Q4 2023 Alexander's Inc Earnings Call

February 13, 2024

Call is being recorded for replay purposes.

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

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I will now turn the call over to Mr. Steve Bernstein, Senior Vice President and corporate Counsel. Please go ahead.

Welcome to Vornado Realty Trust fourth quarter earnings call yesterday afternoon, we issued our fourth quarter earnings release and filed our annual report on Form 10-K, with the Securities and Exchange Commission. These documents 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-K and financial supplement.

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

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

This call is being recorded for replay purposes.

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 filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31 2023.

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.

I will now turn the call over to Mr. Steve Bernstein, Senior Vice President and corporate Counsel. Please go ahead.

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 management 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 press.

Welcome to Vornado Realty Trust's fourth quarter earnings call yesterday afternoon, we issued our fourth quarter earnings release and filed our annual report on Form 10-K, with the Securities and Exchange Commission. These documents as well as our supplemental financial information packages are available on our website www dot <unk> dot com.

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

Under the Investor Relations section in these documents and during today's call. We will discuss certain non-GAAP financial measures reconciliations of these patterson about directly comparable GAAP measures are included in our earnings release.

Thank you, Steve and good morning, everyone.

We ended the year on a high note with a good fourth quarter the quarter and the year were right on target, although as expected our results were negatively affected by the dramatic increase in interest rates.

<unk> 10-K, and financial supplement 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 filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year.

This will carry through next year, but I expect we will reverse as interest rates received.

It is important to note that our businesses continued to perform well.

Michael will review the quarter and the year with you in a moment.

Ended December 31, 2023 for more information regarding these risks and uncertainties. The call may include time sensitive information that maybe accurate only as of today's date. The company does not undertake a duty to update any forward looking statement.

This year, our New York City Office leasing team won the gold medal in.

In the fourth quarter, we leased 840000 square feet for the full year, we leased two 1 million square feet average starting rents for the quarter and the year were record breaking at $100 and $99 per square foot respectively.

On the call today from management 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 present and available for questions I will now turn the call over to Steven Roth.

And more gold medals stuff for the year, we leased one 2 million square feet at over $100 a square foot risks.

The office leasing market is on the foothills of recovery, but the capital market still remains challenged at our evening tightening.

Thank you, Steve and good morning, everyone.

We ended the year on a high note with a good fourth quarter the quarter and the year were right on target.

<unk> been tightening slightly as we speak.

<unk> foreclosure foreclosures and give backs are still in front of us and therefore, so is the opportunity.

As expected our results were negatively affected by the dramatic increase in interest rates.

This will carry through next year, but I expect we will reverse as interest rates received.

As Michael and I have said on the last few calls retail in New York City has bottomed out as recovering rapidly while rents have a way to go to reach peak pricing of five years ago, we feel very good about the activity level of strength of the retail recovery.

It is important to note that our businesses continued to perform well.

Michael will review the quarter and the year with you in a moment.

This year, our New York City Office leasing team won the gold medal in.

And Theres more big retail news and two blockbuster deals announced in December major major global luxury retailers product carrying.

Bought prime Upper fifth Avenue properties for their own use of stores.

On deal was $835 million and the other was $963 million. So it ran up round numbers call. It about 900 million for a half block front.

And more gold metal stuff for the year, we leased one 2 million square feet at over $100 a square foot risks.

Obviously as the market is on the foothills of recovery, but the capital market still remain challenged.

Fifth Avenue.

So we now have the most important retailers in the world.

Aggressively in real estate for their own use.

Our evening Tightenings.

Even tightening slightly as we speak.

The most important retail street in our country.

Foreclosure foreclosures and give backs are still in front of us and therefore, so is the opportunity.

This is only happening in the most important world cities, New York, London and Paris.

Now we take this mark very personally because we own and our retail joint ventures, so 52% our share a 26% market share of available fifth Upper fifth Avenue and four block blocks before have blocks of similar AAA quality.

Okay.

I'm sure you can all do the math here, we also own and that same joint venture. The two best full blocks, so that would be for half blocks in times square and we have the largest signed business in town.

And Theres more big retail news and two blockbuster deals announced in December.

<unk> global luxury retailers products carry.

Bought prime Upper fifth Avenue properties for their own use as stores.

Yes.

It's been a long ride and we have now just about completed construction of our renovation of the double block wide pad two.

One deal was $835 million and the other was $963 million. So it ran round numbers call. It about 900 million for a half block front on upper fifth Avenue.

And we are about 90% complete with the surrounding clauses.

So we now have the most important retailers in the world is investing aggressively in real estate for their own use on the most important retail street in our country.

The huge plaza in front of pen two combined with the 33rd Street Promenade and the 33rd Street setback at Penn One have created enormous open public space, which I might say it will be quite logistic.

This is only happening in the most important world cities, New York, London Paris.

Directly of course seventh Avenue the hotel Penn is now down to the ground, creating our pen 15 site. All of this taken together is for sure a game changer.

Now we take this mark very personally because we own at a retail joint ventures, so 52% our share a 26% market share of available fifth Upper fifth Avenue for block hour blocks before efflux of similar AAA quality.

If you are a shareholder of at Ada or are interested in Grenada.

This is an immediate must go see.

Im sure you can all do the math here.

The alternative funny ways and creates opportunity the retail Apocalypse is now passing having handily survived the e-commerce attack.

Also one in that same joint venture the two best full blocks, so that would be for half blocks in times square and we have the largest si business in town.

But now we have a CBD office apocalypse involving the work for mobile threat and the total blacklisting of office in the capital markets.

It's been a long ride and we have now just about completed construction of our renovation of the double block wide pan too and.

In the end the major cities of America will continue to grow and thrive with New York, our hometown, leading the pack August workers will gather in offices with their colleagues rather than be alone at home at their kitchen table.

And we are about 90% complete with the surrounding classes the.

The huge plaza in front of <unk> combined with the 33rd Street Promenade and the 33rd Street setback at Penn One have created enormous open public space, which I might say it will be quite logistic.

And in the end the supply demand equation will come into balance and bringing on a landlord's market caused by a total cutoff of new supply you can't build anything in these frozen capital markets and in New York, the evaporation or irrelevance of say 100 million square feet of old obsolete and rentable space.

Directly of course seventh Avenue the hotel Penn is now down to the ground grading our pen 15 sites all of them.

This taken together is for sure a game changer.

If you're a shareholder of the data or are interested in this.

Yes.

This cycle is not over yet there remain challenges, but for forward looking investors. The time is now.

This is an immediate must go see.

The alternative funny ways that creates opportunity the retail Apocalypse is now passing having handily survived the e-commerce attack.

My colleagues my colleagues in ISR data are optimistic and excited that over to Michael.

Thank you, Steve and good morning, everyone.

But now we have a CBD office Apocalypse evolving of the work for them all threat and the total black listing of office in the capital markets.

The 2023 was a challenging year, our core office and retail businesses proved to be resilient R.

Our overall, New York business same store cash NOI was up a healthy two 8% year and was up 2% in the fourth quarter compared to last year.

Comparable <unk> as adjusted was $2 61 per share for the year down 54 from 2022, largely due to increased interest expense, which is in line with the expectations that we've previously communicated.

Fourth quarter comparable <unk> as adjusted was <unk> 63 per share compared to 72 per share for last year's fourth quarter a decrease of nine.

