Q3 2023 Alexander's Inc Earnings Call

Yeah.

Yeah.

Good morning, and welcome to the Vornado Realty Trust third quarter 2023 earnings call.

My name is Rocco and I will be your operator for today's call.

This call is being recorded for replay purposes.

All lines are in a listen only mode.

Our speakers will address your questions at the end of the presentation during the question and answer session.

At that time. Please press Star then one on your Touchtone phone.

Now I will turn the call over to Mr. Steve Bernstein, Senior Vice President and Corporate Corporation Counsel. Please go ahead welcome to Vornado Realty Trust third quarter earnings call yesterday afternoon, we issued our third quarter earnings release and filed our quarterly report on Form 10-Q, with the Securities and Exchange Commission. These docs.

And so as well as our supplemental financial information packages are available on our website www dot <unk> dot com under the Investor Relations section in these documents and during today's call. We will discuss certain non-GAAP financial measures reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release form.

10-Q, and financial supplement please be aware that statements made during this call maybe deemed forward looking statements and actual results may differ materially from these statements due to a variety of risks uncertainties and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended.

At December 31, 2022 for more information regarding these risks and uncertainties.

All may include time sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward looking statements on the call today from managed ran for our opening comments are Steven Roth, Chairman and Chief Executive Officer, and Michael Franco President and Chief Financial Officer, Our senior team is also.

And available for questions I will now turn the call over to Steven Roth.

Thank you, Steve and good morning, everyone.

Yes.

I begin by joining with the citizens of the free world by saying that we are shocked and saddened by the now two wars in Ukraine and Gaza.

The loss of life and destruction is heartbreaking, but the importance of the outcome of these hostilities to our way of life cannot be overestimated.

The president of the United States issued an elegant simple one word warning to potential combatants don't.

Domestically, we support Marc Rowan at his fight to right the wrong at the University of Pennsylvania.

A great many American college campuses have similar issues.

The economy has held up better than expected in the face of the federal Reserve's historic interest rate increases, but make no mistake in the end the fed will slow the economy and we will win it's battle against inflation.

Real estate capital markets remained challenged read frozen, making it extremely difficult to finance or sell assets capital is scarce and back breaking Lee expensive.

While the circumstances will cause pain in the short term they lay the foundation for a recovery in fundamentals and values in the future. The direct byproduct that the lack of availability of out of sight high cost of financing is that will shut down almost all new building it.

If history as our guide as demand recovers the market will tighten and class a rents will add values will benefit enormously.

We have seen this movie before.

Despite the difficult markets, our business continues to perform well and on plan for the year, Michael will cover the math I'd give color in a moment.

As we enter the fourth quarter. We are excited that the construction phase of pen two is nearing completion as expected tenant interest is picking up in this unique redevelopment as we get closer to delivery over the next several quarters, we will launch many new food and beverage offerings in the Penn District, and will open a new three <unk>.

<unk> public Plaza on 30, <unk> Street, all of which will significantly enhance the tenant experience.

Demolition of hotel, Pennsylvania is now complete.

Our focus now is on leasing, especially at one and two and the remainder of the faulty retail all of which will drive our near term growth.

And we remain focused on protecting our balance sheet and pushing out maturities.

In the current events category three weeks ago Workman Wegmans opened the 90000 square foot supermarket in the West village and our 770 Broadway property. This is their first store in Manhattan, and new Yorkers are appreciating their unique offering crowding the store with lines around the block it's a terrific success.

In August we contributed our pier 94 leasehold to a joint venture with our partners Hudson Pacific and Blackstone and in return, we will own 50% of the venture this will be the best studio facility in New York City, and the only purpose built one in Manhattan.

We appreciate the mayors and New York City EDC support in completing this important private public partnership we broke ground last week and expect to deliver the project by the fourth quarter of 2025, we believe in the project's potential and expected to generate.

At least a very attractive 10% incremental cash yield on our investment.

To conclude as I've said before we believe in the Great American cities and especially in New York, We believe that the future of work will principally be in the office I can't imagine millions of American office workers working at home alone at that gets at the tables.

We observed in New York City is back usage at our office buildings is now 65% you can feel the energy if you walk the streets and standard our lobbies the restaurants and stores are packed and our buildings are pretty much back to normal Monday through Thursday.

The key is that talent wants to be here. It remains the number one city for college graduates from practically every region of the country.

Now to Michael to cover our financials in the markets.

Thank you, Steve and good morning, everyone.

The financial results for the quarter were down from last year due to items that we previously forecasted our core office and retail businesses continued to remain resilient with long term credit leases.

Third quarter comparable <unk> as adjusted was <unk> 66 per share compared to 81 for last year's third quarter, a decrease of 15.

This decrease was driven primarily by the following items.

<unk> from the one time real estate tax accrual adjustment recorded the Mark in Q3 2022.

<unk> <unk> from higher net interest experience from increased rates.

<unk> from additional stock compensation expense related to the compensation plan implemented in June 2023.

<unk> of other items, primarily lower <unk> from sold properties, we have provided a quarter over quarter bridge in our earnings release and in our financial supplement.

Despite the challenging environment, our outlook for comparable <unk> for 2023, Hasnt changed since the beginning of the year other than the additional G&A expense that we discussed on last quarter's earnings call related to the share based awards granted in June.

New York Office same store cash NOI for the quarter was up a healthy 3% and our New York business overall was up two 1%.

Now turning to the leasing markets.

Manhattan continues to lead the charge nationally in the office sector.

New York City private sector job growth outpaced the national average and Manhattan leasing volume was a healthy $6 5 million square feet. This quarter, driven by large headquarters leases in Midtown and downtown aside of tenants committing long term to the city.

The fire sector continues to lead the leasing volume accounting for 31% of third quarter activity with the government and professional services sectors close behind at 22% each.

Leasing velocity continues to remain steady concentrated in small to medium sized leases.

Focusing on our portfolio during the third quarter, we completed 17 leases totaling 236000 square feet at average starting rents of over $93 per square foot highlighted by a new 101000 square foot lease with law firms cylinder gay at 12 90 Avenue, the Americas, where we are.

Very strong activity.

Overall through the first three quarters of the year, we have signed one 3 million square feet of leases at an industry, leading $98 per square foot, starting rent, notably 65% of these leases have starting rents over $100 per square foot representing more than a third of all triple digit leases done in the market. This year.

Operator: My name is Rocco and I will be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen only mode.

We consistently performed well above our market share here, reflecting the best in class nature of our portfolio.

As we have said for the past several quarters and as the stats continue to bear out there is a clear trend with tenants demanding space in the better buildings around the two main transit hubs in the city, which is where our portfolio is situated.

Operator: Our speakers will address your questions at the end of the presentation during the question and intercession. At that time, please press star then one on your touchtone phone.

Steven Borenstein: Now I will turn the call over to Mr. Steve Borenstein. Senior Vice President and Corporation Council. Please go ahead.

Despite market wide class a vacancy being in the high teens. The best Submarkets are at equilibrium, which is why youre seeing rents trend up here.

Steve Borenstein: Welcome to Vornado Realty Trust third quarter earnings call. Yesterday afternoon, we issued our third quarter earnings relief and filed our quarterly report on form 10Q with the Securities and Exchange Commission. These documents as well as our supplemental financial information packages are available on our website, www.vono.com, under the Investor Relations section. In these documents and during today's call, we will discuss certain non-gap financial measures. Reconciliation of these measures to the most directly comparable gap measures are included in our earnings release, form 10Q and financial supplements.

And as the delivery of new supply is slowing existing high quality assets become a focus of demand, allowing these assets to push pricing a recently signed leases and pipeline of future leases at 12, 90 Avenue, the Americas, and 280 Park Avenue and in Pan reflect these dynamics.

Heading into the fourth quarter, our current pipeline remains strong at one 8 million square feet.

This includes 750000 square feet and four deals expected to close in the fourth quarter, which would put us over 2 million square feet for the year consistent with our historical activity.

Steve Borenstein: Please be aware that statements made during this call may be deemed forward-looking statements and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors. Please refer to our filing with the Securities and Exchange Commission, including our annual report on form 10K for the year ended December 31, 2021. The call may include time-sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward-looking statements.

The pipeline consists of a healthy mix.

With tenants across a wide variety of buildings in our portfolio.

In Chicago at the Mart, while the market remains challenging we completed 68000 square feet of leases during the quarter at $55 per square foot average starting rents and have a solid pipeline of 400000 square feet, including two leases in negotiation totaling 100000 square feet.

