Greetings, and welcome to the Empire State Realty Trust First Quarter 2024 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Heather Houston, Senior Vice President, Chief Counsel, Corporate and Secretary. Thank you. You may begin.

Good afternoon. Thank you for joining us today for Empire State Realty Trust's First Quarter 2024 Earnings Conference Call. In addition to the press release distributed yesterday, a quarterly 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. During today's call, we will discuss certain non-GAAP financial measures, such as FFO, modified and core FFO, NOI, same-store property cash NOI, EBITDA and adjusted 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 company's release and supplemental package, each available on the company's website. Now I will turn the call over to Tony Malkin, our Chairman and Chief Executive Officer.

Thanks, Heather, and good afternoon to everyone. Yesterday, ESRT reported strong first quarter results to start the year with strong leasing progress, observatory results, and proactive balance sheet actions. Today, we will discuss them in our outlook for the rest of 2024. In the first quarter, results came in above expectations. Office leasing absorption and spreads each showed consistently strong positive results. We delivered our ninth consecutive quarter of leased percentage growth and our eleventh consecutive quarter of positive mark-to-market lease spreads. Our Observatory performance continues and we maintain a best-in-class balance sheet. Year-to-date, the company completed several capital markets actions to ensure the balance sheet strength and flexibility, which puts us on our front foot, and we are eager to create additional value for our shareholders in the current real estate cycle. We leased about 250,000 square feet in our top tier commercial portfolio to start the year. Our Manhattan office portfolio had 200 basis points of positive lease absorption year-over-year and is now nearly 93% leased. Tom will discuss our current activity. Our office leasing has outperformed the market because we maintained balance sheet discipline during the financing and acquisition booms, did not lever up, and did not pay top-of-market prices. For a decade, we invested portfolio-wide in upgrades to modernize and amenitize our portfolio. This included intentional vacates to consolidate floors, modernization through GAAP renovation, the addition of amenities, and leadership in energy efficiency and indoor environmental quality. These efforts have resulted in top-tier future-ready products that attract high-quality tenants. Our goal has always been to get the best deals in good times, get the deals in challenged times, and draw consistent leasing volumes through cycles. ESRT's commitment to service and tenant relationships drives strong tenant retention and expansion within our portfolio over time. Since our IPO, we have seen over 2.7 million square feet of tenant expansions in our portfolio. Tenants look to partner with a financially stable landlord who will maintain high-quality standards at their assets. We have the lowest leverage of any New York City REIT and a strong liquidity position with no significant debt maturity until December 2026. Christina will later discuss this. The Observatory continues to perform. In the face of an abundance of rainy, low visibility days, first quarter NOI was up 13% year-over-year, driven by the continued improvement in revenue per capita and a 10% increase in visitation, which was partially helped by the shift of the Easter holiday into March of this year as compared to April in 2023. There is further upside to our Observatory's performance as tourism continues to return. We have exceptional global brand awareness. Our Observatory is iconic in New York City and has been resilient through all economic cycles, new competition, and the pandemic, all as shown on Slide 15 of our investor presentation. Sustainability is a cornerstone of ESRT's business philosophy, and we are the leader in environmental stewardship and healthy building performance. Our track record of successful partnerships with tenants and their employees in sustainability attracts tenants. We received the highest scores in this area. This quarter, we were pleased to receive the ENERGY STAR Partner of the Year Sustained Excellence Award for the second consecutive year, along with the WELL Equity Award and WELL Health Safety Leadership Award. This makes ESRT the first commercial and multifamily REIT to achieve WELL Health Safety certification four times, achieve WELL Equity, and have all buildings enrolled in WELL at scale. We are committed to delivering long-term value to our shareholders through continued excellence and sustainability. I encourage you all to read our just-released 2024 sustainability report that contains full details on our recent accomplishments and initiatives. ESRT's 2024 priorities include growth and a company-wide focus on cash generation from continuing operations. Of course, day in and day out, our focus is to lease space, sell tickets to the Observatory, manage the balance sheet, and achieve our sustainability goals. These actions together enhance shareholder value. We have a future-ready portfolio and an opportunity-ready balance sheet, which gives us options today. We are in a position to take advantage of opportunities created through market disruptions and capital dislocation. Tom, Steve, and Christina will provide more detail on our progress and how we plan to accomplish these goals in 2024. Over to you, Tom.

