Q3 2019 Earnings Call

Now he built to trust third quarter 2019 earnings call.

Ms., Michelle and I will be operator for today's conference.

At this time, all participants are named listen only mode.

Later, well conduct [laughter].

The question answer session. If you have a question before I start.

I'll turn the call ever to mid cabin class mouth.

Yes.

Thank you.

Third quarter earnings.

Our quarterly report on form 10.

Good day.

So with making package are available on our website.

Definitely dot dot com it'd be investor relations.

Indeed documented during todays call.

non-GAAP financial measure.

[laughter] measures.

Yeah.

Right.

Another factor.

It's hard to our filings.

[laughter], okay, but more information regarding certain.

Oh, Okay perfect information.

Only as of today.

Not undertake no duty to update.

Okay.

On todays management for opening permit.

Michael Franco President.

And I see team.

And available.

I will now carry over to Michael Franco.

Good morning, everyone.

Oh.

Great.

Mark this portfolio.

That's for sure.

Last quarter I also discussed.

There is fires next month.

Lisa portion assays.

One other thing.

Lease out with another important.

Both at higher rents Rosemarie.

Well the bankruptcy.

It's still early stages.

Right.

We have to say.

The first year [laughter] to secure long term.

So to summarize.

For sure.

Our non comparable items this quarter until a couple of water.

One.

Sales.

Primarily related to the July .

Yes.

Yes.

It's a.

Yeah, well do the two points.

To date.

We did units for net proceeds.

[laughter] signed contracts for the field.

No.

Remember that we paid off the remaining.

So is it.

With one.

It's important.

Redeploy them district.

Sorry capital the highly accretive.

Oh.

While our third quarter cash basis same store.

20%.

Offices.

About 1% mothers down 1% Bye-bye, California.

For the first nine months.

Same store NOI cost.

[noise], John the or not.

New York Office market.

Did you buy positive job growth.

Yes.

God is gone and during the third quarter.

This connectivity across the city.

Good day by technology.

Im asking rents at record highs or not.

Well, it's 25 million square feet.

Finally, lucky for three quarters.

Many large deals and process et cetera.

And therefore comedies are migrating.

Getting tremendous competition.

No there is more evident.

Good.

Executive real estate is number two drivers.

The best and brightest talent.

Private sector job seekers, typically that person on pace with 2000.

The nine month office sector jobs nucleus exactly.

As compared to 20000 policies out.

And certainly a phase.

Good news like.

There are currently 65.

It is.

They're feeling more totaling 16 million square feet.

This demand is coming from all it is always receptor compounded already in the city of dreams.

But uh huh.

Our development independent assumed about.

As we are involved here are 5.2 million square feet.

Finally development at Carlin.

We are experiencing in Los Angeles, and all three projects.

Thank goodness begins appreciate the magnitude or different transformation.

Responding very favorably.

Major about amenities space off the design each product.

As most successful locations directly on top of another important message.

Probably a little time, we upgrade activity answers.

It depends.

Negotiating what is sort of 400000 square foot.

And there's more than one yes, all brands as a result.

Although activity the basket lift in public sector drivers the government.

The expanded.

Right.

Yes.

And a source.

[laughter] 30 to flag.

Against the backdrop of assisted transformation replacement tires is.

Part of that were negotiating deals securing the digits.

Due to better job.

Coffee spot goodness offerings and other retail service.

These additions will dramatically Angela and drive greater than it is.

Our goal is to make dependent on.

Do you feel the location.

The broadly.

Office portfolios and ratios.

There are substantially ball with occupancy ended the quarter music, 20%.

And then in 2019 exploration drilling 85000 square feet or 2020 aspirations are modest so Illinois 55.

The.

760000 square feet inspiring.

Please remember this includes 565000 square feet offensive.

Second our services point is mine.

Development fixes the idea, which will bring the total out of service offensive and the next year, the approximately 1 million square feet.

Basically repositioning to build in the mid Sixtys per square foot remain listed in the old tenants out more on it.

During the third quarter.