Our new amenity package has generated very positive interest in the marketplace and increased leasing activity.

Steve Borenstein: On the call today from management for our opening comments are Stephen Roth, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions.

We're also benefiting from the fact that we are a strong sponsor and have no debt on the asset and many of our competitor buildings are dealing with financial stress.

Stephen Roth: I will now turn the call over to Stephen Roth. Thank you, Stephen.

Turning to retail we said a few quarters ago that retail had bottomed and the recent stats published support this with vacancies dropping in asking rents increasing year over year in most submarkets. This recovery is being driven by tourism in the city and retailer sales rebounding back to pre pandemic levels.

Stephen Roth: Good morning, everyone. I begin by joining with the citizens of the free world by saying that we are shot and saddened by the now two wars in Ukraine and Gaza. The loss of life and destruction is heartbreaking, but the importance of the outcome of these hostilities to our way of life cannot be overestimated. The President of the United States issued an elegant, simple one-word warning to potential combatants don't. Domestically, we support Mark Rowan in his fight to write the wrongs at the University of Pennsylvania.

And our portfolio, we have seen a noticeable pickup in our leasing activity over the past three or four months with almost all our assets seeing tenant interest, especially on fifth Avenue and times square and independent district.

We have a healthy pipeline with many leases currently in negotiation during the third quarter, we signed leases totaling 29000 square feet at a positive 33, 5% cash mark to market.

Stephen Roth: A great many American college campuses have similar issues. The economy has held up better than expected in the face of the Federal Reserve's historic interest rate increases, but make no mistake. In the end, the Fed will slow the economy and will win its battle against inflation. Real estate capital markets remain challenged, lead frozen, making it extremely difficult to finance or sell assets. Capital is scarce and back-breakingly expensive. While these circumstances will cause pain in the short term, they lay the foundation for a recovery in fundamentals and values in the future. If history is our guide, as the man recovers, the market will tighten, and class A rents and values will benefit enormously. We have seen this movie before.

Turning to capital markets now the financing markets remain quite difficult, particularly for office driven by the volatility from the fed sharp rate increases and pressure on the banks to reduce their office exposure.

Even in this difficult time, we remain in good shape, we have no significant maturities until mid 2024 and are actively working with our lenders to push out the maturities on our loans, which mature in 2024 and beyond.

In this regard we are pleased to welcome Jason Kirshner is our new head of capital markets. Jason is a well known trusted industry colleague with all of our banks and he is off to a great start.

As always we continue to remain focused on maintaining balance sheet strength. Our current liquidity is a strong $3 2 billion, including $1 $3 billion of cash and restricted cash and $1 9 billion Undrawn under our $2 5 billion revolving credit facilities.

Stephen Roth: Despite the difficult markets, our business continues to perform well and on plan for the year.

Lastly, kudos to our sustainability team, which continues to position us at the head of the class in the industry. We just received <unk> Green Star distinction for the 11th time in <unk> five star rating.

Stephen Roth: Michael will cover the math and give color in a moment. As we enter the fourth quarter, we are excited that the construction phase of pen two is nearing completion. As expected, tenant interest is picking up in this unique redevelopment as we get closer to delivery.

With that I'll turn it over to the operator for Q&A.

Thank you we will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

Stephen Roth: Over the next several quarters, we will launch many new food and beverage offerings in the pen district, and we'll open a new three-line public plaza on 33rd street, all of which will significantly enhance the tenant experience. Demolition of hotel Pennsylvania is now complete. Our focus now is on leasing, especially pen one, pen two, and the remainder of the folly retail, all of which will drive our near-term growth. And we remain focused on protecting our balance sheet and pushing out maturities.

If you would like to remove yourself from queue. Please press Star then two.

Today's first question comes from Steve <unk> with Evercore ISI. Please go ahead.

Thanks, Good morning, Michael or maybe Glen could you just expand a little bit on the New York City leasing pipeline as it relates to both the existing portfolio I know you've got a fair amount of square footage coming due in Q4, but also.

As Steve talked about Penn two is nearing completion and just how does the pipeline break out between the existing assets and the development.

Stephen Roth: In the current events category, three weeks ago, Wegmans opened the 90,000 square foot supermarket in the West Village at our 770 Broadway property. This is their first store in Manhattan, and New Yorkers are appreciating their unique offering, crowding the store with lines around the block.

Hi, Steve, It's Glenn and good morning.

So pipeline overall were <unk>.

Squarely attacking the current vacancies.

On pad one focused on the upcoming tend to focus on exploration 2425 coming up.

Stephen Roth: It's a terrific success.

We have as Michael mentioned in the in the <unk>.

Stephen Roth: In August, we contributed our PM 94 leasehold to a joint venture with our partners Hudson Pacific and Blackstone. And in return, we'll own 50% of the venture.

Script.

Their remarks, many of our leases are pinpointed on that expiring space coming up in the next two years.

A good majority of it is in pet.

Stephen Roth: This will be the best studio facility in New York City, and the only purpose built one in Manhattan. We appreciate the mayors and New York City EDC support in completing this important private public partnership. We broke ground last week and expected to live in the project by the fourth quarter of 2025. We believe in the project's potential and expected to generate at least a very attractive 10% incremental cash yield on our investment.

Think about the <unk> story, we said two years ago, it's going to be a chapter by chapter lease up program, which is exactly what's happening.

So over that period of time, we've leased two 5 million feet in.

Independent district at starting rents of $94 a foot.

It comprises mainly of poorly handle Logan Penn one and Penn two next activity has strengthened markedly since our last call projects opening up in about 30 days or so we have proposals, which we're working on as we sit here on this call on the receptions excellent.

Stephen Roth: To conclude, as I said before, we believe in the great American cities and especially New York. We believe that the future of work will principally be in the office. I can't imagine millions of American office workers working at home alone at their kitchen tables.

And I think the best part of the news for US is every tenant who's now Torry is also touring all the new buildings to the west of US. So our plan all along was that.

Stephen Roth: We observed that New York City is back. Usage in our office buildings is now 65%. You can feel the energy if you walk the streets and stand in our lobbies. The restaurants and stores are packed and our buildings are pretty much back to normal Monday through Thursday. The key is that talent wants to be here. It remains the number one city for college graduates from practically every region of the country.

Compete with those guys and we certainly are at this point and as the new F&B programs open as the public Plaza opens and the neighborhood begin to more and more floors for us the actions only going to get better.

Michael Franco: Now to Michael to cover our financials and the markets.

Great. Thanks, maybe Steve or Michael could you just maybe touch on the dividend and the share repurchase program. It didn't seem like you were that active in the quarter I'm not sure if the economic uncertainty and fed tightening is keeping you on pause there, but just any thoughts as we're getting.

Michael Franco: Thank you, Steve, and good morning, everyone. The financial results for the quarter were down from last year due to items that we previously forecasted. Our core office and retail businesses continue to remain resilient with long-term credit leases. Third quarter comparable FFO as adjusted was 66 cents per share compared to 81 cents for last year's third. Recorder, a decrease of 15 cents. This decrease was driven primarily by the following items. Six cents from the one-time real estate tax accrual adjustment recorded at the mark in Q3 2022.

To the end of the year her on the taxable income to dividend and share buybacks. Thanks.

You get a pencil so.

Here's what our projections off of that.

Income and.

The dividends.

We're expecting our <unk> this year to come in at about $2 55.

Michael Franco: Four cents from higher net interest experience from increased rates. Three cents from additional stock compensation expense related to the compensation plan implemented in June 2023. And two cents of other items, primarily lower FFO from sold properties. We have provided a quarter over a quarter bridge in our earnings release and in our financial supplement. Despite the challenging environment, our outlook for comparable FFO for 2023 hasn't changed since the beginning of the year, other than the additional GNA expense that we discussed on last quarter's earnings call, related to the share-based awards granted in June.

We're expecting our recurring taxable income coming in at 68.

Now thats reduced from.

<unk> reduced by accounting treatment of how we depreciate our assets from $1 13, so recurring taxable income is going to be about $1 13 at after the accounting.

Counting treatment.

How we depreciate our assets it'll be 68 sets. We paid 30 pardon me, we paid 37 five cents in the first quarter in cash.

So that would leave about 30.

Michael Franco: Our New York office, same-store cash and NOI for the quarter, was up a healthy 3 percent and our New York business overall was up 2.1 percent.

Sure.

The fourth quarter to true up the entire year.

