Q2 2024 SL Green Realty Corp Earnings Call
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Operator: Your call will begin momentarily; thank you for your patience. Thank you, everybody, for joining us, and welcome to SL Green Realty Corp.'s second quarter 2024 Earnings Results Conference. This conference call is being recorded.
Speaker Change: Thank you, everybody, for joining us, and welcome to SL Green Realty Corp's second quarter 2024 Earnings Results conference call.
Operator: At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. You should not rely on forward-looking statements as predictions of future events, as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their perceptions and beliefs as of today. Additional information regarding the risks and uncertainties and other factors that could cause such differences to appear are set forth in the risk factors and MD&A sections of the company's latest Form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission. Also, during today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act.
Speaker Change: This conference call is being recorded. At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. You should not rely on forward-looking statements as predictions of future events, as actual results and events may differ from any forward-looking statements that management may make today.
Speaker Change: All forward-looking statements made by management on this call are based on their perceptions and beliefs as of today.
Speaker Change: Additional information regarding the risks and uncertainties and other factors that could cause such differences to appear are set forth in the Risk Factors and MD&A sections of the company's latest Form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission.
Speaker Change: Also during today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act.
Operator: The gap financial measures most directly comparable to each non-gap financial measure discussed and the reconciliation of the differences between each non-gap financial measure and the comparable gap financial measures can be found on both the company's website at www.slgreen.com, by selecting the press release regarding the company's second quarter 2024 earnings, and our supplemental information includes our current report on Form 8-K relating to our second quarter 2024 earnings. Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Reality Corp., I ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you. I'll now turn the call over to Marc Holliday. Please go ahead, Marc.
Speaker Change: The GAAP financial measures, most directly comparable to each non-GAAP financial measure, discussed and the reconciliation of the differences between each non-GAAP financial measures and the comparable GAAP financial measures can be found on both the company's website at www.slgreen.com.
Speaker Change: By selecting the press release regarding the company's second quarter 2024 earnings and our supplemental information includes our current report on Form 8K relating to our second quarter 2024 earnings.
Speaker Change: Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Reality Corp, I ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person.
Marc Holliday: Thank you, good afternoon, and I appreciate everybody joining in today. I think this was, by all measures, a great quarter for SL Green, even by our own lofty standards. I want to lead off by expressing my sincere appreciation for the SL Green team, who have massively contributed to our company's impressive results for this quarter and throughout the most challenging times of recent years. The extremely talented men and women of SL Green work seven days a week, believe in New York City, care deeply about what we are doing, and are simply the best in the business.
Speaker Change: Thank you. I'll now turn the call over to Marc Holliday. Please go ahead, Marc.
Speaker Change: Thank you, good afternoon, and I appreciate everybody joining in today.
Marc Holliday: I think this was, by all measures, a great quarter for SL Green, even by our own lofty standards.
Marc Holliday: We could not print these results against the tide of negativity and defeatism without the dedication and loyalty of the 300-plus SL Green corporate employees and another 1,000-plus who work in the buildings day, night, weekends, and holidays. We are extremely lucky to have such a diverse and talented team of professionals.
Marc Holliday: I want to lead off by expressing my sincere appreciation for the SL Green team who have massively contributed to our company's impressive results for this quarter and throughout the most challenging times of recent.
Marc Holliday: The extremely talented men and women of SL Green work 7 days a week, believe in New York City, care deeply about what we are doing, and are simply the best in the business.
Marc Holliday: We could not print these results against the tide of negativity and defeatism without the dedication and loyalty of the 300-plus SL Green corporate employees and another 1,000-plus who work in the buildings day, night, weekends, and holidays.
Marc Holliday: And it's the biggest reason for our performance in the office sector over the past one, three, and five years. And it should be the deciding factor in making an investment in SL Green, the knowledge that we can outperform in good markets and bad, and that we will always put shareholders first in making strategic decisions. This year-to-date achievement illustrates something far greater than simply a market in recovery because we are vastly outperforming an still unsettled commercial real estate market.
Marc Holliday: We are extremely lucky to have such a diverse and talented team of professionals, and it's the biggest reason for our performance in the office sector over the past one, three, and five years.
Marc Holliday: And it should be the deciding factor in making an investment in SL Green, the knowledge that we can outperform in good markets and bad, and that we will always put the shareholders first in making strategic decisions.
Marc Holliday: This year-to-date achievement illustrates something far greater than simply a market in recovery, because we are vastly outperforming a still unsettled commercial real estate market.
Marc Holliday: It is the result of a deliberate plan we laid out years ago to improve the quality of our portfolio by physically improving and amenitizing our properties, focusing our efforts along the Park Avenue spine in East Midtown, selling assets that didn't fit that profile, and then monetizing our best assets to fund our new development activity. What you are now seeing is the positive consequence of the execution of that plan. And I believe we are now on a path to seeing sequential quarterly improvement in our operating and financial metrics for the foreseeable future. When others gave up on New York, we believed.
Marc Holliday: It is the result of a deliberate plan we laid out years ago to improve the quality of our portfolio by physically improving and amenitizing our properties.
Speaker Change: focusing our efforts along the Park Avenue spine in East Midtown, selling assets that didn't fit that profile, and then monetizing our best assets to fund our new development activity.
Speaker Change: What you are now seeing is the positive consequence of the execution of that plan. And I believe we are now on a path to seeing sequential quarterly improvement in our operating and financial metrics into the foreseeable future.
Marc Holliday: People said that the financial sector was picking up and moving to Florida, but what we've seen is significant sector growth right here in our hometown, fueled in part by the $12 billion of Wall Street profits in just the first quarter of 2024. And that's as compared to $26 billion for all of last year. Growth in South Florida and elsewhere doesn't mean contraction here in New York. In fact, it's been the opposite.
Speaker Change: When others gave up on New York, we believed.
Speaker Change: People said that the financial sector was picking up and moving to Florida.
Speaker Change: But what we've seen is significant sector growth right here in our hometown fueled in part by the $12 billion of Wall Street profits in just the first quarter of 2024, and that's as compared to $26 billion for all of last year.
Speaker Change: Growth in South Florida and elsewhere doesn't mean contraction here in New York. In fact, it's been the opposite.
Marc Holliday: Companies like Blackstone, Citadel, Wells Fargo, and Bloomberg are all expanding their footprint here, and it appears that J.P. Morgan is buying the neighboring building at 250 Park Avenue as they continue to report extremely strong profits. But the demand for space goes far beyond Park Avenue, and I think the best illustration of that is looking at our current pipeline of office leasing, which is 1.2 million square feet. This is after all the activity we announced yesterday, totaling 1.4 million square feet of leases signed to date.
Speaker Change: Companies like Blackstone, Citadel, Wells Fargo, and Bloomberg are all expanding their footprint here and it appears that JP Morgan is buying the neighboring building at 250 Park Avenue as they continue to report extremely strong profits.
Speaker Change: but the demand for space
Speaker Change: goes far beyond Park Avenue.
Speaker Change: I think the best.
Speaker Change: illustration of that is looking at our current pipeline
Marc Holliday: There's another 1.2 million square feet of identifiable leases pending term sheets out for signature that we have on our sites after that activity, and interestingly, more than 80% of that activity is not on Park Avenue, but rather it's, you know, radiating outwards through East Midtown, everywhere from 6th Avenue on over to 3rd Avenue, fairly evenly dispersed, lots of mid-market deals, lots of strength in the middle, not And I think it's, you know, one of the more exciting elements of what we have to look forward to for the balance of this year. You know, everyone wrote off retail in New York City, but you saw our release yesterday. And it very clearly is back.
Speaker Change: of Office Leasing, which is 1.2 million square feet.
Speaker Change: This is after all the activity.
Speaker Change: We announced yesterday totaling 1.4 million square feet of leases signed to date.
Speaker Change: There's another 1.2 million square feet of identifiable leases pending, term sheets, out for signature, that we have in our sites after that activity, and interestingly, more than 80% of that activity is not on Park Avenue.
Speaker Change: But rather, it's on, you know, radiating outwards through East Midtown, everywhere from 6th Avenue on over to 3rd Avenue, fairly evenly dispersed, lots of mid-market deals, lots of strength in the middle, not just the big deals.
Speaker Change: and I think it's you know one of the more exciting elements of what we have to look forward to for the balance of this year.
Marc Holliday: Retail is back. Yesterday, we announced at One Madison that retail is now 100% leased, curated in a way that brings real value to our tenants at the building and to the residents of the Flatiron neighborhood. The result of this is the limits on Airbnb and the conversion of some hotel properties to supportive housing. If this trend continues, Midtown is likely going to be under-hoteled again soon.
Speaker Change: You know everyone wrote off retail in New York City, but you saw our release yesterday
Speaker Change: And it very clearly is back. Retail is back. Yesterday we announced that One Madison Retail is now 100% leased, curated in a way that brings real value to our tenants at the building and to the residents of the Flatiron neighborhood.
Speaker Change: and naysayers wrote off New York as a global destination.
Speaker Change: But tourism is beating expectations again well over 60 million tourists expected this year in New York
Speaker Change: Hotel average daily rates up 3% year-over-year, occupancy is approaching 90% in Manhattan.
Speaker Change: And the result of this is because of limits on Airbnbs and conversion of some hotel properties to supportive housing. If this trend continues, Midtown is likely going to be under-hoteled again soon.
Marc Holliday: There is no better evidence of this surge of tourism than right upstairs from us at Summit, where attendance numbers are up again this year over, uh, you know, the out-performance attendance we had last year. And it's just proving again and again that this is, uh, becoming one of New York City's most compelling destination experiences and was a contributor to our quarterly results, and, you know, more to come on that. But I want to end on an even higher note.