Thanks, Tony, and good afternoon, everyone. We just concluded our ninth consecutive quarter in which we increased our leased percentage for our office and retail portfolio. That's nine consecutive quarters of positive absorption and an increase of 540 basis points in leased percentage since the fourth quarter of 2021. The first quarter of 2024 was our eleventh straight quarter with positive market lease spreads in our Manhattan office portfolio. We are off to a strong start in 2024 with 248,000 square feet of total leasing in the first quarter. New and renewal leases were signed at positive mark-to-market rent spreads of 4.8% and a weighted average lease duration of approximately 10 years. We increased our Manhattan office leased percentage to 92.7% in the first quarter, which increased 60 basis points compared to last quarter and is up 200 basis points compared to a year ago. Notable office leases signed in the first quarter include a 16-year, 68,000 square foot expansion lease with Burlington at 1400 Broadway. Burlington has expanded with us three times; with this latest expansion, along with an extension of their current lease, Burlington will occupy a total of 170,000 square feet for a 16-year lease term, an 11-year, 57,000 square foot new lease with Solid Deane, a subsidiary at One Grand Central Place. And we signed leases for 14 pre-built office suites that totaled 67,000 square feet. Additionally, as shown on Page 10 of our supplemental, we have $47 million in incremental cash revenue from signed leases not yet commenced free rent burn-off. Our nine consecutive quarters of strong leasing performance demonstrate that in today's market, there is a flight to quality in product, service, and balance sheet. ESRT continues to offer the top offering in our price bracket, and our portfolio offers what tenants want: high-quality products that are fully modernized. We've invested approximately $1 billion since our IPO to modernize our buildings, including amenities with a variety of fitness offerings, tenant lounges, conferencing, abundant outdoor spaces, energy efficiency, sustainability, and indoor environmental quality, locations near mass transit and neighborhood amenities, quality service, turnkey built tenant spaces, and accessible price points as tenants look for value and balance sheet strength. Today, in advance of every building tour, the broker's qualification list includes the capital stack of the building and the financial strength of the landlord. Tenants make long-term commitments with us based on our financial strength and confidence that we will deliver on our promises. We've seen strong tour volume year-to-date, which will help drive new leasing activity later this year. In our Manhattan office portfolio, we have modest lease expirations for the balance of 2024, with 486,000 square feet set to expire, of which 268,000 square feet is covered by expected renewals, relocations, and new leases. Only 193,000 square feet are known vacates and 25,000 square feet remains undecided at this time. We have a healthy pipeline of over 200,000 square feet of leases in negotiation, of which 140,000 square feet are new deals to balance our renewals. Our multifamily portfolio, with occupancy of 97.1% at quarter end, continues to perform exceptionally well and benefit from strong market fundamentals and recent property improvements. Once again, we had a strong start to the year. And in the first quarter, we signed over 248,000 square feet of commercial leases and increased our Manhattan office lease percentage by 200 basis points from a year ago to 92.7%. Our Manhattan office occupancy increased by 160 basis points compared to last quarter to 88.9%. We are well-positioned to lease space and achieve positive lease absorption with modest lease expirations for the year and a healthy pipeline of new leases to start the year. We continue to see strong demand for our multifamily portfolio. Thank you, and I'll now turn the call over to Steve.

Thanks, Tom. For the first quarter of 2024, we reported core FFO of $57 million or $0.21 per diluted share, which increased 30% year-over-year. Same-store property cash NOI, which now excludes First Stamford Place, increased 12.3% year-over-year, primarily driven by higher revenues from cash rent commencement, which was partially offset by increases in property operating expenses. Excluding non-recurring items, first-quarter 2024 adjusted same-store NOI increased by approximately 8% year-over-year. As it relates to the one-time items in the current period, we recognized approximately $1.5 million of revenue from various items, including bad debt recovery and settlement of an insurance claim. The first quarter of 2023 was an easier comp, as it had about $1 million less cash rents that resulted from adjustments recorded for a few delays in rent commencement. While not material to their individual quarters, we called this out as it contributed to a roughly 4% increase in the comparable same-store cash NOI growth year-over-year. As Christina will discuss, our outlook for same-store NOI growth for the year remains unchanged. We had a solid first quarter of growth driven by strong recurring rental revenues and free rent burn-off, as well as the one-time items just discussed. That said, the remainder of the year will be a tougher year-over-year comp due to several non-recurring items discussed last quarter, which benefited 2023 results primarily in the second to fourth quarters of 2023. Moving to our Observatory business, we generated net operating income of $16 million in the first quarter, which is an increase of 13% year-over-year. Revenue per capita remains high, and admissions continue to improve year-over-year. Observatory expenses were $8.4 million in the first quarter. Christina will discuss the proactive measures we recently took to fortify our balance sheet and then discuss our outlook for the balance of the year. Christina?