Michael Franco: Now turning to leasing markets. Manhattan continues to lead the charge nationally in the office sector. New York City private sector job growth outpaced the national average and Manhattan leasing volume was a healthy 6.5 million square feet this quarter driven by large headquarters leases in Midtown and Downtown, a side of tenants committing long-term to the city. The fire sector continues to lead the leasing volume accounting for 31 percent of third quarter activity, with the government and professional services sectors close behind at 22 percent each.

So we expect to pay out somewhere between.

30, <unk> <unk>.

Probably in cash.

In the fourth quarter.

That's the dividend with respect to us.

Buybacks.

Everybody knows I'm fairly optimistic.

Fairly opportunistic.

So we have a 200 million authorization.

What how much Tom $30 million $30 million, we have $170 million to go we will.

Depending upon the price of the stock et cetera.

Michael Franco: Leasing velocity continues to remain steady, concentrated and small to medium-sized leases. Focusing on our portfolio, during the third quarter we completed 17 leases totaling 236,000 square feet at average starting rate of over 93 dollars per square foot. Highlighted by a new 101,000 square foot lease with law firm Selendee Gay at 1290 Avenue the Americas, where we are seeing very strong activity. Overall through the first three quarters of the year we have signed 1.3 million square feet of an industry leading 98 dollars per square foot starting rent.

Accomplish that and some some time in the short future now remember one thing.

And the buyback program, we are trying to benefit not the selling shareholder but the.

The remaining shareholders.

So.

I Trust that answers your question.

Great and just one more just Michael you sort of touched on the challenging debt markets and just as you think about your exploration.

On the mortgage side for next year.

I guess, how far in front of those refinancings can you get with the banks and you.

Michael Franco: Notably, 65 percent of these leases have starting rents over 100 dollars per square foot, representing more than a third of all triple digit leases done in the market this year. We consistently perform well above our market share here, reflecting the best in class nature of our portfolio.

Is there any sense on where pricing is today for a refinancing existing mortgages.

And I'll stay as I as I said I think on last quarter's call.

The existing lenders the best landed right there is a.

Michael Franco: As we have said for the past several quarters and as the stats continue to pair out, there's a clear trend with tenants demanding space in federal buildings around the two main transit hubs in the city, which is where our portfolio is situated. Despite market-wide class A vacancy being in the high teens, the best submarkets are at equilibrium, which is why you're seeing rent trend up here. And as the delivery of new supply is slowing, existing high-quality assets become the focus of demand allowing these assets to push pricing.

Maybe the only lender right there is a lack of capital for.

For real estate generally and even more so for office right now.

Actually it's in the U S banks, particularly around or so.

It's.

Difficult if not impossible to refinance most assets the.

The lenders recognize that the service is recognize that.

So.

And so in every situation depending on.

The maturity right, we start discussions with our with our Counterparties there.

Michael Franco: A recently signed leases and pipeline of future leases at 1290 avenue the Americas and 280 park avenue and in pen reflect these dynamics. Getting into the fourth quarter, our current pipeline remains strong at 1.8 million square feet. This includes 750,000 square feet and four deals expected to close in the fourth quarter, which would put us over two million square feet for the year, consistent with our historical activity. The pipeline consists of a healthy mix of tenants across a wide variety of buildings in our portfolio.

I think the the banks the Servicers start with how do I have the right sponsor will have somebody who I think is going to ease.

Either maintain or add value during this difficult time and getting into the other side and obviously.

Given our track record.

That answer is an affirmative one always so.

We've done a number of extensions over the last couple of quarters. We are working on the 24 maturity is now even some of the ones beyond in 'twenty five 'twenty six.

Michael Franco: In Chicago at the Mard, while the market remains challenging, we completed 68,000 square feet of leases during the quarter, at $55 per square foot average starting rents, and have a solid pipeline of 400,000 square feet, including two leases in negotiation, totaling 100,000 square feet. Our new amenity package has generated very positive interest in the marketplace and increased leasing activity. We're also benefiting from the fact that we are a strong sponsor and have no debt on the asset, and many of our competitor buildings are dealing with financial stress.

And each one is bespoke right I think in general we don't really want to have band aid solutions, we want to have term, we'd like to get at least three to five years.

On each extension.

We are prepared if the economic arrangement is fair and balanced we're prepared to support the asset whether that's through a paydown or.

Investing capital.

The building or maintain leasing.

But it's really a bespoke situation by situation, but you can rest assured that literally every loan that's maturing in the next couple of years, we are in active discussion with our with our lending counterparties. They appreciate that and.

Michael Franco: Turning to retail, we set a few quarters ago that retail had bottom, and the recent stats published support this, with vacancies dropping and asking rents increasing year over year in most submarkets. This recovery is being driven by tourism in the city and retailer sales rebounding back to pre-pandemic levels.

We will generally work through those but again most of those are the lion's share of our non recourse and they recognize that as well so.

We collectively have to work through a appropriate solution and as we've done to date I think we will in the vast majority.

Michael Franco: In our portfolio, we have seen a noticeable pickup in our leasing activity over the past three or four months, with almost all our assets seeing tenant interest, especially on Fifth Avenue and in Times Square and in the Penn District. We have a healthy pipeline with many leases currently in negotiation. During the third quarter, we signed eight leases totaling 29,000 square feet at a positive 33.5% cash mark to market.

Thank you and our next question today comes from <unk> <unk> with Bofa. Please.

Please go ahead.

Good morning, just following up on the lines of questioning.

Around the balance sheet can you update on us on your latest thoughts around this interest rate environment. How do you think about your revolver now that Scott. It's spreads are tighter than some of the longer term that you can raise.

Michael Franco: Turning to capital markets now, the financing markets remain quite difficult, particularly for office, driven by the volatility from the Fed's sharp rate increases and pressure on the banks to reduce their office exposure. Even in this difficult time, we remain in good shape. We have no significant maturities until mid-2024, and are actively working with our lenders to push out the maturities on our loans, which mature in 2024 and beyond.

Good morning can we help you try in terms of using our revolver.

Yes, yes.

Yes.

We're not we're not interest rates seers. If we were we wouldn't be doing the jobs are currently doing I'm not sure anybody has an interest rates here by the way but.

All we can do is frankly be respectful of the forward curve and budget our business based on that with some conservatism built in so.

Michael Franco: In this regard, we are pleased to welcome Jason Kirschner as our new head of capital markets. Jason is a well-known trusted industry colleague with all of our banks, and he's off to a great start.

That's our our cash plan is model.

And I think you know our company we've always.

Managed our business with a healthier cash balance than.

Michael Franco: As always, we contain remain focused on maintaining balance sheet strength. Our current liquidity is a strong $3.2 billion, including $1.3 billion of cash and restricted cash and $1.9 billion undrawn under our $2.5 billion revolving credit facilities.

Almost every other company is certainly in our sector.

And I think that serves us well right now it gives us flexibility to deal with their bonds or anything else that comes up.

We are building pan out of cash as you know so.

It appears like the fed is done or close to done doesn't mean that rates are going to come down in the next year.

Michael Franco: Lastly, kudos to our sustainability team, which continues to position us at the head of the class in the industry.

Eventually we think they will but we have to continue operate our business with rates staying at these levels. So.

Michael Franco: We just received Gresb's green star distinction for the 11th time in Gresb's 5 star rating.

We're fortunate we have the cash balance you're right. We do have two revolvers.

Operator: With that, I'll turn it over to the operator for Q&A. Thank you. Well, now to get into question and answer session.

It gives us flexibility in how we do things and so that's clearly one of the tools that we can use we will use to the extent we need to whether it's dealing with the 2025 bonds. Although we've got two or three other options other than using the revolver there.

Operator: To ask a question, you may press star than one on your telephone keypad. If you'd like to remove yourself from Q, please press star than two.

Steve Sackwell: Today's first question comes from Steve Sackwell with every core ISI. Please go ahead. Thanks. Good morning. Michael, or maybe Glenn, could you just expand a little bit on the New York City leasing pipeline? Is it related to both the existing portfolio? I know you've got a fair amount of square footage coming to Q4, but also, as Steve talked about, you know, PEN2's nearing completion, and just had us a pipeline break out between the existing assets and the development.

And dealing with any other any other maturities that come up in general our plan is not to use a lot of our revolver capacity to deal with our secured financings.

Dealt with one by one we're going to deploy capital very judiciously on secured assets and their overall are there I would say is more as a backstop for <unk>.