Instead of 25 leases totaling 197000 square feet.

And over $80 per square foot study.

Very strong second generation positive mark to market.

Revenues and cash.

It is 5%.

We've now completed 840000 square feet.

First three quarters of 2000.

Healthy average.

So you know.

In the quarter.

The first lease at our new deal Bioflo reforms that.

Hi.

One area for 20 losses.

Driven.

We also had an additional these out here.

2000 square feet.

We expect to sign.

Additionally, during the quarter to finalize the relocation expansion deal within existing portfolio, which were delivering mid town 20000 square feet 30, West 34th Street independent.

Starting rents per square foot here.

It is record for this bill.

Really benefiting is recognized this coming.

Overall.

Got it across our entire.

Yes, It is 3 million square.

Yes.

Including a strong momentum borrowers.

Moving to Chicago now.

At the March quarter executed 45000 square feet.

At an average starting around lower $48 per square foot.

Mark to market the 6.7% cash.

9%.

Is it is an extension risk losses.

70500 square feet.

Footprint to 100 point.

I think it's easier to 95%.

In San Francisco market continues to do that and also.

With our campus you had a 100% occupancy.

And the tightness.

And now discussing.

Several important.

Hi disease.

Growing rapidly.

During the quarter.

2000 square feet, including 40000 square foot new expansion.

At the mine zones.

Hey, starting rent of 97.

Sure.

You know are positive mark to market and second generation stays here so spectacular.

Mrs Dash.

Yeah.

Before China retail business, let me comment.

This is speculation address that we settle auto industry.

Yes.

And quite the opposite is true yes.

We look at least in one location success a spotlight.

Good.

Okay. Appreciate some of the creativity lead with lots of the offices Joe. So these are space and end users better.

Yes.

Now lets them. This isn't a quarterly provides an important service.

Ecosystem.

The body in white spaces or overall offerings.

HM.

This basically lighter sweeter space, but what the space missions Aug basis.

It is grandevo space on the Vornado and importantly, the tangible equity upside.

Turning now to our New York freely business.

Overall retail market continues to be challenging leasing velocities assets consummated.

Our stock shotgun forever.

Retail occupancy is managed by 9% quarter.

And the third quarter, despite a challenging environment you execute a nominal is is to 20 626000 square feet of retail space.

It is positive mark to market sensitive data.

The 6% gap.

[noise] is in October .

Finalized their replacement.

For the short list.

Four seasons restaurant to 80 Park Avenue the payments best in class the style hotel in restaurants.

As I know, there's been a symbol of qualifying done an excellent they'll follow.

No.

So the diversity of restaurant and focus on plastic diversity similar to those are operations.

I will deliver the best combined Midtown Manhattan austerity atmosphere style sophistication.

The digital footprint and the quality of attendance growth.

To support our size growth.

Yeah.

The data management, a fortress balance sheet reasonable leverage and fundamentally.

Enrolling in the last few years.

Got it is 3.36 billion.

The $1.28 billion in cash.

Cash and securities.

Good 0.0 $8 billion Undrawn.

Lastly, I want to remind you that based on taxable gains on asset sales year to date.

Currently anticipating paying a special dividend.

Approximately $1.90 censorship.

With that I'll turn it over the operator.

[noise] so much star we will now begin to question and answer session.

Your next question. Please press Star then I guess.

If you wish to be even though the Q.

I'm, sorry, I didn't catch.

[laughter] filing you may begin to pick up on your handset first I from the numbers.

We respectfully ask that you limit your questions Q1 question and one follow up question.

Today you have a question. Please press Star then one I touched on top.

The first question they can't comes from Manny Korchman with Citi. Your line is open. Please proceed.

Hey, good morning, everyone.

If you think about the leasing pipeline you talked about independent district, and you dissect that how many those tenants or looking.

To make a move or stay within sort of the Hudson yards.

<unk> was.

10 District court or the first is looking elsewhere in the city.

Hi, there otherwise.

I think overall balancing that pivoted both from has been Midtown South Park Avenue tenant fits all new tenants looking what although project.