Thanks, Steve. We had a busy start to the year from a balance sheet and transaction standpoint. Starting with the balance sheet, in March, we closed on a new $715 million credit facility, which consists of a $620 million revolving credit facility and a $95 million term loan. The new facility matures in March 2029, inclusive of extensions, and replaces the prior facility that was due to mature in March 2025. After quarter end in April, we entered into a note purchase agreement to issue $225 million of green senior unsecured notes in a private placement transaction with three tranches, including $155 million that matures in 2029, $45 million that matures in 2031, and $25 million that matures in 2034 at an overall weighted average rate of 7.25%. We received strong support from both new and existing high-quality institutional investors. This is scheduled to fund in mid-June, and we intend to use the proceeds to eventually pay down indebtedness, including the remaining $100 million maturity in 2025 and the $120 million drawn on our credit facility. With these financings, the company has successfully addressed the entire $315 million of debt that was due to mature in 2025 and extended the maturity of our revolving credit facility from 2025 to 2029, inclusive of extensions. The next meaningful debt maturity is not until December 2026, when a $175 million term loan matures. On the transaction side, in March, we executed a buyout of the remaining 10% that we did not already own in two multifamily assets located at 561 10th Avenue and 345 East 10th Street for approximately $14 million in cash and the assumption of $18 million of the in-place debt. As a reminder, the debt on these two assets has a blended interest rate of 3.9% and matures in 2030 and 2033. As a result, ESRT now owns 100% of our portfolio. We have no joint venture ownership structure, and that allows for great opportunity and flexibility for future financing and capitalization. Subsequent to quarter end, in early April, we entered into an agreement for the strategic disposition of First Stamford Place via a cooperative consensual foreclosure with the lender, which is anticipated to close by the end of the second quarter. Pro forma for the completion of this disposition, 98% of net operating income will be from properties in our New York City focused portfolio. Further, upon completion, our debt maturity in 2027 is reduced to just $155 million, as shown in our pro forma debt maturity schedule on Slide 9 of the investor presentation. This transaction is consistent with our strategy to proactively manage our balance sheet and recycle capital. In our decision here, we considered after CapEx adjusted cash flows, submarket fundamentals in Stamford, Connecticut and our capital allocation objectives. This disposition avoids significant CapEx, reduces secured debt as a percentage of total debt and frees up $176 million of debt capacity from our balance sheet that we can recycle into stronger New York City focused assets that align better with our long-term business plan. Over the past two-plus years, we have disposed of five other non-core assets in Westchester and Connecticut and recycled them into high-quality New York City multifamily and retail. MetroCenter will be our last remaining asset outside of New York City. Its mortgage matures in November 2024, and we have had productive discussions with the lender and are close to finalizing the terms for its refinance at maturity. We continue to look for ways to reinvest capital in a tax-efficient manner and pursue investment opportunities that are additive to our New York City focused portfolio and enhance shareholder value. At quarter end, the company had net debt of $2.2 billion with a weighted average interest rate of 3.97% and a weighted average term to maturity of 5.4 years. We have strong liquidity, no floating rate debt exposure, a well-laddered debt maturity schedule and the lowest leverage among all New York City focused REITs at 5.3x net debt to adjusted EBITDA. From an earnings perspective, the net impact from the balance sheet and transaction activity announced to date will be approximately $0.02 dilutive to our 2024 FFO. This includes the repayment of the old $215 million term loan in March 2024 using proceeds from the new $95 million term loan and the $120 million revolver draw. The $215 million SOFR swap remains in place through March 2025, so the only impact is a modest change in spread for the balance of 2024. It also includes funding of the new $225 million private placement notes in mid-June. Prior to any repayment of debt, these proceeds will earn interest income around a current rate of approximately 5%. It also includes the buyout of our partner's 10% interest in two multifamily assets at the end of the first quarter, including the assumption of their share of debt. And finally, it includes the disposition of First Stamford Place, which for the full year of 2023, generated approximately $10 million of cash NOI and incurred $7.5 million of interest expense. We assume this transaction is completed by the end of the second quarter. Now on to our outlook for 2024. We continue to expect 2024 FFO to range between $0.90 and $0.94 per fully diluted share. As a reminder, our prior guidance range did not include the balance sheet activity and transactions announced to date. But as discussed, these items have only a $0.02 impact on 2024 FFO, and we, therefore, have room within our $0.04 range. Based on our performance to date and forward assumptions provided, we remain confident with this range. We continue to expect same-store cash net operating income for the commercial portfolio to be modestly positive at the midpoint, with a range of down 1% to up 2% relative to 2023 levels. Within this range, we expect positive revenue growth, which assumes commercial occupancy of 87% to 89% by year-end 2024, driven by a strong pipeline of signed leases not yet commenced and manageable lease expirations in 2024. We expect an approximate 6% to 8% increase in forecasted property operating expenses and real estate taxes in 2024, which is partially offset by higher reimbursement income. Lastly, we expect 2024 Observatory NOI to be approximately $94 million to $102 million, and average observatory expenses of approximately $9 million per quarter. In summary, ESRT had another productive quarter and executed well on our priorities. And with that, I will now turn the call back to the operator for a Q&A session.