Dealing with the unsecured bonds to the extent that there's not a better alternative that we see.

Glen Weiss: David's Glen, good morning. So pipeline overall work, you know, squarely attacking the current vacancies, you know, focused on pen-1, focused on the upcoming pen-2, focused on operations 24-25 coming up. We have, as Michael mentioned in the script, there marks many of our leases are pinpointed on that expiring space coming up in the next two years. A good majority of it is in pen. So if you think about the pen story, you know, we said two and a half years ago, it's going to be a chapter by chapter lease up program, which is exactly what's happening.

That's helpful color and specifically around the swaps and caps you have expiring next year will you be letting those roll and how should we think about the potential headwinds are.

Related to that.

Yeah.

Look.

I think we've done a pretty good job of hedging over the last couple of years, we weren't perfect, but I think we've done a good job if you look at the.

The fair value of our hedges right now I think it's roughly 300 million. So that tells you we're quite a bit in the money.

I guess unfortunately.

But we've done a good job of hedging.

That being said you can hedge away maturity risk right and so the loans roll.

Glen Weiss: So over that period of time, we've leased two and a half million feet in the pen district, it's throwing rents of 94 to all the foot, which comprises mainly of farly pen-11 and pen-1 and pen-2's next. Activity has strengthened market leaks since our last call. Projects opening up in about 30 days or so. We have proposals which we're working on as we sit here on this call on the reception excellent. And I think the best part of the news for us is every tenant who's now touring is also touring all the new buildings to the west of us.

Until we figure out what the plan for those assets are.

Difficult to hedge rates offsetting slowing in making various effects and therefore.

We don't need to enroll that hedging, but youre exposed on what the interest rate is when you actually do more so.

The answer is we have some exposure on some expiring or maturing loans.

There.

Camps or swaps are at a lower rate than the in place silver right.

And then we've got a couple of loans, where the swaps five.

For example, we put in place another swap.

Glen Weiss: So our plan all along was to, you know, compete with those guys and we certainly are at this point. And as these new F&B programs open as the public plaza opens and the neighborhood begins to more and more floors for us, the actions are only going to get better.

On that asset that is at a higher level than the existing one so we'll have some leakage we think in 2024 from.

Steve Sackwell: Great, thanks.

Those loans that are rolling over in a couple of those swaps that are that are expiring, but we will replace those we will continue to hedge our portfolio.

But.

Given rates have moved up.

When you move from one edge to the next there'll be some leakage on.

Steve Sackwell: Maybe Steve or Michael, could you just maybe touch on the dividend and the share repurchase program. It didn't seem like you were that active in the quarter. I'm not sure if the economic uncertainty and fed tightening is keeping you on pause there.

Three or four assets.

Okay. Thank you Michael and for my last question switching gears can you talk to the sublease activity you're seeing across the portfolio.

Or has it changed since a year ago and.

Michael Franco: But just any thoughts as we're getting to the end of the year, or on the taxable income, the dividend and share bye-bye, thanks. Steve, get a pencil. So here's where our projections are for the income and the dividend. We're expecting our FFO this year to come in about 255. We're expecting our recurring taxable income to come at 68 cents. Now that's reduced by a counting treatment of how we depreciate our assets from $1.13.

How does it compare by region. Thank you.

Okay.

Hi, Glenn.

Our New York portfolio, I'd say the color Hasnt changed much since last year in terms of the spaces that are on the market in our portfolio from a sublease basis.

<unk> some of it has been fully leased or taken off the market.

For example, Pwc at 90 Park OLED spaces, our coal for.

I would say nothing really new to highlight over the 12 month period.

In Chicago, I think theres more sublease space in the market.

And the market generally and more specifically.

Michael Franco: So recurring taxable income is going to be about $1.13. And after the accounting treatment of how we depreciate our assets, it'll be 68 cents. We paid 37.5 cents in the first quarter in cash. So that would leave about 30 cents for the fourth quarter to true off the entire year. So we expect to pay out somewhere between $20.30 and $0.30, probably in cash in the fourth quarter.

And then San Francisco, the only tenant to note as Microsoft has announced that sub group of aerospace in RFID.

<unk> has a very long term nature left to it.

Was that just general color, but I think if you look at the statistics in New York specifically.

I think the numbers are generally on par with the year ago.

Thank you and our next question today comes from Michael Griffin with Citi. Please go ahead.

Great. Thanks, maybe just another question on leasing for Glenn are you modifying office user taking longer.

Michael Franco: Franco. That's the dividend. With respect to stock buybacks, you know, everybody knows I'm fairly optimistic. I'm fairly opportunistic. So we have a $200 million authorization. We've won how much, Tom, 30 million. We've won 30 May and we have 170 May and to go. We will, depending on the price of the stock, et cetera, accomplish that in some, you know, sometime in the short future. Now remember one thing, in the buyback program, we are trying to benefit not the selling shareholder, but the remaining shareholder. So I trust that answers your question, Steve. Great.

And it's about whether or not the lease space and then if you could update us on kind of where <unk> been trending in the market that would be great.

I think the concession ti's free rent stabilized.

Stabilized.

And as Michael said in our remarks, we're even seeing rents go up in certain buildings like a 280 Park 12 90 of pad one.

Thanks stabilizes the answer around the concessions.

So what was the other part of it remote users taking a longer I think generally right.

The processes are longer in terms of dealmaking from first toward assigning a we definitely longer than historic for sure yes.

That's helpful.

And then just on the dividend policy going forward in 2022, just given how it was handled in 2023 I'm curious if you can kind of update us on kind of any expectations on a go forward here as it relates to the dividend.

Michael Franco: And just one more, Michael, you sort of touched on the challenging debt markets and, you know, just as you think about your expiration on the mortgage side for next year, you know, I guess how, how in far in front of those refinancings can you get, you know, with the banks and, you know, is there any sense on where pricing is today for refinancing existing mortgages? You know, Steve, as I said, I think on last quarter's call, you know, the existing lender is the best lender, right?

Travis Your question Greg is about 2024, I think you said 29, I think you meant 2024.

Yes.

At this point, we don't really have any comment.

I think David gave you a pretty good outline of where we are at 2023 and on the environment is fluid.

As we said earlier this year, we don't know how asset sales could impact, but we have to do I think the same goes for next year.

Michael Franco: Then there's a, maybe the only lender, right? There's a lack of capital for real estate generally, and even more so for office right now, actually the US banks, particularly are under. So, you know, it's difficult, if not impossible to refinance most assets. The lenders recognize that, the services recognize that, and so, you know, and so in every situation depending on, you know, the maturity, right? We start discussions with our counter parties there.

So we will be it will be over the 2024 dividend and try to give a little bit more color as we get into 2024.

Alright, I think it was more sorry about this but I think it was more just with the expectation to pay quarterly or wait until the end of the year. If you can comment at all.

It's not impossible that we will wait till the end of the next year as we did this year.

Thank you and our next question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Michael Franco: And, you know, I think the banks, the services start with, you know, I have the right sponsor, I have somebody who I think is going to, you know, either maintain or add value during this difficult time and give me to the other side and obviously, you know, given our track record, you know, that answer is an affirmative one always. So, you know, I think, like we've done a number of extensions over the last couple quarters, we're working on the 24 maturity is now, even some of the ones beyond the 25, 26.

Hey.

Good morning, Good morning, Steve.

Thanks for your comments at the start of the call.

Appreciate it.

So two questions here.

The first is.

Politics, obviously has gotten pretty animated these days, especially around real estate.

Michael Franco: And each one is bespoke, right? I think in general, we don't really want to have at least three to five years on each extension, you know, we're prepared. If the economic arrangement is fair and balanced, you know, we're prepared to support the asset whether that's through a paydown or, you know, investing capital to lease up the building or maintain a leason. But it's really bespoke, you know, situation by situation. You can refer to sure that literally every loan that's maturing the next couple of years, we have an active discussion with our, with our lending counter parties.

One of your peers, just made a government higher but when you think back to like the Robert Moses era and like.

Jackie Kennedy saving Grand Central It seems like politics has always been pretty big in New York, So Steve given some of the headlines recently, especially around the Penn District would you say in your career the current era of political involvement with regard to development commercial development.

Change of zoning would you say, it's different now or this is really what new York has always been and it is just that we happen to be living in today versus had we been around in the 70% <unk> and before.

Alex that's a very esoteric question, let's say I think the times today are not very different at all from what the times had been over the last decades.

