The clock is already running, so we're going to get started here. My name is Blaine Heck. I am the Senior Office, Industrial and Cold Storage REIT Analyst for Wells Fargo, and I am very privileged and honored to have ESRT here for their presentation. We've got Christina Chiu, the President of ESRT, Ryan Kass, operations, and we've got Steve Horn. Yeah. CFO The end of the table, CFO of ESRT. I'll, without further ado, turn it over to Christina. Yeah Introductory remarks if you want. Sure. We would like this to be as interactive as possible, so please don't hesitate to ask your questions. Yeah. I'll try to cover a lot of bases. Sure In the remarks, and then you guys should definitely feel free to ask questions. Thanks everyone. ESRT is a pure-play New York City REIT aligned with today's city's live, work, play, and visit demand drivers. We benefit from four complementary sources of NOI. Our top-of-tier office portfolio that's well leased and targets the deepest segment of tenant demand, our iconic and top-ranked Empire State Building observation deck, and our high-quality multi-family and prime street retail portfolio. Over the past five years, we've very intentionally transformed ESRT's portfolio and sharpened our strategic focus. We exited out of the suburban commercial asset exposure, recycled capital, and acquired over $1 billion of high-quality New York City properties, all in a tax-efficient manner. At acquisition value, we acquired approximately $400 million of high-quality multi-family in Manhattan, approximately $300 million of prime retail on North 6th Street in Williamsburg, Brooklyn, and at 130 Mercer, a mixed office and retail property in SoHo for $386 million. These transactions enhance our portfolio quality, improve our long-term cash flow growth profile, and were enabled by our well-positioned and flexible balance sheet. This morning, we announced two additional value-enhancing transactions that further demonstrate our active approach to capital recycling and portfolio optimization. 1st, we completed the disposition of 250 West 57th Street for $275 million, which included the buyer's assumption of $180 million of mortgage debt. The transaction represents a tax-efficient recycling of capital into our previously announced December 2025 acquisition of 130 Mercer Street. This is consistent with our strategy to recycle capital from assets where we've executed on the business plan and into high-quality assets with long-term cash flow growth prospects. Second, we strengthened our ownership position of two Broadway campus assets through the acquisition of the land underlying 111 West 33rd Street and 1400 Broadway for an aggregate $110 million, which enhances long-term asset value. Turning to our office portfolio, our office portfolio remains a compelling value proposition that targets the deepest part of the market, as we mentioned. It is 93% leased and continues to perform very well under the haves and have-nots bifurcation within the marketplace. We have delivered our 13th consecutive quarter above 90% leased, and we now have delivered 19 consecutive quarters of positive mark-to-market lease spreads. Office leases continue to execute at a high level over long terms, with 10.5 years in the first quarter on average. Turning to the observation deck, it remains a strong cash flow contributor with low CapEx and significant global recognition. It is a great complement to our property portfolio. We would note that macro and geopolitical environment remains uncertain, and we have continued to experience weakness in visitation attributed to fewer budget-conscious travelers, international tourists, and challenges with pass programs. That said, our focus remains on levers that are within our control to run the operations well, cultivate our brand, enhance the guest experience, broaden our marketing reach, and manage expenses. Longer term, the observation deck has attractive cash flow characteristics, continues to be top-ranked Tripadvisor number one. Our retail portfolio includes well-located, high-foot traffic assets in Manhattan and the Williamsburg portfolio that I previously mentioned. That $300 million portfolio aggregates 124,000 sq ft along the main corridor and is a very strategic position in a sought-after, supply-constrained market that has now allowed a lot of flexibility and optionality and upside. In multi-family, our three assets, two of them are free market. They have low vacancy, minimal new supply, and very solid tenant demand. Overall, the balance sheet remains very strong and a competitive advantage to allow for all of this. We have strong liquidity, lower leverage versus peers, and we continue to maintain this strength. From a capital allocation perspective, we'll continue to evaluate opportunities within the portfolio and recycle capital and new opportunities within New York City office, retail, multi-family, as well as share repurchases. With that, I'll turn to questions. Yeah. You covered a lot of bases there. Maybe just taking a step back, I guess, can you describe what you think differentiates ESRT from excuse me, others in the office REIT sector, and maybe the areas that any newcomers to the story should really focus on? Yeah, I think it's the factors that we mentioned. Pure play, New York