In addition, we've thought about pivoted from that.

The overall employment tax goes all look into deposits as well well tell you to balance dose dependent some within Midtown core and from tenants looking into 210 expanded infinity.

Thanks, Glenn and then on the honest forever 21 to comment you made.

How did you think about sort of getting them that when will we.

The impact that would have on both our leasing and other tenant psychology.

And obviously.

The negative surprise right in the sense, we had terminal is.

So you know that by them and so yes.

Right Yeah.

You know the deal those fraud and finalize now.

I was looking for both parties, but I think importantly.

Yes gives us space occupied paying line and allows us the flexibility was 12%.

And on terms that alike.

So I think about locations.

This is what is lot of away is arguably the best locations.

Mistreated.

I'm good volumes marketplace.

And in sales are holding up the fast.

And we have.

Waterfront.

And by the both sides as the appreciation so.

Appropriate.

Fine.

Placements in the great centers there.

And allowed us to achieve.

For 35 seventh Avenue right that was always a short term over five years.

And in Dallas.

Good when we're ready to new developments higher.

So this is Dave reserve that.

As I didn't go to place.

Now.

End of the bigger picture on for 35.

Thanks, everyone.

Next question in the two comes from the co with Scotiabank. Your line is healthy.

Hi, Thanks, Yeah, I just wanted to ask about you talked about Topshop forever 21, Nice I just wanted to be clear. These impacts that are only I'm starting to hit at all I in the fourth quarter and trying to kind of bridge.

What you reported in the third quarter versus a these impacts.

Hi, This is Joe.

[laughter] Topshop volatile effect in Q3 Q2.

Oh, well appointed and Boston, but in Q.

Okay. So I guess I'm, sorry, sorry, if I missed this would be what period, but I'm just trying to understand how we're always thinking about that threeforty a soft number for the year on AFFO what are some of the items in the fourth quarter that create that drag versus what you reported in the third quarter.

So let one lending has a second quarter call.

He said that the.

Oh vitamins and other items the stuff that is.

And our large going forward.

Despite the six month numbers get through quarter.

The third quarter.

Yes.

96 cents this year to date and that's a diminishment seven times that didn't come primarily from sale.

[laughter].

Retail Jay.

Eight point.

I was that reduction.

We started Madison.

1.4 million sale lessons from share.

Okay.

Sale of were below 1.9 million the delta between dividend.

And our sure.

Love among.

Other items.

That makes 70 cents.

That's helpful and line Linda.

$10 million that all of those items.

In Q4.

Yes that and now.

The forever 21 effect.

Before we Didnt know talk about that through 40, other pluses and minuses.

Comfortable at the board.

[noise]. So that's helpful. Thanks, just just one last question on par Lee I mean, you have a a lot of interest in the door and Paul We've heard a press reports audit.

[laughter] slot on getting the building lease and then in terms of the yield that you given there in the supplemental.

I don't think that's been updated and while we've heard you've kind of pushing rents in the building so is that.

Is there upside to that yield in the building.

Like I think has done a lot of press speculation about.

And.

Yes.

Because we thought about buyer calls.

Due to asset five of them.

And so if it is at high end no. We're not prepared to comment on when a deal I guess on terms of that deal.

But.

At least near term.

Cash flow of massive start.

No problem itself.

The data points.

So oh, we entered the high yield is Pablo.

Last quarter was our best assessment as to where we'll end up you know we're not prepared to.

Making adjustments to that obviously assumptions based on.

In retail and submitted as well so we have to let it play out.

The.

Second quarter numbers.

Well, the 17 basket as to where.

Thank you. The next question comes from Steve Sakwa Evercore. Your line is open.

Thanks, I guess, Mike when you look like when you look through kind of the retail tenant list. Some of these things are kind of popping up that maybe you are expecting just what like how do you sort of look at the watch list today, you know what other potential tenants named without naming specifics are you sort of worried about moving in the 2020 at this point.

Yes, it did.

The retail market is soft.

Tenant performances and now.

So generally.

Six nine months ago.

That has been one spot.