One moment, please, while we pull for your questions. Our first questions come from the line of Steve Sakwa with Evercore ISI.

Maybe, Tom, just starting on the leasing. Could you just provide a little more detail on the pipeline, maybe the types of tenants that you're currently seeing in the market? And whether there seems to be any hesitation from the tenants looking for new space to, in effect, pull the trigger. We've heard some C-suites in other areas maybe being a little bit more gun-shy about making decisions. And I'm just curious what you're seeing in the discussions with the tenants in the pipeline.

Well, Steve, just looking at the results for the first quarter, about 84% of our leasing in Manhattan office and portfolio-wide was for new leasing. So I don't think that indicates hesitancy by those decision-makers. We're seeing activity from a variety of tenant types, which has always been, I think, a hallmark of our portfolio in that we're not tied to one industry. We've got activity from tenants in consumer brands, tech, financial services, professional services, and technology. So look, we got, as I said before, a 200,000 square feet of leases in negotiation. We have a few hundred thousand square feet of active proposals being exchanged and our tour volume is up. So look, we continue to be a standout. We performed well. The things that I mentioned earlier about the flight to quality and the strengths that attract tenants, including modernized and amenitized portfolio, great locations, our balance sheet, the access to transit, all of these things are leading to the activity that we're seeing. So again, I feel good.

I might just add one thing, Steve, to make sure you understand Tom's point. Clearly, the people who are doing tours with us are people who have action on their minds. We do not see a lot of tire-kicking.

Maybe just sticking with you on the transaction front, you have been disciplined over the last several years. I'm just curious, what are you seeing in the marketplace today as it relates to distressed opportunities, the ability to get to debt stacks, and maybe get properties through the back door. I'm just curious how that activity levels may be picking up and doesn't vary greatly across the multifamily, retail, and office sectors?

So we definitely believe the crisis created by the capital dislocation, rising rates, and heavy near-term market maturities will create a once-in-a-lifetime, once-in-a-generation opportunity to buy into certain New York City assets. And we have begun to see cracks. Our focus is actually on the right situations with the right basis. We're extremely disciplined in our approach. We see interesting opportunities in office, retail, and residential. Residential has a backstop with finance from the GSEs, making it much more eminently financeable. Office is more complicated on the capital requirements, and retail is somewhere in the middle. What I will also say is we have been pleasantly surprised by the level of inbound we have received from people who are interested in partnering with us. They see our success and what we have done with our product types. They see the opportunities created by the capital dislocation. These are people who are really not current market participants, and they really, to a significant degree, are what I would call individuals, very wealthy individuals or groups of individuals who can stroke very large checks on a per transaction basis. The focus is not on IRR based on higher leverage; it's based on exactly what our model is, and they really focus on multiple on invested capital over a 10-year hold. So both the opportunity sets have begun to break. We think CMBS will drive sales more quickly than banks as far as products changing hands, and we are absolutely totally and completely disciplined and focused on our basis and structure of deals where we can accommodate existing owners' needs, desires, perhaps to avoid a tax recognition event or perhaps the sale of a minority interest, which will allow them to maintain their current basis and where we can invest capital on a priority basis with yields that will make it worth our while.

Our next questions come from the line of John Kim with BMO Capital Markets.

