Q4 2021 SL Green Realty Corp Earnings Call

[music].

Okay.

Thank you everybody for joining us and welcome to SL Green Realty Corp, fourth quarter 2021 earnings results Conference call.

This conference call is being recorded.

At this time the company would like to remind listeners.

During the call management may make forward looking statements.

You should not rely on forward looking statements as predictions of future events.

Actual results and events may differ from any forward looking statements.

The management May make today.

All forward looking statements made by management on this call are based on your assumptions and beliefs as of today.

Additional information regarding the risks uncertainties and other factors that could cause such differences to appear as set forth in the risk factors and MD&A sections of the company's latest Form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission.

Also during today's conference call the company May discuss non-GAAP financial measures.

Find by regulation G under the Securities Act.

The GAAP financial measure most directly comparable to each non-GAAP financial measure.

And as a confirmation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on both the companys website at Ww dot.

Green Dot com.

Selecting the press release regarding the company's fourth quarter 2021 earnings.

And in our supplemental information filed without current report on form 8-K relating to our fourth quarter 2021 earnings.

Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp.

As the dose will be participating in the Q&A portion of the call to please limit your questions to two per person.

Thank you I will now turn the call over to Marc Holliday. Please go ahead Mike.

Okay. Thank you and good afternoon, everyone before we begin.

I want to express our sincere condolences and deep sympathies to the families of officers Rivera Moura, who gave their lives on the line of duty.

So green, we work hand in hand, with the NYPD Fdny and other first responders and we support their efforts in every way we can day after day.

As an outpouring of support at St. Patrick's Cathedral, right now and there will be more in the coming days and weeks as New administration works with the state to make public safety. The number one priority in the city everyone has a role to play and I'm confident we can it will move forward from this.

Now we appreciate the opportunity to discuss with you our company performance and financial results for the fourth quarter and full year 2021.

After a solid December .

In the office market, we had a bit of a reset in January which is not a typical after the holidays.

But most businesses in our portfolio expressed their intentions to return to the office in February and by March we expect to be back at the same levels. We saw in December if not beyond that.

The omicron virus seems to be dissipating as fast as it arrived and we are hopeful that February we will begin to return to normal those.

Those questioning the ability of New York City to rebound need look no further.

Then the resurgence in 2021 of the residential markets, which saw.

<unk> high end condo sales and 1% vacancy and rental apartments as young people return to the city our newly completed rental project at seven days Street supports this thesis as we have now signed leases for over 100 units at average rents just shy of $100 per square foot.

On the employment front in New York City added another 8000 office using jobs in December bringing the total December to December job gain to 61000, new jobs. We have now regained just over half of all office using jobs lost during the early days of the pandemic and there are approximately 50000.

Additional jobs forecasted to be created in 2022, which should help to begin to reduce office vacancy rates in Manhattan and in some of the Submarkets, we've already started to see those contraction.

We remain optimistic about hitting our ambitious leasing goals for 2022 on the heels of signing 250000 square feet of office leases. After our December Investor Conference and notwithstanding having grown our pipeline to almost one 3 million square feet today from just about 1050 $1 million.

<unk> thousand square feet.

In the beginning of December .

Positive takeaways that companies continue to see the office as the central and necessary hub of business activity and are making long term commitments and expansions within the portfolio that vastly outnumber contractions.

It will take some more time to work through the system and get past the disruption of the pandemic, but with new mayor the new Governor.

The business community, all coming together and playing significant roles in the recovery of the city. We have every expectation of a rapid recovery and another demonstration of new York's extraordinary resiliency.

Seven weeks ago, we hosted our December Investor Conference at one Vanderbilt and.

And we did a deep dive into our goals objectives and expectations for 'twenty, two which we reaffirm as we sit here today.

As usual, we covered a lot of our 2021 accomplishments, which I think we are a sector, leading in New York and many different respects of leasing.

Transactions operational performance and contribution to the city in the form of openings of.

The summit.

<unk> and other things that turned out to be extraordinary successes and I think demonstrated leadership, we have and commitment we have to this.

To this market.

Accordingly as is our custom for the January call, we're going to go right into the Q&A and get questions.

As everything we talked about in December is still relatively fresh.

And happy to address anything we covered then where anything new as a result of the release, we put out last night.

So with that we'll turn it over for some Q&A.

Ladies and gentlemen to ask a question you will need to press. The Star then the one key on your touched on telephone.

To withdraw your question press the pound key.

Installation of time, we ask that you. Please limit yourself to one question and one follow up please standby, while we compile the Q&A roster.

Our first question coming from the line of Michael Lewis with <unk> Securities. Your line is now open.

Great. Thank you.

My first question I wanted to ask about flights.

Flight to quality and so yesterday on Boston properties called the San Francisco as an example.

With market vacancy well over 20%, but when you look at the top 25% of building, it's more like 5%.

Another example, I was in Atlanta recently, where the office vacancy is above 20%, but the rates they are built.

So 10%.

So I wanted to ask about New York and about SL Green your competitive set how you think about maybe your investable universe used to be the top half of buildings in New York announced the top quarter or something like that do you think differently about any of the assets you own or about how you want to concentrate the portfolio now.

I would start off by reminding you that when people talk about the flight to quality.

That's not unique to just new construction or the <unk>.

Very very top 1% of the marketplace. What we're seeing is throughout our portfolio given the fact that our portfolio is highly improved throughout all of the buildings.

With the exception of a couple of buildings that we have in redevelopment.

We are seeing.

Migration of tenants.

Coming into the building of that million three square feet, the Mark spoke of.

Of pipeline.

Probably 85% to 90% of that are new tenant deals.

So.

I think sometimes people get confused that we've had such great success at one Vanderbilt and therefore, that's the whole show but.

We're already seeing the benefit of a redevelopment plan at the Lipstick building, where we have two full floor leases out and we haven't even picked up a hammer yet to start to work, but off of the off of the plan that we've got tenants are coming to the building we're seeing increased activity throughout our other very high end buildings like 100.

Park Avenue for 61, 3% or $2 50 out of the Americas. So you can go down the list of the portfolio.

And.

The better quality buildings, particularly Midtown transportation centric located buildings, we are seeing a lot of the activity in the marketplace.

And the last point I'll drive home as to say, we said at our Investor Conference, we had more guests and to take.

Between then and the end of the year to get to our target of 93% occupancy and in fact, we signed those leases to hit that.

And on that point.

I think the statistics, you mentioned in San Francisco, 20% vacancy, 5% for the top.

The same statistic is right in front of US here at SL Green to this market.

Manhattan market has a vacancy rate of 16% to 18% depending on.

What source you use and our portfolio is only 7% vacant and shrinking. So that same story is there, but that that 7% vacancy rate isn't just our top buildings Thats every building combined on average.

Okay, Great. Thanks, and then my second question I wanted to ask about the risk reward in the DP book.

The rising interest rates have been a theme.

Start to the year.

How do you.

What do you think about it.

Net yields start to creep up and maybe Theres some opportunity there and then on the flip side of that how do you think about the value of your current holdings.

The value of what you all.

Our portfolio is mostly floating rate so.

Yes, I think the value of the portfolio is very much intact. There's.

There is not much dimunition as the 10 year rises.

If at all and we are seeing more structure finance opportunities, but that's mostly based on just increased transaction volume in Manhattan.

More so than <unk>.

As a result of rates rising.

Okay. Thanks.

Our next question coming from the line of Alexander Goldfarb with Piper Sandler Your line is open.

Hey, good afternoon.

Mark I just wanted to go back to your opening comments on on the new Governor and new Mayor.

Obviously Albany.

Neumayer is awesome.

It definitely seems to be some tension with Albany as far as Bell reform, but one of the items that came out late last year was a proposal to do a $1 billion tax.

And tax billionaire capital gains that at a normal income, which I'm guessing would lead to other taxes that perhaps albany, we'd like to pass so.

In your discussions in the business community in New York Crime and Street safety is one element, but there's also the regulatory and tax element as well.

What's your sense of what Albany may do and are they listening to the business community and what really drives the city as far as the company that take residents versus migrating to Florida or elsewhere.

I mean, I do think so this year.

Uniquely among among years.

The state is flushed with cash.

The good news that came out with a budget in excess of 201.

So the highest budget, it's it's ever proposed and we'll see as it gets negotiated and finalized.

But it's it was able to be proposed in a way with very little in the way of any new revenue.

Enhancements because.

The combination of.

Surging business profits in New York State and also personal income taxes in New York State as a result of rising compensation bonuses is leaving state and city coffers relatively flush going into 'twenty, two and I think that will carry into 'twenty, three and that's something I talked about.

In December about the.

Stimulus from the federal and the stimulus.

Ongoing so there is there was the stimulus plan that.

Chuck Schumer was able to bring in $100 billion.

Stimulus and now the infrastructure on top of that.

Which I think will be multiples and again that all of that which we sort of reviewed in December I think.

The tax the business activity the tax collections.

<unk> dollars.

Is.

All pointing to a moment, where there's not a lot of discussion on the table or need more importantly.

For any kind of regressive revenue enhancements and so I don't think we'll see that I think the state of the state that Governor <unk>.

Gave.

Two weeks ago.

Hit on many of the right issues in terms of.

Wanting to.

Work with the city and this new administration on the topics that we talk so much about.

Making investments in infrastructure I think theres a lot of common ground, there, depending no matter, where you stand.

What side of any.

Political or social.

Social leanings affordable housing.

<unk> to come up with new and creative ways to modify for 'twenty one.

In a way that will create more and better affordable housing while also creating.

Creating an economic framework that developers can help the private sector can help deliver that.

In public safety I think again I put it right there is priority one working.

With the mayor and a very concerted way to put higher presence.

Our boots on the street in the subways in mass transit to.

Just to reinforce and get right back to where in New York was not long ago, and where we will be again very soon.

Because we know how to get it done and now I think there is a will to get it done so I'm pretty optimistic Alex.

The soundings coming out of both city Hall, and Albany or are in line with the kinds of things we want to see in here on the <unk>.

From your lips to Albany's years.

Andrew on the on the Mezz book on the DP you guys had a <unk> write down were these I.

I understand these were prior positions I think or maybe not but what was the composition of these write downs and then in general the DP book has been.

Hugely successful over time and at the Investor Day, you spoke about first mortgage hunger that was sort of cashing out a lot of positions.

So workouts or write downs werent required so maybe just a little bit more color on what's driving these write downs and if these are new write downs or or previously.

