ESRT Stock: Dividend vs Core FFO, Observatory Slump, Debt

The dividend against Core FFO and Core FAD, quarter by quarter

ESRT's own yardsticks are Core FFO (FFO plus the amortization of below-market ground leases, with one-time items such as severance, debt extinguishment and the goodwill charge added back) and Core FAD, funds available for distribution, which deducts straight-line rent and the recurring leasing costs: second-generation tenant improvements, building improvements and leasing commissions. The company prints a payout ratio against each. Both appear in the quarterly supplemental, filed with an 8-K.

The company's Core FAD payout counts the common stock and the operating partnership (OP) units together: in Q2 2026 that was $6.0 million of common dividends plus $3.7 million of OP distributions, $9.8 million, which is 60.5% of $16.2 million (our arithmetic). The Core FAD line is lumpy because tenant improvements and commissions are paid when leases are signed: $36.9 million of second-generation tenant improvements in Q2 2025, $13.2 million in Q1 2026, $24.7 million in Q2 2026.

The dividend has not moved while Core FFO has gone from $0.95 to $0.87 and now to a guided $0.75 to $0.79. Because of the unchanged $0.14, the payout rose from 14.7% of 2024 Core FFO to 16.1% of 2025 (our arithmetic), and would be 17.7% to 18.7% on the 2026 range. In dollars, the 2025 distributions of $43.2 million to all equity holders include $4.2 million to the holders of private perpetual preferred units, $15.3 million to OP unitholders and $23.7 million to common stockholders (10-K).

A cash view of the first half of 2026

Net cash from operating activities was $88.5 million in the first half of 2026, against $109.9 million a year earlier. Distributions and dividends to all equity holders were $21.5 million. Additions to buildings and improvements were $49.2 million, against $123.9 million in the first half of 2025. Operating cash flow less distributions less those additions was $17.8 million in 2026 (our arithmetic) and about negative $35.6 million in 2025 (our arithmetic, using the rounded $21.6 million of distributions). ESRT also spent $160.8 million on acquisitions (the land under 111 West 33rd Street and 1400 Broadway, and 41-55 North 6th Street) and received $75.7 million of net proceeds from the sale of 250 West 57th Street. The 10-Q attributes the $21.4 million decline in operating cash flow to “increases in rent concessions” from new and renewed tenants and changes in working capital.

The Observatory: what the company reports

The Observatory is a separate segment: it pays the Empire State Building a market rent that is eliminated on consolidation, and its NOI (excluding that intercompany rent) is what the supplemental shows. The release for the quarter said the Observation Deck NOI of $12.4 million came “with continued impact from reduced international tourism and weakness in the pass program channel.”

Four things stand out. First, visitors fell in each of the last five quarters, and the rate of decline widened from 2.9% to 28.5%; weather does not explain Q2 2026, which had 8 bad weather days against 21 a year earlier. Second, revenue per visitor held at $53.83 against $53.89 (our arithmetic), so ESRT is losing visits, not pricing. Third, the 10-Q gives the reason as “a reduction in pass program performance and a continued decrease in international visitors.” Fourth, the twelve months to June 30, 2026 produced $74.0 million of Observatory NOI, against $90.1 million for 2025 and $87.0 to $92.0 million guided for 2026 in February.

For the full year, 2025 visitors were about 2.3 million, against 2.6 million in both 2024 and 2023 (10-K). In the first half of 2026 the Observatory hosted 800,000 visitors against 1,057,000, a 24.3% fall, and its revenue was $42.7 million against $57.1 million.

On the accounting side, the Observatory reporting unit had its goodwill tested in the quarter after “a sustained decline in visitor volume.” The result was a non-cash charge of $166.1 million, leaving $61.4 million of goodwill in that unit that the 10-Q says remains at risk. The charge is excluded from Core FFO and shows in the $(0.15) loss per share.

2026 guidance, and what it implies for the second half

The company's bridge from net income to the new range adds back $0.61 a share of goodwill impairment and $0.69 of real estate depreciation and subtracts $0.46 for the gain on the 250 West 57th Street sale (the release gives the bridge to Core FFO of $0.75 to $0.79).

What the range means for the rest of the year is our arithmetic: first-half Core FFO was $0.41 a share ($0.20 plus $0.21), which leaves $0.34 to $0.38 for the second half, or $0.17 to $0.19 a quarter, against $0.23 in each of Q3 and Q4 2025. The Observatory piece is larger: with $23.1 million of NOI in the first half, a $55 million year means $31.9 million in the second half, against $51.0 million in the second half of 2025, a fall of 37.4% (our arithmetic). Seasonally the third quarter is the strongest ($26.5 million in Q3 2025), so the Q3 release is the first real test of that $55 million. The $0.035 dividend would be 18.4% to 20.6% of the implied second-half Core FFO (our arithmetic).