City, live, work, play, visit, I think all of that with a very strong balance sheet. We've also been very proactive to add value within our assets and recycle continuously into assets that generate better cash flow growth over time. While the share price is very undervalued, we continue to do the things within our control, which is execute on the business and drive portfolio value. Yeah. To that last point, share price being undervalued relative to the market, what kind of discount do you actually see in the share price versus where you're seeing transactions at this point? Yeah. Well, I should ask you what your thought on the market is, it's highly discounted. Even if you look at the acquisitions that we've done, which aggregate $1.1 billion at acquisition price, which is comprised of multifamily, the Williamsburg portfolio, the Scholastic headquarters building at 130 Mercer, that's a little over $1 billion, call it $1.1 billion, apply any kind of multiple to the Observatory, you already get to the equity market cap of the company. That doesn't even account for all the office that's 93% leased, fully modernized, ready to go, in high demand with no competing supply, given there's no replenishment. Any variety of metrics really speaks to that. Yeah. It's frustrating. We obviously want to deliver on share price performance. At the same time, while that goes on, we'll maintain a flexible, strong balance sheet so we can continue to be very active in capital allocation and strengthening what's in the portfolio, driving better cash flow growth and better portfolio quality. Yeah. Maybe for you, Ryan, can we just dig into recent office fundamentals in New York and how you're viewing this recovery relative to others that you've seen in this market? Yeah. Absolutely. Demand remains strong, and I think one of the big things we've seen that's different from other recoveries is that story of the haves and the have-nots. As Christina spoke about, we're fully modernized, amenitized. We're well-located. Majority of our assets are what we call our one-seat ride. You can come into Penn Station, Port Authority, or Grand Central and walk to your office, and that's sort of the biggest differential. We've continued to outperform. We're at 93% leased, as Christina spoke about earlier. We entered this year, and we are forecasting that our lease percentage will increase over the course of the year. We have been able to continue to push our pricing, and that's evidenced by 19 consecutive quarters of positive mark-to-market spreads and 13 quarters above 90% leased. What we see is we're also focused on high-quality credit tenants, long-term transactions with a high probability for renewal and expansions. That's really evidenced by last quarter's lease term, which was roughly 10.5 years on our office transactions. Are there any specific tenant profiles by size or industry that are really active within New York? One of our benefits is because we're best in class, we're actually fishing in the deepest part of the pond right now. From a price standpoint, we were 60s, 70s. Now we're 70s, 80s, into the 90s. We're seeing everything from financial services, TAMI, professional services, consumer goods. We have our pre-built portfolio that is meant roughly 1 million sq ft for more boutique-sized tenants. Those tenants will come in. We treat those as our one, two-bedroom apartments. Build them once. Tenant comes in. We work to expand them over time. Anaplan is a good example of that. When they move, we paint, carpet, get the next group in. The other thing, we have our individual full floors ranging from 10,000 sq ft- 20,000 sq ft. We've been very successful there, continuing to push pricing. One Grand Central Place, tower floors, 12,000 sq ft, in-building access to Grand Central Terminal. Our goal is to set a record rent for that building, and I'm not talking record post-COVID. It's a record pre- and post-COVID. Wow. We've also worked, as we've shared in our investor deck, to create large blocks of space. We have a few large blocks of space at the Empire State Building. We're actively marketing roughly 100,000 sq ft right now with a large mark-to-market opportunity and lots of demand for that space. As Christina spoke about earlier, 130 Mercer, we've leased one of our full floors already, having closed on that in December. Two full floors, 75,000 sq ft. What's unique about 130 Mercer is fully modernized building, financial stability, amenitized, and a large floor plate all in SoHo. When we say SoHo, you're on Prince and Mercer and Broadway. This is main in main of SoHo. By the way, Ryan referred to the presentation. If you scan your QR code right there, I think you can find it there. What about concessions, Ryan? Are they plateauing? Have they come down for the highest quality properties? Our Net effective rent have grown. As I spoke about earlier, especially over the last 12 months, what we've seen is the ability to push rents on the concession front. TIs have remained stable within our portfolio. The free rent, we used to say one month per lease here. Yeah. What we're seeing now is the ability for the team to deliver and come in inside of that. The goal right now is how do we get multiple tenants submitting offers on the same space? When we can get competition