Oh.

<unk> previously written down.

I mean theyre on previous positions.

The book had an enormously profitable year and.

We take a conservative approach when we think.

There is any type of potential.

For our future write down we like to make sure that it's it's covered and reflected in.

The income is that youre looking at for the year as sort of net of any any potential offset.

But the book had a very good year, we had some very large pay offs. We had a large payoff after the Investor conference on a development position, we add on 70 <unk> Street.

And.

As I said on the call previously, we're seeing very good new opportunities and we'd expect to be able to hit our target we laid out to you in December .

Exceed it for originations for the year.

Okay. Thanks.

And our next question coming from the line of Caitlin Burrows with Goldman Sachs. Your line is now open.

Hi, good afternoon, everyone.

Question first on the return to office I know you mentioned.

Companies that were planning to return in February where March could be back to December levels, or possibly higher I guess, what's your outlook for further improvement of physical utilization.

Conversations with tenants, maybe Brian back in December and like and then more importantly, how important do you think that kind of near to medium term return.

Okay.

Well.

It's hard to get a barometer on the pre pandemic levels, because I think people have in their mind. This notion of 100% benchmark, which is far far from the reality of of what space utilization is and as best I can tell anecdotally speaking with.

All of our tenants, which isn't a bad samples we have now.

900, plus amongst tenants.

Is that between.

PTO and holidays sick days traveling people travel for their work and did and still will.

Yes.

And there was an element of remote work even before the pandemic. It is not it's not a completely new science that.

And average day would be somewhere in the 70% occupancy range.

We can't I don't have hard statistics on that.

But I can tell you that I would say everything I hear is either right at that level or in the 70% to 75% level at Max.

Some companies are different and they have higher capacities and some are less.

But I think thats a good average so when we talk about approaching 50% occupancy.

Physical occupancy in the near term.

That's a good ways back and what it will take and how long would say to you from that 50 to that last 75.

I think thats just as I said earlier, it's just going to be a matter of working through the disruptions of the system and a recognition that many firms will at least for the time being worked some.

Increased element of flexible remote work into their program, but we're still hearing almost across the board.

That the majority of days will be in the office. So whether a company is going to go to a three day work week in office four day work week and also our five day, averaging maybe four days or so.

Everybody.

It Hasnt has.

Everyone's got.

A landing station and.

These same companies that are talking about some element of hybrid work model are the same ones, who are signing 10, 15, 20 year leases and generally expanding I think our expansions outnumber our contractions by like five to one.

That's in terms of square footage and maybe 4% to in terms of number of deals. So the larger deals it is even more pronounced that the.

That the expansions are outnumbering contractions in our portfolio.

4% to 501, and we looked at over 200 transactions, we did 200 and some odd leases in 2021 that shows office leases and so that's a very good sample set and I think that this year the confidence factor is going to be even higher.

We have a rising occupancy so it will.

I don't know if its going to have an impact on our portfolio. It is going to have an impact on the way companies work and I think it's an impact for the better part of this whole shift.

In what we deliver to tenants being not just deliver of commodity space, we never approached like that but now more than ever we are going to make every effort possible to demonstrate leadership in this industry by giving.

Workers every reason to want to be in the office maximum efficiency health safety and wellness.

Food and beverage amenities lounges town halls.

Some fun recreational items workout spa wellness. It's all part of this new package of delivery. We're working into every one of the buildings, we own and the feedback from tenants and tenant employees is that they love it.

At the Vibe is great people have more incentive they feel better.

<unk>.

I think we will over time.

Get back roughly to pre pandemic levels, but for whatever kind of shifts there are that might.

Insert more remote flexibility, but I don't think theres any question.

In my mind about the the office as the central hub.

Everything that.

That takes place in the workplace and the sense of community Mentorship.

Training and business generation.

I don't see that.

Being degraded.

But time will tell.

We will see the results, but the early indicator for me is the leasing and the leasing right now both in terms of the one 9 million square feet, we signed last year.

The 2 million square feet were projecting for this year.

We think says it all.

Got it and maybe then a follow up question on.

Different topic other income it looks like that came in materially higher than expected in <unk>, just wondering what that might have been driven by and as you look out to 2022, it seems like youre expecting that to be significantly less than 21, and 2020 and just wondering why you think that may change.

It's Matt so.

The other income line I think was roughly $7 million better than we expected.

In the fourth quarter.

Most of many most of the.

Other $19 million was expected.

Significant contribution from the fees and income we got from the JV at one Madison.

And the increment was some incremental leasing commissions and fees, we received and also better performance at the summit than we had expected.

Which flows through in large part.

Other income.

And so then when you think about 2022 is that that part of that.

I guess it was just one time and it could be lower perhaps upside opportunity.

Now comfortable with the guidance, we put out for 'twenty, two and other income.

Okay got it thanks.

Our next question coming from the line of Manny Korchman with Citi. Your line is open.

Hey, good afternoon. Thanks, Mark if we if we wanted to spend a couple more minutes on this utilization or.

Sensus question.

A couple of questions. One have you seen a difference in utilization actually people coming in from the companies that have signed new leases more recently are they.

Signing new leases and then trying to bring people in especially on the ones that have expansions are you still on those.

Building census numbers, there and then secondly, as you sign new leases and this might be one for.

Ralph.

Are they thinking about that same 70% on average or are they trying to boost that number and so you might have the same number of.

People you might have the same number of.

Square footage a lot of the people that you are actually taking less space because youre just trying to get utilization up.

Thanks.

I'm trying to answer the first part of that question I would just say that.

The space plans that we've been presented with and whats being built new.

It's very it's well amenity space, it's it's highly efficient space.

And its space that.

I think they intend will be fully utilized.

I don't think these companies are building with the intent that there.

Building with the expectation that all of that space in all of those tests will be utilized in fact, I just I want to caution that everything is in average we have many tenants in front of US right now part of that $1 3 million square feet of pipeline.

Who are at their limits.

In terms of whether who is back in the office company like US we are a 100% back there are others.

That are predominantly back and there are some that have such enormous.

Expansion needs that even when they are underutilized theyre still in the market we've got deals over it.

I will just say in the green.

Grand Central Park Avenue area, Steve, where we were talking the other day two tenants both expanding competing for the same space both of those $30, 50% I was going to say those words.

I thought there were about 50, but Andrew notes, 30% to 50% expansions per tenant.

And we can only accommodate one of.

Those two just given the nature of the building where that's coming from.

One Vanderbilt.

So.

I do.

Go back to what I said, which is when these tenants are very sophisticated.

With sophisticated real estate groups and they do a lot of planning and when they sign. These 10, 15 20 year commitments and they.

Les out their full floor plans.

With desk, they expect to be occupied and they come in they say they've got these significant expansion.

Goes yes, I think they have every intention.

Bringing people back and populating those those work areas.

Because they would not they would not be acting that way otherwise and in terms of who we see doing it.

We absolutely saw that.

The vibe in the city in December was great.

Like I said, we had a reset in January confluence of events.

But we will get past that quick.

I believe in Fab March April we will be there. So on the next call give you the same question again.

Hey, Mark it's Michael Bilerman here with Manny I just wanted to ask a question just about the sort of transaction market and investors.

Last year, when we talked about the subject you talked about maybe a limit of maybe a $500 million check from an individual investor to go into office transactions. We certainly seen the upper ends of the market just like on the leasing front that the investors are.

More.

Looking at higher quality buildings newer buildings environmentally friendly buildings and those deals are getting done.

Where do you think we are in terms of investors may be enlarging the scope of office assets that theyre looking at and maybe even looking at portfolio type transactions and just comparing it to some of the other property sectors.

Family or multifamily or industrial and data centers and infrastructure, where we're seeing multibillion dollar commitment almost on a weekly basis. It just doesn't feel like the office market has turned to that same scope. So I wanted to sort of get a little bit of the color that you are seeing from the institutional world.

Okay, So let's switch to.

A discussion about what we're seeing on the things we've recently transacted on the money raising efforts.

That we're undertaking right now both for.

Pipeline activity and just.

General future activity.

Hey, Andrew.

Cover as much last year.

I think we have an active market for <unk>.

Non trophy properties as well as evidenced by <unk>, 42nd Street, which we closed in December .

Tom.

And.

10, 80, Amsterdam, and many of the other sales that we closed last year.

You saw the <unk>.

Columbia property Trust portfolio, which many of those buildings are certainly not.

They're masonry type buildings in Idaho glass and steel buildings.

And.

I think theres, a thriving market right now for large assets and small assets.

And across the property types, we have here in New York City, obviously, it doesn't speak to data centers and single family homes.

Sure.

There is a lot of liquidity out there for transactions large and small you saw eight spruce, a large multifamily asset trades Blackstone you see one Manhattan, west, which is going to get recapitalized.

Sure.

452 fifth Avenue of the HSBC headquarters.

So theres, a tremendous amount of capital markets activity out there.

On development deals on cash flowing deals on partially vacant deals.

So we see we see a very active investment sales market.

In terms of the multi multibillion dollar portfolio deals I guess Columbia property Trust me that we've.

<unk> had to that.

There just hasnt been that type of offering.

Right.

Okay.

You'd want to point more to more than one and that was sort of framing of my question of whether that is starting to open up and whether youre starting to have more serious discussions on.

Finding that investors want to get more appetite.

So Bob I'll turn it over to the other questions and ill see you down in Florida.

Greg.

See you there.

Our next question coming from the line of Steve <unk>.

<unk> <unk> with Evercore ISI. Your line is now open.

Thanks.

A lot of questions on leasing have been answered asked and answered, but mark maybe just on the summit.

I didn't know exactly what you were planning to do from a disclosure standpoint going forward I don't know what you can share with us about the activity levels in the fourth quarter.

And what is your expectation if any or what's embedded in guidance for 'twenty two for the contribution from the summit.

Sure well, what I can share on the summit is it's unbelievable fantastic.

We opened that October 21.

It exceeded every lofty expectations communicated to you in the prior years.

Not just in terms of the.

Financial performance.

As successful as it will be financially.

It's.

It's an important addition.

To New York and the destination Entertainment.

Sector.

Of its uniqueness.

It's very out of the box it was a little bit risky, but now obviously, we look back and we think we hit it exactly right in terms of.

The customer experience and the journey.

And the uniqueness of it.

What we've created and everybody experience is it a different way and that's kind of the beauty of it some people come individuals they come in groups there is.

People lying on the floor and they'll video themselves and everything going on for hours the dwell time.