Well bankers itself.

There's nothing really buy they look at the end isn't the same positions.

But you know we're constantly watching what we have in different retailers.

And so you know there's risk in this sector.

On average about three years weighted average termite leases retail.

And we continue to alter our goal is a loss trend.

As noted decisions that I've mentioned in but everybody everybody this might be Bose.

Okay, and then maybe just a question for Glenn and I realize you guys don't have a lot of space coming due that Michael outlined but just sort of what is dependent psychology today as tenants or thinking about their 2021, maybe 22 exploration and you know are you seeing more tenants coming to you sooner in order to lock in deals I mean, just sort.

What does that dynamic today.

Yeah, Thanks, a terrible market resistant.

And we're seeing a lot of tenants mobile expanding in the portfolio.

While the tenant listening stakes in the portfolio.

Do you see tended to have expired.

Or looking what our development and hence the typically.

So I would tell you had said all the market overall is helping.

The tenant demand is strong.

Hello, This bodes really after the close all this submarket.

I would just asked is like I said, if we look at the.

If we look at the pipeline.

I live chat in Europe .

No the activity really.

Costs also not Midtown head down south and industry.

Yes, good action across the board and Thats reflective.

The fact that the tenants are growing.

Markets.

And then just lastly could you just comment on the Ti leasing commission. They think it looked a bit elevated on a couple of areas I think in New York It looked a bit high as just wondering if that was a specific deal or kind of what you're seeing on the concession front.

Now, let's go out on the during the quarter, particularly this quarter the bulk of our leasing.

Our turnkey program. So we both space for Ted and all those leases held relatively short term at around seven years on average about leasing on the way they love the turkeys intelligent today [laughter] Tom.

Okay, great value on the next generation of the loosening those spaces.

Why do you see a limited number this quarter.

Thank you Sir your next question comes from Jamie Feldman with Bank of America Pack. Your line is open. Please proceed.

Great. Thanks, and good morning, So I know you guys guide kind of confirm that 340 free fall, but I think on last call you talked about a low 200 range for street retail eight feel comfortable with that I'll like or is that change.

I want engines.

That is the number that.

Dropping from the last call.

That number.

Most of the spot.

But there are some things in loss.

Obviously.

Forever 21, yet a handshake.

Sale that Don and see how that flows out of them generally that come in that specific.

Arrangement.

That.

Gallons sold a couple of assets.

You know.

For the EMS examples.

Comes out.

Alaska is is that.

Yeah. We are we're now projecting to take the retail.

Last year or a couple of years I read it all the time books, so when I come back to add additional retail square footage.

The biggest going to be very high demand based on that retail today.

Net income will be higher, but we're going to lose $12 million per year.

So yeah, there's a couple things that are moving around.

Yeah.

Some of those temporarily inseparable 0.1 player data in general nowadays detail on last call.

So if your phone.

Okay. Thank you.

Hi, or do you say here and talk for a 400000 square foot headquarter deal at two Pan.

Can you talk.

More about that potential eastern and just timing.

400000 square for block, how that would fit into that.

To the to the building and how we think about the ins and outs over the next couple of years if that hit.

No this is out.

Yes.

The next few months.

This is headed would start their construction work will deliver the devoted to them.

[laughter].

We will look a lot and then we're going to try to close to the next few months.

Okay and then finally from me just I know you said, you're seeing expansion pretty healthy market conditions can you just talk about your view of kind of traditional midtown versus Midtown west sounds like a lot of the activities Midtown west, but if the tenants you're talking to do end up moving to the west side, what do you what do you think the outlook.

As for more traditional Midtown.

Market conditions there.

Well I can speak in terms of our portfolio David is how well we are those things expansion intended in the buildings in Midtown weathered the 12 by.

Lighted Parker to park and 87, so we are seeing expansion throughout our portfolio.

In our portfolio have not lost the tenant to the new developments on the website.

Totally specifically speak about the other isn't work that is migrating there, but we're seeing expansion both healthy within our portfolio in the mid calendar.

I would add.

