Greetings, and welcome to the Empire State Realty Trust 1/3 1/4 2022 earnings call. At this time, all participants are in a Listen-Only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Heather Houston, Senior Vice President, Chief Counsel, Corporate & Secretary. Thank you. You may begin. Good afternoon. Thank you for joining us today for Empire State Realty Trust 1/3 1/4 2022 earnings conference call. In addition to the press release distributed yesterday, a quaterly supplemental package with further detail on our results and our latest investor presentation were posted in the Investors section of the company's website at esrtreit.com. On today's call, management's prepared remarks and answers to your questions may contain Forward-Looking statements as defined in applicable securities laws, including those related to market conditions, property operations, capital expenditures, income, expense, financial results, and proposed transactions and events. As a reminder, Forward-Looking statements represent management's current estimates. They are subject to risks and uncertainties, which may cause actual results to differ from those discussed today. Empire State Realty Trust assumes no obligation to update any Forward-Looking statement in the future. We encourage listeners to review the more detailed discussions related to these Forward-Looking statements in the company's filings with the SEC. The COVID situation has normalized, and we will no longer include specific COVID disclosure unless warranted. During today's call, we will discuss certain Non-GAAP financial measures such as FFO, modified and core FFO, NOI, Same-Store NOI, cash NOI, and EBITDA, which we believe are meaningful in evaluating the company's performance. The definitions and reconciliations of these measures to the most directly comparable GAAP measures are included in the earnings release and supplemental package, each available on the company's website. Now, I will turn the call over to Anthony Malkin, our Chairman, President, and Chief Executive Officer. Thanks, Heather, and good afternoon to everyone. We are pleased to report a strong 1/3 1/4 of results, updates on our capital recycling activities, and share the outlook for the balance of our year with you today. ESRT's focus is unchanged. Lease space, sell tickets to the observatory, and enhance shareholder value through proactive portfolio management and capital allocation. ESRT remains Well-Positioned with a modernized portfolio to take advantage of the flight to quality, signed leases that will contribute to earnings, and a strong and flexible balance sheet to take advantage of investment opportunities. There is no doubt about it, New York City is busy again, and we are a great way to benefit from New York City's upside with multiple revenue streams from office, tourism, residential, and retail. Some of you may have noted certain Sell-Side commentary that we exceeded expectations in some areas and fell below in others. That is the beauty to our revenue composition. We have four revenue streams, and therefore, if you want to bet on New York City, we are the best way to make a balanced investment. Our modernized buildings close to mass transit with great amenities and more to come, and our industry leadership in energy efficiency and indoor environmental quality help us to draw consistent leasing volumes, and the 1/3 1/4 was no exception. We find some great independent validation of how the market values our portfolio in the video by our 250 West 57th Street tenant, COOKFOX Architects, and we have that on page 5 in our updated investor presentation. In fact, there are several videos in our investor presentation, and they are all worth the time of anyone who wants to understand our company. The Empire State Building Observatory is Tripadvisor's number 1 attraction in the United States and number 3 in the world. In today's world, the customer rates the experiences and amplifies the brand. Our customers have made our iconic brand universally and internationally important, and our visitors rate more highly than ever our Best-In-Class experience. Our strong and flexible balance sheet with no floating rate debt exposure, and a Well-Laddered maturity schedule with no debt maturity for the next 2 years, makes us very well positioned to allocate capital strategically. We continued our buyback activity during the 1/3 1/4 and beyond. Our identification of cash accretive external growth with an eye to how we can recycle our portfolio for better cash performance and give ESRT its next legs of growth has been very successful. Christina will comment on our current balance sheet recycling. We built our business to create success in unstable markets, and we see an opportunity ahead. Thomas Durels will cover our healthy leasing this 1/4, which totaled 335,000 sq ft, with strong Mark-To-M arket spreads on new leases signed in our Manhattan office portfolio. ESRT is a beneficiary of the flight to quality trend. Tenants focus on buildings with amenities, healthy building features, energy efficiency, low emissions, indoor environmental quality, and convenient access to mass transit. Tenants are attracted to our modernized buildings and their accessible price points, particularly in this environment. Existing tenants who know and love our product grow in our portfolio. The recent expansion of Allied Universal follows expansions with iCapital, and Burlington signed last 1/4 in Signature Bank prior to that. LinkedIn, our largest office tenant, has expanded many times within ESRT's portfolio and recently created a great video showcasing how their office space at the Empire State Building is an asset that helps them attract and retain talent. The link to that video can be found on page 6 in our updated investor presentation. We continue to build our leased percentage, and that will drive higher occupancy and earnings in the future. Third 1/4 visitation to the Empire State Building Observatory totaled 687,000 visitors, and we continued to benefit from strong revenues per cap. A variety of factors, which include airport operation disruptions, war in Europe, and the continued shutdown of China, slowed the pace of growth of international travel to the United States through the 1/4. Third 1/4 recapture rate of 2019 