For some people might exceed two hours, depending on how they want to experience split which is.

Everything about the view outside but being brought inside and the way that.

All.

Curated.

And amplified with the artistic.

Input and creation of Kenzo.

With the various mirrored transcendence rooms, and the air at night Light show in the.

The soundtrack duration. It's just it's it really is wonderful and that's something people are coming back to again and again, which is very atypical for this market to have people coming back to three four times and a very limited period. We only opened this October 'twenty one hour.

Our average capacity sellout was about 95% on average from October 'twenty, one through the end of December most of December was even higher it was probably like 90, 798%.

This industry typically has a is.

A very significant drop off in.

In the first quarter.

After the holidays and yet.

We are still experiencing great numbers for January we sit here today already.

Beyond our January projections, which were already increase when we sat with you guys for the December Investor Conference. So.

Yes.

That's that's just a little bit about split and.

More to come but.

You should also note that.

That capacity I mentioned is kind of self limited because we are only open right now about five days a week and we've curtailed the hours on a couple of days.

We have demand we could we can and will extend the hours and add a day.

Probably at the end of the first quarter I would expect some time in April .

For us to do that I think it's the right time for that and we want to lean into this very gradually this is not.

Some of it is going to be here for a long long time, and it's going to get better and better over time, and we want to make sure that experiences because it can be in terms of numbers.

Matt I don't know what you want to I mean, 'twenty two guidance most of the numbers are embedded in the in the lease payment. That's the way. This deal was structured the the operating company makes has some contribution to <unk>, but probably just a few cents a share on the on the opco and the lease itself.

The projections, we've shown you guys previously and over the years.

Summit bottom line <unk> contribution was always about in the range of 20 to maybe 24% of.

Of the bottom line for Olivier and so it should meet.

We over we exceeded on our rental assumptions and we're exceeding on our summit assumptions and hence that 'twenty to 'twenty two to three 4%.

Contribution to bottom line.

Should be holding up but metal.

Yes.

Spot on in R 22 number we.

We had expected around $100 million of GAAP NOI off one Vanderbilt.

Our share in <unk>.

2025% comes if it comes from.

Amit.

And the operator has a modest contribution of <unk>.

And our F. 'twenty two guidance, alright, and that will be increased in 'twenty, three and beyond as we add hours are days and dial this in even further.

Great. Thanks, My follow up I guess is just on the transaction market and I don't think in the press release, you detailed a lot of deals that had previously been announced either closed or were going to close just curious sort of what's your.

Looking at in terms of bringing to the market or thoughts are in the first half of the year end.

What should we be looking for on the transaction side mirror that up obviously with the buyback.

Well, we have active discussions on quite a few assets.

Yes.

609 fifth on the market.

That'll be that'll.

That will be.

As an alternative to to lease.

But we've received some unsolicited inquiries to purchase that asset.

We are.

Remarketing 110, Greene Street as well so.

Those two are sort of active in the market right now.

Entertaining discussions on other assets that are not on the market.

So.

Look for a very active.

Transaction sort of.

Look for ourselves in the first half of 'twenty two.

I would also just add to that that the activity and.

Expressions of interest, we're receiving on assets mentioned that and assets that we're working on that were mentioned.

In almost every case exceed our own internal MTV.

And.

Accordingly, really give us.

Confidence as we execute our business plan throughout this year to continue to acquire.

Our own stock with proceeds of some of these capital transactions.

As well as investment in new development and debt repayment.

In order to capitalize on what we see still as an attractive and wide arbitrage.

Great that's it for me thanks.

Our next question coming from the line of Jamie Feldman with Bank of America. Your line is open.

Great. Thank you.

Marc in an answer to a prior question you talked a lot about the <unk>.

Of amenities.

Yes, just what your tenants are going to want in their spaces to bring people back to the office and make it a great experience how should we think about the capex for the company I mean do you think there's going to be a good number of major capex projects across the portfolio going forward or is this more capital that is going to look a lot more like traditional ti capital.

Over the next several years.

No.

I mean for this year.

I think we highlighted in December I don't exactly remember, but we we talked about 85.

751 third.

Well and.

Just one other.

19.

Thanks to a certain extent right. So three buildings on third where we think the investment is not.

Don't think of it as redevelopment capital the way we've Redeveloped every building this portfolio, which get down to systems and windows and.

Big heavy infrastructure Mechanicals.

This is usually very targeted surgical.

Programmatic upgrades usually of space, that's underutilized so a lot of times, it's subgrade space.

Some some great space that wasn't fully built out.

All the capital for those projects.

Our in our 2022 capital plan.

Theyre not theyre not.

Disabling in any way and the return on those dollars in terms of the lease velocity and rental.

Uptick we think more than pays for itself I think we spent about.

$3 $5 million at 100 Park for a 10000 square foot, but the name of the facility is a parcel of park club and tenants love. It I mean, it's it's a lot of Bang for the Buck now we're doing.

Larger projects at 885, but we're leasing.

About 600000 feet space so.

This to me is not I wouldn't look at it to me, it's not like Ti capital. This is real permanent building improvement.

And permanent value add this is taking a building from one level up Ti commissions, that's a cost of leasing.

For us because the improvements to 10 spaces not the building space, but this is improvements of fundamental building everything we spend here at one Vanderbilt.

As part of this $5 billion appraised valuation and everything.

Everything we're doing at one Vanderbilt.

We'll be part of what we hope will be another significant im sorry, one Madison, one Madison will be a part of a significant.

Valuation and the same for $85 to 750, so I look at them differently.

Is there more manageable we've planned it throughout the portfolio.

We are internally financing it with the sale proceeds of of assets and we're getting lease velocity and rental uptick.

The reward.

For that delivery of excellence.

Okay. That's helpful. I guess just.

As a follow up just thinking longer term I mean it.

Sounds like the opportunity to do this is when you have vacancy.

You just think about your your exploration schedule or just the portfolio overall I mean, how long do you think this goes on.

Terms of years that youll be putting kind of excess capital into building.

Or is there a way to quantify how much you Gotta go building.

For us it's a very granular process, you've got to go building by building I mean.

Grey bar is done we have our conference center there that actually was the former SL Green Conference Center that we put like a million bucks into and have now turned it into I think one of the.

I mean, a dominant within that world of building small tenant building, it's probably the best amenity of any building and we just opened it wasn't wasn't dramatic cost.

And that that's done and one.

Renewables and $50 fifteens fully tenanted and.

So.

And some of the smaller buildings.

Either they don't require the same investment or.

Or.

Or are we have sold some of the bills that we just saw $110 42nd Street. So no. It's not this sort of endless pipeline of improvement it's very targeted.

And very manageable, so I hear what youre, saying, but it's we.

We don't it doesn't feel like that to us.

By the way this also a little silver lining in a deal like at 18, 7%.

Just.

As part of I guess last year or two years ago I'm not even sure of is part of the pandemic. We took back a fully improved conference center.

That was a third party conference center with full back of house and kitchen and furniture.

With a little bit of investment ready to go.

And we're lining up operators under our leases for that facility.

Which will serve as an amazing amenity for a 10, 7%.

So it's it's underway and.

And the portfolio occupancy level I think reflects the great state of our product.

Alright, great. Thank you.

And our next question coming from the line of John Kim with BMO capital markets. Your line is open.

Thank you good afternoon I just wanted to follow up on your commentary on the summit.

It sounds like Youre expecting 20% to 25 million of NOI this year to be contributed.

And I'm comparing that versus the $2 1 million of intercompany rents that you provided so I was just wondering what that mismatch was.

And then Mark you mentioned, 95% capacity, what does that mean as far as visitors because I think you last provided guidance of 2 million visitors per year.

John I'll take the first one I don't know what the $2 1 million of intercompany rent is but.

Yes, we have we have leases between.

SL Green and one Vanderbilt.

Separate and aside from it from summit so.

I think thats, what you are what you might be looking at and then Theres also remember cash payments.

Base rent.

On our leasing schedule that is separate and aside from the percentage rent right. The bulk of the lease here with summit between summit in one Vanderbilt is a percentage of sales.

Thats, obviously not in the leasing schedule the ground lease schedule that you are looking at I think so.

The $20 to 25% of NOI is based on a projection of attendance and sales in a lease that has.

Rents based on that.

What was your second.

Just about.

Attendance.

<unk> previously.

<unk> previously talked about.

Stabilized.

Underwritten stabilized projections of about 2% or $2 1 billion I think for.

For this year 2022, we're expecting to be about.

70% to 75% of that number I would say our underwritten numbers, probably I would say about 70% of that total capacity. So that's our expectation for the year, obviously, we hope to exceed it but remember it's kind of hard to go buy that next were only opened five days a week and two of those days fairly low.

<unk> like half days.

Okay.

And then when you say, we had a very long ramp that's the part I think that's left out of that question, which is we had not expected to ramp into two $2 1 million until I think it was like 2024 is my recollection.

And we had everything our numbers. We gave you guys in December bleeding in it was roughly 25%, 50%, 75% at 100% over a four year period, I think that was actually our 2020 guidance, we upped that because obviously as we sit here in 'twenty two we're not talking about 50% capacity.

<unk>, which would have been the original guidance, we're talking closer to 70% capacity so far in excess.

Of underwriting.

And still well within the expected ramp to stabilize this facility, which would have been 24.

Metric.

That makes sense.

Yes, I mean is it fair to say that rabbits, Jordan's thats going to be more of like a 'twenty three stabilization.

I think thats reasonably fair to say, maybe I can say I would rather go to the number like between 70% to 75%, but whatever it is it's so vasily in excess of 22 projections.

We're in good shape.

Okay.

And then on your same store occupancy it looks like it dipped to 92, 1% which is versus.

Versus the $92 eight that you provided in December as far as the update so it's come down a little bit and I was wondering how that impacts your guidance I know you didn't change it but you had occupancy guidance of $94 three.

Further ramp up to get there.

Yes, I'll start with Youre picking up the wrong number we ended at 93 as against 92 eight that we guided to in December . So we actually beat our year end same store occupancy projection, which includes leases.

Signed.

So it's a signed occupancy numbers, so exceeded the expectation and feel and puts us on a great ramp to our number for 90 I'm sorry of 94, three for 2000 and tips.

So beat our expect so by 94.

The 94%.

Occupancy including signed leases.

The only way, we quoted and the only way we've ever quoted it and the only way we will continue to quota.

Okay. Thanks.

Alright, thank you.