for like kind space, that's where we really have an opportunity to push for the best result in that transaction and then ultimately shareholders. Sure. Any questions from the audience before I keep going? Don't be shy. There's been a lot of discussion around the potential impact of AI on the office market. How is ESRT thinking about that dynamic and whether it could be a headwind or even tailwind to leasing in the near to midterm? For us right now, it's been a tailwind. Yeah. We've seen a lot of AI companies either expand in New York City or come look to open offices in New York City. That increases demand. We're focused on the high-quality credit ones. An increase in demand, we're seeing the reduction in supply from conversations with our tenants. We are not seeing a noticeable impact. In fact, what we've heard from them is right now they're in the exploratory stages, but what they view it as is, okay, how do we make the employee do more work, better work, in that same amount of space? We're continuing to see the majority of our pipeline right now are expansions, whether it be within our portfolio or new tenants coming to our portfolio. That's what we're focused on. Next queue. Maybe a question for all of you. How are you guys using AI in your business? Yeah. Steve, actually, do you want to start with? Yeah, sure. Efficient and all that? The company as a whole, we've taken an approach that everyone should look at any new task they're taking on or existing task, and take an AI 1st mentality or AI curiosity mentality, and build from there. It's not immediately replacing any individual roles, but what it's doing is finding those in the company that are really proficient at using AI, and then developing them and developing others. In my part of the company, we look a lot at using our connectors into Yardi and getting data out quicker and doing analysis with that, and generate reports automatically that others can use across the company. Yeah. On property. Sure Use instances. On property, Christina knows I love to dive right into the weeds. High level from the operations team, we're continuing to use AI for early detection, preventative maintenance. On the marketing front, renderings. What used to take one week, we can get done in a matter of minutes. Great differentiator for us if we have a prospective tenant tour. Customized book, customize graphics in the space can all be done within 24 hours. We're using the data. We're doing a lot more data mining and also research and drafting off of when we have information from a broker, how do we make sure we're targeting the right spaces based on the feedback we're getting from one specific space? Yeah. Overall, I think as you've heard, we're pushing it throughout the departments, really looking for efficiencies, enhanced productivity. It's a mindset shift, right? Getting rid of the fear, and that it makes mistakes into now that this exists, how do you use it to your advantage, upscale the work, and really building that in. Along the way, you can't discount that it comes with the need for guardrails as well. Security measures, confidentiality, proper ways to use it, the review of work. It's a real balance. All of this technology has evolved extremely quickly. The real democratization of really useful LLMs is inside of nine months. We're really seeing that shift, want to make sure we adapt. A quick comment on the landscape. The narrative has gotten so far ahead in terms of elimination on jobs. As Ryan mentioned, we're not seeing that on the leasing front. That doesn't mean that companies aren't going through their own versions of haves, have-nots, and adaptation. The way we're adapting, other companies are. Over time, you could have increased productivity, increased profitability, and there could also be certain that fall more behind and lag. I think this is evolving landscape. We all have to adapt to that environment and really do sort of tenant and space underwriting, and make sure we're really well-positioned. Great. Thank you. The observatory at the Empire State Building is a major source of revenue and NOI for the company. Can you just talk about recent performance and some of the challenges and opportunities that lie in that line of business? Yeah. As I mentioned earlier, we are seeing continued weakness coming from the first quarter. As a reminder, in the first quarter, we said historically, 1Q represents about 15% of annual admissions because of the seasonality of the business. When you get through the first half, you'll have historically about 40% of visitation, and that's a better juncture to evaluate how the trends have evolved with a lot of macro uncertainty. What we've seen is a continuation of some of that weakness, again, mostly attributable to weaker international, some challenges with the pass programs, which is mostly international, and then a bit more on the budget-conscious traveler. The business remains a very good complement, good cash flow generator, top brand, Tripadvisor number one. What we will do is focus on the levers we can control, which is great experience, great operations, assessing this landscape, and how we can focus on building resiliency into the cash flows amidst a shifting landscape comprised of both macro factors, as well as the ways