The property business has offset a good part of the hole. In Q2 2026 Core FFO was $57.1 million against $59.2 million, down $2.1 million, while Observatory NOI fell $11.6 million; rental revenue rose $11.6 million (7.6%) to $165.2 million, which the 10-Q attributes to higher base rent from new or renewed tenants, higher tenant reimbursements and the net effect of acquisitions and dispositions. Total cash NOI excluding the Observatory was $159.7 million in the first half against $146.4 million, up 9.1%, but that figure includes acquisitions and dispositions, so it is not a same-store number (our arithmetic).

Offices: occupancy, leasing spreads and what they cost

The spread is new cash rent over the previously escalated rent of the same space, which is why it can be double-digit while same-store cash NOI is flat to down: free rent delays the cash and the tenant improvements and commissions are paid up front. In Q2 2026 the 17 office leases averaged $72.75 a square foot against $61.75 before, and included a 16-year, 100,948 square foot new lease with United Talent Agency at the Empire State Building. Over the first half, office tenant improvements plus commissions were $120.95 a square foot, against $94.05 in the first half of 2025, and retail leases were signed 20.8% below the previously escalated rent (10-Q). The 10-Q says ESRT expects to spend a further $107.3 million on tenant improvements and commissions under leases already signed.

The gap between leased (94.9%) and occupied (89.4%) is 462,248 square feet of signed leases not yet commenced (5.6% of the portfolio) plus free-rent periods. Company tables show that, when all of it commences, annual cash rent rises by $76.9 million: $10.3 million of it counts in 2026, $49.7 million in 2027 and $73.2 million in 2028. Divided by 283.2 million shares and units, the 2027 piece is $0.176 a share (our arithmetic, a gross figure before any vacates). First-quarter occupancy had dropped about 140 basis points “due to temporary downtime related to the previously disclosed FDIC expiration, which is fully re-leased.”

Who pays the rent, and when leases expire

New York City is the whole portfolio since the sale of Metro Center in December 2025: 7.8 million rentable square feet of office and retail and 743 apartments at June 30, 2026. The Empire State Building office space alone is 2,709,234 square feet, 88.7% occupied, with $174.0 million of annualized rent, 33.2% of the portfolio's $523.5 million (our arithmetic).

The largest single-year block is 2028 to 2030 (27.1% of square feet, our sum of 9.4%, 9.2% and 8.5%), and Centric Brands, PVH and Li & Fung have leases ending between 2026 and 2028 in the tenant table. ESRT's own forecast for 2027, which it labels subject to change, is 475,127 square feet of office and retail expirations, of which 243,972 square feet (51.3%, our arithmetic) are classed as vacates, 45,861 as renewals, 81,464 as new leases and 103,830 as unknown. That is the year the leased-to-occupied gap has to close without much help from the expiry schedule.

Debt: $2.24 billion, a 4.70% average, and the 2027 to 2029 stack

The first maturities are $125.0 million of 4.09% Series B notes on March 27, 2027 and a $30.0 million mortgage on 1542 Third Avenue at 4.29% on May 1, 2027, then $115.0 million of 4.08% Series D notes on January 22, 2028. The 2029 line includes the $175.0 million revolver draw and the $95.0 million bank term loan (both March 8, 2029 with extensions) and $155.0 million of 7.20% Series I notes. The company has $85.6 million of cash and $445.0 million of undrawn revolver on a $620.0 million facility; $125.0 million of revolver debt is floating-rate at 5.13%, and the term loans are swapped to fixed.

What changed after quarter end: on July 15, 2026 ESRT sold $130.0 million of 5.99% Series M notes due July 15, 2032, and on July 17 it amended its Wells Fargo term loan to add a $245.0 million delayed draw term loan maturing January 12, 2032. The release says the proceeds “are expected to be drawn in January 2027 and used to repay existing debt,” and management says it has “no unaddressed debt maturity until January 2028.” That wording is the company's. Our reading: the 2027 notes and mortgage ($155.0 million) are covered by the delayed draw but are not yet repaid.

Refinancing is the arithmetic to watch. The two newest unsecured placements were at 5.47% (December 2025) and 5.99% (July 2026), and the notes maturing in 2027 and 2028 carry about 4.1%. Re-setting the $125.0 million of Series B notes from 4.09% to 5.99% would add about $2.4 million of annual interest, $0.008 a share and unit (our arithmetic, an illustration and not guidance).

Shares, buybacks and the new holder

ESRT had 283.2 million shares and OP units at June 30, 2026 (171.8 million Class A, 1.0 million Class B, 110.5 million OP units), 3.3% more than the 274.2 million at December 31, 2024 (our arithmetic). It has not been shrinking the share count. Under the repurchase program, which has run since March 2020, about $296 million had been repurchased through October 28, 2025; in 2025 ESRT repurchased $8.1 million at an average $6.78, including 888,188 shares at $6.73 in December. The board renewed a $500.0 million authorization for 2026 and 2027; the 10-Q reports no repurchases in the second quarter and the full $500.0 million still available. At the company's quarter-end price of $5.41 the shares and units were worth about $1.53 billion (our arithmetic), against $2.83 billion at $10.32 at the end of 2024.