Our next question coming from the line of Anthony Powell with Barclays. Your line is now open.

Hi, Good afternoon, just a question on I guess ex.

Exploration of the renewal it seems like a lot of leasing with new tenants, which is positive.

Rates, but that means that there is a lot of churn. So in terms of who is leaving the portfolio.

Why are they leaving are they are they working through reducing opex that are relocating to either new cities and new buildings can what kind of driving some of that.

Churn on that side of the business.

We did a lot of early renewals if youll recall during the depths of the pandemic, we were extremely proactive about going.

And making your outreach to tenants.

In order to quite quite frankly to lock down our rent roll so we.

That pays off.

Pay dividends to us because it helps us stabilize.

Occupancy level.

<unk>.

So it's not so much that we're losing a lot of tenants I would say theres very few tenants who are departing who we haven't.

Who we didn't already identified as likely to leave.

12 to 18 months ago, and the majority of those are typically because they want to rebuild their space they've outgrown them.

Space and they want to make an investment to create a different work environment for themselves.

<unk>.

The reality is it's tough to do around yourself.

Unless we can provide swing space.

When we're so well occupied we don't have a lot of extra space in order to make that happen.

You commented where we can.

But I would say if I was going to broad stroke at the majority of the tenants that.

If they are losing them now is because they've outgrown their space and they want to create an entirely different work environment, which oh by the way I think is a good thing throughout the broader.

Marketplace because.

What are those tenants that are coming into our portfolio are doing the exact same thing.

Right. So youre not seeing tenants, we because you know that theyre going to downsize space is more of a refit reconfigurations youre not really seeing a.

Broader just retreat from office space is more than just reconfiguring switching out where you want it yes.

I think it's they're using their space differently, theyre, not necessarily downsizing and I'd answer it a different way by saying some of the tenants that we see coming into our portfolio.

Good.

A good percentage of the square Footages are being driven by new tenants coming in that are doing consolidations, which is a pretty interesting phenomenon, where we're seeing.

These companies that want to consolidate where they used to split split their operations and go to a campus type of environment. The other water put everybody under one roof and it's all driven by what Mark was saying earlier, which is a desire by the tenants to really create a work environment that gives their employees a reason to want to be in the office and.

As a recruitment tool because it's become.

As remain for quite some time highly competitive in order to recruit new talent.

Okay.

Go ahead, Tim it's Matt it's.

Matt I just wanted to add one thing again, because we keep hearing.

Traction contraction, we said it earlier and I think it's worth saying again, our in the one 9 million square feet of leasing we did in 'twenty, one expansions were five times.

Larger than the contractions, almost 400000 feet of leases where expansion is less than 70000 feet work contractions.

Understood Yes.

Yes.

I think on Investor Day, I think you mentioned that your you hired are starting to hospitality I guess arm hospitality.

Segment, maybe go into more detail about that what do you expect to kind of drive there and then what's the opportunity for you there, yes, well we introduced in December the team the hospitality team headed up by a lower glide Gerald for our end.

Marianna Hertzog and know Jelena.

It has also been promoted within that group. So I'd say its a growing and very solid group that is taking responsibility operational and marketing responsibility for all these locations not just at <unk>.

One Vanderbilt, but one Vanderbilt soon to be one Madison.

100 parked as Steve mentioned earlier, the Gray Bar Conference Center, the one over at a 10.

And.

This is proving to be really not only.

A great source of satisfaction with tenants, but there is an ability for us to drive some revenues that are not.

Not not.

On meaningful in terms of.

After our rentals and events that tenants like to throw because we're doing this F&B at a very high level and generally with <unk> Daniel <unk> company.

That is delivering extraordinary culinary experiences into these spaces.

We have an arrangement with <unk>.

<unk> is a lot of symmetry there.

A lot of compatibility it's a win win situation, where the tenants are getting access to great spaces, and great service and great food and beverage.

<unk> is about as good as it comes in the city of providing that and.

For us, it's a great way to get a return on all of this amenity space.

Really amenity during business hours, and then double down as a function space after business hours no weekend, so we're going to keep growing that business and growing the team and it's.

Eventually it should become a line item on the.

On the on the on the budget I mean in terms of.

Its relevance I could see it growing substantially.

<unk> alone.

Just our one restaurant.

Is is going to be meaningfully is expected to be meaningfully profitable in 2022, which in less than a year of open is quite a statement.

Alright, Thanks, a lot for that I appreciate it.

Yes.

Our next question coming from the line of Derek Johnston with Deutsche Bank. Your line is open.

Yes.

Okay.

Yeah.

Eric.

All right, we're going to try and pick up the pace here because for example industry and I think we still have one or two more questions.

Operator operating go to the next and Derek can jump back in if you're a Colgate Matt yes.

Omidria.

Our next question coming from the line of Ronald Kinder Morgan Stanley . Your line is open.

Hey, two quick ones from me just to update on one Madison and sort of the leasing activity trying to get an anchor there.

Any update there would be great.

Well as we said at Investor Conference, we've heard a lot of.

Very very strong.

Interest from prospective tenants, we are in advanced dialogue with with a couple and we'll.

Feel it unfolds, but.

I would say I think mark would agree that the pace of our.

Discussions with tenants.

At this point in time of that development far exceeds the level of activity that we were experiencing at one Vanderbilt.

At a similar moment in time, so we are.

Emboldened by that and the optimistic end.

There's nothing really specific that we are ready to report yet.

And I hope to have more to talk about later this year.

Great and then sorry. The second question is just relating to co working space just given the experience we've had over the past two years and talking to clients talking to tenants.

Companies use changed on on that business business model.

And is this something that you would consider.

We have a division called emerge to one two of its been operating for about 20 years.

The co working environment so.

We introduced the <unk> suites at one Vanderbilt Thats been a huge success, that's fully furnished shorter term occupancy suites upstairs we've leased.

So at least out on the third and there'll be one remaining shortly so.

<unk> has been a huge success I think we are fans of co working where we build it we operate it we manage it which we do a lot of.

And third party co working.

<unk> never a big priority for us and I would say that.

Sentiment existence continues.

Great. Thank you.

Our next question coming from the line of Nick <unk> with Scotiabank. Your line is open.

Thanks, So I was just hoping to get some more info on on page 29 of the Sup, where you give the occupancy versus leased occupancy is it possible to get the leased occupancy number for the consolidated same store portfolio, where it is showing up here that you have more vacancy than the rest of the portfolio.

It probably is but I haven't done that math so no.

Okay, I mean, I guess I'm, just trying to figure out here I mean, it's the bulk of your vacancy is in the consolidated portfolio.

Certain assets that look.

Under occupied versus history.

<unk> seven <unk> Gray Bar Avenue, the Americas, right, where you are overall vacancy showing up here is very similar to the overall market.

Just kind of how youre thinking about those buildings competing and how much occupancy uplift for those lower.

Occupancy buildings is built into your guidance for the year.

I will say with specific specificity to those buildings I can't tell you, but there are obviously part of the.

101 hundred plus basis points of occupancy pickup in its 130 basis point occupancy pickup we're expecting for for 'twenty two.

Those are traditionally buildings that operate at a much higher occupancy level and they are headed that direction.

So.

I guess, what I'm asking.

You are saying if you are saying they are heading in that direction theyre not its not showing up on the occupancy page so thats right Nick.

For the lease number if you had if there was any added occupancy lift up those buildings that we can't see because it's not on that page.

Nick it's hard to generalize.

<unk> Bill every building has its own DNA Gray bar, you mentioned as a high occupancy building well.

Guess, what we moved out a great bar, we will know that.

We were 100 feet, we were 100000 foot tenant in a building thats made up of.

2500 square foot tenants. So yes, we moved out this year, we I think we left in 2021, we'd left in March I think if I recall, so we left a.

A gaping hole isn't that.

It is great but that.

Don't extrapolate Gray bar is a wonderful building with a lot of activity and we're back filling our space and.

And other space and it'll be back into the nineties I assume I don't have that say I don't have the number of product I got to believe that buildings back in the nineties. This year great building.

It's a little bit more specific two things happening in the property at that point in time.

Certainly couldnt generalized well consolidated properties have high vacancy JV properties have vacancy it ebbs and flows we had.

J B properties last one Vanderbilt was a JV property that was bone MTS as one Madison and those will go to.

Fully leased one now one in the future.

What were some of the other ones you mentioned besides gray bar.

Kevin really 10 sentence, we had that.

I mentioned, we had a conference center that we had a full floor conference center that blew out during pandemic. This pandemic was very tough.

On the conference centers, because there was nobody to convene in the conference Center. So we took it back and now we're in the process of doing some very modest upgrade to that and then re turning around and either re letting it are putting into our management contract and it will become profitable so.

Theres not this portfolio the properties, we own are all excellent buildings leasable buildings that were making better through in some cases through targeted amenity improvement and we're going to increase our occupancy overall too. We think what was the project 90 394.

0.3% 130 basis points.

So that would certainly be a lot better than the market. The market is nowhere near at 5% to 6% if the market was 5% to 6% vacancy.

Wow, we'd be in Umbellule position. So this portfolio will be that's our that's our.

Sure.

Our goal for our investors this year, we wouldn't put it out there if we didn't think we'd get there.

And we'll get there, but I wouldn't draw.

Broadbrush conclusions based on any moment in time vacancy in any particular asset.

I mean, I guess my point was just that if you had activity in those buildings that would be helpful to know kind of what the lease number is in those buildings. Because if you look at this page you just see a lot of occupancy loss in those buildings in the last year I would say the lease number what do you mean by the lease like at least it sounds that that's accurate as the only number you like talking about which is the least.

The occupancy number rather you show a commenced occupancy number for these buildings and my point was that if you have any way to give a leased number for these buildings will be interesting, we'd understand sort of how much leasing activity theres been that's embedded already right in those buildings thats not showing up in the in this page.

I don't I don't think it would matter much which is why we don't put it out there so never hernia, which you say, let us let us I understand what youre, saying, if it's if it's the lag time between leasing commencement.

Let us.

We look at it but when we give that lease number and know that they will all commence so we are 93% leased as we sit here today period. Your point is well I don't know which buildings those leases are in I guess, let's say haven't commenced.

So let us let us.

Let us digest that I hear them alright, thanks, everyone. Appreciate it okay alright.

Okay any more questions operator.

Terrific we will.

Get right back to work and look forward to speaking to everybody in three months. Thank you.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

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Thank you everybody for joining us and welcome to asphalt Greenville, Just Corp, fourth quarter 2021 earnings results conference call.