levels was 66%. We have modified our hypothetical fourth 1/4 visitation recapture to remain at the 1/3 1/4's level. While it will take longer than we previously expected to reach full recovery of the observatory business back to Pre-Pandemic levels, we remain confident in the full recovery. We have effectively managed the business through market downturns before, as seen on page 15 of our investor presentation. Our team continues to focus on effective expense management, made so much easier and more effective through our online reservation ticketing and reservation system implemented during the COVID shutdown, delivery of our Best-In-Class experience, and the procurement of the best partnerships for our iconic brand. The Empire State Building Observatory has unmatched brand recognition and is the authentic Must-Do for a visitor to New York City. This was recognized by Tripadvisor, who declared the ESB Observatory as the number one attraction in the United States and number three in the world. We continue to underwrite new acquisition opportunities that are complementary to our New York City-Focused portfolio, where risk-adjusted returns can be compelling and where we think we have an edge with our local knowledge, ability to spot unique opportunities, and ability to be nimble with our very Well-Positioned balance sheet. We also continue to review our portfolio to monetize assets in which we have added value and reinvest the proceeds in Cash-Accretive acquisitions, which Christina will touch upon shortly. We are happy to report additional sustainability milestones achieved during the 1/4. ESRT achieved carbon neutrality for our entire commercial portfolio in 2022. ESRT accomplished this through its industry leadership on In-Building energy efficiency retrofit work, which has reduced operational emissions 54% at the Empire State Building and 43% Portfolio-Wide to date since 2009. Combined with renewable wind RECs, that's renewable energy credits, to offset 100% of our electrical usage and preservation of close to 9,000 acres of biodiverse forest to offset 100% of ESRT's nonelectric fossil fuel usage. ESRT has made notable strides in emissions reductions due to the important building energy efficiency retrofit work that we have done over the last decade, coupled with ongoing tenant engagement and collaboration. ESRT is America's first commercial office REIT to join the United Nations Global Compact and commit to the Women's Empowerment Principles. Lastly, we announced just earlier this month that ESRT earned the highest possible GRESB five-star rating and Green Star recognition for the 1/3 consecutive year with a score of 95. Additionally, ESRT received a score of 96, the highest in the U.S. diversified group, and an A rating in the public disclosure assessment, which measures ESG disclosure activities. We are extremely happy with these accomplishments and recognition within the ESG space this 1/4, and we'll continue to build on these going forward. Now I will turn it over to Thomas Durels. Hey, thanks, Anthony, and good afternoon, everyone. We had another solid 1/4 headlined by 335,000 sq ft of total leasing volume across our commercial portfolio, which include a strong mark-to-market spreads in our Manhattan office portfolio for new leases, steady tenant demand for our Pre-built spaces, and over 182,000 sq ft of renewals. The facts show continued improvement from the environment we were in one year ago and that our fully modernized, Energy-Efficient, and healthy buildings continue to be a destination for tenants' flight to quality. We offer newly built tenant spaces with latest in indoor environmental quality technologies at a great price point, with convenient access to mass transit and fantastic amenities to which we continue to add. In the 1/3 1/4, we signed 34 new and renewal leases totaling approximately 335,000 sq ft at a weighted average lease term of approximately 8 years, which includes 179,000 sq ft in our Manhattan office properties, 115,000 sq ft in our Greater New York metropolitan office properties, and 41,000 sq ft of retail. Notable leases signed this 1/4 include a 79,000 sq ft renewal lease with Franklin Templeton at First Stamford Place, and with this most recent renewal and previously signed direct leases with former subtenants of Franklin Templeton, we have now re-leased all of Franklin Templeton's 138,000 sq ft that was set to expire in September 2024. We also signed a 59,000 sq ft direct lease with Alfred Dunner at 1,333 Broadway that formerly occupied the space under a sublet from GBG, and an expansion lease with Universal Services of America, who relocated within our portfolio from One Grand Central Place to 501 Seventh Avenue, where they more than doubled in size to 30,000 sq ft. Universal's original space at One Grand Central Place is already leased to another tenant. A 28,000 sq ft new lease with the New York City School Construction Authority at 1,010 Third Avenue, which backfills the entirety of the space vacated this 1/4 by Ethan Allen. We also signed leases for 16 Pre-built office suites in Manhattan, and we've had good success leasing our Pre-B uilts this year and are on pace to match our annual average Pre-Builts leased between 2017 and 2019. We saw good improvement in leasing spreads this 1/4. Weighted lease spreads signed at our Manhattan office properties improved to positive 10% on a cash basis compared to prior escalated rents, driven by new leases up 23.6%. Leased percentage within our portfolio continued to increase in the 1/3 1/4. Consistent with our expectations, which we communicated during the last earnings call, the total commercial portfolio leased percentage was up 70 basis points quarter -over-quarter in the 1/3 1/4 to 88.5%. The Manhattan office leased percentage increased 110 basis points 1/4-over-quarter to 89.4% and has increased by 240 basis points year-to-date. We have now leased over 974,000 sq ft year-to-date following another strong 1/4 and have only 68,000 sq ft of known tenant vacates through the end of this year. We have active deals in our pipeline and will continue to push forward to sign leases in negotiation that have the potential to drive portfolio leased percentage higher. Our focus continues to be on increasing our leased occupancy, which