Overall, the core business was flat and the entire decrease in the quarter was driven by increased G&A and lower <unk> from sold properties we.

Yes.

This cycle is not over yet there remain challenges, but for forward looking investors. The time is now my colleagues.

We have provided a quarter over quarter bridge in our earnings release and in our financial supplement.

Colleagues in ISR data are optimistic and excited.

We recorded $73 million of noncash impairment charges during the fourth quarter, primarily related to joint venture assets that we intend to exit in the next few years. It should be noted that in accordance with NAREIT <unk> definition. This impairment charge is not included in <unk>.

Now over to Michel.

Thank you, Steve and good morning, everyone.

<unk> 2023 was a challenging year, our core office and retail businesses proved to be resilient.

Our overall, New York business same store cash NOI was up a healthy two 8% year and was up 2% in the fourth quarter compared to last year.

Now turning to 2024.

While forecasting remains challenging in the current economic environment, we expect our 2024 comparable <unk> to continue to be impacted by higher interest rates and be down from 2023, which already seems to be in the market. We project a roughly <unk> <unk> impact from higher net interest expense due to extending hedges at higher.

Comparable <unk> as adjusted was $2 61 per share for the year down 54 from 2022, largely due to increased interest expense, which is in line with the expectations that we've previously communicated.

Quarter comparable <unk> as adjusted was <unk> 63 per share compared to 72 per share for last year's fourth quarter a decrease of nine.

Our rates on our variable debt.

Additionally, there will be a deemed to earnings as we turnover certain spaces, primarily at 12 90 Avenue. The Americas 770 Broadway and 280 Park Avenue. This is temporary as we have already leased up a good chunk of this space, but the GAAP earnings from these leases won't begin in 2024.

Overall, the core business was flat and the entire decrease in the quarter was driven by increased G&A and lower <unk> from sold properties.

We have provided a quarter over quarter bridge in our earnings release and in our financial supplement.

We expect 2024 will represent the trough in our earnings and for earnings to increase meaningfully from there as rates trend down and as income from the lease up of 10 and other vacancies comes online.

Yes.

Now turning to the leasing markets.

New York is clearly leading the leasing charge nationally as the city continues to experience strong employment growth.

Now turning to 2024.

23 leasing in Manhattan ended on a strong note and as we entered 2024 market conditions are more favorable than any year since the pandemic and sued in March 2020, providing support for the continued recovery in the class a office market.

The economy is healthy most employers are back in the office at least three to four days per week.

Our rates on our variable debt.

<unk> sublease space is standing in the market for higher end space is tightening fueled by a decline in the new development pipeline now.

Now that companies have greater clarity on their space needs tenant demand is growing which is translating into more leasing transactions.

With new supply evaporating tenants are increasingly focused on the highest quality of Redeveloped class a buildings Theyre Penn station in Grand Central station as they seek to attract and retain talent Act.

Activity in the best buildings has been strong with vacancy at less than 10% and rents rising.

Yes.

Now turning to the leasing markets.

New York is clearly leading the leasing charge nationally as the city continues to experience strong employment growth.

Our best in class portfolio has been a major beneficiary of this trend and the stats bear out this that we consistently outperformed the marketplace as Steve mentioned earlier in 2023 released $2 1 million square feet at average starting rents of an industry, leading $99 per square foot with $1 2 million feet a triple digit.

23 leasing in Manhattan ended on a strong note and as we entered 2024 market conditions are more favorable than any year since the pandemic and suite in March 2020, providing support for the continued recovery in the class a office market.

Starting rents.

The economy is healthy most employers are back in the office at least three to four days per week competitive sublease space is standing in the market for higher end space is tightening fueled by a decline in the new development pipeline now.

Importantly, we made significant strides in addressing our upcoming vacancy and tenant role at some of our most important assets with leases with the following important customers Citadel at 350 Park Avenue P. J T partners and GIC at 280 Park Avenue, King <unk>, Spalding, so and being gay and Cushman <unk> Wakefield at $12 90.

Now that companies have greater clarity on their space needs tenant demand is growing which is translating into more leasing transactions.

<unk> Avenue, the Americas, and Shopify at 80, 510th Avenue.

With new supply evaporating tenants are increasingly focused on the highest quality redeveloped class a buildings Theyre Penn station in Grand Central station as they seek to attract and retain talent.

Additionally, at Penn One we maintained strong momentum with another 300000 square feet of deals highlighted by new leases with Samsung in Canada Accord Genuity.

Activity in the best buildings has been strong with vacancy at less than 10% and rents rising.

Just as a reminder, since we started our redevelopment efforts in the Penn District, we have leased over two 5 million square feet of office at average starting rents of $94 per square foot a significant increase from what these buildings achieved previously.

Our fourth quarter activity led the overall market's leasing volume upturn as we completed 17 leases comprising 840000 feet at starting rents of $100 per square foot.

Starting rents.

Importantly, we made significant strides in addressing our upcoming vacancy and tenant role at some of our most important assets with leases with the following important customers Citadel at $3 50 Park Avenue P. J T partners and GIC at 280 Park Avenue, King <unk>, Spalding, so and being gay and Cushman <unk> Wakefield at $12 90.

Even with our very strong close to 2023, our leasing pipeline heading into 2024 is robust. We currently have almost 300000 feet of leases in negotiation with another 2 million feet and our pipeline at different stages of negotiation, including a balanced mix of new and renewal deals.

Avenue, the Americas and Shopify at 80, 510th Avenue.

Turning to the capital markets now.

Additionally, at Penn One we maintained strong momentum with another 300000 square feet of deals highlighted by new leases with Samsung in Canada Accord Genuity.

While the financing markets for office remains very challenging as banks continue to deal with problem loans, we are starting to see some stability with the fed potentially cutting rates in 2024.

Fixed income investors are constructive again on high quality office and unsecured bond spreads for office have tightened significantly over the past couple of quarters that.

That being said, we're still a ways away from a healthy mortgage financing market in office and most office loans will have to be restructured or extended as they arent refinance will at their current levels.

Our fourth quarter activity led the overall market's leasing volume upturn as we completed 17 leases comprising 840000 feet at starting rents of $100 per square foot.

More broadly lenders have no appetite for construction financing across most property types, which should keep a lid on new supply.

Conversely, the financing market for retail is now wide open now that the sector has bottomed.

As always we continue to remain focused on maintaining balance sheet strength, even in this challenging financing environment, our balance sheet remains in very good shape with strong liquidity.

We are actively working with our lenders and making good progress pushing out the maturities on our loans, which mature this year.

Turning to the capital markets now.

While the financing markets for office remains very challenging as banks continue to deal with problem loans, we are starting to see some stability with the fed potentially cutting rates in 2024.

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.

Fixed income investors are constructive again on high quality office and unsecured bond spreads for office have tightened significantly over the past couple of quarters.

<unk> credit facilities with that I'll turn it over to the operator for Q&A.

That being said, we're still a ways away from a healthy mortgage financing market in office and most office loans will have to be restructured or extended as they arent refinances will at their current levels.

We will now begin the question and answer session.

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More broadly lenders have no appetite for construction financing across most property types, which should keep a lid on new supply.

If you wish to be removed from the queue. Please press Star then two.

If you are using a speakerphone you may need to pick up the handset first before pressing the numbers.

Firstly the financing market for retail is now wide open now that the sector has bottomed.