This conference call is being recorded.

At this time the company would like to remind listeners that during the call management may make forward looking statements.

You should not rely on forward looking statements are predictions of future events and actual results and events may differ from any forward looking statements.

The management May make today.

All forward looking statements made by management on this call are based on the assumptions and beliefs as of today.

Additional information regarding the risks uncertainties and other factors that could cause such differences to appear are set forth in the risk factors and MD&A sections of the company's latest Form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission.

Also during today's conference call. The company May discuss non-GAAP financial measures as defined by regulation G. Under the Securities Act.

The GAAP financial measure most directly comparable to each non-GAAP financial measure discussed and the conversation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on both the company's website at Ww Dod SL Green Dot com.

By selecting the press release regarding the company's fourth quarter 2021 earnings.

And in our supplemental information filed without current report on form 8-K relating to our fourth quarter 2021 earnings.

Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp.

Those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you.

I will now turn the call over to Marc Holliday. Please go ahead Marc.

Okay. Thank you and good afternoon, everyone before we begin.

I want to express our sincere condolences and deep sympathies to the families of officers where they are.

Maura.

Gave their lives in the line of duty.

At SL Green, we work hand in hand, with the NYPD Fdny and other first responders and we support their efforts in every way we can day after day.

There was an outpouring of support at St. Patrick's Cathedral, right now and there will be more in the coming days and weeks as New administration works with the state.

To make public safety the number one priority in the city, everyone has a role to play and I'm confident we can it will move forward from this.

Now we appreciate the opportunity to discuss with you our company performance and financial results for the fourth quarter and full year 2021.

After a solid December .

In the office market, we had a bit of a reset in January which is not a typical after the holidays.

But most businesses in our portfolio expressed their intentions to return to the office in February and by March we expect to be back at the same levels. We saw in December if not beyond that.

The omicron virus seems to be dissipating as fast as it arrived and we are hopeful that February we will begin to return to normal.

Those questioning the ability of New York City to rebound need look no further.

Then the resurgence in 2021 of the residential markets, which saw.

<unk> high end condo sales and 1% vacancy and rental apartments as young people return to the city our newly completed.

<unk> rental project at seven days III supports this thesis as we have now signed leases for over 100 units at average rents just shy of $100 per square foot.

On the employment front, New York City added another 8000 office using jobs in December bringing the total December to December job gain to 61000, new jobs. We have now regained just over half of all office using jobs lost during the early days of the pandemic and there are approximately 50000.

Additional jobs forecasted to be created in 2022, which should help to begin to reduce office vacancy rates in Manhattan and in some of the Submarkets, we've already started to see those contraction.

We remain optimistic about hitting our ambitious leasing goals for 2022 on the heels of signing 250000 square feet of office leases. After our December Investor Conference and notwithstanding having grown our pipeline to almost one 3 million square feet today from just about $1051 50.

<unk> thousand square feet.

In the beginning of December .

Positive takeaways that companies continue to see the office as the central and necessary hub of business activity and are making long term commitments and expansions within the portfolio that vastly outnumber contractions.

It will take some more time to work through the system and get past the disruption of the pandemic, but with the new mayor the new Governor.

And the business community, all coming together and playing significant roles in the recovery of the city. We have every expectation of a rapid recovery and another demonstration of new York's extraordinary resiliency.

Seven weeks ago, we hosted our December Investor Conference at one Vanderbilt and.

And we did a deep dive into our goals objectives and expectations for 'twenty, two which we reaffirm as we sit here today.

As usual, we covered a lot of our 2021 accomplishments, which I think we are a sector, leading in New York and many different respects of leasing.

Transactions operational performance and contribution to the city in the form of openings of.

The summit.

<unk> and other things that turned out to be extraordinary successes and I think demonstrated leadership, we have and commitment we have to this.

To this market.

Accordingly as is our custom for the January call, we're going to go right into the Q&A and get questions.

As everything we talked about in December is still relatively fresh.

And happy to address anything we covered then where anything new as a result of the release, we put out last night.

So with that we'll turn it over for some Q&A.

Ladies and gentlemen to ask a question you will need to press. The Star then the one key on your touched on telephone.

To withdraw your question press the pound key.

Consideration of time, we ask that you. Please limit yourself to one question and one follow up.

Please standby, while we compile the Q&A roster.

Now first question coming from the line of Michael Lewis with <unk> Securities. Your line is now open.

Great. Thank you.

My first question I wanted to ask about <unk>.

Fight to quality and so yesterday on Boston properties called <unk>, San Francisco as an example.

With market vacancy well over 20%, but when you look at the top 25% of building, it's more like 5%.

Another example, I was in Atlanta recently, where the office vacancy is above 20%, but the rates they are below 10%.

So I wanted to ask about New York and about SL Green your competitive set how you think about maybe your investable universe used to be the top half of buildings in New York announced the top quarter something like that do you think differently about any of the assets you own or about how you want to concentrate the portfolio now.

I would start off by reminding you that when people talk about the flight to quality.

That's not unique to just new construction or the the very very top 1% of the marketplace. What we're seeing is throughout our portfolio given the fact that our portfolio is highly improved throughout all of the buildings.

With the exception of a couple of buildings that we have in redevelopment.

We are seeing.

Gration of tenants.

Coming into the building of that million three square feet, the Mark spoke of.

Of pipeline.

Probably 85% to 90% of that are new tenant deals.

So.

I think sometimes people get confused that.

<unk> had such great success at one Vanderbilt and therefore, that's the whole show but.

Truth, we're already seeing the benefit of a redevelopment plan at <unk>.

Lipstick building, where we have two full floor leases out and we haven't even picked up a hammer yet to start to work, but off of the off of the plan that we've got tenants are coming to the building we're seeing increased activity throughout our other very high end buildings like 100 Park Avenue for 61, $330 50 of the Americas. So you can go down the <unk>.

List of the portfolio and.

The better quality buildings, particularly Midtown transportation centric located buildings is seeing a lot of the activity in the marketplace and the last point I'll drive home as to say, we said at our Investor Conference, we had more guests and to take.

Between then and the end of the year to get to our target of 93% occupancy and in fact, we signed those leases to hit that.

Bogey.

And on that point.

Think the statistic you mentioned in San Francisco, 20% vacancy, 5% from the top.

The same statistic is right in front of US here at SL Green to this market.

Manhattan market has a vacancy rate of 16% to 18% depending on.

What source you use and our portfolio is only 7% vacant and shrinking. So that same story is there, but that that 7% vacancy rate isn't just our top buildings Thats every building combined on average.

Okay, Great. Thanks, and then my second question I wanted to ask about the risk reward in the DP book.

The rising interest rates have been a theme.

Start to the year.

How do you.

What do you think about it.

Net yields start to creep up, but maybe theres some opportunity there and then on the flip side of that how do you think about the value of your current holdings.

The value of what you all.

Well our portfolio is mostly floating rate so.

Yes, I think the value of the portfolio is very much intact, yes, theres not much dimunition as the tenure rises.

If at all.

And we are seeing more structure finance opportunities, but that's mostly based on just increased transaction volume in Manhattan.

More so than.

As a result of rates rising.

Okay. Thanks.

And our next question coming from the line of Alexander Goldfarb with Piper Sandler Your line is open.

Hey, good afternoon.

Mark I just wanted to go back to your opening comments on.

On the new Governor Neumayer, obviously Albany.

The new mayor is awesome.

There is definitely seems to be some tension with Albany as far as Bell reform, but one of the items that came out late last year with <unk>.

Poses to do a $1 billion tax.

And tax billionaire capital gains that at a normal income, which I'm guessing would lead to other taxes that perhaps albany, we'd like to pass so.

In your discussions in the business community in New York Crime and Street safety is one element, but there's also the regulatory and tax element as well.

What's your sense of what Albany may do and are they listening to the business community and what really drives the city as far as the company that take residents versus migrating to Florida or elsewhere.

Yes.

I do think so this year.

Uniquely among among years.

The state is flushed with cash I mean thats. The good news that came out with a budget in excess of 200.

Billion, so the highest budget it's it's.

Ever proposed and we'll see as it gets negotiated and finalized.

But it's it was able to be proposed in a way with very little in the way of any new revenue.

Enhancements because the.

The combination of.

Surging business profits in New York State and also personal income taxes in New York State as a result of rising compensation bonuses is leaving state and city coffers relatively flush going into 'twenty, two and I think that will carry into 'twenty three and that's that's something I talked about.

In December about the.

Stimulus from the federal and the stimulus.

Ongoing so there is there was the stimulus plan that.

Chuck Schumer was able to bring the $100 billion.

Stimulus and now the infrastructure on top of that which I think will be multiples and again that all of that which we sort of reviewed in December I think.

The tax the business activity the tax collections.

The stimulus dollars.

It is.

All pointing to a moment, where there is not a lot of discussion on the table or need more importantly.

For any kind of a regressive revenue enhancements and so I don't think we will see that I think the state of the state that Governor <unk>.

Gave.

Two weeks ago.

Hit on many of the right issues in terms of.

Wanting to work with the city and this new administration.

On the topics that we talk so much about.

Making investment in infrastructure I think theres a lot of common ground there no matter, where you stand.

On what side of any political.

<unk>.

Social leanings.

Affordable housing.

Mandate to come up with new and creative ways to modify for 'twenty one.

A way that will create more and better affordable housing while also.

Creating an economic framework that developers can help the private sector can help deliver that.

In public safety I think again I put it right there is priority one working.

With the mayor in a very concerted way to put.

Higher presence of <unk>.

<unk> on the street in the subways in mass transit too.

To reinforce and get right back to where in New York was not long ago, and where we will be again very soon.

Because we know how to get it done and now I think there is a will to get it done so I am pretty optimistic Alex.

The soundings coming out of both city Hall, and Albany or are in line with the kinds of things we want to see in here on the <unk>.

From your left to Albany's years.

Andrew on the on the Mezz book on the DTA, you guys had a <unk> right down with it.

I understand these were prior positions I think or maybe not but what was the composition of these write downs and then in general the DP book has been.

Hugely successful over time and at the Investor Day, you spoke about first mortgage hunger that was sort of cashing out a lot of positions.

So workouts or write downs werent required so maybe just a little bit more color on what's driving these write downs and if these are new write downs or or previously.

Positions previously written down.

Well I mean, they are on previous positions.

The.

Book had an enormously profitable year, and we take a conservative approach when we think.