Speaker Change: There is no better evidence of this surge of tourism than right upstairs from us at Summit.
Speaker Change: Where attendance numbers are up again this year over, you know, the out performance attendance we had last year. And it's just proving again and again that this is.
Speaker Change: Become one of New York City's most compelling destination experiences and was a contributor to our quarterly results.
Marc Holliday: Today, I'm excited to announce that we have secured our first new summit global location, and we are expanding to Paris. More details to come on that in the fall, but today I can say to everyone listening in Paris, a bientot, and see you soon, and thank you all for listening, and we'll take questions. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star one, one on your telephone. Wait for your name to be called. If you would like to withdraw your question, please press star 11 again. Please limit your questions to two per person.
Speaker Change: And, you know, more to come on that. But I want to end on an even higher note. Today I'm excited to announce that we have secured our first New Summit Global Location and we are expanding to...
Speaker Change: Paris. More details to come on that in the fall today, but today I can say to everyone listening in in Paris, a bientot, and see you soon, and thank you all for listening, and we'll take questions.
Speaker Change: Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit your questions to two per person. Please stand by while we compile the Q&A roster.
John P. Kim: Please stand by while we compile the Q&A roster. Our first question comes from the line of John Kim of BMO Capital Markets. Your line is now open, through Curveball on the Paris announcement. So I have to ask you about that. Can you talk anything more about the location of Summit in Paris, the timing of it? And you know, anything else you could describe about it?
Speaker Change: Our first question comes from the line of John Kim of BMO Capital Markets. Your line is now open.
John P. Kim: through a curveball with the with the Paris announcement. So I have to ask about that. Can you, um, talk anything more about the location of of summit in Paris, the timing of it and, you know, anything else you could you could describe on it? Yeah, no, you know, we're gonna leave that.
Marc Holliday: Yeah, no, you know, we're gonna leave that. Stay tuned, more formal rollout in the coming months, lots to talk about, very exciting, but just wanted everyone to know we're coming. Maybe if I could focus in on Summit New York. You had a 16% growth in revenue this quarter year over year. How much of that was visitor count versus average ticket price? And can you also remind us of the mechanics of how the rent is paid to the JV, and how much of the OPEX is that rent figure? I understand the first part of the question.
Speaker Change: Stay tuned. More formal rollout in the coming months. Lots to talk about. Very exciting. But just wanted everyone to know we're coming.
Speaker Change: Maybe if I could focus in on Summit New York, you had a 16% growth in revenue this quarter year-over-year. How much of that was visitor count versus average ticket price?
Speaker Change: And can you also remind us on the mechanics of how the rent is paid to the JV, how much of the OPEX is that rent figure?
Marc Holliday: It's mostly attendance that matters. I think the attendance, which we had up for the year, was up another 100,000 for the first half of the year above our budgeted numbers. The ticket prices are fixed. My goal is, and the goal at Summit, is to really keep Summit at an affordable price point as possible so people can come and enjoy it both within the city and around the world. We have programs for New York residents where they get discounts. We have discounted programs that I think are best in class for. Active Duty Personnel and Veterans
Speaker Change: I got the first part of the question.
Speaker Change: Up for the year was up another $100,000 for the first half of the year above our budgeted numbers. The ticket prices are fixed. My goal is, and the goal of Summit, is to really keep Summit
Marc Holliday: And the prices are fixed; we don't surge prices. We set those prices at the beginning of the year. We hold them fixed and evaluate them at the end of every year. So almost all of what you see is attendance. What was that second part that you asked, if I can ask you, John, again?
Speaker Change: as an affordable price point as possible so people can come and enjoy it both within the city and around the world. We have programs for New York residents where they get discounts. We have discounted programs.
Speaker Change: that I think are best in class for...
Speaker Change: Active duty personnel and veterans and the prices are fixed. We don't surge price.
Speaker Change: We set those prices.
Speaker Change: The intercompany rent, or the rent that you pay to the JV, is that... how much of that is...
John P. Kim: The intercompany rent or the rent that you pay to the JV, how much of that is in the operating expense? And also on the revenue or visitor accounts? When do you start opening up on Mondays or expanding the hours? Well, why don't you answer the rent part?
Speaker Change: and the operating expense. And also on the revenue or visitor accounts, when do you start opening up on Mondays or expanding the hours?
Speaker Change: Well, why don't you answer the rent part. Yeah, rent schedules in the supplemental, John . The base rent. We don't get into how much percentage rent the summit pays to the building.
Unknown Executive: Yeah, rent schedules in the supplemental, John. The base rent. We don't get into how much of a percentage rent the summit pays to the city, Okay, and then hours, hours of operation. You know, those are I think right now we're typically opening from around nine in the morning, last ticket sale at 1030 at night, and the facility closes at midnight. We could go on for longer in the night; the night experience at the summit is every bit as good as daytime and sunset, something better.
Speaker Change: Okay, and then ours.
Speaker Change: Hours of Operation?
Speaker Change: Um, you know...
Speaker Change: Those are I think right now we're typically Opening from around 9 in the morning last ticket sale 1030 at night facility closes at midnight We could go longer the night the night experience at Summit is every bit as good as daytime and sunset something better
Marc Holliday: Because of the city lights and the air at night feature we have with that we've curated in the evening. So it's possible that in the second half of the year, maybe after the summer, we'll go later on in the closing hours. We're open seven days a week now. For portions of the first half of the year, we were closed on Tuesdays, I believe, down days, but right now, the facility is in excellent condition. The demand is strong. We're going seven days, and I imagine we'll be going seven days almost right up until the end of the season.
Speaker Change: because of the city lights and the air at night feature we have with
Speaker Change: that we've curated in the evening. So it's possible that in the second half of the year, maybe after the summer, we'll, we'll go later on the closing hours. We're open seven days a week now.
Speaker Change: Portions of the first half of the year, we were closed on Tuesdays, I believe, down days, but right now the facility is in excellent condition. The demand is strong. We're going seven days, and I imagine we'll be going seven days almost right up until the end of the season.
Connor Mitchell: We hope to see you in a year. Thank you. Please hold on for one moment for our next question. Our next question comes from the line of Connor Mitchell from Piper Sandler. Your line is now open. Hey, good afternoon.
Speaker Change: What happens here in a year?
Speaker Change: Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Connor Mitchell of Piper Sandler. Your line is now open.
Marc Holliday: Thanks for taking my question. Marc, you touched on it in your opening remarks, which is that Park Avenue leases up at higher rents with, you know, the recent quarter and activity as an example. Can you just expand on how you guys are seeing the dynamics of the neighboring submarkets changing in terms of pricing, concessions, Tory activity, any other color you might be able to give? Yeah, you know. The I don't have the average starting rent for the pipeline, but, you know, just to give you a sense for the leases done in the second quarter. The average rent, which was about $93 in the first quarter, was up over 10% to over $100 in the second quarter.
Marc Holliday: So, you know, a lot of that is influenced by Park, but not all of it. It's really, it's as much Park Avenue as it is the tops of buildings. Because, you know, I think Steve will sort of run you through the dynamic of the dearth, if you will, of big block availability, particularly on the tops of buildings, whether it's old or new, and regardless if it's on Park or off of Park, and it's definitely driving rents. And as it relates to concessions, Steve, you know, what are your thoughts? Well, there are a couple of points.
Connor Mitchell: Hey, good afternoon. Thanks for taking my question.
Connor Mitchell: Mark, you touched on it in your opening remarks, but just as Park Avenue leases up at higher rents with, you know, the Risa Corridor and activity as an example.
Speaker Change: Could you just expand on how you guys are seeing the dynamic of the neighboring submarkets changing in terms of pricing, concessions, Tory activity, any other color you might be able to give? Yeah.
Speaker Change: I don't have the average starting rent for the pipeline, but just to give you a sense for the leases done in the second quarter.
Speaker Change: The average rent...
Speaker Change: which was about $93 in the first quarter was up over 10% to over $100 in the second quarter.
Speaker Change: So, you know, a lot of that is influenced by Park, but not all of it's really it's as much Park Avenue as it is tops of buildings because, you know, I think Steve will sort of run you through the dynamic.
Steve: In the dearth, if you will, of big block availability, particularly in tops of buildings, whether it's old or new, and regardless if it's on park or off of park, and it's definitely driving rents and as it relates to concessions, Steve, you know, your thoughts? Well, a couple points.
Steven M. Durels: You know, Marc's spot on with regard to the migration to better quality space. And don't confuse that with just new construction or heavily renovated buildings. What we're seeing is that.
Steve: You know, Marc's spot on with regards to the, you know, migration to better quality space.
Speaker Change: And don't confuse that to mean just new construction or heavily renovated buildings. What we're seeing is that...
Steven M. Durels: Even in the mid-price point buildings, where we've got a tremendous amount of activity in our portfolio, but a lot of that is skewed towards the upper half of the floors, so the tower floors in particular. If you look overall in the market, beyond just our portfolio, Stat Out There would tell you that 57% of the current direct availability in the marketplace is located in base buildings or on the base floors of buildings. So you're seeing price appreciation on Park Avenue. You're seeing price appreciation in heavily renovated buildings, irrespective of location.
Steve: Well, we've got a tremendous amount of activity in our portfolio, but a lot of that is skewed towards the upper half of the floors, so the tower floors in particular. If you look overall in the market, you know, beyond just our portfolio,
Speaker Change: There's a stat out there that would tell you that 57% of the current direct availability in the marketplace is located in the base floors of buildings.
Speaker Change: So, you're seeing price appreciation on Park Avenue, you're seeing price appreciation in the heavily renovated buildings, irrespective of location, and you're seeing price appreciation in heavy and strong leasing velocity in the tower floors.