will translate to higher portfolio occupancy over time, and we maintain our projected 2022 year-end occupancy of 84%-86%. Looking ahead to 2023, we have manageable upcoming lease expirations with only 5.5% or 540,000 sq ft expiring in 2023, of which we expect to vacate about 280,000 sq ft and 98,000 sq ft of tenants who are undecided. That said, we feel confident in our ability to achieve positive absorption in 2023 despite current economic headwinds based on our proven ability to lease space through cycles. Additionally, we have $57 million of contracted incremental rent from signed leases not yet commenced and free rent burn off. As previously announced, we will expand our amenity offerings in 2023 across our Manhattan office portfolio to include a 10,000 sq ft, 400-Person All-Hands presentation room, basketball and pickleball court, tenant lounge with bar service, and two golf simulators at the Empire State Building. Just announced this week, the new Starbucks Reserve, spanning 23,000 sq ft and 3 floors at the Empire State Building, will open on November sixteenth. The new Reserve will be a one-of-a-kind destination with exclusive offerings, interactive experiences, curated food, and full-service cocktail menus. Tenants located in our Times Square South campus will benefit from shared access to new amenities planned for 2023 that include a 300-person town hall presentation room and lounge at 1400 Broadway, a new rooftop lounge with private cabanas at 1333 Broadway, and we derive cost synergies from the proximity of our assets such that other buildings of similar size are unable to deliver comparable amenities. Despite the increased Work-From-Home flexibilities that companies have offered their employees over the last two or more years, very few of our tenants have decided to operate under a hoteling model, and our high-quality buildings offer healthy workplaces to attract and retain their employees. Additionally, New York City office-using employment has fully recovered and it now exceeds Pre-pandemic levels as close to 200,000 Office-U sing jobs have been added since the second 1/4 of 2020. Same-S tore cash operating expenses and real estate taxes in the 1/3 1/4 were $71.5 million. An increase of $7.1 million from second 1/4 levels and an $8.9 million increase from the 1/3 1/4 2021 due to real estate taxes, utilities, labor, and repair and maintenance related to increased utilization. We continue to anticipate Same-Store operating expenses for the full year of 2022 will run about 7% below Pre-pandemic levels due to a combination of earlier permanent cost-saving measures and gradual return to office through the year. Turning to our multifamily assets. Occupancy remains strong at 98.4%, and we continue to see strong mark-to-market increases, reduced concessions, which will validate our earlier investment decision. In summary, we had another solid leasing 1/4 with 335,000 sq ft of total office and retail leases signed at strong and improved mark-to-market leasing spreads. We increased our Manhattan office lease percentage by 110 basis points 1/4-over-quarter and 240 basis points year to date. We're Well-Positioned to increase our portfolio occupancy, and we continue to see strong fundamentals in our multifamily properties. Now I'll turn the call over to Christina. Christina. Thanks, Thomas. I'm pleased to provide comments on a solid 1/4 that emphasizes the competitive strength of our portfolio, comprised of quality office assets at accessible price points, the Empire State Building Observatory, the number one attraction in the United States, strong everyday retail assets with 95% national retail tenancy, and our well-located amenitized multifamily assets. For the 1/3 1/4 of 2022, we reported core FFO of $56.5 million or $0.21 per diluted share, which compares to core FFO of $55.3 million or $0.20 per diluted share for the 1/3 1/4 of 2021. In line with our 2022 earnings outlook, Same-Store Cash NOI, excluding lease termination fees, was down 7.5% year-over-year, primarily due to the normalization of operating expenses amid higher building utilization, as well as the impact from the occupancy loss of GBG in late 2021. For the 1/3 1/4 of 2022, the Observatory hosted 687,000 visitors and generated NOI of $24.5 million, up significantly from 255,000 visitors and $6.4 million in the 1/3 1/4 of 2021. We continue to generate strong revenues per capita, tightly manage expenses, and remain confident in the path back to Pre-pandemic levels of performance. However, as Anthony mentioned earlier, we expect this full recovery will take longer. As a reminder, the Observatory historically contributed roughly a 1/4 of the company's NOI and stands at roughly 19% on a trailing twelve-month basis through the 1/3 1/4. Turning to our balance sheet, as of September 30, 2022, the company had liquidity totaling $1.2 billion, which is comprised of $387 million of cash and $850 million of undrawn capacity on our revolving credit facility. At 1/4 end, the company had net debt per share of $2.3 billion, with a weighted average interest rate of 3.9% and a weighted average term to maturity of 6.7 years. Notably, we are Well-Positioned in a rising rate environment with no floating rate debt exposure and a well-laddered maturity schedule with no debt maturities for the next two years. Our ratio of net debt to adjusted EBITDA was 5.6 times, well below peer averages. Our Well-Positioned balance sheet affords us flexibility to engage in activities that generate shareholder value. This includes the repurchase of our shares, the pursuit of investment opportunities that are additive to our New York City-Focused portfolio, and potential capital recycling. In the 1/3 1/4 and through October 24, 2022, the company repurchased $20.1 million of its common stock at a weighted average price of $7 per share. This brings the cumulative amount repurchased to $275 million at a weighted average price of $8.36 per share, which represents approximately 11% of total shares outstanding as of March 5, 2020, the date our share buyback program began. Subsequent to 1/4 end, we entered into agreements to sell 500 Mamaroneck Avenue in Harrison, New York, and 10 Bank Street in White Plains, New York, at an aggregate gross asset valuation of $95 million. We expect to