I just talked about this man.

Calls.

Is that yes.

The effective in this marketplace yesterday after the modern.

Infrastructure standpoint, technology standpoint, and standpoint, and we've got ahead of that so many years ago.

All of our buildings in Midtown.

Yeah and renovated.

The other attractive.

You know topflight tends to enter those redevelopment and so you look at our assets.

Notwithstanding the activity levels are healthy dynamic there generally put to bed for awhile I did not and you look at the leasing activity last quarter's call or net flows alluded to.

Not a while all the good news develop those buildings the bad.

I had healthy rent and.

So I think you're going to see some impact instrument landlords. It has.

Okay.

Functionally obsolete and assets.

In our summit.

Thank you to next question comes from John Kim What's the amount of your line is helping please proceed.

Thank you a question on the Forever 21 run cuts.

Taken that Youre really sustained.

Right.

Are there new bank.

<unk>.

Yes.

No trouble hearing the yen.

The strategic questions.

Oh.

I would say.

[noise] take them individually right on.

What is Broadway.

Yes.

The quality that space.

You know there should be able achieve higher end.

Them.

And for 35 seven Lewis.

Temporary deal.

We went believes that long term.

The higher.

One of the flexibility and so.

Our balance sheet flexibility to kind of route so frankly.

You guys care quarter to quarter, what the rental.

He is here with the lenders.

I wouldn't have visited decision, but I plan.

Okay. Michael you mentioned 65 tenants potentially looking for up to 60 million square feet.

In Manhattan.

You have any commentary on how much of that is new demand versus just musical chairs.

But go ahead.

Hello.

In the midst of type of 10, well the demands expansion.

Mentioned.

As we close all that industry sectors across all the spot market.

No sorry, 10.1 particular flavor of activity within that.

But what do I jumped on the one thing I find one thing I would add is.

Yeah, you see.

In related.

Thank you should read is that.

The growth from the tech companies, which.

Most people do you see a magnitude.

Earlier this year and.

The file on those.

In fact.

And the happen.

This is much greater student audio.

So.

They're seeing migration with those tenants yet.

The expansion that's been.

Pretty soon here.

Great. Thank you.

Your next question comes from John Guy.

[laughter] for your line is helping please proceed.

Right.

Well two sources and uses questions are far stuff can you remind us again when you have access as a preferred equity club the retail getting that earlier that here.

And then what you expect to be the remaining after tax proceeds that to 20 Central Park South.

And then then that's the sources and uses is that.

How do you think the JP Morgan is ultimately plays out.

This resulted in a stable had pets headcount and New York City or is it down 20%.

So John one.

I love jealous of the after tax proceeds.

One.

Okay, let's call it that John Hi, alloys, Joe.

John anything right now.

She is it.

Christine.

The next Tonight.

Good.

Do you have 1.9 billion and future sales.

Lions share of which is under contract.

Another 100000, the taxes against that 1.9 billion.

And then another 100000 of course to complete the project and camps that 1.9 billion.

So net of all cost notable taxes from this point forward.

Susan $1.7 billion plus minus from remained his sales.

The for sale at two point.

Doug.

Sure.

A question.

So let me tell preferred.

Not specifically in the past.

Then that the refinancing the disease.

So now wants to.

No this action dividend.

But we will.

You know and.

In due time deal to design activity that at least.

But as you pointed out is another she yet.

Hi, Thanks.

Yes.

Let's turn to the JP Morgan announcement.

The most important thing too.

To to remember years as they are building.

Yes, again, a world class headquarters on Park Avenue, right now and.

Yes, we committed to New York City legitimate.

This is there on analytics.

For companies, taking advantage to the back office personnel.

New York into New Jersey over to other series and so I think this is this is a along those lines.

But I haven't heard any announcements on presented in the headcount what not wall.

Got it ebbs and flows.

In the city.

A combination hours, where all of that.

Good.

Yes.

Great.

We're nation state. Thank you.

Uh huh.

Next question comes from Alexander Goldfarb with Sandler O'neill. Your line is open.