There is any type of potential.

For our future write down we like to make sure that it's it's covered and reflected in the income is that youre looking at for the year sort of net of any any potential offset.

But the book had a very good year, we had some very large pay offs. We had a large payoff after the Investor conference on a development position, we add on 70 <unk> Street.

And.

As I said on the call previously, we're seeing very good new opportunities and we'd expect to be able to hit our target we laid out to you in December .

Or exceed it for originations for the year.

Okay. Thanks.

And our next question coming from the line of Caitlin Burrows with Goldman Sachs. Your line is now open.

Hi, good afternoon, everyone.

Question first on the return to office I know you mentioned.

Company's debt.

We're planning to return in February where March can be back to December levels, or possibly higher I guess, what's your outlook for further improvement in physical utilization.

Recent conversations with tenants, who maybe weren't yet back in December in light and then more importantly, how important do you think that kind of near to medium term return.

Okay.

Well.

Okay.

It's hard to get a barometer on the pre pandemic levels, because I think people have in their mind.

This notion of 100% benchmark, which is <unk>.

Far far from the reality of of what space utilization is and as best I can tell anecdotally speaking with.

All of our tenants, which isn't a bad samples we have.

900, plus amongst tenants.

Is that between.

PTO and holidays sick days traveling people travel for their work and did and still will.

<unk>.

And there was an element of remote work even before the pandemic. It is not it's not a completely new site.

Since that.

And average day would be somewhere in the 70% occupancy range.

We can't I don't have hard statistics on that.

But I can tell you that I would say everything I hear is either right at that level or in the 70% to 75% level at Max.

Some companies are different and they have higher capacities and some are less.

But I think thats a good average so when we talk about approaching 50% occupancy.

Physical occupancy in the near term.

It's a good ways back.

What it will take and how long it's ATF net 50 to that last 75.

I think thats just as I said earlier, it's just going to be a matter of working through the disruptions of the system and a recognition that many firms will at least for the time being worked some.

Increased element of flexible remote work into their program, but we're still hearing almost across the board.

That the majority of days will be in the office. So whether a company is going to go to a three day work week in office four day work week and also our five day, averaging maybe four days or so.

Everybody.

Has it hasnt has as the desk everyone's got.

A landing station and.

These same companies that are talking about some element of hybrid work model are the same ones, who are signing 10, 15, 20 year leases and generally expanding I think our expansions outnumber our contractions by like five to one.

That's in terms of square footage and maybe 4% to in terms of number of deals. So the larger deals it's even more pronounced that the.

That the expansions are outnumbering contractions in our portfolio.

4% to 501, and we looked at over 200 transactions, we did 200 and some odd leases in 2021 that shows office leases and so.

That's a very good sample set and I think that this year the confidence factor is going to be even higher.

We have a rising occupancy so it will.

I don't know if its going to have an impact on our portfolio. It is going to have an impact on the way companies work and I think it has an impact for the better. It is part of this whole shift in.

And what we deliver to tenants being not just a deliver of commodity space. We never approach it like that but now more than ever we are going to make every effort possible to demonstrate leadership in this industry by giving.

Workers every reason to want to be in the office maximum efficiency health safety and wellness.

Food and beverage amenities lounges town halls.

Some fun recreational items workout spa wellness. It's all part of this new package of delivery. We're working into every one of the buildings, we own and the feedback from tenants and tenant employees is that they love it.

At the Vibe is great people have more incentive they feel better.

<unk>.

I think we will over time get.

Back roughly to pre pandemic levels, but for whatever kind of shifts there are that might insert more remote flexibility, but I don't think theres any question.

In my mind about the the office as the central hub.

Of everything that.

That takes place in the workplace.

And the sense of community Mentorship trained.

Training and business generation.

I don't see that.

Being degraded.

But time will tell and we'll see the results, but the early indicator for me is the leasing and the leasing right now both in terms of the one 9 million square feet, we signed last year and the 2 million square feet were projecting for this year.

We think says it all.

Got it and maybe then a follow up question on different.

Different topic other income it looks like that came in materially higher than expected in <unk>, just wondering what that might have been driven by and as you look out to 2022, it seems like youre expecting that to be significantly less than 21 and 2020. So just wondering why you think that may change.

It's Matt so.

The other income line I think was roughly $7 million better than we expected.

In the fourth quarter.

Most of meaning most of the.

Other $19 million was expected.

Significant contribution from the fees and income we got from the JV at one Madison.

And the increment was some incremental leasing commissions and fees, we received and also better performance at the summit than we had expected which flows through in large part.

Other income.

And so when you think about 2022 units at that part of that.

I guess I was just one time and it could be lower perhaps upside opportunity.

Now comfortable with the guidance, we put out for 'twenty, two and other income.

Okay got it thanks.

Our next question coming from the line of Manny Korchman with Citi. Your line is open.

Hey, good afternoon. Thanks, Mark if we if we wanted to spend a couple more minutes on this utilization or.

Sensus question.

A couple of questions. One have you seen a difference in utilization actually people coming in from the companies that have signed new leases more recently are they signing new leases and I'm trying to bring people in especially on the ones that have expansions are you still on those.

Lower building census numbers, there and then secondly, as you sign new leases and this might be one.

Throughout.

Are they thinking about that same 70% on average or are they trying to boost that number and so you might have the same number of.

People you might have the same number of.

Square footage a lot of the people that youre actually taking less space, because youre, just trying to get utilization up.

Thanks.

Trying to answer the first part of that question I would just say that.

The space plans that we've been presented with and whats being built new.

Is very.

It's well amenity space it's.

It's highly efficient space.

And its space that.

I think they intend will be fully utilized.

I don't think these companies are building with the intent that there.

Building with the expectation that all of that space in all of those task won't be utilized in fact, I just I want to caution that everything is in average we have many tenants in front of US right now part of that $1 3 million square feet of pipeline.

Who are at their limits.

In terms of whether who is back in the office company like US we are a 100% back there are others.

That are predominantly back and there are some that have such enormous.

Expansion needs that even when they are underutilized theres still in the market we've got deals over it.

I will just say in the.

Grand Central Park Avenue area, Steve, where we were talking the other day two tenants both expanding competing for the same space both of those $30, 50% I was going to say those words.

I thought there were about 50, but Andrew notes, 30% to 50% expansions per tenant.

And we can only accommodate one of.

Those two just given the nature of the building where that's coming from.

One Vanderbilt.

So.

There.

I do.

Go back to what I said, which is when these tenants are very sophisticated.

With sophisticated real estate groups and they do a lot of planning and when they sign. These 10, 15 20 year commitments and they.

Les out their full floor plans.

With desk, they expect to be occupied and they come in they say they've got these significant expansion.

Goes yes, I think they have every intention of.

Bringing people back and populating those those work areas.

Because they would not they would not be acting that way otherwise and in terms of who we see doing it.

We absolutely saw that the.

The vibe in the city in December was great.

Like I said, we had a reset in January confluence of events.

But we will get past that quick.

I believe in Fab March April we will be there. So on the next call give you the same question again.

Hey, Mark it's Michael Bilerman here with Manny I just wanted to ask a question just about the sort of transaction market and investors.

Last year, when we talked about the subject you talked about maybe a limit of maybe a $500 million check from an individual investor to go into office transactions. We certainly seen the upper end of the market just like on the leasing front that the investors are.

More.

Looking at higher quality buildings newer buildings environmentally friendly buildings and those deals are getting done where do you think we are in terms of investors may be enlarging the scope of office assets that theyre looking at and maybe even looking at portfolio type transactions and just comparing it to some of the other property sectors.

Family or multifamily or industrial and data centers and infrastructure, where we're seeing multibillion dollar commitment almost on a weekly basis.

And feel like the office market has turned to that same scope. So I wanted to sort of get a little bit of the color that youre seeing from the institutional world.

Okay, So let's switch to.

A discussion about what we were seeing on the things we've recently transacted on the money raising efforts.

That we're undertaking right now both for.

Pipeline activity and just.

General future activity.

Andrew what you sort of cover as much last year.

I think we have an active market for.

Non trophy properties as well as evidenced by one Chinese 42nd Street, which we closed in December .

And.

10, 80, Amsterdam, and many of the other sales that we closed last year.

You saw the Columbia.

Columbia property Trust portfolio, which.

Many of those buildings are certainly not.

Theyre masonry type buildings in Idaho glass and steel buildings.

And.

I think theres, a thriving market right now for large assets and small assets.

And across the property types, we have here in New York.

Our city, obviously, it doesn't speak to data centers and single family homes.

There's a lot of liquidity out there for transactions large and small you saw eight spruce, our large multifamily asset trades at Blackstone.

One Manhattan, West, which is going to get recapitalized.

452 fifth Avenue of the HSBC headquarters.

There's a tremendous amount of capital markets activity out there.

On development deals on cash flowing deals on partially vacant deals.

So we see we see a very active investment sales market.

In terms of the multi multibillion dollar portfolio deals I guess Columbia property trust to be that close to correct.

We've had to that.

There just hasnt been that type of offering.

Right.

You'd want to point more to more than one and that was sort of a framing of my question of whether that is starting to open up and whether youre starting to have more serious discussions on.

Finding that investors want to get more appetite.

So Bob I'll turn it over to the other questions and ill see you down in Florida.

Greg.

Either.

And our next question coming from the line of Steve <unk>.

Doug <unk> with Evercore ISI. Your line is now open.

Thanks.

A lot of questions on leasing have been answered asked and answered, but mark maybe just on the summit.

No exactly what you were planning to do from a disclosure standpoint going forward I don't know what you can share with us about the activity levels in the fourth quarter.

And what is your expectation if any or what's embedded in guidance for 'twenty two for the contribution from the summit.

Sure well, what I can share on the summit is it's unbelievable fantastic.

We opened that October 21.

It exceeded every lofty expectations communicated to you in the prior years.

Not just in terms of the <unk>.

Financial performance.

Is.

As successful as it will be financially.

It's it's an important.

<unk> addition.

To New York and the destination Entertainment.

Sector.

<unk> of its uniqueness.

It's very out of the box it was a little bit risky, but now obviously, we look back and we think we hit it exactly right in terms of.

The customer experience and the journey.

And the uniqueness of it.

What we've created and everybody experience is it a different way and that's kind of the beauty of it some people come individuals they come in groups theirs.

People lying on the floor and they'll video themselves and everything going on for hours the dwell time.

For some people might exceed two hours, depending on how they want to experience split which is.