Once again, if you have a question. Please press Star then one on your Touchtone phone. Please.

As always we continue to remain focused on maintaining balance sheet strength, even in this challenging financing environment, our balance sheet remains in very good shape with strong liquidity.

Please hold momentarily, while we assemble the roster.

We are actively working with our lenders and making good progress pushing out the maturities on our loans, which mature this year.

Okay.

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.

And our first question comes from Steve Butler of Evercore ISI. Please go ahead.

Thanks.

Revolving credit facilities with that I'll turn it over to the operator for Q&A.

First question for Michael or maybe Glenn just kind of on that I guess pipeline, the 2 million square feet that you talked about.

Could you maybe tell us a little bit how much of that is for kind of the existing portfolio. How much of that is for the development such as tend to.

We will now begin the question and answer session.

Do you have a question. Please press Star then one on your Touchtone phone.

And.

In that discussion can you just talk about the upcoming explorations and 24 are there any large known move outs.

If you wish to be removed from the queue. Please press Star then two.

If you are using a speakerphone you may need to pick up the handset first before pressing the numbers.

This year that you might know about that you could share with us.

Once again, if you have a question. Please press Star then one on your Touchtone phone.

Hey, Steve it's Glenn.

So the pipeline that we mentioned in the opening remarks, there is a good spread in there, including Penn one and Penn two.

Please hold momentarily, while we assemble the roster.

So activity continues to strengthen at both properties.

Okay.

The reception of pen two has been better than excellent tour volume is off the charts ever.

And our first question comes from Steve <unk> of Evercore ISI.

Everyone thinks this thing has allowed nothing they've ever seen so the pipeline does include activity at both <unk>, two and <unk> one.

Please go ahead.

Thanks, I guess first question for Michael or maybe Glenn just kind of on that I guess pipeline. The 2 million square feet that you talked about could you.

As a result relates to the ball June 24, the exploration that we were facing we've attacked it I think very well thus far.

Maybe tell us a little bit how much of that is for kind of the existing portfolio. How much of that is for the development such as <unk> two <unk>.

At 12, 90, we've already leased more than 50% of the space that was expiring in 'twenty four between variable and equitable.

And.

At 280 Park, we re leased over 200000 feet of the 275000 feet expiring between 2025 and put away P. J P, which was expiring in 2006.

In that discussion can you just talk about the upcoming explorations and 24 are there any large known move outs.

This year that you might know about that you could share with us.

Hey, Steve it's Glenn.

So the pipeline we mentioned in the opening remarks, there is a good spread in there, including Penn one and Penn two.

770 Broadway, we continue to be in the market with that building of course is more of a big Tech media building on but we expect that building to perform as we move along here given its great location and great boats.

So activity continues to strengthen at both properties.

The reception at Penn two has been better than excellent tour volume is off the charts ever.

Sorry, just a quick follow up are you, saying 770 is does that have a meta exploration that.

Everyone thinks this thing as a wound nothing they've ever seen so the pipeline does include activity at both <unk>, two and pen one.

It is a meta exploration of 275000 feet in June of this year.

And as it relates to the bulk June 24, the exploration that we were facing we've attacked it I think very well thus far.

What's left.

The rest of it.

So meta after that exploration, Steve we will have another 500000 feet long term in the building.

At 12, 90, we've already leased more than 50% of the space that was expiring in 'twenty four between variable and equitable at.

Okay, great. Thanks, and then just on the second question I noticed that you pushed out the stabilization of pen two by year, which certainly makes sense just given the challenging market today, but you guys also kept the.

At 280 Park, we released over 200000 feet of the 275000 feet expiring between 2025 and put away P. J P, which was expiring in 2006.

I guess you kept the yield unchanged. So just can you kind of help us think through that and I guess from an accounting perspective. This leasing doesn't occur. This year somewhat soon does that begin to create a potential earnings drag in 'twenty five just from the lack of ability to continue to capitalize costs on that project.

Thanks.

So just a quick follow up are you, saying 770 is does that have a meta exploration.

Hi, Good morning, David Michael.

The answer with respect to stabilization as we did push it out to 'twenty six.

And as a matter of exploration of 275000 feet in June of this year.

It's taken a little longer to get going.

What's left.

On take up there, but as Glenn.

The rest of it.

Just referenced the reaction as its gotten to delivery here has been outstanding. So we expect that to pick up but that being said, we're trying to be realistic as well and so we pushed it out.

So meta after that exploration, Steve we will have another 500000 feet long term in the building.

Okay.

The yield is.

Is based on the $750 million cost does not include Kerry.

Based NOI over the over the original cost so that's.

Thats the simple math for you.

Right drag beyond 'twenty five.

If it's not done I guess potentially but.

We feel good about the pipeline and what we have baked in right now.

Great. Thanks, that's it.

Thanks.

Hi, Good morning, it's David Michael.

The next question comes from Michael Griffin of Citi. Please go ahead.

The answer with respect to stabilization as we did push it out to 2006.

Great. Thanks, Steve I know in your opening remarks, you talked about the stressed opportunities youre seeing out there in the market can you maybe quantify kind of what those opportunities could be and when you look at kind of capital allocation priorities. When it makes sense to take advantage of those maybe relative to buying back your stock or starting new developments.

It's taken a little longer to get going on.

On take up there, but as Glenn.

Just referenced the reaction as its gotten to deliberate here has been outstanding. So we expect that pick up but that being said, we're trying to be realistic as well and so we pushed it out.

<unk>.

Okay.

The yield is.

There are three opportunities.

<unk>.

Based on the $750 million cost does not include Gary So thats based NOI over the over the original cost so that's.

Buying back our stock.

As the first one.

He uses.

Capital allocation in the second half.

Debt deleveraging, a little bit and the third is offensively acquiring new assets.

That's the simple math for you.

Right drag beyond 'twenty five.

It's not done I guess potentially but.

We are only interested in acquiring new assets at distressed prices and I think as I've said, the foreclosures and the give backs and not really happened is accelerating accelerated Wade. So the opportunities are still in front of us.

We feel good about the pipeline and what we have baked in right now.

Great. Thanks, that's it.

The next question comes from Michael Griffin of Citi. Please go ahead.

I don't have any comments as to what we might do.

<unk>.

Our number one priority to us.

The debt that we need.

With that expertise and then after that we go on the outfit.

The stock, we will react opportunistically to the stock price over time.

Great. Thanks.

<unk>.

And then I was wondering if you could comment on the recent news about rent reduction from a tentative fixed at the Madison I know you only own 20% of this building, but is there a worry that we should extrapolate. This in terms of kind of future rent roll in maybe a sign of things to come from from our leasing and rent perspective.

Okay.

There are three opportunities.

Buying back our stock.

As the first one.

He uses.

Capital allocation in the second half.

Debt deleveraging, a little bit and this area is offensively acquiring new assets.

The interesting thing is some of the industry.

We are only interested in acquiring new assets at distressed prices and I think as I've said, the foreclosures and the give backs and not really happened is accelerating accelerated way. So the opportunities are still in front of us.

Papers.

I always get it right with this case, they've got a dead wrong.

The facts are.

$60 number was a net number so if you gross it up it's about $100 a foot.

Glenn is telling me, it's a little less than $100 a foot.

I don't have any comments as to what we might do.

In the low nineties I guess.

<unk>.

