Deferred Costs, Acquired Lease Intangibles and Goodwill

3 Months Ended

Mar. 31, 2026

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)	March 31, 2026		December 31, 2025
Deferred leasing costs	$	228,410	$	227,722
Acquired in-place lease value, acquired deferred leasing costs and deferred acquisition costs	184,780		190,570
Acquired above-market leases	57,479		57,569
Total deferred costs, excluding deferred financing costs	470,669		475,861
Less: accumulated amortization	(214,682)		(214,917)
Total deferred costs, net, excluding net deferred financing costs	255,987		260,944
Deferred financing costs, net, of accumulated amortization of $10,429 and $9,900, respectively (See Note 5)	6,225		6,738
Total deferred costs, net	$	262,212	$	267,682

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


(amounts in thousands)	March 31, 2026		December 31, 2025
Acquired below-market ground leases	$	396,916	$	396,916
Less: accumulated amortization	(93,295)		(91,337)
Acquired below-market ground leases, net	$	303,621	$	305,579

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


(amounts in thousands)	March 31, 2026		December 31, 2025
Acquired below-market leases	$	(63,802)	$	(81,539)
Less: accumulated amortization	25,854		41,772
Acquired below-market leases, net	$	(37,948)	$	(39,767)

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


	Three Months Ended March 31,
(amounts in thousands)	2026		2025
Rental revenue:
Amortization of below-market leases, net of above-market leases	$	670	$	798
Depreciation and amortization:
Amortization of deferred leasing costs and acquired deferred leasing costs	4,920		5,369
Amortization related to acquired in-place lease value	2,399		1,408

As of March 31, 2026 and December 31, 2025, we had goodwill of $491.5 million. Goodwill was allocated $227.5 million to the Observatory reportable segment and $264.0 million to the real estate reportable segment.

We performed our annual goodwill testing in October 2025 for both the Real Estate and Observatory reportable segments. 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.