Michael Franco: They appreciate that and, you know, we'll generally work through those. But again, most of those are, the lion's share are non-recourse and they recognize that as well. So, you know, we collectively have to work to a appropriate solution. And as we've done today, I think we will. And the vastness.

Yes.

Unknown Executive: Jars.

All of this in the United States have always been interesting.

The growth of the cities in the United States as well.

Unknown Executive: Thank you.

<unk> always been.

It's fairly aggressive.

Both.

Cities wants to grow New York is in that category by the way.

Camille Bonnel: And our next question today comes from Camille Bonnel with BLA, please, you're around. Good morning, just following up on the lines of questioning around the balance sheet, can you update on us on your latest thoughts around this interest rate environment? How do you think about your revolver now that spreads or tighter than some of the longer term that you can raise? Morning, Camille, if you try to turn to using our revolver.

Okay and then the second question is.

A few years ago quite a few years ago, you guys announced an effort to trim G&A given the reduction in the size of the company.

With the different platform spinoffs et cetera, as we look at <unk>, it's about half the level that it was.

Eight or so years ago, but G&A is only down maybe 15%. So is there as you think about the prior question on the dividend for next year as you think about <unk>.

Camille Bonnel: Yes. Yeah, I mean, look, we're not interest rate seers. If we were, we wouldn't be doing the jobs we're currently doing. I'm not sure anybody is an interest rate seer by the way, but all we can do is, frankly, be respectful of the forward curve and budget our business based on that with some conservatism built in. So, you know, that's our cash plant is model. And, you know, I think you know, our commonly we've always managed our business with a healthier cash balance than, you know, almost every other company, certainly in our sector.

Increasing shareholder returns.

What's your perspective on.

On corporate overhead reduction as part of.

Boosting earnings and growing the dividend.

Alex Good morning, it's Michael.

Michael.

I think we were.

Maybe the only company in our sector and certainly in the industry.

I guess, it's almost three years ago now that did a major reduction.

And the height of the pandemic.

Difficult.

Camille Bonnel: And I think that serves us well right now gives us flexibility to deal with our bonds or any else that comes up. We're building up. There's like the Fed is done or close to done doesn't mean that rates are going to come down in the next year. Eventually we think they will, but, you know, we have to can operate our business with rates, you know, staying at these levels. So, we're fortunate we have the cash balance.

The reduction, but we did it it goes to a responsible decision in the company is.

Performed fine and frankly, we elevated some some young leaders that I think have done extraordinarily well hungrier than quite K. So I think we're pleased with what we did in retrospect you look we are constantly evaluating business both from a personnel standpoint from a <unk>.

Camille Bonnel: You're right. We do have two revolvers, which gives us flexibility on how we have things. And so, you know, that's clearly one of the tools that we can use. We will use the extent we need to, whether it's dealing with the 2025 bonds, although we've got, you know, two or three other options than using the revolver there. And, you know, in dealing with any other, any other maturities that come up. In general, you know, our plan is not to use a lot of our revolver capacity to deal with our secured plants.

Some standpoint, how do we do things more efficiently et cetera.

And we will do that as we as we enter year end here, but I don't see.

We made some major cuts personnel wise, you know and I think people have worked smarter more efficiently, etc. So I wouldn't wait by your print are looking for.

<unk> cuts there.

From an overall corporate G&A standpoint.

Tom and I in particular.

Camille Bonnel: You know, those are dealt with one by one. We're going to deploy capital very judiciously on secured assets. And the revolver there, I would say, is more as they backed up for dealing with the unsecured bonds, to the extent that there's not a better alternative that we see. That's helpful, Collar. And specifically around the swaps and caps, you have expiring next year. Will you be letting those roll? And how should we think about the potential headwind related to that?

We will look at that all the time and we're doing some things around the edges to help and we'll continue to do it but.

I don't think its going to be dramatic I think I think we're I think we're actually quite efficient.

And yes, the earnings are down some for a variety of reasons, but I think the business is not a lot of fat here Alex.

Okay listen thank you.

I'd like to.

I'll just add one other thing another senior team has kept their comps flat for the last four or five years.

We obviously, Joe and Dave are tired. So I think we've taken a lot of steps and I think.

Camille Bonnel: Yeah, yeah. Look, you know, I think we've done a pretty good job of hedging over the last, you know, a couple of years. We weren't perfect, but I think we've done a good job. You know, if you look at the, you know, the fair value of our hedges right now, I think it's roughly 300 million. So that tells you we're, we're, you know, quite a bit in the money, I guess, unfortunately.

We were all major shareholders, it's a big part of our network if not the largest and we act like owners and we run the business that way.

Thank you.

Alex you'll know.

Camille Bonnel: But, you know, it means we've done a good job of hedging. You know, that being said, you can't hedge away maturity risk, right? And so it loans roll, you know, until we figure out what the plan for those assets are difficult to hedge, right? So if something's floating and we can wear the fixed, and therefore, you know, we don't need to overrule that hedge, but you're exposed on what the interest rate is when you actually do.

That.

Overhead does not go down in proportion.

With a business which is reducing.

It's much more efficient to grow than it is to reduce.

So we acknowledge that our.

G&A has not gone down.

<unk>.

Top line of our business.

<unk>.

Looking at it.

Camille Bonnel: So, you know, we, the answer is we have some exposure on some expiring or maturing loans where, you know, the, the camps or swaps are at lower rate than the in place soper rate. And then we've got a couple of loans where the swaps, you know, five by five, for example, you know, we put in place another swap on that asset that, you know, is at a higher level than the 50 one.

But there are.

We believe we have a fairly efficient operation, but youre correct about the ratio.

Thank you and our next question today comes from doing Brzezinski with Green Street. Please go ahead.

Hi, guys. Thanks for taking the question.

I guess and I appreciate your comments on sort of the challenging capital markets environment, especially for office, but I guess, just as you think about the portfolio and the capital allocation game plan moving forward is it your sense that youll continue to try and take advantage of potential disposition opportunities in near future.

Camille Bonnel: So, you know, we'll have some leakage we think in 2024 from, you know, those loans that are rolling over in a couple of those swaps that are that are falling to expiring, but we will replace this. We will continue to hedge our portfolio, but, you know, given rates have moved up when you, when you move from one hedge to the next, will be some leakage on, on, you know, period four assets.

Good morning, Don.

The answer is yes.

We are we obviously sold some things over the course of the year, we're working on some other things right now.

Michael Franco: Okay, thank you, Michael.

Camille Bonnel: And for my last question, switching gears a bit, can you talk to the subway activity you're seeing across the portfolio? How has it changed since a year ago, and how does it compare by region? Thank you.

I would say theyre more bilateral and broadly marketed opportunities because we think thats a smarter way to try to execute in this environment. So we have a handful of things that we're working on I'm not going to sit here and promise that any of them will get done, but there is a likelihood that.

Glen Weiss: Hi Camille, Glen. You know, in New York portfolio, I'd say the color has been changed much since last year in terms of the spaces that are on the market and are portfolio from the subtly spaces. As a matter of fact, some of it has been fully leased or taken off the market. For example, PWC, 90 Park, all that space is now called for.

Okay.

Portion of those could get done. So the answer is we're going to we're going to be opportunistic in terms of either selling or recapitalizing.

Some assets, we're going to do it if we think the pricing is accretive.

I sort of come back to what I said, a few moments ago, which as you know we're in a good position from a cash standpoint.

Glen Weiss: I would say nothing really new to highlight over the 12-month period. In Chicago, I think there's more subtly space in the market, in the market generally, and at the market specifically, and in San Francisco, the only tenant to note is Microsoft has announced the sub-leaf of their space in R555. That means it has a very long term nature left to it. Such general color, but I think if you look at those statistics in New York specifically, I think the numbers are generally on par with the year ago.

Unknown Executive: Thank you.

We're sitting on over $1 billion, we don't have to do anything, but we'd like to do some things and so our goal is to generate some meaningful proceeds both to delever and to attack the stock and so we're working on some things and we'll just have to see how it plays out.

And just to your point on sort of there being a lack of overall debt financing for the sector today.

Is there any appetite to offer seller financing for a small portion of any future dispositions or I guess, just how do you guys think about that.

Michael Griffin: And our next question today comes from Michael Griffin with City. Please go ahead. Great. Thank you. Maybe just another question on leasing for Glenn.

Sure I think.

Following our company.

We don't like creativity so.

Yes, sorry for Anthony can help facilitate a transaction that we think that the overall transaction makes sense, we would absolutely consider that.