Our number one priority to us.

Great. That's it from me thanks for the time.

With that what we need to do.

With that expertise and then after that we go on the outfit the.

Yes, Sir thank you.

The stock, we will react opportunistically to the stock price over time.

The next question comes from Kony Albano of Bank of America. Please go ahead.

Good morning can you talk a bit more to the retention levels at the overall portfolio in 2023, how did it track versus your expectations and with the lack of new supply on the horizon.

Great. Thanks.

Then I was wondering if you could comment on the recent news about rent reduction from a tenant at fixed at the Madison I know you only own 20% of this building, but is there a worry that we should extrapolate. This in terms of kind of future rent roll in maybe a sign of things to come from from our leasing and rent perspective.

I think this will pick up in 'twenty four.

Alright, Glenn.

Our retention rate was strong as I mentioned, the leasing that we've gotten done.

The interesting thing is some of the industry.

<unk> I think went better than we originally thought with beginning of 'twenty three.

Papers.

I always get it right with this case they've got did rollout.

And in our pipeline that we referenced.

Thanks, a lot.

$60 number was a net number so if you gross it up it's about $100 a foot.

We have very good activity on forward lease explorations, we are definitely finding that Ceos and decision makers of the patents were expiring forward.

Glenn is telling me, it's a little less than $100 a foot so again.

It's in the low nineties I guess.

Now coming to us earlier than they had been over the past few years.

Great. That's it for me thanks for the time.

Yes, Sir thank you.

Because there is less and less quality blocks of space available to them. So I would say definitively the renewal.

The next question comes from Neil Bonnell of Bank of America. Please go ahead.

Program is stronger than it had been we are in very good talks with many of our tenants going forward and I think it's showing in our leasing activity numbers.

Good morning can you talk a bit more to the retention levels at the overall portfolio in 2023, how did it track versus your expectations and with the lack of new supply on the horizon do you think this will pick up in 'twenty four.

Especially with the volume we had during 2003 and what we're now seeing in 'twenty four already.

You make a good point.

Hi, it's Glenn.

I think you said with the lack of supply so the dynamics, which are going to cause the office market to get very very healthy.

Our retention rate was strong as I mentioned, the leasing that we've gotten done.

The renewals I think went better than we originally thought with beginning of 'twenty three.

Pretty soon.

And in our pipeline that we referenced.

Are you cant anything in this capital market. So there will be no no new supply coming on stream.

We have very good activity on forward lease explorations, we are definitely finding that Ceos and decision makers of these patents were expiring forward are now coming to us earlier than they had been over the past few years.

The supply of buildings that were built in the last cycle over the last number of years.

That space is all <unk>.

And the next.

It's Ryan is that tenants seem to want high quality buildings, which are either brand new or buildings, which have been completely retrofitted which is.

Because there is less and less quality blocks and space available to them.

I'd say definitively the renewal.

And so the older buildings that I think I said this back of those somewhere around.

Program is stronger than it had been.

Very good talks with many of our tenants going forward and I think it's showing in our leasing activity numbers.

100, 150 million square feet.

Those are just obsolete and irrelevant.

Especially with the volume we had during 2003 and what we're now seeing in 2400 already.

Will evaporate. So we're dealing with is not a 400 million of forming a 400 million square foot marketplace with dealing with something which is somewhere in the high <unk>, which is a totally different supply demand.

You make a good point.

I think you said with the lack of supply so the dynamics, which are going to cause the office market to get very very healthy.

Our equation.

I appreciate the color there.

Pretty soon.

Given retail seems to be a bit of a bright spot in your portfolio can you also talk about how the your leasing pipeline is looking for that side of the business.

You can't build anything in this capital market. So there will be no no new supply coming on stream.

The supply of buildings that were built in the last cycle over the last number of years.

Sure.

That space is all <unk>.

<unk>.

I appreciate you recognizing the retails at bright spot I think.

And the next.

It's Ryan is that tenants seem to want high quality buildings, which are either brand new or buildings, which have been completely retrofitted which is.

It feels like investors wrote it off.

Everything thats happened in the marketplace.

Got it and then we still on.

The most in the highest quality retail in New York City as Steve alluded to in his opening remarks so.

And so the older buildings that I think I said this back of those somewhere around.

These are scarce trophy assets I think the value is being recognized.

100, 150 million square feet.

Those are just obsolete and irrelevant.

Talked about the last couple of quarters and that continues in our leasing pipeline. We've got activity across the board really really on all of our spaces, where there's where there is vacancy rollover occurring.

Will evaporate. So we're dealing with is not a $400 million of forming a 400 million square foot marketplace with dealing with something which is somewhere in the high <unk>, which is a totally different supply demand.

Tenant activity in some cases multiple tenants or.

Spaces, and our rents are clearly rebounding. So I would just sort of say stay tune.

Our equation.

I appreciate the color there.

We're optimistic in terms of what's coming down the Pike based on what we're working on right now.

Given retail seems to be a bit of a bright spot in your portfolio can you also talk about how the your leasing pipeline is looking for that side of the business.

It's definitely a finite supply.

The highest quality retail space, which is what the marketplace wants.

Sure.

And then.

I hope Youll notice I have a new financial metric.

I appreciate you recognizing the retails at bright spot I think.

Retail, which is called <unk> block.

It feels like investors wrote it off and with everything Thats happened in the marketplace.

And we got a lot of half blocks in the best place.

And that we still own.

The most in the highest quality retail in New York City as Steve alluded to in his opening remarks so.

Okay.

I appreciate that and just finally on the G&A side, you've managed to control those costs quite well since the pandemic, but it did pick up last year due to some additional stock expense.

These are scarce trophy assets I think the value is being recognized we've talked about the last couple of quarters and that continues in our leasing pipeline.

This is a reoccurring event going forward and are there any key considerations for 24 that will keep your G&A at the current or higher levels for.

We've got activity across the board really really on all of our spaces, where there's where there is vacancy our rollover occurring we have tenant activity in some cases multiple tenants for those.

For instance, less capitalized interest in their development program now that <unk> got on for Paul.

Of those spaces.

And rents are clearly rebounding, so I would just sort of say stay tune.

Capitalized interest will be comparable.

We're optimistic in terms of what's coming down the Pike based on what we're working on right now.

G&A.

But only a finite supply.

Some of that will roll off given given that was a onetime event.

The highest quality retail space, which is what the marketplace wants.

But I.

I think what you're referencing generally is the compensation plans put in place, which we felt important to retain our talent in a difficult environment.

And then I hope you.

I have a new financial metric for sure.

Retail, which is called half block.

Price.

We got a lot of half blocks in the best place.

And so we implemented those.

Yes.

One in June and are heavily tied to entirely tied to stock performance over the next three years 40 years.

I appreciate that and just finally on the G&A side, you've managed to control those costs quite well since the pandemic, but it should pick up last year due to some additional stock expense is this a reoccurring event going forward and are there any key considerations for 24 that will keep your <unk>.

And as the shareholders do quite well when the employees will do quite well.

So.

That expense was elevated in 'twenty three.

And.

That will start to normalize as we get into this year, Tom how many how many years that we are writing off the expense.

G&A at the current or higher levels for.

For instance, less capitalized interest in the development program and I'll, let Ken Wong Zhang on for Paul.

So it's four years youre accelerating so say it again you are accelerating so.