Tony, I just wanted to maybe follow up and ask about the timing of when you could deploy some of this capital. And on the joint venture partnerships with private owners entering the market, is this on office, or is it on conversions? Or any other color you could provide on what kind of asset type that you're looking to partner on with?

So I want to be really super specific. We will remain very focused on our discipline; that has not changed. That says we've transacted more in the last 2.5 years than we did in the prior 10, including our pre-IPO period. So we are absolutely on novice opportunistic. That hasn't changed. Our focus continues to be on New York. The people who have come to us have said, we think you are a well-established strong player with a great balance sheet without problems. And we see the leasing you've accomplished, and we see your transactions you've done recently; we'd like to talk with you about whatever you think is interesting to do. And the last thing I'll say with regard to conversions, our view on conversions is pretty simple. We've said it before. These are difficult to do in a way that doesn't produce a compromised product. Our view is that there are others who may have stronger motivations to do so than we do. We certainly don't have anything in our existing portfolio for which it makes any sense because our portfolio is extraordinarily well leased. We do believe that we can find a lot of really good opportunities without the need to do office conversions into residential. So we don't put residential conversions from office high on our list to do.

That's great color. My second question is on your tenant vacates in the first quarter. On Page 14 of your supplement, it looks like the quarter ended up less than you were expecting last quarter. What led to that? Was that just a timing issue? And maybe on a related note, second half of the year in 2025, it looks like the estimated vacates have picked up a little bit. Any color that you could provide on the tenants or locations of these known vacates?

Yes, it's really just timing. If you look at the overall, it hasn't changed significantly with the expected total vacates for the year; about 192,000 square feet in our Manhattan office portfolio. But it's really just timing from quarter-to-quarter. Given the volume of tenants that we deal with, it's nothing significant that stands out that caused that change.

Any particular asset that's seeing more vacates than others?

No, it's really across the board. I mean, at 1400 Broadway, we have floors that are being vacated backfilled by the Burlington lease. But as vacates uncovered, we've got a consolidated full floor at 1400 Broadway. We've got a full floor consolidated at 1333 Broadway, a Tower Floor at Empire State Building this year. The good news for us is that these are full floors. They've been built out; a lot of the base-building work has been done. So it puts us in a good position to market and lease those spaces. In 2025, the known vacates about 122,000 square feet; it's really across the board, with the largest one being a 26,000 square foot built space that we built on a pre-basis at 111 West 33rd Street. The rest are smaller spaces across the board.

Our next questions come from the line of Michael Griffin with Citi.

I want to go back to the new leasing in the quarter and maybe get some more color. For those tenants that are taking new space, is it people moving down the affordability curve from higher rent buildings? And if so, would you expect this trend to continue throughout the year?

Well, we're trying to capture all markets, and it's a mix of tenants that are looking forward to move to buildings that are better amenitized, modernized and provide better service, turnkey installations, newly built out spaces, which we provide and offer all of that. Some are looking to improve their employee experience and their office environment, while others are involved in some expansion. We continue to attract tenants from really all submarkets. And again, it speaks to this flight to quality that we've spoken about, and it's not just new development. It's all the things that I continue to mention and that we continue to market that is very appealing to tenants: our locations, the modernization, the amenities, it's great service. But by and large, we see more tenants looking for just an overall better landlord, better experience, better product, and better environment. That's why we're having the success that we have.

Right. But I guess what I'm saying is, are you seeing tenants that are paying $90 of rent that are looking to pay in the $60s? Or is it people that are currently paying in the middle-of-the-road price point, just trying to move to a better amenitized building?

Well, I would characterize it more that all tenants look for value. We have attracted tenants that could certainly afford to pay more, and they look for the value that we provide. They recognize that we provide the absolute top product in our price tier. If you look at the vast majority of deals in the market, the majority of activity occurs in our price point, which is high 50s to high 70s per square foot, where we play, and that’s where we compete and win deals.

Got you. I appreciate the color there. And then just on the full year guide, it seemed like a pretty strong quarter. You saw pretty good increases, particularly in the Observatory. I wonder, is it just conservatism deciding not to raise the guide right now? Or maybe how should we think about that?

Yes. I think as mentioned, we always have building blocks for guidance. We're very clear on the various drivers. As the year proceeds, we can look at areas where we can tighten up the range and make adjustments. There was a $0.02 impact from all the activity that we just announced, and we were able to maintain that. We'll continue to monitor and make adjustments as we go along.