in which tickets are sold and how we cultivate our audience. All of that is underway. It's a moment in time, but we have within this a very valuable asset, and we'll continue to look for ways to optimize even in a temporarily weak environment. What do you think needs to change to kind of spur the foreign tourism again? Is it all geopolitical? Is it? Yeah Cost? That helps. I mean, inflation. Yeah Oil prices, war, tariffs. None of that is very helpful. Right. It's hard to predict exactly, but New York is a strong market, and I think it's continuing to look at the business. If you have a strong brand, great potential, how do you think about revenues in four walls? How do you think about revenues outside the four walls? Position accordingly. What we're seeing is a great opportunity to say there are factors in the business, and like any business, you want to get in front of it and think differently, and not just operate off of what has historically been a great brand and still is, but you want to carry it further. Sure. There's also been a lot of competition that's come to the market with SUMMIT One Vanderbilt and Edge. Are you guys seeing that impact your ESB performance? Well, there's certainly more options. Sure Customers to go to, so that's just fact, and the business is spread out more. That said, each of them do something different. We continue to be highly ranked. Yeah With ratings amongst attractions. They each do something different. SUMMIT has done a beautiful job with the experience, Instagram, and tie-in. Edge does something very different by Hudson Yards off of the restaurant base, really high point. Empire State Building is the only one that's iconic, New York s ort of historically tied. I think when it comes down to it, each of them are going for something a little bit different. There are more choices, and the onus is on each attraction to run the business well and think about the cultivation of different channels of customers, and how to approach this with some of the macro backdrop. Sure. Okay. I'll open it up to the audience again. Could you just talk about 130 Mercer? Sure. How long were you circling the property? I own some shares of Scholastic, so I was just curious as to what the thought process was, how many other bidders, things like that. Sure. They ran a marketed process. Yeah. I won't say too much. The company has its own press releases. Right. They were going through their own strategic t ransactions analysis. It included the divestment of a corporate headquarters and a distributions facility. On the corporate headquarters, we found it very attractive, both in terms of having Scholastic as a long-term tenant. They were in there, rate $85 with escalations, no downtime, no TIs. That provides a yield component. The bottom of the building is, as Ryan said, prime and prime retail. eight-year lease terms, Sephora, Capital One, on Broadway, right by Prince Street. That left three vacant floors. To us, the opportunity to be able to buy in with a mid-fives yield, lease up three floors, a very clean mandate, and get to an eight inside of four years, was extremely compelling. Other factors that we looked at include price per sq ft metrics. There's about $45 million of CapEx beyond the $386 million acquisition price that we think we need for the full lease up of the three spaces and some updating of the amenities. Overall, that creates a very attractive all-in cost per square foot for very unique real estate. That sub-market also does not have institutional supply and doesn't have a lot of large floor plates. The opportunity to be able to deliver that within our operating expertise and our service orientation was also really exciting. Overall, we thought it was excellent standing on its own two feet as a deal. In addition to that, to be able to execute on 250 West 57th as a sale and have that be a redeployment, and do that in a tax-efficient manner, really generates a huge amount of value for shareholders. Thanks. Go ahead. Is there an escalator associated with that property? Annual escalation? Yeah. 3% on the Scholastic portion, and on the one of the three floors, we start in the mid-90s, and it goes to a bit above $100 in a few years. Yes. Yes. You mentioned a couple of different sectors that you have. What's the current NOI mix per sector, and are you happy with that NOI mix, or do you see that shifting over the next 12 - 24 months? We have about little over 50% in office, and then we have about 20% in the Observatory, about just under 20% in retail, and then the balance in multi-family. That's sort of the rough mix. Over time, we continue to look at New York City office, retail, as well as multi-family. It'll really be opportunity-dependent. As you can see, we did more office, but we love the risk-adjusted return and cash flow profile of that asset for super unique, high-quality space. It's a very disciplined approach to the quality of real estate, cash flow growth potential, and we very much focus on going in basis because if you get the right basis, it allows you to spend the CapEx and do the work needed to get to the appropriate level of return. It's vintage and overpaying that usually causes issues in real estate deals. Any others? I guess at this point, you guys have done a lot of asset