Steven M. Durels: And you're seeing price appreciation and heavy and strong leasing velocity on the tower floors of both the high quality buildings and the mid price point buildings. Concessions, I think, as we've said for a while now, remain pretty static. I haven't seen any change in concessions, irrespective of the building you're in.
Speaker Change: of both the high-quality buildings and the mid-price point buildings.
Speaker Change: Concessions, I think.
Speaker Change: As we've said for a while now, remain pretty static. I haven't seen any change in concessions, irrespective of the building you're in. And we're seeing the prices get pushed on the better portions of buildings and better quality buildings.
Connor Mitchell: And, you know, we're seeing prices get pushed on the better portions of buildings and better quality buildings. And I think we commented earlier in the year when asked that same question, that's exactly how we expected things to unfold as the market continues to improve.
Speaker Change: And I think we had commented earlier in the year, when asked that same question, that's exactly how we expected things to unfold as the market continues to improve.
Michael Robert Lewis: And then maybe just a quick question on the JV debt bond as well. Just wondering if there's any update on if the focus is still primarily on Manhattan, or maybe any other opportunities outside of the company's primary focus sub markets may surprise you, and you're kind of taking a look at any opportunities for the debt fund outside of. I will add to that, you know, as you start to see us or continue to see us grow the special servicing and asset management business, which is not a principal investment business. You'll continue to see us pick up assignments outside of Manhattan, but that's purely a commission business. Okay, thanks very much.
Speaker Change: Okay, appreciate that. And then maybe just a quick question on the JV Debt Fund as well, just wondering if there's any update on if the focus is still primarily on Manhattan or maybe any
Speaker Change: Any opportunities outside of the company's primary focus, sub-markets, may it surprise you, and you're kind of taking a look at any opportunities for the debt fund outside of Manhattan.
Speaker Change: Manhattan. The focus is Manhattan. I will add to that, you know, as you'll start to see us or continue to see us grow the special servicing and asset management business.
Speaker Change: which is not a principal investment business. You'll continue to see us pick up assignments outside of Manhattan, but that's purely a fee business for us.
Michael Robert Lewis: Thank you. One moment for the next question. Our next question comes from the line of Michael Lewis of Tourist Securities. Your line is now open.
Speaker Change: Okay, thanks very much.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Bye-bye. Bye. Bye. Bye.
Michael Robert Lewis: Thank you. My first question is about the leasing in Manhattan so far this year. You know, your full year guidance, as you know, for Manhattan office sign leases is 2 million square feet for the year. I don't know if you expected that to be, you know, the first half waited or not.
Speaker Change: Our next question comes from the line of Michael Lewis of Church Securities. Your line is now open.
Michael Robert Lewis: Thank you.
Michael Robert Lewis: My first question is about the leasing in Manhattan so far year-to-date.
Michael Robert Lewis: You know, your full year guidance, as you know, for Manhattan office sign lease is 2 million square feet for the year. I don't know if you expected that to be, you know, first half weighted or not. So I guess the question is, you know, is your volume year to date? Are you running ahead of what you expected in your guidance?
Marc Holliday: So I guess the question is, you know, what is your volume year to date? Are you running ahead of what you expected in your guidance? And if you are, you know, is there a reason or is it just, you know, broad strength that you're seeing in the market? Well, I mean, we're definitely running ahead of guidance. Um, the year has been, you know, the first half of the year was really strong for us and, uh, occupancy is heading in the right direction.
Speaker Change: And if you are, you know, is there, is there a reason or is it just.
Speaker Change: The broad strength that you're seeing in the market.
Speaker Change: Well, I mean, we're definitely running ahead of guidance.
Speaker Change: The year has been, you know, first half of the year was really strong for us and occupancy heading in the right direction.
Marc Holliday: Not just volume for volume's sake, but really good leases on terms that we're satisfied with and, you know, I think you saw that in our guidance as well as, as well as in other ways. So yeah, we should exceed our goal for the year. And that's good by how much we'll see. I'd like to see Steve and his team blow it away and end up with some really sort of fantastic results.
Speaker Change: Not just volume for volume's sake, but really good leases on, you know, terms where we're satisfied with and, you know, I think you saw, you know, you're seeing that in our guidance as well as
Speaker Change: as well as in other ways. So yeah, we should exceed our goal for the year.
Speaker Change: And that's, you know, that's good by how much we'll see, I'd like to see Steve and his team blow it away, you know, and end up with some really, you know, sort of fantastic results. But look, it's, there's a lot of work to do on that million two pipeline, I guess, you know, Steve, you could sort of give some,
Steven M. Durels: But look, there's a lot of work to do on that million-dollar pipeline. I guess, Steve, you could sort of give some parameters around what's driving that pipeline and where that strength is coming from. Yeah, so as we mentioned earlier, the pipeline currently stands at about 1,200,000 square feet. In that number, we have leases out in negotiation as opposed to just term sheets being negotiated, covering over 760,000 square feet.
Steve: You know parameters around what's driving that pipeline and you know where that strength is coming from. Yeah so as we mentioned earlier the pipe is Currently it stands at about a million two hundred thousand square feet
Steve: In that number we have leases out in negotiation as opposed to just term sheets being negotiated covering over 760,000 square feet.
Steven M. Durels: And of that number, of the overall pipeline of 1.2 million, 62% of the square footage that's in the pipeline is for deals or pending deals for current vacancy in the building. So you're seeing a lot of new tenants come into the portfolio, filling current vacancy. We're seeing the financial service sector, which makes up 50% of our pipeline, continue to add employees and add square footage and see dramatic expansion. Some of the bigger deals that you've seen us announce recently this year with both PJT at 280 Park Avenue and Harry's at 245 Park Avenue.
Steve: And of that number, of the overall pipeline of 1,000,002, 62%
Steve: of the square footage that's in the pipeline.
Steve: is for deals or pending deals for current vacancy in the building. So you're seeing a lot of new tenants come into the into the portfolio.
Steve: Filling current vacancy. We're seeing the financial service sector, which makes up 50% of our pipeline, continue to add bodies and add square footage and see dramatic expansions.
Steve: Some of the bigger deals that you've seen us announce recently this year with both PJT at 280 Park Avenue and
Steven M. Durels: Those were very large transactions, and each of them was for tenants that were doubling in size. So I think those were the, you know, those were some big drivers of our success to date. And, you know, we're seeing that in our pipeline. So we have no expectation that it's slowing down for the rest of the year. All right, well, we'll look for that green thumbs up on that slide in the deck in December. My second question is about fee income. And I talked to Matt a little bit about this. The other revenue line item was $33 million this quarter.
Steve: Harry's at 245 Park Avenue. Those were very large transactions and each of them were for tenants that were doubling in size So I think those were the you know, those are some big drivers
Steve: of our success to date. And we're seeing that in our pipeline. So no expectation that's slowing down for the rest of the year.
Speaker Change: I agree. We'll look for that green thumbs up on that slide in the deck in December .
Speaker Change: My second question is about the fee income, and I talked to Matt a little bit about this. The other revenue line item was $33 million this quarter. It was $13 million in the first quarter. If I look at the guidance, it appears to me it's somewhere in the mid-teens quarterly run rate the next couple of quarters.
Michael Robert Lewis: It was $13 million in the first quarter. If I looked at the guidance, it appears to me it's somewhere in the mid-teens quarterly run rates for the next couple of quarters. Can you maybe talk about the recurring fees? And I don't want to call the rest of them non-recurring because I realize they're just lumpy and more transaction-driven, but it might help kind of frame not only modeling but what multiples to put on revenue streams to talk about the servicing fees versus some of the lumpier transaction fees. In that line, I don't know. Yeah, it's Matt.
Speaker Change: Can you maybe talk about the recurring fees, and I don't want to call the rest of them non-recurring because I realize they're just lumpy and more transaction driven, but it might help kind of frame not only modeling, but what multiples to put on revenue streams, you know, to talk about the servicing fee versus some of the lumpier transaction fees.
Matthew J. DiLiberto: So, you know, I think this quarter finally illuminates for people the fee-generating machine that this platform can be, which we've, you know, telegraphed to people the last few years, and it's really, you know, showing its strength. Now, these fees come in in various forms, and they can be lumpy. So last quarter was, you know, a fairly muted quarter for ancillary fee income; this was big. And those fees can come in many forms.
Speaker Change: In that line, I know.
Speaker Change: Yeah, it's Matt. So, you know, I think this quarter...
Speaker Change: Finally, illuminates to people, you know, the fee-generating machine that this platform can be, which we've
Speaker Change: Andrew Mathias, The Big Game Hunter, www.TheBigGameHunter.com
Matthew J. DiLiberto: We talked about the special servicing business; that business is, you know, basic, modest fees on a monthly basis until you resolve the situation, then you get a resolution success fee. Those are unpredictable, but they're sizable when they come in.
Speaker Change: muted quarter in ancillary fee income this was big and those fees can come in many forms we talked about the special servicing business
Speaker Change: That business is, you know, basic modest fees on a monthly basis until you resolve the situation, then you get a resolution success fee. Those are unpredictable, but they're sizable when they come in. We often get fees from
Matthew J. DiLiberto: We often get fees from Partners, Buyers of Assets of Restructuring Debt, those can be lumpy, or they can be a function of the timing of the closing of those deals. That's part of what flowed through in the quarter. So when you say, "What's recurring?", Well, all of those as categories are recurring. The timing of those things is what is most challenging, by the way, even for us, the blessing of not putting out quarterly guidance. I don't have to guess when these fees will come in.
Speaker Change: Andrew Mathias, The Big Game Hunter, www.thebiggamehunter.com
Speaker Change: The timing of those things is what is most challenging, by the way, even for us, it's...