Everything about the view outside but being brought inside and the way that is all.

Curated.

And amplified with the artistic.

Input and creation of Kenzo.

With the various mirrored transcendence rooms, and the air at night Light show in the.

The soundtrack duration. It's just it's it really is wonderful and that's something people are coming back to again and again, which is very atypical for this market to have people coming back to three four times and a very limited period. We only opened this October 'twenty one hour.

Our average capacity sellout was about 95% on average from October 20, <unk> through the end of December most of December was even higher it was probably like 90, 798% and this industry typically has a is a very significant drop off in.

In the first quarter.

For the holidays and yet.

We are still experiencing great numbers for January we sit here today already.

Beyond our January projections, which were already increase when we sat with you guys for the December Investor Conference. So.

That's that's just a little bit about split and.

More to come but.

You should also note that.

That capacity I mentioned is kind of self limited because we are only open right now about five days a week and we've curtailed the hours on a couple of days.

We have demand we could we can and will extend the hours and add a day.

Probably at the end of the first quarter I would expect sometime in April .

For us to do that I think it's the right time for that and we want to lean into this very gradually this is not.

Some it's going to be here for a long long time, and it's going to get better and better over time, and we want to make sure that experiences because it can be in terms of numbers.

Matt I don't know what you want to I mean, 'twenty two guidance most of the numbers are embedded in the in the lease payment. That's the way. This deal is structured the the operating company makes has some contribution to <unk>, but probably just a few cents a share on the on the opco and the lease itself.

The projections, we've shown you guys previously and over the years.

Summit Bottomline <unk> contribution was always about in the range of 20 to maybe 24% of.

Of the bottom line for Olivier and so it should meet.

We over we exceeded on our rental assumptions and we're exceeding on our somebody assumptions and hence that 'twenty to 'twenty two to three 4%.

Contribution to bottom line.

Should be holding up but metals.

Yes.

Spot on in R 22 number we.

We had expected around $100 million of GAAP NOI off one Vanderbilt.

Our share in.

2025% comes if it comes from.

Amit.

And the operator has a modest contribution of <unk>.

And our F. 'twenty two guidance right and that will be increased in 'twenty, three and beyond as we add hours are days and dial this in even further.

Great. Thanks, My follow up I guess is just on the transaction market and I don't think in the press release, you detailed a lot of deals that had previously been announced either closed or were going to close just curious sort of what your.

Looking at in terms of bringing to the market or thoughts are in the first half of the year end.

What should we be looking for on the transaction side and mirror that up obviously with the buyback.

Well, we have active discussions on quite a few assets.

Yes.

609 fifth on the market.

That'll be that'll.

That will be.

As an alternative to to lease.

But we've received some unsolicited inquiries to purchase that asset.

We are.

Remarketing 110, Greene Street as well so.

Those two are sort of active in the market right now and we're entertaining discussions on other assets that are not in the market.

So.

Look for a very active.

Transaction, yes sort of.

Look for ourselves in the first half of 'twenty two.

I would also just add to that that the activity and.

Expressions of interest, we're receiving on assets mentioned that and assets that we're working on that were mentioned.

In almost every case exceed our own internal MTV.

And.

Accordingly, really give us.

Confidence as we execute our business plan throughout this year to continue to acquire.

Our own stock with proceeds of some of these capital transactions.

As well as investment in new development and debt repayment.

In order to capitalize on what we see still as an attractive and wide arbitrage.

Great that's it for me thanks.

Our next question coming from the line of Jamie Feldman with Bank of America. Your line is open.

Great. Thank you.

Marc in an answer to a prior question you talked a lot about the <unk>.

Dips of amenities.

Just what your tenants are going to want in their spaces to bring people back to the office and make it a great experience how should we think about the capex for the company I mean do you think there's going to be a good number of major capex projects across the portfolio going forward or is this more capital that is going to look a lot more like traditional ti capital.

Over the next several years.

No.

I mean for this year.

I think we highlighted in December I don't I don't exactly remember, but we we talked about 85.

<unk> 751 third.

Well and.

Just one other.

Slide 19.

Granted to certain extent right. So three buildings on third where we think the investment is not done.

Think of it as redevelopment capital the way we've Redeveloped every building this portfolio, which get down to systems and windows and.

Big heavy infrastructure Mechanicals.

This is this is usually very targeted surgical.

Programmatic upgrades usually of space, that's underutilized so a lot of times, it's subgrade space.

Or at some some great space that wasn't fully built out all.

All the capital for those projects.

Our in our 2022 capital plan.

Theyre not theyre not.

Disabling in any way and the return on those dollars in terms of the lease velocity and rental.

Uptick we think more than pays for itself I think we spent about.

$3 $5 million at 100 Park for a 10000 square foot, but the name of the facility is a parcel of park club and tenants love. It I mean, it's it's a lot of Bang for the Buck now we're doing.

Larger projects at 885, but we're leasing.

About 600000 feet space so.

This to me is not I wouldn't look at it to me, it's not like Ti capital. This is real permanent building improvement.

And permanent value add this is taking a building from one level up Ti commissions, that's a cost of leasing.

For us because the improvements to 10 spaces not the building space, but this is improvement to fundamental building everything we spend here at one Vanderbilt I mean.

As part of this $5 billion appraised valuation and everything we're doing at one Vanderbilt.

We'll be part of what we hope will be another significant I'm, sorry, one Madison, one magic will be a part of a significant.

Valuation and the same for $85 to $7 50, so I look at them differently.

Is there more manageable we've planned it throughout the portfolio.

We are internally financing it with the sale proceeds of of assets and we're getting lease velocity and rental uptick as the reward.

For that delivery of excellence.

Okay. That's helpful. I guess, just as a <unk>.

Just thinking longer term I mean, it sounds like the opportunity to do this is when you have vacancy.

And you just think about your your exploration schedule or just the portfolio overall I mean, how long do you think this goes on in terms of years that youll be putting kind of excess capital into building.

Or is there a way to quantify how many you Gotta go building.

Look for us it's a very granular process, you've got to go building by building I mean.

The Gray bar is done we have our conference center there that actually was the former SL Green Conference Center that we put like a million bucks into and have now turned it into I think one of the.

I mean a dominant.

In that world of building small tenant building, it's probably the best amenity of any building and we just opened it wasn't it wasn't dramatic cost.

And that that's done and.

One renewables.

<unk> fully tested it in.

So.

And some of these smaller buildings.

Either they don't require the same investment or.

Or.

Or are we have sold some of the bills that we just saw $110 42nd Street. So no. It's not this sort of endless pipeline of improvement it's very targeted.

Yes.

And very manageable, so I hear what youre, saying, but it's we don't it doesn't feel like that to us.

By the way this also a little silver lining in a deal like at 18, 7%.

Just as.

As part of I guess last year or two years ago I'm not even sure of is part of the pandemic. We took back a fully improved conference center.

That was a third party conference center with full back of house and kitchen and furniture.

With a little bit of investment ready to go.

And we're aligning up operators under our leases for that facility.

Which will serve as an amazing amenity for a 10, 7%.

So it's it's underway and.

And the portfolio occupancy level I think reflects the great state of our product.

Alright, great. Thank you.

And our next question coming from the line of John Kim with BMO capital markets. Your line is open.

Thank you good afternoon I just wanted to follow up on your commentary on the summit.

It sounds like Youre expecting 2000 25 million of NOI this year to be contributed.

And I'm comparing that versus the $2 1 million of intercompany rents.

That you provided so I was just wondering what that mismatch was.

And then Mark you mentioned, 95% capacity, what does that mean as far as visitors and I think you last provided guidance of 2 million visitors per year.

John I'll take the first one I don't know what the $2 1 million of intercompany rent is but yes.

Yes, we have we have leases between.

SL Green and one Vanderbilt.

Thats separate and aside from from summit so.

I think thats what you are.

But you might be looking at and then Theres also remember cash payments.

Base rent on.

Our leasing schedule that is separate and aside from the percentage rent right. The bulk of the lease here with summit between summit in one Vanderbilt is percentage of sales.

Obviously not in the leasing schedule the ground lease schedule that you are looking at I think so.

The 20% to 25% of NOI is based on a projection of attendance and sales in a lease that has <unk>.

<unk> based on that.

What was your second.

About.

Attendance we had.

Previously talked about.

Stabilized.

<unk> underwritten stabilized projections of about 2% or $2 1 million I think four.

For this year 2022, we're expecting to be about <unk>.

70% to 75% of that number I would say our underwritten numbers, probably happens to about 70% of that total capacity. So that's our expectation for the year, obviously, we hope to exceed it but remember it's kind of hard to go buy that next were only opened five days a week and two of those days fairly limited.

Like half days.

Okay.

Yeah.

Im trying to say it we had a very long ramp.

The part I think that's left out of that question, which is we.

We had not expected to ramp into two $2 1 million until I think it was like 2024 is my recollection.

And we had everything our numbers. We gave you guys in December bleeding in it was roughly 25%, 50%, 75% at 100% over a four year period, I think that was actually our 2020 guidance, we upped that because obviously as we sit here in 'twenty two we're not talking about 50% capacity.

<unk>, which would have been the original guidance, we're talking closer to 70% capacity so far in excess.

Of underwriting.

And still well within the expected ramp to stabilize this facility, which would have been 24.

Metric that makes sense.

Yes, I mean is it fair to say that rapid shortens thats going to be more of like a 'twenty three stabilization, yes, I think thats reasonably fair to say, maybe like I say I'd, rather go the number like between 70% to 75%, but whatever it is so vastly in excess of 22 projections.

We're in good shape.

Okay.

And then on your same store occupancy it looks like it dipped to 92, 1% which is versus.

Versus the $92 eight that you provided in December as far as the update so it's come down a little bit and I was wondering how that impacts your guidance I know you didn't change it but you had occupancy guidance of $94 three.

Further ramp ups to get there.

Yes, I'll start with Youre picking up the wrong number we ended at 93 as against 92 eight that we guided to in December . So we actually beat our year end same store occupancy projection, which includes leases.

Signed.

So it's a signed occupancy numbers, so exceeded the expectation and feel and puts us on a great ramp to our number for 90 I'm sorry of 94 three for 2000 Atms.

So beat our expect so about 94.

The 94%.

Occupancy including signed leases.

That's the only way, we quoted and the only way we've ever quoted it the only way we will continue to quota.

Yeah.

Okay. That's.

That's clear thank you.

Our next.