Hey, good morning, good morning.

Two questions.

First you guys, obviously talked a lot about the big Tech demand this year that supply the market.

At the same time.

Sluggish is busy contemplating redeveloping one Madison you guys have the Farley, but at the same time you have the forever I Hotel, Pennsylvania. So are there is there sufficient demand in the market, where you guys would start to I don't know dropped off the all past, maybe reconceive, but with that project start to be.

Something that may actually come to fruition, given the tech demand the city at that location.

[noise] pointed out.

Our unbilled excited about that sensei these days at that site.

On the street forms.

Yes.

Anyone.

It's going to do.

The guidance.

So, but as time has not yet no we're going to finish development 21 cents.

ER and.

That's all of that after the fact.

So there's definitely more demand.

Yeah.

234 years.

Going into the fact that we'll do that we've begun to plan we have today.

But.

Also.

Okay.

Okay and then the second question, it's just going back to the questions on on retail ranked.

Topshop you mentioned a cut to run.

The Ikea replacement for the fear gotten Regal Park is a cut from what's yours is paying so it almost sounds like rents for street retail are there either coming down dramatically or these are special circumstances, where they were so far above where the market had moved there maybe it's just the amount of space the ladies and just give a little.

More color.

On the dramatic cuts sourcing and these locations versus where you think you know sort of generic your generic your average street retail links with good reprice.

But I think we've talked about the scientists Alas lose two years. It no street dealt rental Caesars is really a.

Is there.

And the market has been a correct.

Demand is down.

This lorenz followed.

Got a power than most of the up again.

Madison Avenue and and so.

Yes.

On the highway model.

Yes.

Those rents come down so.

Yes, Madison can be done.

Certainly from 1000.

Certainly below that lost out so yeah. The market has been collecting it would bottom.

Yes, it in some sub markets look close and up or not.

Uh huh.

But I did a case by case right.

Sign.

Yes.

Our still below market, obviously somewhere above my and my what advantages is we're obviously when weather is his role.

People that whether market will be at that time, but in some cases, the asset better use of topshop. So.

Entirely gale.

Yeah, David you mentioned that the glass blower.

Sales in the upper floors come off.

And then on is not that different.

At office space with across this be addressed.

And there's going to be very attractive.

And on the asset depending on Submarket.

But clearly.

You know rents have been for us.

Thank you.

And then next question then the kids comes from become <unk> from Morgan Stanley in My mind. This open. Please proceed.

Hi, Thanks for taking I've talked to question. So just one following up on street retail any update on the Massimo space or the the medicine assets.

I wanted to.

Nothing really to report.

On on one of those.

We have some kind of dialog line on fifth Avenue.

But nothing is imminent.

The sales in cautious.

Yeah.

Oh, I can serve about making large from that.

Good afternoon.

So.

Nothing to report their Madison is a little bit different where do not massive this law.

Sure.

Demand on that probably.

The lowest already submarket or.

The city.

And so.

Is it takes some time to go up.

Okay, Great and I just wanted to clarify on the 340 in the run rate going into next year.

Joel should we is viewing that therefore the F. One for Qs closer to 80 cents to hit that T 40, and you said anticipate recouping a lot of those losses heading into 2020.

Hi, Justin I'm, not so far we've talked about forever 21.

Oh, you said that the went at share a 20 million and that's been a diminished by at least path.

You talked about the long on rather concourse coming out of service next year.

Even though they were included in cost about.

Went to 20 versus 29.

No, we don't give guidance, but that being said.

As a result of that negative effect. The forever 21 additional out of service a pen one incentives to support our development plans, including alloy or.

No expectation from hotel, Pennsylvania.

No longer believed that 2020, they see substantial bounced back year rapidly to de lever.

Okay. That's helpful offline. Thank you.

Yes.

I would just to add digital as Joe said, though which is though.

Notwithstanding an obvious on that yet.

No.

And others are very focused on next few quarters.

I guess not business.

Okay growth and is that.

We have tremendous confidence in what we're doing their own reception.

Very positive and so.

