation for time-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the shorter of (i) the stated vesting period, which is generally three, four or five years, or (ii) the period from the date of grant to the date the employee becomes retirement eligible for awards granted to non-named executive officer employees and awards granted before 2025 to named executive officers, which may occur upon grant. An employee is retirement eligible when the employee attains the (i) age of 65 and (ii) the date on which the employee has first completed the requisite years of continuous service with us or our affiliates. Share-based compensation for market-based equity awards and performance-based equity awards is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over three or four years. Additionally, for the performance-based equity awards, we assess, at each reporting period, whether it is probable that the performance conditions will be satisfied. We recognize expense respective to the number of awards we expect to vest at the conclusion of the measurement period. Changes in estimate are accounted for in the period of change through a cumulative catch-up adjustment. Any forfeitures of share-based compensation awards are recognized as they occur. For the market-based LTIP units, the fair value of the awards was estimated using a Monte Carlo Simulation model and discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. Our stock price, along with the prices of the comparative indexes, is assumed to follow the Geometric Brownian Motion Process. Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on our stock price and the comparative indexes were estimated based on implied volatilities and historical volatilities using an appropriate look-back period. The expected growth rate of the stock prices over the performance period is determined with consideration of the risk-free rate as of the grant date. For LTIP unit awards that are time or performance based, the fair value of the awards was estimated based on the fair value of our stock at the grant date discounted for the restriction period during which the LTIP units cannot be redeemed or transferred and the uncertainty regarding if, and when, the book capital account of the LTIP units will equal that of the common units. For restricted stock awards, the fair value of the awards is based on the market price of ESRT stock at the grant date. LTIP units and ESRT restricted stock issued during the six months ended June 30, 2025 were valued at $28.9 million. The weighted average per unit or share fair value was $5.89 for grants issued for the six months ended June 30, 2025. The fair value per unit or share granted in 2025 was estimated on the respective dates of grant using the following assumptions:
| 2025
Expected life | 2.0 to 5.3 years
Dividend rate | 1.7%
Risk-free interest rate | 3.9% - 4.0%
Expected price volatility | 35.0% - 44.0%
No stock options, dividend equivalents, or stock appreciation rights were issued or outstanding during the six months ended June 30, 2025. The following is a summary of ESRT restricted stock and LTIP unit activity for the six months ended June 30, 2025:
| Restricted Stock |  | Time-based LTIPs |  | Market-based LTIPs |  | Performance-based LTIPs |  | Weighted Average Grant Fair Value
Unvested balance at December 31, 2024 | 612,416 |  |  | 3,615,771 |  |  | 2,629,002 |  |  | 2,078,099 |  |  | $ | 6.87 |
Vested | (211,476) |  |  | (1,361,704) |  |  | (340,736) |  |  | (229,162) |  |  | 7.48 |
Granted | 245,616 |  |  | 1,866,961 |  |  | 1,679,320 |  |  | 1,112,709 |  |  | 5.89 |
Forfeited or unearned | (27,124) |  |  | — |  |  | — |  |  | (46,846) |  |  | 7.91 |
Unvested balance at June 30, 2025 | 619,432 |  |  | 4,121,028 |  |  | 3,967,586 |  |  | 2,914,800 |  |  | $ | 6.33 |
The time-based LTIPs and ESRT restricted stock awards granted to non-named executive officers or granted to certain named executive officers before 2025, are treated for accounting purposes as immediately vested upon the later of (i) the date the grantee attains the age of 65, and (ii) the date on which grantee has first completed the requisite years of continuous service with our Company or its affiliates. For award agreements that qualify, we recognize noncash compensation expense on the grant date for the time-based awards and ratably over the vesting period for the market-based and performance-based awards, and accordingly, we recognized $1.6 million and $2.7 million for the three and six months ended June 30, 2025, respectively, and $1.7 million and $2.4 million for the three and six months ended June 30, 2024, respectively. Unrecognized compensation expense was $4.7 million at June 30, 2025, which will be recognized over a weighted average period of 1.4 years. For the remainder of the LTIP unit awards, we recognized noncash compensation expense ratably over the vesting period, and accordingly, we recognized noncash compensation expense of $5.3 million and $9.2 million for the three and six months ended June 30, 2025, respectively, and $5.5 million and $8.2 million for the three and six months ended June 30, 2024, respectively. Unrecognized compensation expense was $42.1 million at June 30, 2025, which will be recognized over a weighted average period of 2.8 years. Earnings Per Unit Earnings per unit is calculated by dividing the net income attributable to common unitholders by the weighted average number of units outstanding during the respective period. Unvested share-based payment awards that contain non-forfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Share-based payment awards are included in the calculation of diluted income using the treasury stock method if dilutive. Earnings per unit is computed as follows:
| Three Months Ended |  | Six Months Ended
(amounts in thousands, except per unit amounts) | June 30, 2025 |  | June 30, 2024 |  | June 30, 2025 |  | June 30, 2024
Numerator: |  |  |  |  |  |  |
Net income | $ | 11,385 |  |  | $ | 28,555 |  |  | $ | 27,163 |  |  | $ | 38,770 |
Private perpetual preferred unit distributions | (1,051) |  |  | (1,051) |  |  | (2,101) |  |  | (2,101) |
Net income attributable to non-controlling interests in other partnerships | — |  |  | — |  |  | — |  |  | (4) |
Net income attributable to common unitholders – basic and diluted | $ | 10,334 |  |  | $ | 27,504 |  |  | $ | 25,062 |  |  | $ | 36,665 |
Denominator: |  |  |  |  |  |  |
Weighted average units outstanding – basic | 266,899 |  |  | 264,676 |  |  | 266,985 |  |  | 264,619 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock-based compensation plans | 3,052 |  |  | 4,040 |  |  | 2,754 |  |  | 3,486 |
Weighted average units outstanding – diluted | 269,951 |  |  | 268,716 |  |  | 269,739 |  |  | 268,105 |
Earnings per unit: |  |  |  |  |  |  |
Basic | $ | 0.04 |  |  | $ | 0.10 |  |  | $ | 0.09 |  |  | $ | 0.14 |
Diluted | $ | 0.04 |  |  | $ | 0.10 |  |  | $ | 0.09 |  |  | $ | 0.14 |
There were zero antidilutive shares and LTIP units for the three and six months ended June 30, 2025 and 2024.

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