close in the first 1/4 of 2023, subject to customary closing conditions and redeploy the proceeds in 1031 transactions. Turning to our guidance, we now expect 2022 Core FFO to range between $0.83 and $0.85 per fully diluted share. Within this revised 2022 Core FFO range, we now expect 2022 Observatory NOI to be approximately $67 million-$70 million compared to $74 million-$77 million. We continue to expect Observatory expenses of approximately $8 million-$9 million for the fourth 1/4. We expect 2022 Same-Store cash net operating income, excluding lease termination income, to be down in the 8% range from 2021 levels. We expect Same-Store occupancy to be between 84% and 86% by year-end, up from 82.4% at year-end 2021. Lastly, as a reminder on G&A expense, 2021 reflected certain temporary cost savings. Amidst a rising cost environment, we expect fourth 1/4 G&A to be similar to the 1/3 1/4. Please note that the guidance estimates and assumptions just described do not include the impact of any meaningful future lease termination fee income or any potential future property acquisitions, dispositions, or capital markets activity beyond October 24, 2022. As we look ahead, we advance through the balance of 2022 with a Well-Positioned and flexible balance sheet, a focus on disciplined capital allocation and continued commitment to ESG. We also look forward to benefiting from New York City's upside with multiple revenue streams from office, tourism, residential, and retail. With that, I will now turn the call back to the operator for a Q&A session. Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Camille Bonnel with Bank of America. Please proceed with your questions. Hi. Starting with your guidance, expectations for Observatory NOI was lowered from the original projections, but guidance midpoint was up by $0.01. Just doing the quick math here, what's driving the sustained guidance? Can you highlight any drivers to core performance that keeps you comfortable with this level for the remainder of the year? Sure. Thanks, Camille. So just a quick point. I know analysts tend to look at midpoints, so technically it went up. But from our vantage, it wasn't really raising the midpoint. We started with a $0.05 range, and as we, you know, get down to the latter part of the year, we were able to narrow the range from $0.05 to $0.03. The previous wider range had room for other downside from uncertainties in the market, including leasing starts, higher OpEx, and slower than expected recovery in Observatory. Now with that revised Observatory range, and better visibility on the balance of the year, we're able to keep the same high end and able to reduce a little bit of that downside room and narrow the range to $0.83-$0.85, which inherently brings the midpoint up by $0.01. Camille, I'd just point out, you know, this is our inaugural year of guidance. Some people may have forgotten that. We're quite pleased at how this went for our first year after having run a shadow guidance program last year. We're happy with our FP&A, and we're happy with how the team has come through. Okay, great. Can you update us with your latest thoughts on capital allocation with the backdrop of limited access to bank financing, even though Empire State doesn't have any debt coming due soon and below average just how are you balancing investment opportunities such as development or acquisitions versus purchases? Hey, Camille, you're cutting in and out. Could you please repeat that question, or maybe we could move you to the back of the queue, and you could dial back in on a line that's more constant. Hi. Is this clearer? Yeah. Why don't you give it another shot? Can you please update us with your latest thoughts on capital allocation with the backdrop of limited access to bank financing? Even though you don't have any debt coming due, I'm just wondering how are you balancing investment opportunities such as development or acquisitions versus share repurchases? Yeah, sure. You're correct in noting that we have no debt coming due for the next 2 years. Additionally, we're fortunate. We have no floating rate debt exposure, so that places us in a very good position, that coupled with a high cash balance and an undrawn credit facility. With that, we really do focus on ways to enhance shareholder value. Share buybacks continue to be a strategic part of how we think about capital allocation. If the market does not recognize the value that we bring within our portfolio and how we operate the business, it is a good opportunity to buy back our shares. Additionally, we have been very clear, we are focused on opportunities in the market that are the right deals, and that make sense, and we continue to be active on that front. Last piece is capital recycling. We have the balance sheet that affords us flexibility. All of our commercial assets are 100% owned. That affords us additional flexibility. If we see that there are certain assets where we've added value, completed the business plan, and can monetize and redeploy into other opportunities that make sense, and generate good cash flow growth going forward for the company, we will certainly take advantage. You're right in that the debt markets are really tricky, and I think not having to access forcefully is an advantage that we have. Clearly, we're all looking for that. The last thing that I'll mention, you know, I think we've noted this before, but maybe if it's relevant, is that we do have net operating loss balance that we disclosed in our 10-K, right? So as of that date, it ran in the mid-$70s million. I mention that because currently our dividend runs at about one-1/3 of our previous levels. We've always said we'll monitor the dividend level. We actively discuss that between management and the board, and we'll find the right point in time to bring that back up. Clearly, we're entering into peak uncertain market periods. I mention the NOLs because, you know, our job is not to hold back the dividend. As we determine the pace of ramp up and other alternative uses of that capital, including share buybacks, we can definitely use some of the NOLs, effectively monetize on that, and allocate the cash instead, towards share buybacks. Everything is on the table. Everything is with an eye towards generating and maximizing