Glen Weiss: Are you not if an office user is taking longer and making decisions about whether or not the leased space, and then he could update us on kind of where TIs and free rents have been trending in the market. That was great. I think the concession TIs free rent that they'll stabilize, and as Michael said in the remarks, we're even seeing rents go up in certain buildings, like a 280-part, 1290-of-pan one. So I think stabilized is the answer on the concession.

I appreciate the detail thanks.

Thank you and our next question today comes from John Kim of BMO capital markets.

Thank you.

Can I ask about leasing activity it was a little bit light compared to here.

508000 square feet in negotiations.

Last quarter I was wondering how much of that is timing related versus deals that fell apart.

Glen Weiss: So what was the other part of it for my point of view is just taking longer. A longer? I think generally right. The processes are longer in terms of the making, you know, from first toward assigning a lease definitely longer than his store, for sure. Yes. That's helpful.

Hi, John It's Glenn it's all timing related so as we said earlier.

Based on the timing of some leases that 11% to <unk> III, we expect to be at $2 million by the end of the year based on the activity, we have and based on where those leases are currently in documentation.

Michael Griffin: And then just on the dividend policy going forward in 2022, just given how it was handled in 2024, I'm curious if you can kind of update us on kind of any expectations for the go for a year that relates to the dividend. Your question, Griff, is about 2024? I think you did 2019 too, but I think you meant 2024? Yeah. You know, at this point, we don't really have any comment. I think they gave you a pretty good outline of where we are 2023, the environment is fluid. You know, as we said earlier this year, you know, we don't know how asset sales could impact what we have to do. I think the same goes for next year.

It was all timing related Youre correct.

Okay any more color you can provide in that 750000 square feet of leases that you expect to close in the fourth quarter. I think you mentioned 280 Park unsold 90 after the Americas, but is the Mart included in this as well and any color on the types of tenants that you are signing.

The deals we spoke about our New York related to AED 12, 96 that the patent one.

<unk>.

Financial law fashion at the more separately as another 100000 feet in lease documentation.

Michael Griffin: So, you know, we'll deal with the 2024 dividend and try to give a little bit more color as we get into 2024. Right. I think it was more sorry about this, but I think it was more just the expectation to pay it quarterly or wait until the end of the year if you can comment at all. It's not impossible that we will wait till the end of the year next year as we did this year. Thank you.

Which we expect to get done this quarter as well.

The more additive to the to the New York number we had given you.

Okay.

Got it okay.

<unk> Park, you do have mortgage debt due in about a year.

Based on your recent debt extension at 150, west 34th which.

Which was extended but downsized do you think thats a likelihood that that.

Alexander Goldfarb: And our next question today comes from Alexander Goldfarb. Please go ahead.

The mortgage debt that gets reduced.

Stephen Roth: Good morning, Steve. And thanks for your comments at the start of the call. Appreciate it. So two questions here. The first is, you know, politics obviously has gotten, you know, it's pretty animated these days, especially around real estate. One of your peers just made a government hire, but when you think back to like the Robert Moses era and like, you know, Jackie Kennedy saving grand central, it seems like politics has always been pretty big in New York.

John It's an active discussion right now so I don't really want to comment on it but.

I think my general comments, I made and I think to <unk> question.

Yes.

Stanford $2 80.

And.

Our expectation is as I said, we're in discussion with every lender or servicer that one happens to be a servicer for our 24 maturities. That's included there it's an active discussion.

Stephen Roth: So Steve, given some of the headlines recently, especially around the pen district, would you say in your career, the current era of political involvement with regard to development, commercial development, you know, change of zoning. Would you say it's different now or this is really what New York has always been. It's just that we happen to be living it today versus had we've been around in the 70s, 60s and before.

Hopefully we'll figure it out.

Thank you and our next question today comes from Anthony <unk> with Jpmorgan. Please go ahead.

Alright, great. Thanks.

So hotel Penn has been taken down it looks like you put up some some big signage there its a big site and just curious if you have any opportunities to drive any meaningful cash flow from the location just wallet.

Sits and waiting for a longer term plan.

Stephen Roth: Alexander, very eccentric question. I think, I think the times today are not very different at all from what the times have been over the last decades. The politics in the United States have always been interesting. The growth of the cities in the United States is always been fairly aggressive. And most cities want to grow. New York is in that category, by the way. Okay.

The answer is we are studying that right now Anthony.

Answer is we think so.

We're pursuing a few ideas.

Too early to tell you, which one or ones, we're going to settle on but youre exactly right.

Great.

The city.

And.

Whether its fashion shows or other temporary uses we think there will be opportunities to generate some cash flow until the site is ready for development.

Michael Franco: And then the second question is a few years ago, well, quite a few years ago, you guys announced an effort to trim GNA given the reduction in the size of the company with, you know, the different platform spin-offs, etc. As we look at FFO, it's about half the level that it was, you know, eight or so years ago, but GNA is only down maybe 15%.

Okay and then.

Last I recall, there was still some back and forth on ground lease at a pan any update or final resolution to that.

That's in process.

Okay, and then if I could ask one final one just on the March.

Michael Franco: So is there, you know, if you think about to the prior question on the dividend for next year, as you think about increasing shareholder returns, what's your perspective on, you know, corporate on corporate overhead reduction as part of, you know, boosting earnings and growing the dividend? Alex, good morning, Michael. Morning, Michael. You know, I think we were maybe the only company in our sector and certainly in the industry, you know, I guess it's almost three years ago now that did a major reduction in the height of the pandemic.

I just find it a little tricky to adjust for taxes, and some ins and outs there any way to give us a sense as to where.

Sort of like run rate EBITDA for a year is that asset right now.

Okay.

Yes.

Probably.

And the low 60% or $60 million neighborhood right now given the.

Decline in occupancy.

And over time as we build that back up we think that number will get back to $90 million to $100 million.

Thank you and our next question today comes from Julien.

Michael Franco: And, you know, it was a difficult reduction, but we did it. The goes responsible decision and I think the company has performed fine and frankly, we elevate some young leaders that I think have done extraordinarily well, you know, hungerier and quite capable. So, you know, I think we're pleased with what we did in retrospect. Look, we are constantly evaluating business, both from a personnel standpoint, from a system standpoint, how do we do things more efficiently, et cetera.

With Goldman Sachs. Please go ahead.

Yes. Good morning, Thank you for taking my question Glenn.

Glenn you mentioned, the Microsoft sub lease space at 555, California can you talk about your upcoming explorations at 555 Cal.

Looks like there is over 50% ABR rolling through 2006.

Including 274000 square feet and 25.

Just any sense you have on what those tenants are thinking whether these tenants might downsize or give back space.

Michael Franco: And, you know, we'll do that as we, as we, you know, enter your end here. But I don't see, you know, we make some major cuts, personnel wise, you know, and I think people have worked smarter, more efficiently, et cetera. So, I wouldn't wait by your printer looking for.., of significant cuts there. From a overall corporate G&A standpoint, Tom and I in particular, we look at that all the time and we're doing some things around the edges to help and we'll continue to do it but I don't think it's going to be dramatic. I think we're actually quite efficient and yes, the earnings are down some for a variety of reasons but I think the business is not a lot of fat here Alex.

So yes.

Relates to the rollover and the Bofa lease we have extended by 10 years than the 35, so I'm not sure if youre counting that enough by what Youre looking at but otherwise as you would expect we were and we are in formal negotiation with every tenant expiring between now and 2006.

In paper.

And I would expect.

Success at our renewal program as we've had historically.

Got it Thats helpful.

And then I guess given the comments around the bilateral deals youre looking at I guess is your current plan to execute on your 350 Park put option given the accretive ness of redeploying.

Michael Franco: Okay, listen, thank you. I just had one other thing, the senior team has kept their comp flat for generally in the last four or five years. We obviously, Joe and David are tired. So I think we've taken a lot of steps and I think we're all major shareholders. It's a big part of our net worth is not the largest and we act like owners. We run the business that way.

Redeploying that into debt repayments in this higher interest rate environment.

It's pretty much all of it.

It's pretty much you too.

Hi.

I'll take that question.

Thank you and our next.

Right.

I'm sorry apologize please continue sir.

The transaction that we have.

350 bar.

Michael Franco: Thank you. Alex, you know that overhead does not go down in proportion with a business which is reducing. So it's much more efficient to grow than it is to reduce. So we acknowledge that our G&A has not gone down in proportion to the top line of our business. We're just looking at it saying it but there are, we believe we have a fairly efficient operation but you're collective at the ratios.