<unk> coming from the line of Anthony Powell with Barclays. Your line is now open.

Hi, Good afternoon, just a question on I guess.

Explorations and renewals feedback a lot of leasing is with new tenants, which is positive.

But that means that there's a lot of churn so in terms of who is leaving the portfolio.

Why are they leaving are they are they working through reducing opex with relocating to either new cities buildings can what's kind of driving some of that.

Churn on that side of the business.

We did a lot of early renewals if you'll recall during the depths of the pandemic, we were extremely proactive about going.

Outreach to tenants.

In order to quite quite frankly to lock down our rent roll so we.

That pays off.

Pay dividends to us because it helps us stabilize.

Occupancy level.

<unk>.

So it's not so much that we're losing a lot of tenants I would say theres very few tenants who are departing who we haven't.

Who we didn't already identified as likely to leave.

12 to 18 months ago, and the majority of those are typically because they want to rebuild their space they've outgrown them.

The space and they want to make an investment to create a different work environment for themselves.

<unk>.

The reality is it's tough to do around yourself.

Unless we can provide swing space.

When we're so well occupied we don't have a lot of excess space in order to make that happen.

You commented where we can.

But I would say if I was going to broad stroke at the majority of the tenants that.

If they are losing them now is because they've outgrown their space and they want to create an entirely different work environment, which oh by the way I think is a good thing throughout the broader.

Marketplace because.

What are those tenants that are coming into our portfolio are doing the exact same thing.

Right. So youre not seeing tenants, we because you know that theyre going to downsize space is more of a refit reconfigurations youre not really seeing a.

Broader just retreat from office space is more than just reconfiguring switching out where you want it yes.

I think it's they're using their space differently, theyre, not necessarily downsizing and I'd answer it a different way by saying some of the tenants that we see coming into our portfolio.

Good.

A good percentage of the square Footages are being driven by new tenants coming in that are doing consolidations, which is a pretty interesting phenomenon, where we're seeing.

These companies that want to consolidate where they used to split split their operations and go to a campus type of environment. The other water put everybody under one roof and it's all driven by what Mark was saying earlier, which is a desire by the tenants to really create a work environment that gives their employees a reason to want to be in the office and.

As a recruitment tool because it's become.

As remain for quite some time highly competitive in order to recruit new talent.

Okay.

Go ahead Tim.

Matt I just wanted to add one thing again, because we keep hearing.

Contraction contraction, we said it earlier and I think it's worth saying again, our in the one 9 million square feet of leasing we did in 'twenty, one expansions were five times.

Larger than the contractions, almost 400000 feet of leases where expansion is less than 70000 feet work contractions.

Yes understood.

And then in your Investor Day, I think you mentioned that your you hired are starting to hospitality I guess arm hospitality.

I guess segment, maybe go into more detail about that but what do you expect to kind of drive there and then what's the opportunity for you there.

Yes, well we introduced in December the team the hospitality team headed up by a lower glide Gerald for our end.

Marianna Hertzog and know Jelena.

It has also been promoted within that group. So I'd say its a growing and very solid group that is taking responsibility operational and marketing responsibility for all of these locations not just at <unk>.

One Vanderbilt, but one Vanderbilt soon to be one Madison.

100 parked as Steve mentioned earlier, the Gray Bar Conference Center, the one over at a 10.

And.

This is proving to be really not only.

A great source of satisfaction with tenants, but there is an ability for us to drive some revenues that are not.

Not not.

On meaningful in terms of.

After our rentals and events that tenants like to throw because we're doing this F&B at a very high level and generally with <unk> Daniel <unk> company.

That is delivering extraordinary culinary experiences into these spaces.

And we have an arrangement with.

With <unk> there is a lot of symmetry there.

A lot of compatibility it's a win win situation, where the tenants are getting access to great spaces, and great service and great food and beverage.

<unk> is about as good as it comes in the city of providing that.

And.

For us it's a great way to get a return on all of this amenity space, that's really amenity during business hours, and then double down as a function space after business hours no weekend, so we're going to keep growing that business and growing the team.

<unk>.

Eventually it should become a line item on the <unk>.

On the on the on the budget.

<unk>.

Its relevance I could see it growing substantially.

<unk> alone.

Our one restaurant.

Is is going to be meaningfully is expected to be meaningfully profitable in 2022, which in less than a year of open is quite a statement.

Alright, Thanks, a lot for that I appreciate it.

Our next question coming from the line of Derek Johnston with Deutsche Bank. Your line is open.

Yes.

Okay.

Eric.

All right, we're going to try and pick up the pace here because for example industry and I think we still have one or two more questions.

Operator operating go to the next and Derek can jump back in if you correlate all Matt yes.

<unk>.

Our next question coming from the line of Ronald Camden with Morgan Stanley . Your line is open.

Hey, two quick ones from me just to update on one Madison and sort of the leasing activity trying to get an anchor there.

Any update there would be great.

Well as we said at Investor Conference, we've heard a lot of.

Very very strong.

Interest from prospective tenants, we are in advanced dialogue with with a couple.

We'll see how it unfolds, but.

I would say I think mark would agree that the pace of our.

Discussions with tenants.

At this point in time of that development far exceeds the level of activity that we were experiencing at one Vanderbilt.

At a similar moment in time, so we're we're emboldened by that and optimistic.

Theres nothing really specific that we are ready to report yet but.

And I hope to have more to talk about later this year.

Great and then sorry. The second question is just relating to co working space just given the experience we've had over the past two years and talking to clients talking to tenants.

The company's views changed on on that business business model.

And is this something that you would consider.

We have a <unk>.

Vision called emerge to one two of its been operating for about 20 years.

On the co working environment so.

We introduced the ultra suites at one Vanderbilt thats been a huge success, that's fully furnished shorter term occupancy suites upstairs we've leased.

<unk>.

He is out on the third and there'll be one remaining shortly so.

All of this has been a huge success I think we are fans of co working where we build it we operated we manager, which we do a lot of.

And third party co working.

Never a big priority for us and I would say that.

Sentiment existence continues.

Great. Thank you.

Our next question coming from the line of Nick <unk> with Scotiabank. Your line is open.

Thanks, So I was just hoping to get some more info on on page 29 of the Sup, where you give the occupancy versus the leased occupancy is it possible to get the leased occupancy number for the consolidated same store portfolio, where it is showing a period that you have more vacancy than the rest of the portfolio.

Sure.

It probably is but I haven't done that math so no.

Okay, I mean, I guess I'm, just trying to figure out here I mean, it's the bulk of your vacancy is in the consolidated portfolio.

Certain assets that look.

Under occupied versus history, I mean <unk>.

Kevin Gray Bar Avenue, the Americas right, where.

Your overall vacancy showing up here is very similar to the overall market.

Just kind of how youre thinking about those buildings competing and how much occupancy uplift.

For those lower.

Occupancy buildings is built into your guidance for the year.

I will say with specific specificity to those buildings I can't tell you, but there are obviously part of the.

101 hundred plus basis point occupancy pick up in its 130 basis point occupancy pickup we're expecting for 'twenty two.

Those are traditionally buildings that operate at a much higher occupancy level and they are headed that direction.

So.

Thank you.

I guess, what I'm asking.

Thank you.

You're saying they are heading in that direction theyre not its not showing up on the occupancy page so thats right Nick.

Looking for the leisure number if you had if there was any added occupancy lift up those buildings that we can't see because it's not on that page right. Nick it's hard to generalize amongst every building has its own DNA Gray bar, you mentioned as a high occupancy building well.

Guess, what we moved out of Grey bar, we will know that just 10, we were 100 feet. We were 100000 foot tenant in a building thats made up of.

2500 square foot tenants. So yes, we moved out this year.

We left in.

In 2021, we'd left in March I think if I recall, so we left a.

Gaping hole isn't that.

It is great but.

I don't extrapolate Gray bar is a wonderful building with a lot of activity and we're back filling our space in <unk>.

And other space and it will be back into the nineties I assume I don't have that say I don't have a number of product I got to believe that buildings back in the Ninety's This year great buildings.

It's a little bit more specific two things happening in the property at that point in time.

Certainly couldnt generalized well consolidated properties have high vacancy JV properties have low vacancy it ebbs and flows we've had.

<unk> properties last one Vanderbilt was a JV property that was bone MTS as one Madison and those will go to.

Fully leased one now one in the future.

What were some of the other ones you mentioned besides graybar eight seven really 10 sentence, we had that.

I mentioned, we had a conference center that we had a full floor conference center that blew out during pandemic pandemic was very tough.

On the conference centers, because there was nobody to convene in the conference Center. So we took it back and now we're in the process of doing some very modest upgrades to that and then.

Turning around and either re letting it or putting under a management contract and it will become profitable so.

Theres not this portfolio the properties, we own are all excellent buildings leasable buildings that were making better through in some cases through targeted amenity improvement and we're going to increase our occupancy overall too. We think what was the project 90 394.

<unk> <unk> three.

3% 130 basis points, so that would certainly be a lot better than the market. The market is nowhere near at 5% to 6%. If the market was 5% to 6% vacancy I mean wow, we'd be in Unbilled position. So this portfolio will be.

Our that's our.

Sure.

Our goal for our investors this year, we wouldn't put it out there if we didn't think we'd get there.

And we'll get there, but I wouldn't draw.

Broadbrush conclusions based on any moment in time vacancy in any particular asset.

I mean, I guess my point was just that if you had activity in those buildings that would be helpful to know kind of what the lease number is in those buildings. Because if you look at this page you just see a lot of occupancy loss in those buildings in the last year and I'd say, it's a lease number what do you mean by the lease like at least it sounds like that you asked.

As the only number you like talking about which is the least the leased occupancy number rather you show a commenced occupancy number for these buildings and my point was that if you have any way to give a leased number for these buildings will be interesting, we'd understand sort of how much leasing activity. There then that's embedded already in those.

<unk>, that's not showing up in the in this page.

I don't think it would matter much which is why we don't put it out there so never heard or would you say, let us let us let us I.

I understand what you're saying if it's if it's the lag time between lease and commencement.

Let us.

Looking at it but when we give that lease number and know that they will all commence so we are 93% leased as we sit here today period. Your point is well I don't know which buildings those leases are in I guess, let's say haven't commenced so let us let us.

Let us digest that.

Alright, thanks, everyone. Appreciate it okay alright.

Okay any more questions operator.

Terrific we will.

Get right back to work and look forward to speaking to everybody in three months. Thank you.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.