shareholder value. Okay. Appreciate that color. Finally, we've been hearing from other office landlords this week that demand from occupiers will be weaker in 2023. You had a solid 1/4 of leasing activity, and I know you mentioned absorption will remain positive. Are you expecting the rate of leasing for your portfolio to slow? Well, first, we had a really solid 1/4 with 335,000 sq ft, and that follows three solid quaters prior to that. We have a good pipeline of activity heading into the fourth 1/4, and whether those tenants with whom we're in negotiation right now close in the fourth or first 1/4, the good news is we've got activity from a broad range of industry types that includes financial services, professional services, healthcare tech, legal, and others. You know, Look, I would say that we benefit from a flight to quality as tenants are focused on the things that our portfolio provides. I think we'll outperform, you know, our competition because we offer healthy buildings that are modernized for the 21st century, the latest technologies in IEQ, newly built energy efficient tenant spaces, great access to mass transit, great amenities to which we're adding and all at an accessible price point. Remember, we've invested $1 billion into our asset, upgrading common areas and building systems, and we've redeveloped 95% of our tenant space to deliver modern, efficient office spaces that tenants seek today. As tenants are looking at their alternatives, I think that we are well positioned to outperform. We have not given our guidance for 2023, and of course, we will be preparing that, and that will be provided in a later 1/4. Right now, where we sit today, I feel, you know, very, very good about our portfolio and our offering. Okay. Thank you for taking my questions. Thanks, Ann. Thank you. Our next question has come from the line of Blaine Heck with Wells Fargo. Please proceed with your questions. Great. Thanks. Good afternoon. Now that we've moved past Labor Day, I'm curious what you guys are seeing in terms of tenant space usage or your estimate of utilization and, also days in the office per week at your office properties? I think that we can look at a couple of things there. I think that the statistic at which I like to look the most is not certainly not Kastle Systems. We don't have it in all of our portfolio, and a lot of that data is incorrect. That gives you the daily in and out. It doesn't tell you how many times individuals are in the office through the week. We actually look at. I like the most is the utilization of the Empire State Building fitness center. That's a tenants-only fitness center. I can just tell you that, you know, we're close to two-1/3s of restored memberships from 2019. We can check our utilization. What we find is that we don't think that the commonly stated statistics are accurate. We think that work has changed. At the same time, what we think tenants understand and our tenants understand is you don't want a scenario in which people are walking around as though they're at an airport lounge saying, "Are you done with this space? Can I sit here? Are you moving on?" That's what we've seen the most with our tenants who have leased space, expanded in space. I think another big issue for us is that we are flight to quality. We've got great amenities. We've got both existing and on the way. We've got great healthy environments with energy efficient spaces and terrific locations at very accessible price points. That all dictates towards tenants who have workers they need to occupy space and to lease with us. Ask Thomas if he's got any other comment on this. Look, Jeff, definitely the way tenants work has changed. You can see the vibrancy of New York City, walk around the streets, look at the activity in general. We're not seeing a diminishing in the demand for tenants because of the change in the way they use their space. Constantly, I ask our leasing folks, what are tenants saying? Why are they leasing this space? And they fundamentally still want a place to work, a place for their employees to gather, to collaborate, and to work together, regardless of, you know, the daily utilization that everybody's so fixated on. Look, the real measuring stick is the 335,000 sq ft of leasing that we just posted this 1/4. Very helpful commentary. Thanks. Switching gears here a little bit, there seems to be a healthy debate emerging here around asset values and cap rates in this increasing interest rate environment. Since there aren't many transactions to point to, Anthony, I wanted to get your take on how you think asset values and cap rates may have moved this year, given the increase in cost of debt and low availability. You know, maybe you can touch on both office and multifamily. Well, it's sort of interesting. If Christina and I sound a little slower this morning, it's because we both got in late last night from Dallas from Urban Land Institute, where we got to chat with a lot of different folks in our councils and people with whom we met. I'd throw a few things out. First of all, the primary activity of new acquisitions right now appears to be 1031. We fit in there. It's logical from that perspective, I suppose. People who sell assets in order to 1031 are active. Number two, don't focus on the headline cap rate. Focus on two what people underwrite. There are two ways you can underwrite your cap rates other than just what's the entry level. One is you look at make a choice as to what you think the interest rates will be over the time of your hold. There's no question that we approach the peak of the Fed activity. We're not there yet. We had one member of the San Francisco Fed and a former member of the Dallas Fed comment that they expect another 75 and 25 over the next three meetings as far as increases. Number two is also. Well, there could be some assets which aren't run properly or well or which have been starved from capital, where you might buy at a cap rate of 4% or 4.5% or even 3.5%, however, you have the opportunity over time to improve their performance. I think there's been a widening at certain levels as far as what people are prepared to pay. I think transactions, we know transactions are fewer. Then you get a print like the one that Boston Properties just announced of the partial