Gives us various options and optionality as it is the counterparty various options that optionality so those decisions.

Alright in the future.

Unknown Executive: Thank you.

Yes.

Thank you and our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Thanks for taking the question just I wanted to clarify maybe I misheard can you did you give us sort of an update on.

The <unk> kind of a run rate or the full year at the full expectation and just given all the moving pieces. We've just talked about do you mind, just sort of giving us any.

Dylan Burzinski: And our next question today, how some Dylan Bersinsky with ministry, please go ahead. Hi guys, thanks for taking the question. I guess I appreciate your comments on sort of the challenging capital market environment, especially for office. But I guess just as you think about the portfolio and the capital allocation game plan will report. Is it your sense that you'll continue to try and take advantage of potential disposition opportunities in the future?

Larger moving bucket.

Buckets, we should think about whether it's the big expirations or other pieces of the model into 'twenty four.

Yes.

Sure.

As you know, we don't give guidance and I think your question goes to guidance so basically.

That's not a question that we're going to be able to handle sorry.

Okay.

Okay.

Okay, and then I guess, just you talked a lot about.

Stephen Roth: Morning Dylan. The answer is yes. You know, we are, we've obviously sold some things over the course of the year. We're working on some other things right now. They're not, you know, they're more bilateral than broadly marketed opportunities because we've got smarter way to try to execute in this environment. So, you know, we have a handful of things that we're working on. I'm not going to sit here and promise that any of them will get done but there's a likelihood that portion of those could get done.

New York being back and I just wanted to see if we can square that with.

You know you sort of in prior cycles, you've always made money kind of at the bottom of the cycle.

Finding interesting assets and I'm just wondering.

Given New York is back.

Debt markets, the challenge, but but where are we in sort of that.

Timeline or what milestones are you looking for in terms of finally, putting capital to work.

The my comment about his back was basically about the.

Stephen Roth: So the answer is we're going to be opportunistic in terms of either selling or recapitalizing some assets. We're going to do it if we beat the pricing as a creative. You know, I sort of come back when I said a few moments ago, which is, you know, we're in a good position for a cash standpoint. You know, we're sitting on over a billion dollars. We don't have to do anything, but we'd like to do some things. And so our goal is to generate, you know, some meaningful proceeds, both to deliver and to attack the stock and, and so work on some things.

Traffic.

The.

Tourism.

The activity level in the buildings and industries.

With respect to.

Opportunities too.

By assets that.

Totally influenced by the fact that interest rates have gone from say pick it up before that pick a number 8%. So if interest rates are double.

It's pretty easy to predict at both assets.

Which have financing on them has probably helped.

Stephen Roth: And we'll just have to see how it plays out.

So the action will be.

Stephen Roth: And just to your point on sort of there being a lack of overall debt financing for the sector today. Is there any appetite to offer seller financing for a small portion of any future dispositions or I guess just how do you guys think about that? Sure. I think, you know, if you followed our company, you know, we don't like creativity. So, if, you know, Silicon Antony can help facilitate a transaction, you know, we think that the overall transaction makes sense, we absolutely consider that. Appreciate the detail.

Almost all of which were looking at very carefully.

Unknown Executive: Thanks.

Thank you and our next question today comes from Nick <unk> with Scotiabank. Please go ahead.

Thanks, I was just hoping to get a feel for how capitalized interest burn off is going to work the timing of that for Penn One and Penn two over the next two years.

Unknown Executive: Thank you.

Okay.

Yeah.

Nick I gave you a general commentary, but but.

I think that we want to deal with specifics probably better that.

Do it offline.

John Kim: And our next question today comes from John.

We've got I think a number will stay fairly constant this year.

John Kim: Can a BMO capital markets? Thank you.

This year I think is about little over $40 million, while it goes down a little bit next year and then I think is 25 as you know <unk> done.

John Kim: Can I ask about leasing activity? It was a little bit light compared to your 508,000 square feet in negotiations. Last quarter, I was wondering how much of that is timing-related versus field that's all apart.

<unk> will decline significantly in 2025.

Glen Weiss: Hi, John, it's fun. It's all timing-related. So, as we said earlier, based on the timing, some leases that 11 to 4, Q versus 3, Q, we expect to be a two-million feet body under the air based on the activity we have and based on where those leases are currently in documentation.

Okay. Thanks, and then secondly, I just wanted to ask about the dividend.

It kind of sounds like your strategy right now at the board. The board strategy is to match the dividend to taxable income.

And I guess I'm just wondering when you.

When you suspended the dividend earlier.

This year it kind of felt like you had some potential asset sales in the work and maybe there could be a special dividend that was affecting the decision, making but I guess I'm just trying to understand like.

Glen Weiss: So, it was all timing-related. You're correct. Okay, any more color you could provide in that 750,000 square feet of leases that you expect to close in the fourth quarter. I think you mentioned 280 park in 1290 after the Americas, but is the mart included in this as well and any color on the types of tenants that you're signing. The deals we spoke about are New York related, 280, 1290, 650, 101, financial law, fashion.

Going forward, how we should think about this why only pay a dividend that is matching taxable income.

The policy of the company in this environment is to retain as much cash as we can we think that thats the preservation of our balance sheet.

As the number one.

Priority so basically.

Glen Weiss: At the mart separately is another 100,000 feet in leased documentation, which, you know, we expect to get done this quarter as well. The more additive to the New York number we had given you. Okay, at 280 park, you do have mortgage that do in about a year based on your recent debt extension at 150 plus 34, which was extended, but downsized. Do you think that's a likelihood that that mortgage debt gets reduced?

What we're after is to pay.

Reasonable.

But may I use the word low dividend.

To preserve cash.

Thank you and our next question today comes from Ron Camden with Morgan Stanley. Please go ahead.

Hey, just starting with the cash flow statement, just saw 62 million of cash from operations, this quarter, which sort of surprised us.

Can you comment is there sort of any one timers with working capital or just trying to figure out why sort of that cash conversion, maybe dip this quarter a little bit.

Glen Weiss: You know, John, it's an active discussion right now, so I don't really want to comment on it, but I think in my general comments I made, I think to Camille's question, you know, stand for 280 and, you know, our expectation is, as I said, we're in discussion with every lender or service, so that wouldn't have to be a servicer for our 24 maturities. That's included there. It's an active discussion and, you know, hopefully we'll figure it out.

Ron will have to come back to you on that at all have to stay in front of me off hand, but.

Theres nothing in particular that jumps out.

We'll come back to you on that.

Great helpful. And then switching gears back to 12 90 Avenue of the Americas I think last quarter, you had sort of mentioned that there were.

Unknown Executive: Thank you.

Some activity I think there was even a tenant interest and it was closed just wondering what was the update there how's that progressing conversations going forward pausing.

Anthony Paolone: And our next question today comes from Anthony Palom with JP Morgan. Please go ahead. All right. Great. Thanks. So Hotel Penn has been taken down. It looks like you put up some some big signage there. It's a big site.

Just on 12 90, specifically thanks.

So we've signed we signed the lease with <unk>, which we mentioned for 100000 feet.

Stephen Roth: Just curious if you have any opportunities to drive any meaningful cash flow from the location, just while it sits in waiting for a longer-term plan. You know, the answer is we are studying that right now, Anthony. And the answer is we think stuff, you know, we're pursuing a few ideas, to relate to tell you which one or ones we're going to settle on but you're exactly right it's a it's a great cycle in the center of the city and you know whether it's it's fashion shows or other temporary uses we think there will be opportunities to generate some cash flow until the site is ready for development.

We have another very sizable lease out in documentation right now which is in our fourth quarter projection of leasing activity.

Otherwise tour volume is very very strong.

The building is.

If not the best certainly one of the best assets in Midtown.

And it's showing just how good it is right now.

This comes off the renovation, we did some 10 years ago and now with the new amenity program, we'll bring it in there. So actually has been very good at 12 90, we expect more to come next year as we get these spaces back from equitable and others.

And I would just add to what Glenn said, we've talked about this demand trend tenants wanting to be in the better buildings.

Stephen Roth: Okay and then I think you'll last I recall there was still some back and forth on the ground lease at Penn and any update or final resolution to that that's in process.

Submarine best Submarkets.

Basically being at equilibrium and I think $12 90 reflects that.

And so if you look at where we are signing deals versus where we thought we'd be earlier in the year rents are definitely up.