Our next questions come from the line of Blaine Heck with Wells Fargo.

Observatory attendance has definitely continued to improve, and NOI is now above pre-pandemic levels. So can you just talk about how you plan on continuing to improve those numbers? And maybe just how sensitive that business could be to a hypothetical slowdown in consumption in the U.S.?

I appreciate that question. If you look at the performance of the Observatory over a long period, it has weathered various economic challenges, including the SARS epidemic and COVID, as well as the introduction of new attractions. It has consistently performed well. We plan to keep our efforts focused on maintaining and enhancing the Empire State Building brand globally, while continuing our successful co-branding partnerships, such as our recent collaboration with Disney and Star Wars. We also have an exciting new partnership that will be announced soon. All of this aims to support the steady performance of the Observatory across different economic cycles and enhance our results despite increased competition. Our net operating income per capita surpasses that of any other reporting entity.

Second question, can you just talk about the expected cadence for same-store NOI throughout the year? Obviously, you guys had a great quarter with 12% in the first quarter but kept guidance unchanged at negative 1% to positive 2%. Occupancy is expected to stay largely flat to modestly higher by the end of the year. I think you talked about some tougher comps, higher OpEx and some one-time items. So just hoping you can give a little bit more color on what the impact is from each of those on same-store NOI relative to the first quarter and how we might expect same-store to trend throughout the year?

Yes. Regarding same-store NOI, you're correct in noting that for the first quarter of '24 compared to '23, we experienced support from the lower comparison in '23 due to unique items I mentioned earlier, specifically the reduced cash rents resulting from short-term delays in recommencement. As we look at the rest of the year, we anticipate those comparisons to become more challenging as the one-time items that positively impacted us from the second to fourth quarters begin to play into our comparisons. We highlighted these during our last earnings call to emphasize their significance and timing. All of this is incorporated into our guidance. We expect to see these factors reflected, which is why we haven't adjusted our guidance at this moment.

Yes. And overall, as mentioned in our earnings release, we assume continued positive revenue growth, and we still maintain a 6% to 8% increase in OpEx. So all of that still holds. Steve just highlighted the factors that drove an outsized first quarter.

Our next questions come from the line of Camilla Bonnel with Bank of America.

Tom, the team has had some clear success in leasing up your buildings around Ten Station, but there are one or two where it doesn't seem to have gained much traction like 250 West 57th Street and 501 Seventh Avenue. Is there anything unique about the floor plates or how the space is being marketed? Just trying to get a sense of the level of interest you're getting for these spaces.

Well, specifically on 250 West 57th and 501 Seventh Avenue, the Columbus Circle submarket where 250 is located is clearly not seeing the same level of activity we've seen in the other submarkets. At 501 Seventh Avenue, we have had some good showings. We have one single full floor that is available. It's side core and very efficient. I think it's at an attractive price point with great access to Penn Station. So I'm confident that space will move. Aside from that, we've got good activity across the board, and that's the pipeline I spoke to earlier, in which we've had really good momentum with nine consecutive quarters of positive absorption.

I appreciate the additional color there. And Tony called out the pickup in Observatory visitors this quarter. If you normalize for the timing of Easter, is this side of the business tracking in line or above your expectations for the first quarter?

It's tracking in line with our expectations.

Got it. I'm curious, since this business has moved to a reservations-only model, do you have visibility on what demand looks like into the peak period or in the upcoming months?

The vast majority of reservations we receive do not extend that far out.

Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Chairman and CEO, Anthony Malkin for closing remarks.

Again, we're thrilled with this quarter. We're thrilled with the continuation of our team points on the board. ESRT is the pure-play New York City REIT, and we have four diverse ways to play it: an office portfolio that is top of our tier and targets the deepest market segment, our observatory that continues to perform, our high foot traffic everyday street retail, and a growing multifamily platform. We have a future-ready portfolio and an opportunity balance sheet. We are confident in the company's ability to execute on our goals and drive further growth for shareholders in 2024. Many thanks to our great team who work incredibly hard, and we have every confidence that we will continue to do a great job on behalf of stakeholders. We thank you all for your participation in today's call and look forward to the chance to meet with many of you at non-deal roadshows, conferences, and property tours in the months ahead, including one we had planned for the fall in Europe. Until then, thank you very much for your interest. Onward and upward.

Thank you. This does conclude today's teleconference. You may disconnect at this time. Thank you for your participation, and enjoy the rest of your day.