purchase at 200 Fifth Avenue. When you look at that, I'd say that it's a little early to call anything other than a modest increase, sort of maybe a 50-75 basis points increase in cap rates, if there were arm's length transactions that were not 1031. Very helpful. If I could just do one follow-up to that, Anthony. You talked about before about your interest in kind of complicated transactions. Based on some kind of broker conversations we're having, it sounds like there might be some distressed opportunities that come about on the office side. Is that something you guys would be interested in, or is your focus more on growing the multifamily portfolio? I've said this before, we are omnivorous opportunivores, and it really comes down to not just FFO accretion, but cash accretion. It comes down to, you know, how we can structure things. Most of what we have on our plate right now, really the only things in which we're active right now are either failed transactions from quite some time ago or transactions that have not even hit the market. I think that office will be interesting to us when it reaches a point of attraction. We haven't seen anything to date that reaches that point. Very helpful. Thank you. Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your questions. Yeah, thanks. Good afternoon. I guess I was hoping you guys could talk a little bit about the widening spread between the% leased and the% occupied. It's up from about 300 basis points to kind of 430 basis points, and it's nice to certainly see the% leased moving up. I'm just curious kind of when you start to expect that gap to close, and I guess how tight can that gap actually get? Steve, it's Thomas. Yeah. Certainly keep an eye on our lease percentage. That will drive our occupancy as signed leases commence later this year and into 2023. We're confident in our stated goal of, you know, 84%-86% portfolio occupancy by year-end. Although I think we'll be more towards the mid or high end of that range, depending on when certain leases commence this year. In the fourth 1/4, we only have about 68,000 sq ft of tenant move-outs, offset by roughly a 1/4 million sq ft of leases that are signed that should commence in the fourth 1/4 or first 1/4 of 2023. Depending on when those leases commence, and they will commence, we will see positive absorption and increased occupancy in the near term of well over 100 basis points. Then in 2023, we only have about 5.5% of our portfolio leases expiring. We're about 539,000 sq ft, and we've identified about 280,000 sq ft of known move-outs, but that's offset by, you know, another 179,000 sq ft or so of leases that should commence in 2023, plus any additional leasing that we do. Given the signed leases that are due to commence in the near term and in 2023, a very modest lease rollover and tenant move-outs, we're Well-Positioned to move our occupancy up, you know, which obviously trails our leased percentage. Great. Thanks. I guess on the dispositions, you know, in the press release, you know, you made mention that, you know, you would be looking to 1031 the proceeds from the two suburban sales. I guess I'm just curious, you know, is that sort of a hard and fast, you know, we're definitely looking to buy something, or we need to buy something for tax protection? Does the NOL help offset that? Might share repurchases be a better use of that capital? Yeah. Thanks, Steve. I think 1031 is part of the business plan. As you mentioned, we do have the NOL, so that's additional optionality. We also have cash on the balance sheet, so that always provides us an avenue to do share repurchases. Without any, you know, real need to forcefully pay down debt, we can allocate capital in that fashion towards buybacks. All of those are options for us, but I think 1031 is an appealing one because that allows us to monetize the NOLs in other ways to generate shareholder value. That continues to be the interest. In terms of what categories, you know, as we've mentioned, we focus on New York City. It's office, multifamily, and retail. You know, we have interest, you know, in multifamily, in the right assets that complement the portfolio. Great. I guess last question, Anthony, on the observatory. You know, I realize international travel sort of stalled out a little bit with the strengthening US dollar. I guess, does that give you any sort of pause for concern just around the ramp into 2023? I guess, do you need strong international tourism to kind of get back to the prior peak levels? I guess I know, Steve, you probably expect this, that I will differ with the concept of stalled out. We know our sources of traffic. Some of our international sources are virtually near 100%. Some are not. One of the things that hit in the 1/3 1/4 is a reduction in the seasonality of our domestic travel and an increase in our international, and that's what smooths it out. To be quite honest, we're a little perplexed how countries which are adjacent to each other have very different return to U.S. visits rates. We do hear a lot more foreign languages and accents at the observatory. Our real initial thought is that people are so scarred from the horror stories of airports, travels, and lost luggage and experiences that they just said, "We're just not gonna go anywhere till things calm down." You know, we'll see. In the meantime, the key to us is this is really important. We know we are number one. Based upon public disclosures, we can tell you that during the period for which SL Green disclosed, The Summit had 1.1 million visitors, and we had 1.7 million visitors. That's a period that covers, you know, you guys have heard me say this so many times, their, quote, bright, shiny penny, unquote, moment. We're actually very happy with the performance. We are thrilled, even as volumes increase, how well the reservation system has worked. It has reduced crowds and produced a much better quality experience for our visitors. The visitors love it. Our offering is absolute premier number one, and they have more time, so they're not running out because they haven't waited in line. Even our sales in the gift shop are higher on a per cap basis and close to where they used to be. Our use of our prix fixe menus at our restaurants. We also know that we will have the benefit