Matthew J. DiLiberto: Every three months, we can do it over the course of 12 months, but even that can change from quarter to quarter. But as categories, you will see special servicing fees, ancillary fees, asset management fees, continue to be a bigger and bigger part of our recurring income. And that's a very high-margin business, much higher margin than real estate, and therefore requires a much higher multiple. Well, I have to continue to do it quarter to quarter, so I'll do my best, but thank you for that.
Speaker Change: The blessing of not putting out quarterly guidance. I don't have to guess when these fees come in Every three months we can do it over the course of 12 months
Speaker Change: that even that can move from quarter to quarter, but as categories.
Speaker Change: You will see special servicing fees, ancillary fees.
Speaker Change: Asset management fees continue to be a bigger and bigger part of our recurring income. And that's a very high margin business, much higher margin than the real estate, and therefore requires a much higher multiple.
Speaker Change: Well, I have to continue to do quarter to quarter, so I'll do my best. But thank you for that.
Speaker Change: Thank you. One moment for our next question.
Nicholas Philip Yulico: Thank you, one moment, for our next question. Our next question comes from the line of Nick Yulico of Scottship Bank. Your line is now open.
Speaker Change: Our next question comes from the line of Nick Yulico of Scottship Bank. Your line is now open.
Nicholas Philip Yulico: Thanks. The first question is about the Ares renewal and expansion. I think that was done in July. Is it possible to get a feel for the mark to market value on that? It's a sizable number. I don't want to get into specific mark to mark on leases, but it's, you know, the leases in 245 Park, as a general statement, are being marked up significantly from prior vintage. Yeah, I mean, you got to understand that the asset was owned by H&A for a period of time.
Speaker Change: First question is for the Ares renewal and expansion. I think that was done in July . Is it possible to get a feel for the mark to market on that?
Speaker Change: It's a...
Speaker Change: Sizable number. I don't want to get into specific mark-to-market on leases, but it's, you know, the leases in 245 Park, as a general statement, are being marked up.
Speaker Change: significantly from prior vintage. I mean, you got to understand the the asset was owned by H&A for a period of time and you know, it was
Nicholas Philip Yulico: And, you know, it was probably not receiving the amount of capital commitment it deserved in order to be responsive to [inaudible] It's already underway. We hope to be done by the end of 25, first quarter of 26.
Speaker Change: It was probably not receiving the amount of capital commitment it deserved in order to be responsive to
Speaker Change: A building that's in an unbelievable location and should be a market leader, you know, really, in terms of Park Avenue address. So, you know, we're obviously addressing that through a significant capital program we've launched. It's already underway. We hope to be done by end of...
Marc Holliday: Unknown Speaker. And, you know, we're marketing the building, off of the commitment to do that, you know, very robust repositioning of the property, everything from plaza to lobby, amenities, new rooftop, etc. I mean, it's, it's going to be a, it's gonna be a phenomenal building when it's done. So, you know, when you look at Mark to Mark, it's, it's kind of, it's a bit unfair to compare, you know, apples and oranges, because this building is, is completely different than it's current state or predecessor building, the rents are reflective of that, and all the rents in the building from bottom to top are decidedly triple digits, you know, maxing out at, you know, as much as $150 a foot or thereabouts.
Speaker Change: And, you know, we're marketing the building.
Speaker Change: off of the commitment to do that, you know, very robust repositioning of the property, everything from plaza to lobby.
Speaker Change: amenities, new rooftop, etc. I mean, it's it's going to be a
Speaker Change: It's going to be a phenomenal building when it's done.
Speaker Change: When you look at mark-to-market, it's a bit unfair to compare.
Speaker Change: Apples and Oranges, because this building is completely different than its predecessor.
Speaker Change: Current State or Predecessor Building, the rents are reflective of that, and all the rents in the building from bottom to top are decidedly triple digits, you know, maxing out at, you know, as much as $150 a foot or thereabouts.
Marc Holliday: And, you know, we're probably raising rents as we go forward because there's a diminishing supply of what's left. We had forecasted a longer lease-up period. But given both the demand for renewal space and expansion space, and new leases we've signed, you've seen a bunch of them over the past few quarters, I expect we'll be able to achieve even higher mark to markets as we go forward to full lease up of the building. Okay, thanks for that.
Speaker Change: And, you know, we're probably raising rents as we go forward because there's a diminishing
Speaker Change: supply of what's left. We had forecasted a longer lease up period, but given both the
Speaker Change: Demand for Renewal Space and Expansion Space, and new leases we've signed. You've seen a bunch of them over the past few quarters. I expect we'll be able to achieve even higher mark-to-markets as we go forward to full lease up of the building.
Nicholas Philip Yulico: I guess, Marc, just to follow up, then, you know, I know, you've gotten a lot of leasing done in the building, as you mentioned, and it sounds like rents have gone higher. Can you then just give us a feel for how you're thinking about then what the asset valuation could be like versus the interest sale that was done last year? I realize you're still focused on that. Just any feel for whether it's Based on the underwriting a year ago versus what you're seeing now. Well, I don't have those numbers in front of me.
Speaker Change: Okay, thanks for that. I guess, Marc, just a follow-up then is that, you know, I know
Speaker Change: You've gotten a lot of leasing done in the building, as you mentioned, and it sounds like rents have gone higher. Can you then just give us a feel for how you're thinking about then what the asset valuation could be like?
Speaker Change: Unknown Speaker, the Interest Sale that was done last year, I realize you're still, you know, I think focused on that. Just any feel for whether it's an NOI number or something else, how that may have changed based on the underwriting a year ago versus what you're trying to achieve now.
Marc Holliday: But I mean, you know, just looking intuitively, we're like over a year ahead, I think, in terms of time elapsed, we've leased up a lot of space, we've done it, you know, on budget. So time value alone would warrant, you know, some type of premium. On the one hand, you could say, well, you know, that's great progress.
Speaker Change: Well, I don't have those numbers in front of me, but I mean, you know, just
Speaker Change: Looking at it intuitively, we're like over a year forward, I think, in terms of
Speaker Change: Time elapsed. We've leased up a lot of space. We've done it.
Speaker Change: [inaudible]
Marc Holliday: On the other hand, we budgeted for this progress. That's the progress our partner bought into. When they did the deal, when was it, Harry? 13 months ago.
Marc Holliday: And, you know, one of the things our partners rely on is that we put numbers on a piece of paper. They're not shy. They're not, they're not, you know, unattainable, obviously, but they're not shy. We test ourselves just like we do with you guys every December with our scorecard; we do the same with our partners, and put down what we think we can achieve both in terms of timing and rents and concession packages. We've been achieving that.
Harry: When they did the deal, when was it Harry?
Harry: 13 Months Ago and you know one of the things our partners rely on is we we put numbers on a piece of paper
Marc Holliday: So the good news is we're executing the plan. The costs for the development are coming in right on the nose of where we expected them to come in. In fact, we increased the scope a bit to include a more dramatic improved rooftop, like we did at One Madison. And by the way, the rooftop at One Madison is spectacular. And I think it's going to be one of the real icons down in that area for venue space going forward. And so, on the one hand, you pick up the time value.
Speaker Change: They're not shy. They're not, you know, unobtainable, obviously, but they're not shy.
Speaker Change: We test ourselves just like we do with you guys every December with our scorecard, we do it the same with our partners and put down what we think we can achieve both timing and rents and concession packages.
Speaker Change: We've been achieving that, so the good news is we're executing the plan. The costs for the development are coming in right on the nose of where we expected them to come in. In fact, we increased the scope a bit.
Marc Holliday: On the other hand, we're dead on our numbers, so that's the good news. And I would expect there to be some premium where we transact. All right, thanks.
Speaker Change: to include a more dramatically improved rooftop like we did at One Madison and by the way the rooftop at One Madison is spectacular and I think it's going to be one of the one of the real icons down in that area.
Speaker Change: for venue space going forward. And so on the one hand, you pick up the time value. On the other hand, we're dead on our numbers. So that's the good news. And I would expect there'll be some premium to where we transacted.
Stephen Thomas Sakwa: One moment for our next question. Our next question comes from the line of Steve Sakwa of Evercore ASI. The line is now open. Thanks.
Speaker Change: All right, thanks, appreciate it.
Stephen Thomas Sakwa: You guys have had a lot of success leasing up, you know, 280 Park, 245 Park, obviously one Vanderbilt is filled. You know, One Madison on the office side maybe hasn't made as much traction, Marc, I know you kind of leased up all the retail there, but maybe you or Steve could just kind of speak to the demand within that 1.2 million square foot pipeline that you're seeing for One Madison and maybe what's been holding the leasing back at that asset. Steve, I just want to, no, no, no, no, no, I got to, first of all, somebody restrained this guy.
Speaker Change: Q & A Q & A Q & A Q & A Q & A
Marc Holliday: Second of all, Steve Sakwa, that's quite a statement, given that we're 65% leased, over 70% economically leased, right on our original budget, which was a pre-COVID budget, right on our numbers. And the building doesn't even really open until, I think, you know, November. So to say the building is behind schedule or whatever words you use or, you know, not leasing or anything, no chance, my friend. I mean, we leased that building. I don't think I said that, Marc, but
Speaker Change: Our next question comes from the line of Steve Sakwa of Evercore ISI. The line is now open.
Stephen Thomas Sakwa: Thanks. You guys have had a lot of success leasing up, you know, 280 Park, 245 Park, obviously one Vanderbilt is filled.
Speaker Change: You know, one Madison on the office side maybe hasn't made as much traction, Marc, I know you kind of leased up all the retail there, but maybe you or Steve just kind of speak to the demand within that 1.2 million square foot pipeline that you're seeing for.