Capitalized interest will be comparable.

So the expense or writing off the equity comp plan that we issued in June.

G&A.

Some of that will roll off given given that was a onetime event.

It's over a four year period, so the G&A will benefit enormously shortly as that rolls off and I think I said in my remarks.

I think what you're referencing generally is the compensation plans put in place, which we felt important to <unk>.

<unk> our talent.

Youre climbing the mountain and when you go to the other side of the mountain so.

A difficult environment.

And so we implemented those.

Rising interest rates had.

And in June heavily tied to entirely tied to stock performance over the next $3 40 years.

Penalised are earning exactly.

Substantially.

That is going to reverse somewhere as the government begins to.

And as the shareholders do quite well when the employees will do quite well.

Reduced rates, which they will.

So.

And then similarly.

That expense was elevated in 'twenty three.

And.

Well I guess thats the big.

That will start to normalize as we get into this year, Tom how many how many years of writing off the expense.

That's the big thing now similarly.

Michael said that our earnings we're going to be it was deemed that I think was his word by turnover in attendance from the bulge at expiry lease expiries that once again those spaces will fill up income will come onboard. So these are temporary reductions are in our earnings which will.

Comp plan. So it's four years youre accelerating so say it again you are accelerating so.

So the expense or writing off the equity comp plan that we issued in June is over a four year period. So the G&A will benefit enormously shortly as that rolls off.

Absolutely reverse.

Sure.

I said in my remarks.

The next question comes from John Kim of BMO. Please go ahead.

Youre climbing the mountain and when you go to the other side of the mountain.

<unk>.

The rise in interest rates.

Thank you.

Given all your commentary on street retail.

Penalised are earning exactly pretty.

How it has recovered the pricing has been very strong.

Naturally that is going to reverse somewhere as the government begins to <unk>.

Are you going to be looking to sell into this strength or do you think market rents are going to improve or if it's really just.

Reduced rates, which they will.

And then similarly.

Telling us to update our NAV estimates.

Hi, John how are you what was first thing is we're enjoying.

Well I guess thats the big.

That's the big thing now similarly.

A bounce back from.

The retail I mean.

Michael said that our earnings we're going to be it was deemed I think was his word by turnover independent from the bulge at expiry lease expiry that once again those spaces will fill up income will come onboard. So these are temporary reductions are in our earnings which will.

Got it.

Retail had a target on its back threatened by e-commerce et cetera.

And.

That is all evaporated now.

Retail has become the vote.

We believe that.

Asset prices.

Absolutely reverse.

The assets that we own.

Sure.

Increased dramatically from the bottom.

And we may.

The next question comes from John Kim of BMO. Please go ahead.

Take advantage of those prices by selling assets for year to year for me.

Thank you.

Every once in a while we have already sold a chunk of assets that we really thought were not part of our core.

Given all your commentary on street retail.

It has recovered the pricing has been very strong.

So we saw some we may well sell some more.

Are you going to be looking to sell into this strength or do you think market rents are going to improve or is it really just.

We're absolutely we're absolutely convinced that rents are going to arise will they rise to the peak pricing.

Telling us to update our NAV estimates.

Five years ago, probably not but there is certainly going to rise from here.

Hi, John how are you what was first thing is we're enjoying it.

A bounce back from.

The retail I mean.

Okay.

Do you think we will get you will get the same pricing that you got originally when you.

Retail had a target on its back threatened by e-commerce et cetera.

Established a joint venture in other words had pricing and assets reached peak.

<unk>.

That is all evaporate now.

Wilson.

We're delighted with the pricing that we were able to achieve.

Retail has become.

<unk>.

We believe that asset prices.

And a large.

Our joint.

Joining furniture.

The assets that we own.

We're not going to speculate on what the pricing will be John.

Increased dramatically from the bottom.

That's speculation I think.

We may take advantage of those prices by selling assets for year to year.

If you look at the pricing that Prada and carrying paid.

For me.

Every once in a while we have already sold a chunk of assets that we really thought were not part of our core.

And Steve talked about the half blocks.

And you analyze what our portfolio could be worse than.

So we sold some.

May well sell some more.

It's not a stretch to say that we're back at those levels or get back to those levels right now.

But we're absolutely we're absolutely convinced that rates are going to arise will they rise to the peak pricing.

Who knows over time, but I think what Youre seeing is I think the most important thing is you have two of the most important retailers in the world who are saying fifth Avenue is critically important to us we want to be there forever, we are prepared to pay.

They were five years ago, probably not but there is certainly going to rise from here.

Okay. Do you think we will get you will get the same pricing that you got originally when U S.

Established a joint venture in other words have pricing and assets reached peak.

A meaningful price to be there.

And I think that the history of these things as you know the animal spirits get going.

<unk>.

We're delighted with the pricing that we were able to achieve.

You don't think that other retailers are behind them, saying you know.

And a large.

Maybe we need to make sure we have a place on fifth and secure our position. So I don't think its a stretch to think that these arent the last two transactions that occur on fifth.

Joint venture, we're not going to speculate on what the pricing will be John.

That's speculation.

If you look at the pricing.

And Michael you mentioned impairments that you've taken this quarter related to joint venture assets Youre looking to exit is it retail joint venture that you are discussing or are there other.

Prada and carrying paid.

Steve talked about the half blocks.

And you analyze what our portfolio could be worse than.

Assets, and if so which ones are they.

Yes.

It's not a stretch to say that we're back at those levels or get back to those levels right now.

The retail retail the worst has passed as we've said now.

<unk>.

A handful of smaller.

And who knows over time, but I think what Youre seeing is I think the most important thing is you have two of the most important retailers in the world who are saying fifth Avenue is critically important to us we want to be there forever, we are prepared to pay.

Really all office assets that are in joint venture the accounting treatment is.

You guys should know well by now given the street retail to engineer the accounting treatment of the impairment methodologies is much different from joint ventures.

And then four wholly owned assets and this is a handful of assets that we intend to exit over the next three years and that that results in a different accounting approach and thus the thus the impairment.

A meaningful price to be there and I think that the history of these things as you know the animal spirits get going.

You don't think that other retailers are behind them, saying you know.

Maybe we need to make sure we have a place on fifth and secure our position. So I don't think its a stretch to think that these arent the last two transactions that occur on fifth.

In accounting.

Convention, what the ultimate proceeds will be realized TBD, but.

But again it relates to a handful of smaller assets, but there is no doubt that in this cycle values have fallen so when interest rates go from.

And Michael you mentioned in impairments that you've taken this quarter related to joint venture assets Youre looking to exit is it retail joint venture that you are discussing or are there other.

Three 5% to 8% that has an enormous effect on value and so therefore I'm very pleased that the impairments were as small as they were actually.

And if so which ones are they.

Yes.

The retail retail the worst has passed as we've said now.

And just to confirm this does not include 12 90 or five count.

<unk>.

A handful of smaller.

Really all office assets that are in joint venture the accounting treatment as you.

No Thats correct.

Great. Thank you.

Thank you.

You guys should know well by now given the street retail to engineer the accounting treatment of the apparent methodology is much different from joint ventures.

The next question comes from Dillon Brzezinski of Green Street. Please go ahead.

Then four wholly owned assets and this is a handful of assets that we intend to exit over the next three years and that that results in a different accounting approach and thus the does the impairment.

Hi, guys. Thanks for taking the question.