Unknown Executive: Okay and then if I guess one final one just on the mark you always find it a little tricky to adjust for taxes and some ins and outs there anyway to give us a sense as to where you sort of like run rate EBITDA for a year is at that asset right now. Yeah I think in the probably in the low 60s or 60 million dollar neighborhood right now you know given the decline in occupancy you know and over time as we build that back up you know we think that number will get back to you know 90 to 100 million dollars.

Tenants recognized the quality of the building.

And our leasing track record there has historically always been good so.

I think our activity level of where we're at is.

We're quite encouraged by what we sign of what's in the queue I don't want to come back to your first question. How we distribute just look quickly on the side you are correct in terms of the 62 being low are the the big driver of why that was down was.

We did a significant.

In the money Cat premium for 12, 90 actually last quarter of about $60 million.

Unknown Executive: Thank you and our next question today comes from Julian Blower with Goldman Sachs please come ahead. Yeah good morning thank you for taking my question Glenn you mentioned the Microsoft subway space at 555 California can you talk about your upcoming explorations at 555 Cal looks like there's over 50% ABR rolling through 26 including 274,000 square feet. And 25 I guess just any sense you have on what those tenants are thinking whether these tenants might downsize or give back space.

So that's what the that's what the Delta was the main driver.

Thank you and our final question today is a follow up from Steve <unk> Evercore ISI. Please go ahead.

Thanks, Steve I was just wondering if you could sort of provide any updates on the casino license, maybe that vornado was potentially pursuing and any thoughts just kind of on where the state is in that whole process.

Sure.

It's highly likely that we will not pursue a casino license.

Unknown Executive: So you know it was a place to the roll over the B of A lease we've extended by 10 years so that goes to 35 so I'm not sure if you're counting that or not by what you're looking at but otherwise as you would expect we are in form on the negotiation with every tenant expiring between now and 26. In paper and I would expect success in our real program as we've had historically.

Thank you and ladies and gentlemen. This concludes our question and answer session I would like to turn the conference back over to the management team for any closing.

Okay.

2007.

Okay.

Thank you all for joining us.

We will look forward to talking to you on our next call Tuesday February 13th.

He has a happy Halloween and get lots of good PND take care.

Unknown Executive: Got it that's helpful and then I guess given the comments around the bilateral deals you're looking at I guess is your current plan to execute on your 350 park put option given the accretiveness of redeploying that into debt repayments in this higher interest rate environment. It's pretty much you're it's pretty much you're to hang out take that question.

Thank you Sir This concludes today's conference call. Thank you all for attending today's presentation.

Now disconnect your lines and have a wonderful day.

<unk>.

Unknown Executive: Thank you and our next one. Oops I apologize please continue sir. The transaction that we have on 350 part gives us various options and optionality as it gives the counterparty various options and optionality so those decisions are, of the future.

Unknown Executive: Thank you.

Vikram Malhotra: And our next question today comes from Vikram Malhotra with Mizufo, please go ahead. Thanks, Ting, the question. Just, I want to clarify, maybe I miss her.

Vikram Malhotra: Did you give us sort of an update on the SFO kind of run rate or the full year after four expectation and just given all the moving pieces we've just talked about. You should think about whether it's big explorations or other pieces as we model into 24. You know, as you know, we don't give guidance. I think your question goes to guidance. So basically, that's not a question that we're going to be able to handle. Sorry. Okay.

Stephen Roth: And then I guess just, you know, you talked a lot about New York being back. And I just wanted to see if we can square that with, you know, you're sort of in prior cycles. You've always made money kind of at the bottom of the cycle of finding, you know, those interesting assets. And I'm just wondering, you know, given New York is back, that market for challenge, but where are we in sort of that timeline or what milestones are you looking for in terms of finding, putting capital to the work?

Stephen Roth: My comment about New York is back was basically about the traffic, the tourism, the activity level in the buildings and in the streets. With respect to opportunities, to biases, that's totally influenced by the fact that interest rates have gone from, say, picking up a four to pick a number eight percent. So if interest rates have doubled, then it's pretty easy to predict that most assets, which have financing on them, have probably hit and value. So the action will be in the debt, as it almost always is, which we're looking at very carefully. Thank you.

Nikuliko: And our next question today comes from Nikuliko with Scotia Bank. Please go ahead. Thanks.

Nikuliko: I was just hoping to get a feel for, you know, how capitalized interest burn off is going to work, you know, the timing of that for pen one and pen two over the next two years. You know, Nick, I gave you a general comment, sorry, but, but, you know, I think if you want to deal with specifics, it's probably better to put it offline. You know, I think we've got, I think the numbers stay fairly constant this year, you know, this year, I think it's about a little over $40 million, probably goes down a little bit next year. And then I think it's 25, it's, you know, pen two's done, you know, that number will decline, you know, significantly in 2025.

Nikuliko: Okay, thanks.

Michael Franco: And then secondly, I just wanted to ask about, you know, the dividend and you know, it kind of sounds like your strategy right now at the board or the board strategy is to, you know, match the dividend to taxable income. And I guess I'm just wondering, you know, when you, when you suspended the dividend earlier this year, it kind of felt like you had some potential asset sales and the work and maybe there could be a special dividend.

Michael Franco: That was affecting the decision making, but I guess I'm just trying to understand like going forward how we should think about this. So, you know, why only pay a dividend that is matching taxable income. The policy of the company in this environment is to retain as much cash as we can. We think that that's the preservation of our balance sheet is the number one priority. So basically, what we're to preserve cash.

Ron Kamdem: Thank you.

Ron Kamdem: And our next question today comes from Ron Kamdem with Morgan Stanley. Please go ahead. Hey, just starting with the cash flow statement. I just saw 62 million of cash from operation in this quarter, which sort of surprised us. Maybe can you comment, is there sort of any one-timers with working capital or just trying to figure out why sort of that cash conversion maybe we dipped this quarter a little bit? Ron, we'll have to come back to you on that. I don't have to stay even in front of me offhand, but there's nothing in particular that jumps out for comment, but we'll come back to you on that. Great, helpful.

Glen Weiss: And then switching gears back to 1290 Avenue of the Americas. I think last quarter, you sort of mentioned that there was from activity. I think there was even an tenant interest, and it was closed. Just wondering what was the update there? How is that progressing? Conversations going forward, pausing. Just on 1290 specifically. Thanks. So we've signed, we've signed the lease with Tony Engay, which we have mentioned for 100,000 feet. We have another very sizable lease out in documentation right now, which is in our fourth quarter projection of leasing activity.

Glen Weiss: Otherwise, tour volume is very, very strong. The building is, if not the best, certainly one of the best assets in Mithaq. And it's showing just how good it is right now. You know, this comes off the renovation we did some 10 years ago, and now with the new amenity program, we're bringing them there. So action's been very good at 1290. We expect more to come next year, as we get the spaces back from equitable and others.

Glen Weiss: And I would just add to it when we said, you know, we talked about this demand, the trend, tenants wanting to be in the better buildings, the submarkets, basically being at equilibrium. I think 1290 reflects that. And so if you look at where we're signing deals, for sure, we thought we'd be earlier in the year, you know, rents are definitely up. I think tenants recognize the quality of the building. And our leasing track record there is historically always been good. So, you know, I think our activity level of where we're at is, you know, we're quite encouraged by both what we sign and what's in the queue.

Glen Weiss: I want to come back to your first question. We just looked quickly on the side. You were correct in terms of the 62 being lower. The big driver of why that was down was, you know, we did a significant, you know, in the money cap premium for 1290 actually last quarter, but about 60 million dollars. And so that's what the, that's what the Delta was for the, how do I mean? Thank you.

Steve Sakwa: And our final question today is a follow-up from Steve Sakwa at Evercore ISI.

Stephen Roth: Please go ahead. Thanks. Steve, I was just wondering if you could sort of provide any updates on the casino license. Maybe that Vornado was potentially pursuing and any thoughts just kind of on where the state is in that whole process. It's highly likely that we will not pursue a casino license.

Unknown Executive: Thank you.

Unknown Executive: And ladies and gentlemen, this concludes our question and answer session.

Unknown Executive: I'd like to turn the conference back over to the members of the team. Thank you all for joining us. We will look forward to talking to you on the next call to the February 13th.

Unknown Executive: Hope everybody has a happy Halloween and get lots of good candy. Take care. Thank you, sir.

Operator: This concludes today's conference call. We thank you all for attempting today's presentation. You've got to select your lines and have a wonderful day.