of this fantastic 23,000 sq ft, three-level Starbucks Reserve that is about to open, which is truly spectacular and will be a mecca for Starbucks fans and for tourists to New York. We feel good. At the same time, keep in mind, we'll take a look at guidance for 2023, and when we give guidance, we'll probably give some indications of where we think the observatory comes through. Great. Thank you. That's it for me. Thank you. Our next question comes from the line of Michael Bilerman with Citi. Please proceed with your questions. Great. Thanks. Maybe we can go back to the leasing side. Thomas Durels, I'm curious, are there things that tenants are asking for now that they may not have been, call it, earlier in the year? Have they been quicker or slower to make decisions recently? Any color around that would be great. Well, on your second question, I would comment that as we look at our tour volume, while we're seeing total tours that are below maybe the high points of 2018 and 2019, our conversion of deals to tour has increased significantly. What that tells us clearly is that the business leaders and decision makers who are out touring space and spending the time on that are committed to transact. That's, you know, kind of an interesting stat and, you know, and quite telling. In terms of what tenants are seeking, you know, look, it goes back to the things that we are offering, and we've been building Pre-COVID, and as we redeveloped 95% of our portfolio space since IPO, including, you know, healthy buildings, technologies, and IEQ, energy efficient space, and obviously access to mass transit. Certainly, we are adding to our amenities, as I mentioned before, because certainly tenants are focused on. It's the right amenities, and we think we are delivering the right mix and a great addition, particularly at Empire State Building with our plans for a new basketball sports pickleball court, a 400-person all-hands presentation room, a tenant lounge with bar service, golf simulators. That combined with the 8 on-site food and beverage options, the 23,000 sq ft Starbucks that was just mentioned, the rooftop lounge at 1333 Broadway, the expanded lounge and town hall room at 1400 Broadway. These are the things that tenants are looking for. Of course, remember, we're in great neighborhoods with great neighborhood amenities to complement our in-building offerings. We think we deliver the right suite of and package of amenities and efficient, modern office spaces that tenants are seeking. Great. Thanks. Just maybe going back on the guidance part. It looks like the change implies a deceleration into the fourth 1/4. I guess, is this a function of expense timing or could there be something more there? Kind of looking to run right through to 2023, you know, understanding you haven't given 2023 guidance, I guess, how should we think about this? Is this a good kind of starting point for that? Any color around that would be great. Sure. In 4Q, we already mentioned the slower recovery of the observatory for the backdrop and the reasons that Anthony had already mentioned. That's reflected in there. We're still not through the end of the year. As I mentioned, the factors that are considered variables, you know, what else on the observatory, what else on operating expenses, and maybe some variation in leases going into commencement. That's pretty much it. We're really transparent on each of the drivers. It's been pretty consistent with the rest of our earnings guidance. We have not given guidance yet for 2023, but I think one comment we have made is regarding operating expenses. This was a year where the increase in operating expenses compared to the prior year was accentuated because our team did a phenomenal job of proactively lowering expenses when we were able to during very low levels of building utilization. The drawback of that is on the way up, it creates a tough comparison year. We're seeing that in this year. That's now back to normalization based on what you saw in 3Q and what's expected in 4Q. We should have a more normal path. Assuming that's not the main drag on NOI, it gets us to a better trajectory. That's all I'll say on next year, but that's one item that we've mentioned. Awesome. That's it for me. Thanks for the time. Thank you. Thank you. Our next question has come from the line of Daniel Ismail with Green Street. Please proceed with your questions. Great. Thank you. Maybe just going back to the asset sales. I believe those have been on the market since at least earlier this year. I'm just curious, how much did pricing change, if at all, from when you first put those assets on the market to the final sale price? Yeah. Hey, Daniel, thanks for the question. Those were on the market since then. Like any process, you know, you go through back and forth. 10 Bank actually has assumable debt. The other one has no debt on it, and there are various factors. Without getting into too much specifics, you know, we're still in the deal. You have these conversations, and you work through all the points. For us, as we've mentioned, we're not fire sellers, so it's got to be a fair and reasonable price that makes it through. Our eye is on execution and how we redeploy the assets into new ones that make sense for the portfolio and the future cash flow growth for the company. Yeah, I would just add that the pricing came in where we thought the pricing would come in on the basis of where we launched the sales. You know, there you go. Got it. Anthony, and everyone, I guess congrats on achieving carbon neutrality. I'm just curious. On Local Law 97, the mayor's office released some new guidance a few weeks ago. I'm just curious, Anthony, as you said, you know, close to the implementation of that law, how do you think it's broadly being implemented toward office? It did seem like there were some new technical changes in there which seemed unfair generally to office owners, at least in the technical definitions of carbon limits. I'm just curious how you think broadly how that new law is being implemented and then how Empire State is adjusting to those new changes. Well, yeah, you know, as we've said, we know we have no fines in 2024, and we have plans for how we get successfully through 2030. We'll see how that goes. I'm on the advisory