Speaker Change: for one Madison and maybe what's what's been holding the leasing back at that asset.
Stephen Thomas Sakwa: Steve, I just want to... No, no, Steve. First of all, somebody restrain this guy. Second of all...
Stephen Thomas Sakwa: Steve Sakwa, that's quite a statement, given that we're 65% leased, over 70% economically leased right on our original budget, which was a pre-COVID budget, right on our numbers.
Speaker Change: And the building doesn't even really open until, I think, like, you know, November or something.
Stephen Thomas Sakwa: So, to say the building is behind schedule, or whatever words you use, or, you know, not leasing or anything, no chance, my friend. I mean, we leased that building. I don't think I said that, Marc, but... We leased that building. That retail is 100% leased. The tower is 100% leased.
Stephen Thomas Sakwa: We leased that building, that retail is 100% leased, the tower is 100% leased, and we are, I think, three-eighths leased on the podium or something like that. It is dead on the numbers. So we could talk about the leasing status, that's fine, but no notion of any challenge or any underperformance on that asset, no way. Now, Steve Durels, calm down a bit so we can go.
Speaker Change: and we are, I think, three-eighths leased in the podium or something like that. It is dead on the numbers, so we could talk about the leasing status.
Steven M. Durels: That's fine, but no notion of any challenge or any underperformance on that asset. No way. Now Steve Durels. He's calmed down a bit so he can go.
Steven M. Durels: Steve, isn't it good when your boss has your back that way? I'm glad he's passionate about the... Well, I think Mark hit all the highlights, you know, it's... The building is 65% leased; the tower portion of the building is fully leased. We just signed the top floor with an expansion to FanDuel, so they now have two floors in the building, rents that exceed our underwrite for that last floor. What we have remaining in the building are five floors in the podium of the building. Those are 92,000 square foot floor plates.
Steven M. Durels: Steve, isn't it good when your boss has your back that way?
Steven M. Durels: I'm glad he's passionate about the project.
Steven M. Durels: Well, I think Mark hit all the highlights. The building is 65% leased, the tower portion of the building is fully leased.
Speaker Change: We just signed the top floor with an expansion to FanDuel, so they now have two floors in the building. Rents that exceeded are underwrite for that last floor. What we have remaining in the building are five floors in the podium of the building. Those are 92,000 square foot floor plates.
Steven M. Durels: Without a doubt, it is the best building in the Midtown South sub-market, and everybody we toured through there loves the project. The challenge is, you know, what we have available right now are those five large floor plates. And as no doubt you've read some of the market reports in the brokerage houses, there's been a dearth of large tenants in the Midtown South market, as opposed to large tenants actively translating, and transacting in Midtown, where we've done more than our fair share of very large deals in the Midtown market.
Speaker Change: Without a doubt it is the best building in the Midtown South sub markets and everybody we toured through there loves the project.
Steven M. Durels: The challenge are, you know, what we have available right now are those five large floor plates.
Steven M. Durels: And there's no doubt you've read some of the market reports in the brokerage houses.
Steven M. Durels: There's been a dearth of large tenants in the Midtown South market as opposed to large tenants actively Translating transacting in Midtown where we've done more than our fair share of very large deals in in the Midtown market
Steven M. Durels: It's just, it's a matter of time before, you know, the large tenants sort of come back into the Midtown South market. And when they do, the building is well positioned, and we'll have great success. Okay, thanks.
Steven M. Durels: It's just a matter of time before, you know, the large tenants sort of come back into the Midtown South market. And when they do, the building is well positioned and will have great success.
Stephen Thomas Sakwa: And then, is there any update on the potential stake in One Vanderbilt? I know that was something that was actively marketed and part of your plan for 2024. I'm just curious if there are any updates you can share.
Speaker Change: Okay, thanks. And then is there any update on the potential stake in One Vanderbilt? I know that was something that was actively marketed and part of your plan for 2024. I'm just curious if there's any updates you can share.
Marc Holliday: Yeah, sure. One Vanderbilt, you know, continues to set the standard for the market, and it continues to receive recognition nationally and globally.
Marc Holliday: No matter what meetings we're in throughout the world, the first thing investors want to talk about is One Vanderbilt. It's fully leased. The debt is locked in through 2031, and sub 3%. Summit continues to outperform as a globally recognized tourist destination.
Speaker Change: It's fully leased.
Speaker Change: The debt is locked in through 2031 sub-3%.
Marc Holliday: We just added our second Michelin star restaurant. Architecturally, Jamie Von Klemper and the KPF team just received, I think it was last month, the prestigious AIA National Architecture Award for their work at the building. And by my estimation, we have in excess of $30 a foot of average embedded rent growth, which I look at as demonstrating the scarcity and really no comparable supply on the horizon due to a bunch of factors. You know, sourcing the right location, long lead time, and lack of affordable construction financing.
Speaker Change: Summit continues to outperform as a globally recognized tourist destination. We just added our second Michelin star restaurant.
Speaker Change: Architecturally, Jamie von Klemper and the KPF team just received, I think it was like last month, the prestigious AIA National Architecture Award for their work at the building.
Speaker Change: And by my estimation, we have an excess of $30 a foot of average embedded rent growth.
Speaker Change: Really, which I look at as demonstrating the scarcity and really no comparable supply on the horizon due to a bunch of factors. You know, sourcing the right location.
Marc Holliday: Some of the big anchors needed for any comparable project to this recently signed up commitments. I think you have Blackstone, Bloomberg, and Citadel, and I think all these factors really create a moat for one van.
Speaker Change: Long lead time, lack of affordable construction financing, some of the big anchors needed for any comparable project to this recently signed up commitments. I think you have Blackstone, Bloomberg,
Marc Holliday: And so, for all these reasons, of course. We have very strong investor appetite and multiple offers from investors. And I know everyone on this call wants speed, but I think what's most important is the right investor on the right terms and not really looking at it quarter by quarter. With that said, we are working on transaction documents, and I do expect news to share later this week. Great, thanks.
Speaker Change: Citadel, and I think all these factors they really create a moat for one Vanderbilt.
Speaker Change: And so for all these reasons, of course.
Speaker Change: We have very strong investor appetite and multiple offers from investors.
Speaker Change: And I know everyone on this call wants speed, but I think most important is the right investor on the right terms and not really looking at it quarter by quarter. With that said, we are working on transaction documents, and I do expect news to share later this quarter.
Camille Bonnell: Thank you one moment for our next question. Our next question comes from the line of Camille Bonnell of Bank of America. Your line is now open. Hi, it seems like the financing and transaction market is starting to open up this year. So more broadly, can you talk about how investors are underwriting lease up timelines and returns for office in New York City? So just repeat, do you mind repeating the question?
Speaker Change: Great, thanks.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Camille Bonnell of Bank of America. Your line is now open.
Camille Bonnell: Just wondering if you could provide more color on the underwriting that investors are looking for when looking at office buildings. Yeah, look, at least the timeline. You know, I would say, on the fundamental side for the right assets, I think, as we've always said, you can't generalize the market. But for the types of deals we own, for the types of deals we're investing in and looking at, whether it be through the fund or through our balance sheet, the fundamentals of the real estate are very easily wrapped around by investors.
Camille Bonnell: Hi. It seems like the financing and transaction market is starting to open up this year. So, more broadly, can you talk to how investors are underwriting lease-up timelines and returns for office in New York City?
Speaker Change: So just just repeat do you mind repeating the question?
Speaker Change: Just wondering if you could provide more color on the underwriting that investors are looking for when looking at office buildings.
Speaker Change: Yeah, look, at least the timeline yields.
Speaker Change: I would say on the fundamental side for the right assets, I think, as we've always said, you can't generalize the market.
Speaker Change: But for the types of deals we own, for the types of deals we're investing in, looking at, whether it be through the fund or through our balance sheet, the fundamentals of the real estate investors are very easily wrapping their head around today.
Camille Bonnell: There isn't a lot of question about rents, downtime, or even concessions at this point. Investors, again, whether it be through the fund or on specific deals, they have a lot of confidence in our ability to underwrite assets. We talked about 245 Park.
Speaker Change: There isn't a lot of question about rents, downtime or even concessions at this point. You know investors again whether it be through the fund or on specific deals.
Speaker Change: They have a lot of confidence in our ability to underwrite assets. We talked about 245 Park, as Marc said, we're dead on the underwrite that we presented to our partner a year ago, and that is over 500,000 square feet of leasing just in 13 months.
Harry Olsen: As Marc said, we're dead on the underwrite that we presented to our partner a year ago, and that is over 500,000 square feet of leasing just in 13 months. So there's a lot of ability for investors as we sit with them to wrap their heads around those fundamentals. With respect to the overall transaction market, the reason we're not seeing a significant number of investor transactions is really just the lack of debt liquidity.
Speaker Change: So there's a lot of, there's a lot of ability for investors as we sit with them to wrap their head around those fundamentals. With respect to the overall transaction market, you know, the reason we're not seeing, you know, significant number of investor transactions is really just the lack of debt liquidity today.
Harry Olsen: And a lot of that is what is driving us to want to launch the fund, and the efforts that we're putting in there are to be that source. But, you know, right now, the reason we're not seeing significant investor activity is really because investors are still trying to wrap their heads around where the liquidity will come from in the debt capital market. Okay, and for the benefit of those who've only started to follow your company more recently, curious to understand the kind of involvement your teams engage in when you have active assignments on the special servicing side, how much capacity do they have to take on more?
Speaker Change: And a lot of that is what is driving us to want to launch the fund and the efforts that we're putting in there is to be that source of liquidity.