And time to kick yet, but are some meaningful bugs and highest polished and promotion versus.

Last quarter.

So we feel good so.

We recorded a little patients, but growth is going to come.

That's great and I just wanted to just clarify just on the 340, Joe the run rate is that 340 still intact for the reported full year or that was that a run rate sort of number.

Yep.

We expect to publish it ended this year.

On the 2000.

Okay great.

I'll close the call. Thank you.

And the next question comes from Manny Korchman, but can you remind yourself.

Hey, Michael Berman.

Just a few follow up question.

Michael you mentioned, but for capital square foot headquarters lease.

I don't have gone or David on yourself want to answer that but I guess it.

Do you sort of disclose that information to the three kick out to machine in your comment that there was a lot more in the war.

I assume that filing and maybe other stuff a pen water probably two other building. So I guess whats called the negotiation do you feel comfortable making a statement, but you did about a significant.

Value, creating leaks.

Okay.

But like I think we'll we'll announce program related is actually side.

The general deal.

We got good dialogue.

Yes.

Welcome.

But I guess if cases, it's out for student.

It could you talked about on the call it out for signature I just didn't know at what point in the process, let's say at least part of them would be.

I would be talking about that in the open about about about real.

Yeah, just just want to cycle.

So in this case, the 400000 Psi and you're just going through.

400000 areas, where we're negotiating those.

So I guess in the other leases that you're negotiating held by the board organ, where do they stand at the process relative to its 400000 that hadnt too.

Idle and then just trying to pin down on exactly where we already I think.

More than say.

Hi level able to say is.

So all of our prepared to cigarette now.

It's a bit side Mount grows.

Rolled out though.

So they've done nothing is done and.

No I will mention specifically is again, though yeah, just active dialogue in negotiation.

Yeah.

Right I look at it's very exciting to hear about 10 to lease I was just trying to understand.

Policy you have in terms of disclosing it at that was a little more I'm trying to get out.

I've said in my though.

Got a little bit.

Maybe a question for Steve.

You know you've not been shy about where your shares trade relative to the inherent value.

The asset base and.

Extraordinarily aggressive over the last six years at simplifying a lot of the complexity in more sale.

Completed construction of to 25, we buy at all.

I'd along a lot.

I guess Where's your head today in terms of a further shorter potential sales.

Obvious would be something on the office side, either didn't work or outside of New York.

Either in a joint venture out like.

Or it's all the focus right now on Penn Plaza redevelopment effort.

All of the book, Oh, I'll say a couple of.

The table it has been for.

Yes.

Certainly not bad debt.

Definitely.

Just I would like to throttle back.

Yep.

You said assets outside of I guess.

That is Chicago I provided.

The last five years.

So let's go over the last five years in battle back.

<unk> billion dollars engine can visit.

So it is off the table.

Uh huh.

No.

Bye Bye bye.

So just the markets because.

But.

I'm just in terms of 220.

1.7 billion.

That also include the basis the money you have in the building so effectively.

Think about I've been talking about cash flow chart.

Michael I will just talk a little bit out over time tried to date.

So the answer is that we have published numbers did show.

So updating of about <unk> book.

Yes.

And of course, we're not building is about $2. Okay.

From there.

The important is that all in April .

So over the CLO dot com.

Good.

Go ahead.

Our treasury.

Bob.

So outstanding.

Hello.

$2 billion.

But that sell out.

Yeah.

I'm knocking on the system that is.

Can't go back about [laughter].

One of the region.

I've been accused [laughter] property.

Ah that's really not the case, we had a very important clientele.

I think.

[laughter] book.

Instead of a little bit bought they've got involved.

So information.

Mark.

Okay.

Okay.

First let me keep comes from Daniel its now with Green Street Advisors. Your line is open. Please proceed.

Right.

Morning, guys.

New York City office cap rate back through the movement in the 10 year sales everything in New York villas that today.

Earlier that you guys could afford a half capriati tropical they do you think just at higher or lower.

Uh huh.

I don't know launches in Europe , but obviously the ones.