The Schedule 13D filed on October 5, 2026 lists Erez Asset Management LLC with shared voting and dispositive power over 10,000,000 Class A shares (5.8% of the 172,165,643 outstanding on August 4, 2026) and Erez REIT Opportunities LP, a fund it manages, with 7,500,000 (4.4%). The date of the event was October 1, 2026 and the funds used were about $43 million, which is $4.30 a share (our arithmetic) against the $5.41 company price at June 30. Item 4 says the filers believe the shares are undervalued, have communicated with management and the board on capital allocation, operations and strategy including “a potential strategic review of some or all of the Issuer’s assets,” and may raise governance, capital structure and “dividend and/or buyback policies.” A 13D is a statement of intent by the filer. It is not a proposal, and the EDGAR list shows no 8-K from ESRT after the August 6 10-Q.

What changed in the second quarter of 2026

• Observatory: NOI $12.4 million against $24.1 million; $166.1 million goodwill impairment; guidance cut.
• Portfolio recycling: 250 West 57th Street sold in June for $275 million including the buyer's assumption of $180 million of mortgage debt, a $124.6 million gain, “without recognition of a taxable gain” through the redeployment into 130 Mercer Street (bought for $386.0 million in December 2025). Land under 111 West 33rd Street and 1400 Broadway bought for $110.0 million. 130 Mercer Street (396,000 square feet, under redevelopment) is 70.6% occupied and 80.6% leased.
• Overhead: $5.5 million of one-time severance in general and administrative expense, excluded from Core FFO.
• Financing: $130.0 million of 5.99% notes and a $245.0 million delayed draw term loan, both closed in July.
• Dividend: unchanged at $0.035, paid June 30; on August 5 the board declared $0.035 for the third quarter, payable September 30 to holders of record on September 15 (company press release, not an SEC filing).

What has been filed since the last 10-Q, and what comes on November 2

Since the 10-Q of August 6, 2026 the EDGAR list for ESRT shows Schedule 13G amendments and filings from holders in August and the Erez Schedule 13D of October 5; no 8-K from the company. Aggregator sites list an estimated date of October 28; the company's own announcement says otherwise. The Q3 figures arrive with the release on Monday, November 2, 2026, after the close, and a call on Tuesday, November 3 at 12:00 p.m. Eastern, per a company press release (not an SEC filing). Over the last three quarters the 10-Q came 7 to 8 days after the earnings 8-K, which points to about November 9 to 10 (our estimate, not a company date).

How this compares with other office and income real estate

ESRT is a listed, New York-only REIT: it owns office, retail and 743 apartments, plus the Observatory, and its board sets the dividend each quarter. The shares trade every day; a non-traded NAV REIT does not, and redeems at a published NAV within monthly or quarterly limits. For that difference see non-traded REITs versus publicly traded REITs and our NAV REIT comparison. For other listed office landlords read the same way, see Vornado's dividend against FFO and FAD, SL Green's dividend against FFO, BXP's dividend and office occupancy and our office REIT dividend, occupancy and debt page. The yardsticks differ (Core FFO and Core FAD here, FFO as adjusted and FAD at Vornado), so compare the method before the percentage.

What a holder or reader can do with this

This page is analysis of public documents, not investment, legal or tax advice. Things the filings let you check yourself:

• Say which payout you mean. 16.7% of Q2 Core FFO, 39.9% of first-half Core FAD, 46.2% of 2025 Core FAD and 148.1% of first-half 2025 Core FAD are all correct and answer different questions.
• Check the $55 million Observatory assumption against the visitor count. The company says it assumes no improvement to current visitation; the Q3 count (648,000 a year earlier) tells you how much room that has.
• Separate Observatory loss from property performance. Cash NOI excluding the Observatory rose 9.1% in the first half (not same-store); same-store cash NOI excluding one-time items fell 3.2% in Q2.
• Read the 2027 expirations. The company's own forecast classes 51.3% of 2027 square feet as vacates.
• Read Item 4 of the 13D yourself, and the 8-Ks that follow it.
• Use the CSV. It has every figure above with its filing and accession number.

FAQ

All figures are from Empire State Realty Trust, Inc. (SEC CIK 1541401) filings read on EDGAR on October 19, 2026: Form 10-K for 2025 (accession 0001541401-26-000008); Form 10-Q for the quarter ended June 30, 2026 (0001541401-26-000033); earnings releases and supplemental reports attached to Forms 8-K for Q4 2024 (0001104659-25-015176), Q1 2025 (0001104659-25-041274), Q2 2025 (0001541401-25-000025), Q3 2025 (0001541401-25-000034), Q4 2025 (0001541401-26-000005), Q1 2026 (0001541401-26-000016) and Q2 2026 (0001541401-26-000030); the Schedule 13D of Erez Asset Management LLC and Erez REIT Opportunities LP filed October 5, 2026 (0000902664-26-004065); and the EDGAR filing list. The November 2 and 3, 2026 dates and the August 5, 2026 third-quarter dividend declaration come from company press releases, which are not SEC filings. Payout ratios other than the company's, the cash view, implied second-half figures, the 2027 incremental rent per share, the refinancing illustration, the shares and units total and the value at the quarter-end price are our arithmetic. This page has no market data of its own. Compiled by CrowdfundedWealth.