recycling. What's the next page in the game plan? Are you guys pursuing additional acquisitions or Steve, are you shoring up the balance sheet? Yeah. Well, I think it's all of those things. The capital recycling is never just done. Sure. We've added value to a lot of our assets, and we'll continue to look through the portfolio, execute the business plan, find opportunities to add more cash flow growth. Over time, that's always a great opportunity. Along the way, maintaining a very strong and flexible balance sheet, hugely important. One, a recognition that shares trade at a big discount, so equity issuance is not available to us. Even more important to run the balance sheet where you don't require equity issuance to bail you out, so to speak. Right. That's really important. The other is, if you think about the trade that we did, we bought first at 130 Mercer and then lined up the sale. It really takes a well-positioned balance sheet to be able to fund a purchase in advance of a sale and come out with a good outcome on behalf of shareholders. Want to make sure we always have the ability to do that. On shoring up the balance sheet, there were specific actions taken to make sure that we get to no unaddressed debt maturities until January 2028. If the capital markets continue to be accommodative, that's great. Great financing for all. If it goes sideways, whether it's because of private credit issues or other things that are out of our control, we're extremely well-positioned. If that results in more opportunities in the marketplace, more distress, more sideways capital stacks, that allows us to be really opportunistic. Yeah. Importantly, share buybacks do remain within our strategic capital allocation plan. We just want to be careful that we don't want to lever up to do that and put the balance sheet in a worse position than when we started. Yeah. It's definitely part of the plan as we evaluate other capital recycling opportunities. Yeah, I guess to that point, where do repurchases stack up in your potential uses of capital? Yeah. It's part of our strategic plan. We did about $700 million of our $1 billion of acquisition. Yeah Without leverage, we used balance sheet capacity in our corporate line. Our net debt to EBITDA is 6.3x currently. It'll go down a bit. We're very focused on that. Not so much the absolute net debt to EBITDA, but to ensure that we continue to have flexibility to be able to navigate, and that we're not levering up with share buybacks. Very attractive. We do think our shares are undervalued. I gave some metrics earlier. Yep. At the same time, want to make sure we have ample flexibility. On the disposition side, is there anything that kind of screams at you guys that is non-core and other than what you guys just executed on? Yeah, I think You've exited suburban New York. Exited suburban. That's easier as non-core. 250 was in a different sub-market. Yep. As we look through our portfolio, it's actually quite easy to understand. We have 100% ownership of all of our assets. We can definitely evaluate JVs across the board, which is a form of sales. When we look at the assets, we have One Grand Central place, so great beneficiary of the great leasing and rent growth that's happening at Grand Central. We have Empire State Building that benefits from both mass transit hubs. We have the Broadway campus, which is six buildings in close proximity that have shared amenities. We've done a great job with leasing. We've executed on the business plan. Right We can certainly evaluate those. At the same time, we want to think about what else there is in the marketplace, and do it in a thoughtful manner. The good thing with a good balance sheet is we're not forced into a situation, and so we want to make sure we get the best execution as we evaluate all of these options. Great. We've got a minute left. Anyone? Okay. Maybe just digging into AI real quick with the minute we have left. Have you guys leased to AI? How do you think about the credit there and? Yeah, look, a lot of companies utilize forms of AI, right? Sure. You could have tech companies, and they utilize it. Everyone's AI. I think it's everywhere there. To your point about, you're just leasing AI, the operative piece is evaluating credit and viability. Right Of business overall. Right? If it's a business that doesn't quite have a tie-in with the business, if it's really dashboard stresses software, right? You have to think about some of the risks that come with that. If it's a really viable value additive business, could be an acquisition target, could have a lot of growth prospects, that's another form. You can't paint AI with one brush and say. Sure it's not viable, at the same time, you can't assume that all of it will be positive. In the meantime, as Ryan had mentioned, it has added to demand here. You're hearing it in San Fran. They are a big driver of it. It will also add to company productivity, and that is a positive thing, both between the spending and the training and the upscaling. We're going through an adjustment period, and our job is to be really diligent in how we underwrite assets and tenants as we navigate all these shifts. Very helpful. Well, we're out of time. Thank you, Christina, Ryan, and Steve. Appreciate it, and thank you all for attending.