Visits on C., you know where market side, but I was in capital sources.

Yes, I do think that the.

That is bad debt interest rates have.

Trended back down.

Is stable and this lower that is.

It is.

Brean capital.

We also the general matter and I think that number capital sources, we thought there.

I think youre as.

Yeah.

You know they did this value by itself.

You know the cap rates, probably widened a bit over the last year. So.

And then when the 10 year is unique in finance.

And ladies molested they generally below what was done right now is very attractive cash on cash yield.

So the hedging costs have come in.

For a number of the capital sources broad that are.

No that's important issue.

This is seeing capital sources refocus a bit.

You asked but on New York potentially play didn't dies, and frankly pretty flat the little bit down itself. You know, there's a lot that goes into what we're probably it's not just.

It is but you know.

How much growth in any particular asset vacancy or whatnot. So did that knows the closer to being a little and policy.

But I did today's rationally.

[laughter].

Hello.

Overpriced.

I'm not sure we did that.

So if you look.

<unk> costs.

So let me walk.

Yeah.

Oh.

Bottom line.

[noise] tickets capital markets.

The decline.

Okay.

Hello.

So those specific asset by asset.

The envelope calculation.

[laughter].

Hi.

[laughter].

[noise] acted bucket.

So.

Wow.

Pricing is pretty much.

Oh gosh.

And then.

A little bit too pessimistic on there but.

Hello.

Yes.

[laughter].

All right, but.

Thats fair or maybe just a quick follow up on a pad one and two based on my earlier comments.

I mentioned when added to the flex space. There yourself is that a result of any of the turmoil that that we work and blank to reduce operator risk or is that a competition captured some of the outside.

Okay.

Yeah.

Hi, Scott.

Thank you had its important to create.

The flex space for our portfolio coils Ken.

Particularly having one thought the bid build into what else needs more than 200 penetrated building those audiences CAD is needed agile state while the Swiss based expansion space short term banded space for whatever reason.

Thanks Bill had.

During the call worked in the flex space is going to.

Benefit for us in our head of course with that we do expect it to be a profitable operation, which is why we decided to do that at Penn War.

And then you spoke about this this is.

This is.

Oh, the centerpiece independently, we want to control exactly what those on exactly how they want.

And so.

Hey, Mike, but are you asking themselves.

Isn't that over the years.

What was done and so.

Think about we released a cohort an operator in general is providing the bulk of T.I.s and getting all that is committed to get a lot. So I'd like to want to credit.

The upside so here.

Building Investor capital, exactly otherwise and great right environment and adapting the bulk of the upside.

And so for us is pretty straightforward.

Next I think that.

That's all that's always been flat.

Thank you and the next question comes from Jamie Feldman with Bank of America. Your line is open.

Thanks, just a quick follow up on that last question I mean, how do you what I know hasn't been that long, but what changes have you seen in the market since we were pulled their IPO.

In terms of demand for co working or just you know tenant behavior or discussion.

I haven't seen any change there is no change.

Yes, my time.

Well I guess, you said the attitude towards co working and likely thing I mean, it certainly seems like and you know the product.

The cycle seems a lot more I talked about and.

Kind of see more interested.

I think it's.

So the way the people work.

Hi, this is that space.

A new offerings.

Typing centers.

With that.

I do think it'd be.

That it's been big discussion shift toward enterprise.

This cohort rebounded.

And large enterprises are not going to focus on harder on the dilemma. So I think that included in traditional landlords.

Quite a bit like us and so you know the death by Das and small.

Small companies you know the co authenticity.

An alternative or number lows, but.

I do think that initiative.

Thank you Sir.

This time I will turn over to Mr., Michael Franco for any closing remarks.

[laughter].

Thank you everybody for joining the call. We look forward to see many of our investors out at nearly conference in Los Angeles on November 12, and 13.

And our next earnings call for fourth quarter earnings will be on Wednesday February 19.1.

For the station.

Take care.

Thank you, ladies and gentlemen, [laughter] Frank.

Participating you may now disconnect.

[laughter].

[laughter].

[noise].