Just two quick ones on occupancy for both the office and retail side of things. So it sounds like for New York Office.

In accounting.

That occupancy should bottom throughout 2024.

Convention.

The ultimate proceeds will be realized TBD, but.

And as you guys are already leased of some of the move out that it should.

But again it relates to a handful of smaller assets, but there is no doubt that in this cycle values have fallen so when interest rates go.

Pretty swift recovery as we look at the China 25, and beyond is that sort of a fair characterization.

Hi, It's Glenn I think that's fair I think you will see a dip over the coming quarters based on what we talked about earlier and based on the pipeline will come right back up I think it's fair.

Would you characterize yes, probably flattish for 2000 and for the overall.

Just one more then.

Hang on hang on.

Just a word about occupancy.

So the market occupancy is at the high teens.

So our occupancy is give or take around 90.

Hey, Ed.

The author of his outlook might be.

If you look back over our history, our normal occupancy is a hair over 95% 90 690 call. It 96.

The difference between 96% a 100 is kind of like structural.

It never get to 100.

Large over 20 million square foot portfolio.

Our occupancy is really the difference between our vacancy is really the difference between 96% 90 lets say, 6%, which we think is we can do better we will do better, but we think that's pretty good performance in a soft market.

The next thing is that when we ramped up the space.

The markets revert to normal.

From 90 to 96, that's a very significant increase in our earnings. So we have that in front of us for sure.

Okay.

Great and I think that kind of leads into my next question is on the retail side of things as we look at the portfolio today I think in your disclosure you guys say occupancies highest <unk> pre Covid you were mid <unk> I guess, just how do we think about the recovery there given some of the comments you guys laid out regarding the leasing pipeline.

Well.

While occupancy is really sort of.

Nominally it includes.

The Manhattan Mall Jcpenney bake.

He will make a couple of years ago, and that's 11 points of occupancy is that right and what's the what's the second one so if barley the retail there and then finally, we have we have slow going on the ninth Avenue side. So between those two with somewhere in the mid eighties.

That's helpful. Thanks, guys.

The next question comes from Vikram Malhotra of Mizuho. Please go ahead.

Hi, Good morning, Thanks for taking the question just I wanted to just go back to your comment.

About SFO dropping in <unk>. So just two clarification as to what you said.

One is the Facebook lease and 70.

It was clear that the 200000 square.

Quick with expiring there will move out but then the rest is there long term number one and number two could you just roughly call. It quantify the move outs you mentioned what is the <unk> impact this year to that.

On the first question the remaining meadow, a 500000 feet is long term thats correct.

Alright, so it is yes.

270000 payers just that one component this year and the remainder Beckham.

Give guidance right. There is a number of ins and outs, yes, you can just quantify.

The specific three situations, we mentioned, but there's other things that are going on as well. So I don't want to isolate and say. These three this is the impact because that doesn't give the full picture net net we expect it to be negative how big.

We have to see what transpires across the whole portfolio.

And so I guess just second question just to clarify you're basically saying with the move outs would be interest rate impact et cetera, the ins and outs you think thats a full legal occupancy will dip youre, assuming the lease street will eventually come back is what I'm, assuming you're referring to and then the impact of all that leaving will have 25 recover asset light is that fair.

Are there any other big moving piece to that equation.

No I think I think that's fair, obviously luck as we lease up pen, which is which in some of the other vacancy that Steve mentioned that not just natural turnover, it's in apparel as well, but I think your general comment is accurate.

So that's helpful.

Hey, Brian.

I agree it's accurate so to summarize.

Interest rates.

I have gone up.

It's painful.

They will go down they're not going to go down all the way to zero, but they will go down and so that's going to increase our earnings from here.

Our our occupancy is going to decline from say 92 whatever.

And so that's going to increase our earnings and then the big thing is.

Over the next two years to a pan will read.

The income from that will come online.

Probably over $100 million.

These are fairly substantial numbers, but overall youre, 100% correct. Thank you.

Your elite Ansary number followed by the pound key.

Okay, Great and then Steve just last one.

You mentioned external growth opportunity that some point, obviously paying delevering.

Welcome to chorus call. Please enter your elite Ansary number followed by the pound key.

I'm, assuming that <unk> growth is important but when you look to maybe at the board and you said you look the look through award executive Lps going forward, what are maybe one or two of the top metrics that could be different. The next five years versus the last five years in terms of gauging those those LTI awards.

Welcome to chorus call. Please enter your elite Ansary number followed by the pound key.

Sure.

I don't know how to answer that question.

We don't give guidance for next quarter, and it's very difficult to predict what's going to happen over the next five years.

Welcome to chorus call. Please enter your elite Ansary number.

Welcome to chorus call. Please hold for a conference specialist.

But.

A couple of talk around that very sophisticated question vikram.

[music].

New York centric company.

Imagine that we will open up a new beachhead.

Welcome to chorus call. Please hold for a conference specialist.

Where we don't have the same kind of depth of experience knowledge and.

[music].

Franchise that we haven't so basically mercury our company my guess is that.

Welcome to chorus call. Please hold for a conference specialist.

Im not contemplated it comes up we will stay as a company.

[music].

We opened up a beachhead in Washington.

Hi course, Kawa conference would you like.

Years ago, we spun that off into a separate company.

Hi, Your line May be muted what conference would you like.

I think is a terrific opportunity and then we had a large.

North eastern.

Shopping Center company, which we also spun off so we have experience with different geographies, but my guess is the main company will continue to feed New York centric.

Okay.

The.

The likelihood is we will continue to be a large aggressive office company.

But I think I've said this before we will not make acquisitions of conventional office.

<unk>.

At at full pricing, we will only be a buyer.

I don't want to call it distressed what's the right word Michael.

Okay at distressed prices.

Office buildings, and we will only buy the finest office buildings.

We have some residential and we might do a little more of that and then what we will develop in the Penn District.

Broaden their really important part of our company.

That may be arguably the most important development in the country as we go forward.

You can't build anything in the Penn District today, because of the frozen capital market you cannot do with the math doesn't work, but as Matt as that.

<unk>.

Begins to fall off.

We will consider residential building and developing residential in that marketplace, and we might even sell a piece of land to residential developer. So we can't predict what's going to happen, but its five years, we will be in New York centric, we will be.

The majority of that office company and the Penn District will be really important five years from now.

The next question comes from Alexander Goldfarb of Piper Sandler. Please go ahead.

Hey, good morning, good morning, Steve and Michael.

Uh huh.

Steve just.

Okay.

Talking about the comp plan that you guys put in place around $3 50 Park.

Year end, obviously in the middle of last year, the stocks were on their back and you guys.

Revised your comp plan understandably, just given how the stock was depressed and I think we all understood that at the end of the year. The $3 50 comp plan definitely surprised and especially that shareholders have to wait until the end of this year to figure out their dividend for 2020 for the stub the <unk> stub aside.

So can you just walk through how we should think about that comp plan for development project that doesn't deliver for another decade, while youre talking about earnings still going down this year and shareholders.

Turning to wait another year for the dividend just wanted to understand that especially in light of.

The mid year update that you guys did for the senior executives and upper generation last summer.

Sure.

Hi, Alex.

The.

Let me go backwards first.

Comment about the dividend.

We have had.

An enormous number of incoming from shareholders analysts et cetera, and industry peers are saying and what we did with the dividend was correct.