Andrew W. Mathias: Andrew Mathias, The Big Game Hunter, www.TheBigGameHunter.com
Speaker Change: Okay. And for the benefit for those who've only started to follow your company more recently, curious to understand the kind of involvement your teams engage in when you have active assignments on the special servicing side. How much capacity do they have to take on more?
Harry Olsen: Yeah, look, special servicing and asset management for us is really an exponentially growing opportunity. You know, we have a subsidiary entity, Green Loan Services, run by Andrew Falk. And, you know, capital providers continue to come to us for real estate services, whether that be on the special servicing side or asset management. Right now, we have over $3 billion of active special servicing and asset management and another $6 billion where we're named a special servicer, which I just look at as future opportunities for the special servicing business.
Speaker Change: Yeah, look, special servicing and asset management for us is really an exponentially growing opportunity.
Speaker Change: We have a subsidiary entity, Green Loan Services, run by Andrew Falk.
Speaker Change: and you know capital providers continue to come to us for real estate services whether that be on the special servicing side or asset management side.
Speaker Change: Right now, we have over $3 billion of active special servicing and asset management, and another $6 billion where we're named special servicer, which I just look at as future opportunities for the special servicing business.
Harry Olsen: In addition to that, I expect that to grow pretty exponentially over the coming quarters. We have a pipeline right now of over $2 billion of additional opportunities, not all in New York, and I would expect to land most, if not all of those, very shortly.
Speaker Change: In addition to that...
Speaker Change: You know, I expect that to grow pretty exponentially over the coming quarters. We have a pipeline right now of over $2 billion of additional opportunities, not all in New York, and I would expect very shortly to land most, if not all of those.
Harry Olsen: Those figures are going to continue to grow, and as Matt alluded to earlier, that almost entirely goes right to the bottom line. So that's a big focus of ours. In terms of staff, which I think was the second part of your question, Andrew and his team continue to have the ability to take on new opportunities and use the resources within the firm.
Speaker Change: You know, those figures are going to continue to grow. And as I think Matt alluded to earlier, that almost entirely goes right to the bottom line. So, you know, that's a big that's a big focus of ours in terms of staff.
Speaker Change: You know, which I think was the second part of your question, you know, Andrew and his team, you know, continue to have the ability to take on new opportunities and use the resources within the firm.
Harry Olsen: But we're constantly monitoring if we need to staff additional people on it. But again, I would expect most, if not all, of the revenues to go right to the bottom line. And so to clarify, is the timing of that $6 billion that you're designated as factored into the updated guidance you provided last night? The $6 billion is not at all factored into the guidance we put out last night.
Speaker Change: But we're constantly monitoring if we need to staff additional people on it. But again, I would expect most, if not all, the revenues to go right to bottom line.
Speaker Change: And so to clarify, is the timing of that $6 billion that you're designated as factored into the updated guidance you provided last night?
Camille Bonnell: None of that. Thank you, one moment for our next question. Our next question comes from the line of Blaine Heck of Wells Fargo. Your line is now open.
Speaker Change: The $6 billion is not at all factored into the guidance we put out last night.
Speaker Change: None of it. Okay, thank you.
Speaker Change #101: Thank you. One moment for our next question.
Blaine Matthew Heck: Great, thanks. Rent spreads on signed leases increased really nicely for you guys this quarter. Can you just try to characterize kind of how much of that might have been more of a mix issue and lower rents on expirations this quarter versus how much of that is kind of a reflection of market rent growth that you guys have seen recently? Really just trying to figure out whether the mid-teens level seen this quarter is kind of a blip or a level that could be more sustainable.
Speaker Change #100: Our next question comes from the line of Blaine Heck of Wells Fargo. Your line is now open.
Speaker Change #102: Great, thanks. Rent spreads on signed leases increased really nicely for you guys this quarter. Can you just try to characterize kind of how much of that you think might have...
Blaine Matthew Heck: been more of a mixed issue and lower rents on the expirations this quarter versus how much of that is kind of a reflection of market rent growth that you guys have seen recently. Really just trying to get get at whether the the mid-teens level seen this quarter is kind of a blip or a level that could be more sustainable.
Steven M. Durels: Yeah, I mean, the mark to market, when we put out our guidance and then reported the first quarter, people questioned, you know, how do you correlate down in the first quarter to a positive two and a half to five for the full year? The mix and the quarter, quarterly activity is going to bounce all over the place. So today, yeah, we had a good quarter; we expected the quarter, second, and third quarter to be relatively strong, just based on the mix of leases that we expected to do in those periods. I think we're still on a trajectory on a full year basis to hit our targets.
Speaker Change #104: Yeah, I mean the mark to market when we put out our guidance and then reported first quarter people questioned You know, how do you correlate down in the first quarter to a you know positive two and a half to five for the full? Year, you know the mix and the the quarter
Speaker Change #104: Quarterly activity is going to, you know, bounce all over the place. So to date, yeah, we had a good quarter. We expected the quarter, second, third quarter to be relatively strong just based on the mix.
Steven M. Durels: That'll be a function of the mix that happens for the back half of the year. But I wouldn't read, you know, too much market movement or anything like that into what we've achieved thus far in volume. Yeah, you could do that.
Speaker Change #104: of leases that we expected to do in those periods.
Speaker Change #104: I think we're still on a trajectory on a full year basis to hit our targets. That'll be a function of the mix that happens for the back half of the year. But I wouldn't read too much market movement or anything like that into what we've achieved thus far. Volume, yeah, you could do that, but mark to market now.
Blaine Matthew Heck: But you know, the mark to market, Great, that's helpful. And then just a second question, any update on the casino bid that you can provide? No, I don't think anything.
Speaker Change #105: Great, that's helpful. And then just second question, any update on the casino bid that you can provide?
Unknown Executive: I mean, yeah, if you're asking about casino timing, then no, I think everything is out there in terms of the decision that's in front of the governor right now as to whether to expedite the process. Unknown Speaker. Bye. We're calling for submissions, forming the CAC, and getting past the first stage of the process, which is the hyperlocal stage. We, of course, are strong advocates of expediting. We think there are a number of reasons not to want to see the process drag out indefinitely, really because the jobs that will be produced in the aggregate by three casino licenses will be extraordinary and impactful on the construction trades and the industry in order to get what will undoubtedly be tens of billions of dollars of construction underway.
Speaker Change #106: No, I don't think anything. I mean, you know, if you're asking about casino timing, then no, I think everything is is out there in terms of
Speaker Change #107: the decision that's in front of the governor right now as to whether to expedite the process by
Speaker Change #107: calling for the submissions, forming the CAC, and getting past the first stage of the process, which is the hyper-local stage. We, of course,
Speaker Change #107: are strong advocates.
Speaker Change #107: of Expediting,
Speaker Change #108: We think there's a number of reasons not to want to see the process.
Speaker Change #108: Drag out indefinitely.
Speaker Change #108: really because of the
Speaker Change #108: The jobs that will be produced.
Speaker Change #108: in the aggregate by three casino licenses will be, you know, extraordinary and impactful.
Speaker Change #108: on the Construction Trades and the Industry.
Speaker Change #108: In order to get, you know, what will undoubtedly be tens of billions of dollars of construction underway.
Unknown Executive: In addition, after they're built, there will be a significant number of operating jobs, and New York City, hopefully, will be the beneficiary of not just one but, hopefully, you know, two licenses. You know, I think there are a lot of reasons also on the taxation front, because there's certainly upfront monies that the state stands to benefit from for the upfront license fees, and then obviously the significant ongoing taxes that will be projected to be earned by the gaming operations.
Speaker Change #108: And, you know, in addition, there's what, after they're built, there's significant number of operating jobs, good paying, you know, excellent newly formed jobs that
Speaker Change #108: New York City hopefully will be the beneficiary of not just one, but hopefully, you know, two licenses and
Speaker Change #109: You know, I think there's a lot of reasons also on the taxation front because there's certainly upfront monies that the state stands to benefit from for the upfront license fees. And then obviously the significant ongoing taxes that will be projected to be earned by the gaming industry.
Marc Holliday: So, a lot of good reasons to expedite; we're certainly ready, we have our building, the building is built. There's really no displacement issues or interruption issues; we have a great bid that will uplift all of Times Square and also, you know, the city as a whole because of the way in which we're working with Caesars Rewards to solicit hundreds of coalition supporters for the bid, who will all benefit from the fact that the Times Square Caesars Palace Casino will be really outward facing when it comes to things like retail, restaurants, hotels, and entertainment. It's like one of the most compelling community development and economic development projects I can think of in New York City.
Speaker Change #109: You know, operations. So, a lot of good reasons to expedite. We're certainly ready. We have our building. The building is built.
Speaker Change #109: There's really no displacement issues or interruption issues. We have a great bid that will uplift all of Times Square.
Speaker Change #109: Also, you know, the city as a whole, because of the way in which we're working with Caesars Rewards to solicit hundreds
Speaker Change #109: of coalition supporters into the bid who will all benefit.
Speaker Change #109: It's like one of the...
Speaker Change #109: You know most compelling community development economic development Projects I can think of in New York City, so we're hopeful To prevail and we'd like to see the process get going with that said I think that there's still a decision
Marc Holliday: So we're hopeful that we can prevail, and we'd like to see the process get going. With that said, I think that there's still a decision pending up in Albany as to when exactly the bids will be called for, and when they are, we'll be ready. Great. Thanks, guys. Thank you, one more for the next question. Our next question comes from the line of Anthony Paolone of JP Morgan. Your line is now
Speaker Change #109: pending up in Albany as to when exactly the bids will be called for and when they are will be ready.
Speaker Change #109: Great, thanks guys.
Speaker Change #109: Thank you, one more for our next question.