implementation board, the advisory board for the implementation of Local Law 97, a board of the DOB. The only commercial landlord on it. I don't think there's been anything unfair put out there. I think it's pretty straightforward. I would say that, you know, resi is one level of performance achievability versus office. There are other challenges, opportunities for achievability, achievement of goals in retail and logistics. The partnership that we develop with our tenants, and that's from our groundbreaking work led by Dana Robbins Schneider, who's our lead on this of energy sustainability and ESG. We're very science-based targets. I think the big challenge for a lot of companies is that they've gone for soft targets to date, and they might have lead. And even GRESB to some degree is a softer target. When you get to the Local Law 97, it's all about data, and it's all about actual performance. It's pretty much in line with, in many ways, the sort of data and performance that we may have to produce under the SEC's proposed new reporting requirements. We'll see if they actually go into place. You may be aware that there's a lawsuit against Local Law 97. We have no involvement in that. We'll see about the implementation of Local Law 97. That said, we believe it's good business to be an asset rather than a liability to users, tenants, whose actual companies. The better credit quality companies have a greater and greater responsibility and burden and practice of disclosure of their carbon footprint, of what they do, and what space they occupies makes a difference in their own scores. We look at all of this strictly from a perspective, Daniel, of how do we compete best for tenants. How does this put points on the board for ESRT? Everything we do is integrated to any other expense we have, life cycle cost analysis included. We spend the money, we get the results. We attract better tenants on longer leases with better credit quality, and we think better rents. We're accessible through our price points, along with indoor environmental quality and healthy buildings, and those practices, things we started to put in place back in 2009. It's a real competitive advantage, and Local Law 97 is something that occurs along the way. Yeah. I would just add one more point, which is, you know, our journey to carbon neutrality is very much about what we do within our operations. You know, as there's more focus on this, it's not enough to just use RECs and offsets. You really need to engage with the tenants. Anthony mentioned being helpful to the tenants, but it's also bringing them along in the journey on what they can do, and that's how we'll, and all landlords will ultimately achieve it. The fact that we're ahead, you know, even with these tweaks in the law, makes us much better positioned. Thanks, Christina. Thanks, everyone. Thank you. Our next question has come from the line of John Kim with BMO. Please proceed with your questions. Thank you. I realize it's only two assets, but I was wondering if you could provide any more color on how your Multi-Family portfolio has done. I know you mentioned 98% occupancy, but the organic growth, any additional commentary on Same-Store revenue or NOI and how that performed relative to your expectations? Yeah, John, they've done well. I think that's the best color we can say. We're, you know, ahead of where we thought we would be when we acquired them and underwrote them, and we love our partner, the Fetner Organization. We think that the success we have had with them in the work we do makes us quite appealing for others who might like to recap. We've done well, as we thought we would. We're happy that people can look at the wisdom of what we did, although that people were not thrilled when we acquired them originally. Given the success of your Multi-Family investments and the economies of scale, are you inclined to, you know, build scale in Multi-Family, or do you anticipate, I don't know, bigger dislocations in the market? I know you're not seeing signs of distress today, but I'm just wondering, you know, given your balance sheet, given that you had previously talked about opportunities like this, I'm wondering if, you know, potentially you look at other asset types for use of proceeds. Well, we already said that we're not really looking at office right now, so that kind of narrows down the food groups. Yeah. John, we've spoken on this. We have interest in Multi-Family. We've made it clear. It's not just about we will get to scale at all costs. We're gonna wait for the right deal. It's a very healthy asset class, so probably not likely to see a ton of distress. We'll look for situations, and our team is hard at work on that. Anthony, you mentioned you retained your top position for the Observatory. Are you surprised at all by the success of Summit and the Edge? I mean, you've outpaced Summit, but it's not open seven days a week yet, and I was wondering if that played at all a part in your reduced outlook for the Observatory. John, we didn't outpace Summit. We crushed them. It's not outpace. You know, let's look at the numbers that I just cited. Number one. Number two, our rev per caps are awesome. Number three, we know the performance of the Edge, and we'll just say that their bright, shiny penny moment has passed, and we anticipate the bright, shiny penny moment of the Summit will pass. We are number one. We are the international icon. Our brand is fantastic in every continent in the world. What was the visitor count on the Edge? They just read their disclosure. I think we're running to the end of the call, so unless we have any other calls, I think we probably wanna wrap up and let people go. You can also listen to what we said earlier in the call. Look, please remember that Forward-Looking statements, including guidance, are meant to be helpful with forward modeling, but are not guarantees. Many thanks to our great team who have worked incredibly hard, and I have every confidence we'll continue to do a great job on behalf of stakeholders. We look forward to the chance to meet with many of you at Non-deal roadshows, conferences, and property tours in the months ahead. Until then, thanks for your interest. Onward and upward, everybody. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.