And.

Yes.

To continue to pay.

The way, we will rightsize the dividend, but to continue to pay and overpay, a dividend et cetera.

Capital markets is just not the most efficient.

Use of capital so you seem to be on the other side of that I can tell you that most of your friends and peers.

And what we did was that correct.

Pardon me now.

I need to Hollywood.

No Thats fair enough.

If I was there.

Well.

I'm not going to get into that.

Now, let's talk about the development fee comp plan.

So this is something that we've been thinking about a long time. So the first thing is it's objective is retention.

Reward.

Two increased motivation and to Incent.

Sure.

Our.

Most important employees retention.

Reward.

<unk> and <unk>. So the first thing is is that anything that is paid out on that comp land comes from joint ventures.

<unk> projects now we don't do a lot of those.

350 Park.

Probably in my memory the first one.

Did.

We did $2, 20% to 100%.

And we own the Penn District, 100%.

This doesn't come into being until there is a joint venture partner that pays a development fee.

Now I talked about incentives and motivation.

We think that it's.

Shoulder to shoulder with our shareholders, but we do this time.

Of investing and we think it's also shoulder to shoulder with our shareholders that we bring an outside third party capital.

Yes, which has become most of our most of our peers in the industry are using outside capital, we havent done that in the past so we want to do that in the future. So.

That's the beginning.

<unk> of it by the way, it's a very small plant.

<unk>.

Substantial in any way and as we looked at it and as we review.

Our senior management compensation and even down the line, we find that our compensation is lower at almost all of our peers.

So this is a way to have performance based.

Comp.

A small amount a small amount by the way.

Other initiatives other than stock based comp because we can't control the stock price, but we can control our performance in joint ventures.

Payable out of third party development fee is not not development fees that remainder would be paid.

And we think it's highly appropriate.

We'd be probably made a mistake.

We did a good job of socializing.

June comp plan.

We didn't do it with this development plan because we thought it was very small.

Sure.

We feel like shareholders would get it and frankly.

Frankly, I made a mistake we should have.

Our shareholder base, what we what we were going to do I myself.

Hang on.

I'm extremely unhappy to get any negative comments about that.

But there it is we think it's right we think it's a good.

Way of keeping our people we don't think our people are underpaid certainly.

At the highest level.

And by the way.

Doing a 2 million square foot building.

In New York City.

Breaking work.

Its night since we can't it's backbreaking work and we think that the team deserves it.

So Steve but to that point, if it's a small amount.

Would seem like something Thats, just part of the annual comp Committee like Hey, you guys did a great job as part of your bonus for your 2023 or 2024, we're rewarding. So if it's a small number it doesn't seem like that much of an incremental incentive and two it just seems like Gordon every course that management is expected to do to drive value for shareholders. It would be part of their regular course.

Compensation, it's not clear why it would be a standalone.

Obviously I don't agree with you.

Okay.

This is.

I would like to agree with you I would like you to agree with me but.

I'd like to agree with me rather than be agree with you but anyway.

Alright.

Yes.

Sure.

No.

Most of it is.

Plant is paid.

It goes through the comp committee of the board and they take all.

Circumstances into account.

So there.

There you have it.

Okay, Let me switch Glenn on Penn two I believe you guys switched brokers from your original one to it to a new one just curious the progress that you guys have had on Penn one seemed pretty good you toward us last year. The projected certainly seemed impressive what you guys have done with Penn one it seemed like leasing was going well what <unk>.

With 10 to that you found it necessary to switch brokers.

And is that sort of a repositioning of the asset different tenants or was there something else that you learned through the process that caused you to switch brokers on Penn too.

So we did not switch brokers.

Wakefield team has added to my team something we do not do often as you know, but here, we decided to do it to cover the entire market both regionally locally and nationally we brought in a great team.

The team has just done all leasing over in Manhattan, West So we've additive not a switch at.

<unk> remains the <unk> team.

The reasoning for doing depend too.

Cushman <unk> Wakefield, but no switch no change normal course of business, Alex I'll know confident.

And.

The gold medal team of Glenn and the rest of his team in house.

The strength the ability the franchise to do the job.

But we're in no stone unturned business and so we thought that adding cushman.

To have that extra.

Looking to the marketplace.

It was a good piece of insurance and it's working out.

The next question comes from Caitlin Burrows of Goldman Sachs.

Please go ahead.

Alright. Thank you. This is Julian bluing on for Caitlin. Thank you for taking the question, Steve regarding the dividend and adding to Alex's question last quarter. You provided a really helpful. Breakdown of your 2023 expected taxable income I was wondering if you could provide the same for 2020.

Four and should we assume that the fourth quarter dividend will be again set at sort of.

The minimum required taxable income level.

The answer to that is that we have a.

Abroad.

Idea of what the 2020, what actual income will be as you would expect.

It is not a number that we are comfortable enough with disclosing publicly.

So that's the first point the second point.

Time is the financial policy of our boards to pay out.

Minimum dividend equal us.

From a capital allocation point of view, that's the right decision.

As I said before numerous.

Investors shareholders analysts.

Trs tell us that's the right decision.

The dividend the most interesting part of the dividend, however will likely be.

Gains on asset sales because all of our assets have very low basis. So if we chose to sell.

I'll ask two or three or four and 24 that will determine more than anything what the dividend would be.

That's really helpful. Thank you.

And then maybe switching gears.

Tibet 10, one the ground lease renewal I think you mentioned at the beginning of last year that you thought the final number could come in lower than the original $26 million estimate just based on evolving sort of market conditions is that still your expectation and I guess what is what is the latest update on that process.

That's absolutely my expectation, but then somebody on the other side that disagrees with that.

So we're in the middle of.

The process the arbitration process to determine what the number will be.

And Thats something we cant speculate on that.

Okay, great. Thank you.

Yes, Sir.

The next question comes from Nick <unk> of Scotiabank. Please go ahead.

Hi, Thanks, just first a question on Penn one.

Based on the incremental yield you get.

Dave last quarter and this up I know, it's now in the I guess more stabilized pool, but.

It looks like there was eventually $59 million of future NOI assume now on a cash basis can you just let us know like how any of that has already been captured yet and just how to think about.

The impact of any any of that if there is any of that benefit assumed for this year.

Yes, Nick as Michael I can't give you the exact numbers off hand. The answer is some of that is factored in 'twenty four but this is this is a rolling program in.

And so it'll continue to come in next year as well honestly, there's vacancy there does that get leased up that will come online as well. So the answer is yes. Some of it there I can tell you is and it's not in the <unk>.

Development yields anymore, just because of the project is done but.

Are the last one we had published.

Confident in terms of hitting that and hopefully exceeding it but.

We can we can circle up and get the launch specifics, but some of thats in 'twenty, four but it'll it'll roll in over the next year or two as well.

Okay. Thanks.

I'd like to make a couple of comments.

The first is that.

All of US focus on what the initial yield is on.

Asset.

I think it is.

A very interesting exercise to say what can that asset produce in terms of revenue 357 years out. So we believe for example, independent district, we believe in the west side of Manhattan.

We believe that when you combine Penn district, with Manhattan, West and Hudson yards.

Hello, Hello enabled it.

Hi, highly sought after.

Ever.

So we believe that these assets will return.

Satisfactory return.

The get go and we will grow from there as we continued O&M over the next period of time.