Anthony Paolone: Thanks. I'd like to go back to the transaction market and understand the lack of debt out there. But, as you mentioned, you all have a balance sheet, partners, and have been able to get debt. So, I mean, what would the levered and unlevered IRRs have to be for you all to put capital out there to do something, you know, on assets that you find attractive? Attractive Unlimited in order to, well, for what kind of business for which type of, I mean, everything's got, you know, there's, obviously, we're doing a lot of, we intend to be doing a lot of debt and preferred equity. I think you talked about the growing pipeline, most of which is intended, or all of which is intended for the fund.
Speaker Change #110: Our next question comes from the line of Anthony Paolone of J.P. Morgan. Your line is now open.
Anthony Franklin Powell: Thanks. I'd like to go back to the transaction market and understand the lack of debt out there, but as you mentioned, you all have a balance sheet, partners, and have been able to get debt.
Anthony Franklin Powell: Anywhere.
Speaker Change #112: Attractive Unlevered in order to, well, for what kind of business?
Speaker Change #113: for which type of I mean everything's got you know there's
Speaker Change #114: Obviously, we're doing a lot of, we intend to be doing a lot of debt and preferred equity. I think you talked about the growing pipeline, most of which is intended, or all of which is intended for the fund.
Anthony Paolone: You know, and you know, those returns, I think, we've talked about in the past, in terms of, well, you know, I think the market for that product can range anywhere from, you know, low teens to high teens, on average, depending on the type of, The type of asset, the location, the credit, it's very hard to.., and you know in other activity obviously all the feed-based activity that Harry spoke of that's you know it's almost you know it's very capital light so the returns there are, We'll be committing some dollars in that towards building out the platform with additional resources and in some cases taking some capital positions, but that's very high margin business. You know, that the expansion of Summit, you know, is a very, you know, relatively high margin business, which is return for having spent years and years building a brand.
Speaker Change #114: You know and you know those returns I think
Speaker Change #114: We've talked about in the past in terms of, well, you know, I think the market for that product can range anywhere from, you know, low teens to high teens on average, depending on the type of
Speaker Change #114: You know, the type of asset, the location, the credit, it's very hard to...
Speaker Change #114: You know extrapolate from that because every deal is so different has its own nuances, but I think you know for Subordinate lending I feel safe in saying you know low teens to high teens is a good spread
Speaker Change #115: and you know in other activity obviously all the fee-based activity that Harry spoke of that's you know it's almost it's very capital light so the returns there
Harry: Extremely strong.
Harry: And, you know, we'll be committing some dollars in that, you know, towards building out the platform with additional resources, and in some cases, taking some capital positions, but that's very high margin business.
Speaker Change #116: You know, the expansion of Summit, you know, is a very
Speaker Change #116: Relatively high margin business, which is return for having spent years and years building a brand.
Anthony Paolone: And you know, so it's, it's a higher return activity. And in terms of, you know, new property acquisitions, you know, we've, we're really development focused right now. Because we see that as being strength in the market. You know, conversion, conversion of office to residential, 753rd being the first of that program that we're intending to roll out. We're already in design development. We've retained our professionals and our team.
Speaker Change #116: and you know so therefore it's it's a higher return activity.
Speaker Change #117: you know, conversion, conversion of office to residential,
Speaker Change #117: program that we're intending to roll out. We're already in design development. We've retained our professionals and our team. We're making headway on the design and programming of that building. We intend to be in physical construction sometime in early 2025.
Marc Holliday: We're making headway on the design and programming of that building, and we intend to be in physical construction sometime in early 2025. I think it's going to be, you know, sort of, it's going to set the standard, if you will, in terms of conversions of that vintage of office building in Midtown to something that I think will be a real destination. And, you know, the levered returns on a project like that will be, you know, mid to high teens. And that's, I think, you know, for residential, which is very in vogue and attractive these days, I think that's a very compelling return.
Speaker Change #117: I think it's going to be, you know, sort of a, it's going to set the standard, if you will, in terms of
Speaker Change #117: Conversions of that vintage of office building in Midtown to something that I think will be a real destination and you know the levered returns on a project like that will be you know mid to high teens levered.
Andrew W. Mathias: Andrew Mathias
Andrew W. Mathias: And that's, I think, you know, for residential, which is very in vogue and attractive these days, I think it's a very compelling return. And that's because, you know, we're going the affordable route in order to be able to do something really good for the city and produce, you know.
Marc Holliday: And that's because, you know, we're going the affordable route in order to be able to do something really good for the city and produce, you know, I'm, at the same time, being able to generate returns that we think we'll be able to attract debt and equity capital that we can go forward with. We'll be working on that capitalization throughout the balance of this year. So probably in December, at the investor meeting, we could shed more light on exactly, you know, what those returns look like. And I would think those would be prototypical.
Andrew W. Mathias: You know, what could be 100 units or more of affordable housing in just one project. And...
Speaker Change #118: Andrew Mathias, Ph.D.: I'm
Speaker Change #119: You know, at the same time, being able to generate returns that we think we'll be able to.
Speaker Change #119: [inaudible]
Anthony Paolone: Okay, and then just, excuse me, my second question, maybe just a detailed one for Matt. Matt, if my notes are right, I think on Investor Day, the guidance for other income for the year was, I think, $84.5 million, and I think it included $17.5 million for Summit. If I got this right. And so I was wondering what that new number might be because it sounds like part of the guidance bump was changed there. No, well, a little part of the guidance bump was other income, you know. We increased guidance by 10 cents. I'd say half of that is fee income, the rest is summit. NOI
Speaker Change #120: Okay. And then just, excuse me, my second question, maybe just a detailed one for Matt.
Speaker Change #121: Matt, if my notes are right, I think in Investor Day, the guidance for other income for the year was, I think, $84.5 million, and I think it included $17.5 for Summit, if I got this right. And so just wondering what that new number might be, because it sounds like part of the guidance bump was changed there.
Speaker Change #122: No. Well, a little part of the guidance bump was other income.
Matthew J. DiLiberto: So, you know, that's five cents is roughly three and a half million dollars or so. That's the incremental fee income. So, you know, we're not running that far ahead of our anticipated other income levels overall. But, you know, there's the potential to do better than that, depending on how special servicing assignments play out over the balance of the year. But, you know, I think we're trending exactly where we expected to be, maybe slightly ahead.
Speaker Change #123: Guidance by 10 cents, I'd say, you know, half of that is fee income, the rest is summit and...
Speaker Change #124: NOI. So, you know, that's five cents is roughly three and a half million dollars or so. That's the incremental fee income. So, you know, we're not running that far ahead of our anticipated other income levels.
Speaker Change #124: Overall, but you know, there's the potential to do better than that, depending on how special servicing assignments
Speaker Change #124: I think we're trending exactly where we expected to be, maybe slightly ahead, and we'll expect to see similar levels as we head into next year.
Matthew J. DiLiberto: And we'll expect to see similar levels as we head into next year. Okay, so just make sure I got that right about a nickel from the other income running a little ahead, two, three cents from summit, and the rest from the core. Correct. Okay, got it.
Speaker Change #126: Okay, so just make sure I got that right about a nickel from the other income running a little ahead, two, three cents from summit and the rest from the core. Correct.
Anthony Paolone: Thank you. Please hold one moment for our next question. Our next question comes from the line of Michael Griffin of Citi. Your line is now open.
Speaker Change #126: Okay, got it. Thank you.
Speaker Change #125: Thank you one moment for our next question.
Speaker Change #127: Our next question comes from the line of Michael Griffin of Citi. Your line is now open.
Michael Anderson Griffin: Great, thanks. Um, I wanted to go back and touch on leasing for a minute. Steve, I think you mentioned earlier in the call that, you know, some of the vacancy you're seeing in the market is those, you know, bottom levels, not the tower floors. But if we're led to believe that, you know, particularly Park Avenue is as strong as it's been, wouldn't you expect some kind of greater leasing demand to come from those, you know, lower, lower placed floors?
Michael Anderson Griffin: Unknown Attendee, Michael Williams, Omotayo Okusanya, John Kim, Blaine Heck, Anthony Powell, Andrew Mathias, Steven Durels, Michael Lewis, Michael Griffin, Peter Abramowitz, Ronald Kamdem, You mentioned concessions as well. I'm curious if you've seen any change in net effective rents given...
Michael Anderson Griffin: And then, you mentioned concessions as well. I'm curious if you've seen any change in the net effect of rents given; it seems like face rents have been increasing, particularly a lot of properties in that. Well, when I refer to the vacancy in the, You know, being heavily weighted towards the bottoms of the buildings, I was speaking to the overall market. So that that was not limited to Park Avenue. That was not the case. All buildings, you know, in the class A sector, Park Avenue over all, that's what you're really asking.
Speaker Change #128: It seems like space rents have been increasing, particularly a lot of properties in that submarket. Well, when I referred to the vacancy in the, you know, being heavily weighted towards the bottoms of the buildings, I was speaking to the overall market. So that was not limited to Park Avenue. That was, you know,
Speaker Change #128: All buildings.
Speaker Change #128: in the Class A sector. Park Avenue overall, if that's what you're really asking, I mean, that has a...
Steven M. Durels: I mean, that has a current vacancy of less than 9%. So that is a landlord-favorable sub-market, which is why you've seen us raise rents in our Park Avenue buildings at 280 Park, at 245 Park, at 450 Park, and I don't see any let-down as far as tenant demand is concerned for those quality buildings on Park Avenue, irrespective of whether those spaces are located at the top or bottom As for sessions, as I spoke to you earlier, I haven't seen any change.
Speaker Change #128: a current vacancy of less than 9%. So that is a landlord favorable sub-market.
Speaker Change #128: which is why you've seen us raise rents in our Park Avenue buildings at 280 Park, at 245 Park, at 450 Park.
Speaker Change #128: and I don't see any let-up as far as tenant demand for those quality buildings on Park Avenue irrespective of whether those spaces are located at the top or bottom of the building.
Steven M. Durels: You know, I'm just a believer that right now there's an ability to push rents as opposed to tighten concessions. With the passage of time, you'll see concessions, you know, get reeled in a little bit. But the first thing I'll come off the table will be some of the free rent. But I think the bill for tenants is still very expensive. That's why the tenants are leaning heavily on their landlords and expect to get TI allowance while they sort of cover it in the form of a higher rent.
Speaker Change #128: I'm of a believer that right now there's an ability to push rents as opposed to tighten concessions.
Speaker Change #128: with the passage of time you'll see concessions, you know get reeled in a little bit, but first thing I'll come off the table will be some of the free rents, but I think because
Speaker Change #128: Build-out cost for tenants is still very expensive, that's why the tenants are leaning heavily on their landlords and expect to get TI allowances while they sort of cover it in the form of a higher rent.
Michael Anderson Griffin: Great, that makes sense. And then maybe one Matt for you just on the capital plan, given I think where the equity is currently trading, you know, could you look at maybe issuing equity as kind of an arrow in your quiver? Or is the plan to kind of maintain the outlook for your capital needs laid out? I like the analogy to an arrow in the quiver. You know, part of the beauty of being in public companies is that it's available to us.
Matt: Great. That makes sense. And then maybe one, Matt, for you, just on the capital plan, given, I think, where the equity is currently trading, you know, could you look at maybe issuing equity as kind of an arrow in your quiver, or is the plan to kind of maintain the outlook for your capital needs laid out at Investor Day?
Matt: I like the analogy to an arrow in the quiver, you know, part of...
Michael Anderson Griffin: You know, we don't see, as we play out over the course of 24, on our base case plan, the need for any equity because, you know, our balance sheet is in a good place, our liquidity is in a good place, the plan that we laid out in December is playing out as expected. So, you know, we'll always keep an eye out for stuff like that. But that's, you know, that's what it would take for us to really look at equity as a source, because it is still relatively expensive. Great, that's it for me. Thanks for your time.
Speaker Change #131: and the beauty of being in public companies that it's available to us. You know, we don't see as we play out over the course of 24
Matt: The on our base case plan the need for any equity because you know, we're our balance sheets in good place
Matt: Our liquidity is in good place, you know, the plan that we laid out in December is playing out as expected. I think where we might see an opportunity to top up liquidity is if we saw additional investment opportunities.
Matt: So, you know, we'll keep we always keep eyes out for stuff like that. But that's you know, that's that's what it would take for us to really look at, you know, the equity as a as a source, because it is still relatively expensive.
Michael Anderson Griffin: Thank you. One moment for our next question. Our next question comes from the line of Ronald Kamdem of Morgan Stanley. Your line is now open.
Matt: Great, that's it for me. Thanks for the time.
Speaker Change #132: Thank you. One moment for our next question.
Speaker Change #132: Our next question comes from the line of Ronald Kamdem of Morgan Stanley . Your line is now open.
Ronald Kamdem: Great. Hey, just one quick one for me, just on the same store, NOI. Just thinking about the guidance at the investor day and comparing where you're trending sort of year to date, that suggests there's sort of a big acceleration in the second half of the year. Just my thinking about that, right, that the same store is sort of could be two, three in the second half.
Ronald Kamdem: Great. Hey, just one quick one for me, just on the same store.
Ronald Kamdem: [inaudible]
Ronald Kamdem: Puts and Takes as we're thinking about the second half and going into 2025. Yeah, let's, let's clarify that. And I'm sitting next to him.
Matthew J. DiLiberto: So he's, you know, he can reach me if he needs to. So our guidance for same-star NOI was down one to two; a certain CEO next to me said for goals and objectives, kind of tongue in cheek, that we would be up one to two. Now, we are trending ahead in the first half of the year. So that's good.
Ronald Kamdem: Puts and Takes as we're thinking about the second half and going into 2025. Thanks.
Speaker Change #134: Yeah, let's clarify that, and I'm sitting next to him, so he can reach me if he needs to. So, our guidance for same-star NOI was down one to two percent.
Speaker Change #134: A certain CEO next to me
Speaker Change #135: for Goals and Objectives.
Speaker Change #136: that we would be up one to two. Now, we are trending ahead first half of the year, so that's good. I think to reach the goal would be, I'd love to see it, it'd be outstanding.
Matthew J. DiLiberto: I think to reach the goal would, you know, be, I'd love to see it, it'd be outstanding. But, as we said today, we're trending a little bit closer to our original guidance as opposed to the objective. Yeah, look, those are just stretch goals. We never hit all of them, nor should we, although we'd like to.
Speaker Change #137: But, as we said today, we're trending a little bit closer to our original guidance as opposed to the...
Speaker Change #137: [inaudible]
Marc Holliday: But the goal is to hit as many as we can, and I believe in having a target that is an ambitious goal on all levels. When I look at those goals and objectives for the year, midway through the year, we're tracking really well on many of them, most of them, certainly, not all of them. There was a scenario where we could have been in that one-to-two range. There still is a scenario where we can be in that one-to-two range with a big second half of the year. But, you know, it's... It's going to be pretty tough.
Speaker Change #137: When I look at those goals and objectives for the year, midway through the year, we're tracking really well on many of them, most of them, certainly.
Speaker Change #138: Not all.
Speaker Change #138: There was a scenario where we could have been in that one-to-two range. There still is a scenario where we can be in that run-to-two range with a big second half a year. But, you know, it's...
Marc Holliday: And you know, we may or may not hit that particular goal. But I'm confident we're going to hit the vast majority of those goals. And, you know, the important thing on this end is to, you know, try and, you know, shoot lights out on all these, you know, leases that we do, we do, dozens and dozens a year, probably over 100 a year. And, you know, let's see how the second half of the market second half of the year shapes up.
Speaker Change #138: It's going to be pretty tough.
Speaker Change #138: and you know we may or may not hit that particular goal but I'm confident we're going to hit the vast majority of those goals and you know the important thing on this end is to you know is to try and you know shoot lights out on all these
Speaker Change #138: You know, leases that we do, we do, you know, dozens and dozens a year, probably over a hundred a year actually.
Speaker Change #138: And, you know, let's see how the second half of the year shapes up.
Marc Holliday: And we're going to try and push the bottom line as much as we can and squeeze down our expenses as much as we can in the second half of the year without sacrificing any quality in order to try and hit the goal. But it's too early to say one way or the other.
Speaker Change #138: and we're going to try and push, you know, push the bottom line as much as we can and squeeze down our expenses.
Speaker Change #138: As much as we can in the second half of the year without sacrificing any quality in order to try and, you know, make the goal. But it's too early to say one way or the other, but, you know, I said it, you know, we said it in December , this one was going to be a push.
Ronald Kamdem: But, you know, I said it, you know, we said it in December: this one was going to be a push. Great. And then my second one was just, you guys have a lot, a lot of properties where you've been, JV's redevelopment right from 1 Vanderbilt to 45 Park to Herald Square. Maybe can you just talk about the sort of level of demand interest from, you know, U.S. buyers, international buyers, and sort of your... getting a lot of those deals through the finish line.
Speaker Change #139: Great. And then my second one was just there is, you know, you guys have a lot, a lot of properties.
Speaker Change #140: where you've been looking to do JVs or redevelopment right from 1 Vanderbilt to 45 Park to Herald Square.
Speaker Change #141: Unknown Speaker Maybe can you just talk about what the sort of level of demand and interest from local US buyers, international buyers and sort of your conviction and getting a lot of those deals through the finish line? Are you building conviction?
Ronald Kamdem: Building Conviction. Comments there would be helpful. Yeah, look, the demand from foreign buyers today is very strong. It hits on what I said earlier, the assets we own today; investors believe heavily in the fundamentals of those assets. And, you know, the good news for us is that in many cases, as you know, we're working through our plan to extend our debt across all the assets, and that makes assets more attractive for investors to invest in. So there's a lot of belief from the foreign market in the fundamentals of our real estate.
Speaker Change #142: Any comments there would be helpful.
Speaker Change #143: Yeah, look, the demand from foreign buyers today is very strong. It hits on what I said earlier. The assets we own today, investors believe heavily in the fundamentals of those assets.
Speaker Change #144: and you know the good news for us is in many cases as you know we're working through our plan to extend our debt across all the assets and that makes assets more attractive for investors to to invest so there's a lot of belief from the foreign market
Speaker Change #144: in the fundamentals of our real estate. And we'll continue to see new joint ventures over the next few years.
Harry Olsen: And we'll continue to see new joint ventures over the next few years. Thank you. This concludes the question and answer session. I'd now like to turn it back to Marc Holliday for closing remarks. Okay, well, for those still on, thank you for, you know, participating and listening in. We appreciate it. We like the questions. We love the constructive feedback. We'll take it to heart. Everyone have a great summer, and we'll speak again in Q3. Thank you. Thank you for participating in today's conference. This does conclude the program, and we now disconnect.
Speaker Change #144: Thanks so much.
Speaker Change #144: Thank you. This concludes the question and answer session. I would now like to turn it back to Marc Holliday for closing remarks.
Marc Holliday: Okay, well, for those still on, thank you for participating and listening in. We appreciate it. We like the questions. We love the constructive feedback. We'll take it to heart. Everyone have a great summer.
Marc Holliday: And we'll speak again in Q3. Thank you.
Speaker Change #145: Thank you for participating in today's conference. This does conclude the program. You may now disconnect.