So is that we also believe.

I mean, there's no question about.

Which is more important.

Grand Central.

The answer is obviously grand Central is at the foot of Park Avenue, So thats very important.

And I think everybody.

Consider this block.

The principal business Boulevard.

And in the country, maybe maybe even.

The World, we have a representation of multiple assets on park Avenue too, but it's interesting to note.

That New Jersey Transit comes into only Penn station in New Jersey is the fastest growing.

A suburb of New York. So we are very very happy with our position.

Okay. Thanks. Thanks for that just second question is on 10 warrant intend to.

You guys give only the occupancy numbers in the soft and I'm just wondering if there's any way that you can give us a feel for like a leased rate for those assets or even think about how much of the leasing you've achieved so far.

What your ultimate plan is on getting to these.

Stabilized cash yields you talk about for the projects.

So much.

And one of the least comments again.

As Michael said 10, one is a multiyear program when we set out on the project there were over 200 tenants in the property, which we're rolling over the next call. It 567 years.

We've leased a considerable amount of space in pen once the data and we continue to cycle through with the tenants expire year to year.

So it's been very successful we've leased 30000 feet this year.

It runs north of 90, and we have a lot of action in the pipeline now Similarly, your pen two we've talked about the pipeline we have deals coming to afford <unk> two as we speak and you can stay tuned on that activity as we roll into the.

First second quarter of 2004.

Okay, Yeah, no I appreciate all the commentary on the re leasing it's just honestly a little bit hard to understand where you guys are at in terms of the re leasing of those projects.

At what point, you're getting the NOI benefit because there is no like bridge provided anymore about rolling out in the rolling in of the NOI. So it's honestly very difficult to quantify what the benefit to the company is going to be able to cover that.

The next couple of years.

I would say, Joe I would say Nick.

Right.

We've got $1 million quarterly so okay pen one we've probably taken care of.

Im going to rough guess grant path to square footage today right. So there's probably another $1 million to go in terms of rolling that up mark that to market between those two assets.

A short period of time and lets call it.

Usually asset three years right.

Going to be.

An incremental $200 million of it comes from an NOI that comes from those assets.

A little less from Charlie too in terms of our main retail, but the bulk of that one too that's probably and that our capitalized interest another $150 million right. So.

That's as crisp as I can give it to you a little bit early a little bit late on the timing, that's the magnitude and thats going to happen.

Great. Thanks, I appreciate that extra commentary.

Michael Yes.

Yes.

The next question comes from Anthony <unk> of Jpmorgan. Please go ahead.

Hi, Thanks, I just have one Michael if I got your comment right earlier I think you mentioned.

Debt markets are pretty open right now for retail and so I was wondering if that creates any opportunities for you all to get paid back.

On your prep interest in the JV in the near term at all.

Good morning.

We're pleased that the markets are opening.

And the answer is we are starting to look at it but.

We've got we've got some leasing to do on a couple of those assets as well if you think about a $6 89.

Fifth or.

The old space at $50 40, so theres, a little bit of leasing as they get accomplished stabilize two or three of the assets but.

As opposed to something that was sort of not on the table as a possibility I think it is emerging as a possibility and if the markets continue to improve.

As we are we are absolutely focused on it.

And we're sort of gathering data and looking at it but.

It's one of those things, where we've got to do the leasing there is also a size limitation in terms of how much.

You can put through the system, but.

Our goal is to repatriate that capital at a time and that then opportunities emerge.

I look at it differently.

The markets are open, which really means that lenders are prepared to give you.

Money at 8%.

That is not open to me because the cluster of that capital is just too high.

<unk>.

This is not the time to be aggressively borrowing.

Unless you absolutely need it so the answer is as we look at it.

Im an academic point of view, but it would be very surprising to see our company aggressively refinanced the preferred or anything else.

At these interest rates.

Now just a minute about our liquidity.

We have $1 billion some odd in cash.

We consider at some point in time that the preferred as a source of liquidity.

<unk>.

Not at 8%, but lower but if we add to it as a source of liquidity and that's $1 $8 billion.

The next is remember that Penn Plaza has no debt on it so we've got one debt free.

That's right.

Finally debt free and the hotel Penn site debt free so we have an enormous.

Liquidity.

Which we.

We think is.

Pretty interesting.

Okay. Thank you.

Thank you.

The next question comes from Ronald Camden of Morgan Stanley. Please go ahead.

Great just one from me as well I was just looking at the 10-K in a footnote.

You put some really helpful details about where you expect to release some of the maturities on the office portfolio I think it looks like flat or in some of the retail it at sort of over 30%, which I thought was helpful. But it's trying to connect the dots between those releasing spreads I think we talked earlier on the call about occupancy potentially dipping in the first packet.

Part of the year before picking up can you put that all together for us and to our same store NOI number I know you don't give guidance, but is there some broad strokes that we should be thinking about same store NOI is that is it flat is it slightly down.

How should we think about those pieces.

It's probably a little bit down.

The aggregate.

But.

Again.

It depends a little bit on what spaces and when happens so.

Hard to give you any more guidance than that but.

But I think your overall characterization in the office on average basis flat is probably accurate.

But.

As Glenn has a history of doing.

We pull forward a number of leases that are going to roll in <unk>. So.

It's sort of hard to give you that number.

Got it thanks, so much.

Okay.

The next question is a follow up Keith Bachman of Evercore ISI. Please go ahead.

Yeah. Thanks, just two quick follow ups, Michael I think on the G&A, you and Steve have provided some color, but I just wanted to.

Are you, saying that in 'twenty, four or you think the G&A will be flattish with 23 or it actually comes down.

24 versus 23.

Well, it's going to come down.

<unk>, we're not going to be there right.

That was a there was a last year item is not going to reoccur. This item, so thats going down so.

Answer is yes, we think it will be down.

Okay, but just basically stripping that out that's really the only kind of one timer that would sort of come off the 2020 number.

Yes.

There is a little bit more in terms of things that were accelerated that arent going to reoccur.

Just based on historical vesting for certain people, but.

Yes.

So the answer is net net.

All in fee that I don't know, Tom we're talking $10 million, so and neighborhood probably somewhere in the neighborhood.

That comes off the books from 2004.

Okay, Great. Thanks, and then just second follow up just on I think <unk> got a big refinancing that youre working on with your partner at 280 Park Avenue, just any kind of color I think that might have gone into special servicing I assume that that was maybe.

Part of the mechanics of getting that loan refinance, but just any color or commentary you can provide on that refinancing would be great. Thanks.

Sure I am not going to say too much given we're still in the middle of the process by then it is a <unk> loan.

Going into special servicing is part of the process of working that out.

And.

We and our partner, making good progress on that and we expect to get to a successful resolution with.

Terms that we think are attractive so more to come shortly there.

But we've been hard at work for the last.

Six to nine months the <unk> loans are.

Painful complicated.

Given the way, they're set up but.

You have the right sponsorship and.

I think they recognize that so we're getting closer to the finish line.

Great that's it for me thanks.

Thank you.

Yes.

Okay.

That concludes today's question and answer session I would like to turn the conference back over to Steven Roth for any closing remarks.

Thank you everybody. We appreciate your interest in our company we learned from you every call.

This was essentially call and.

Yes.

It's snowing in New York.

And we'll see you at the next call when is the next call.

On May seven.

Have a good day.

Okay.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.

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