Q2 2024 Paramount Group Inc Earnings Call - Q&A

Operator: Good day, ladies and gentlemen. Thank you for standing by.

Operator: Good day, ladies and gentlemen. Thank you for standing by.

Good day, ladies and gentlemen, thank you for standing by and welcome to the Paramount Group Second quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

Operator: Welcome to the Paramount Group second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, August 1st, 2024. I'll now turn the call over to Tom Hennessy, Vice President of Business Development and Investor Relations. Please go ahead, sir.

Operator: Welcome to the Paramount Group 2nd quarter of 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question in the intercession will follow the formal presentation.

<unk> and answer session will follow the formal presentation.

Operator: Please note that this conference call is being recorded today, August 1st, 2024.

Please note that this conference call is being recorded today August 1st 2024.

Thomas Hennessy: I'll now turn the call over to Tom Hennessy, Vice President of Business Development and Investor Relations.

Tom Hennessy: And now I'll turn the call over to Tom Hennessy, Vice President of business development and Investor Relations. Please go ahead Sir.

Thomas Hennessy: Please go ahead, sir.

Tom Hennessy: Thank you, Operator, and good morning, everyone. Before we begin, I would like to point everyone to our second quarter 2024 earnings release and supplemental information, which were released yesterday. Both can be found under the heading Financial Results in the Investors section of the Paramount Group website at www.pgre.com. Additionally, some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, expect, should, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them.

Thomas Hennessy: Thank you, operator, and good morning, everyone. Before we begin, I would like to point everyone to our second quarter 2024 earnings release and supplemental information, which we released yesterday. Both can be found under the heading Financial Results and the Investor section of the Paramount Group website at www.pgr.com.

Tom Hennessy: Thank you operator, and good morning, everyone before we begin I would like to point, everyone to our second quarter 2024 earnings release, and supplemental information, which we released yesterday.

Both can be found under the heading financial results in the investors section of the Paramount Group website at Www Dot P. G. R E Dot com.

Thomas Hennessy: Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, expect, should, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

Tom Hennessy: Some of our comments will be forward looking statements within the meaning of the federal Securities laws forward looking statements, which are usually identified by the use of words, such as will expect should or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect therefore.

Tom Hennessy: You should exercise caution in interpreting and relying on them.

Tom Hennessy: We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable gap measure is available in our second quarter 2024 earnings release and our supplemental information.

Tom Hennessy: We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

Thomas Hennessy: During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our second quarter 2024 earnings release and our supplemental information.

Tom Hennessy: During the call we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

Tom Hennessy: A reconciliation of these measures to the most directly comparable GAAP measure is available in our second quarter 2024 earnings release, and our supplemental information.

Thomas Hennessy: Hosting the call today, we have Mr. Albert Baylor, Chairman, CEO, and President of the company. We'll repay his Chief Operating Officer, Chief Financial Officer, and Treasurer, and Peter Brindley, Executive Vice President and Head of Real Estate. Management will provide some opening remarks, and we will then open the call to questions.

Tom Hennessy: Hosting the call today, we have Mr. Albert Behler, Chairman, CEO, and President of the company, Wilbur Paes, Chief Operating Officer, Chief Financial Officer, and Treasurer, and Peter Brindley, Executive Vice President and Head of Real Estate. Management will provide some opening remarks, and we will then open the call to questions. With that, I will turn the call over to Albert.

Speaker Change: Hosting the call today, we have Mr. Albert Behler, Chairman CEO and president of the company Wilbur.

Speaker Change: Overpays, Chief operating Officer, Chief Financial Officer, and Treasurer, and Peter Brindley Executive Vice President and head of real estate.

Speaker Change: Management will provide some opening remarks, and we will then open the call to questions with that I will turn the call over to Albert.

Albert Behler: With that, I will turn the call over to Albert. Thank you, Tom, and thank you all for joining us today. Yesterday, we reported core FFO of 20 cents per share for the second quarter, in line with consensus. Operationally, we had another solid quarter of leasing activity. We executed leases of approximately 198,500 square feet, bringing our year-to-date leasing volume to about 475,000 square feet. This represents our strongest second quarter and first half of leasing since 2020, demonstrating the continued strength and appeal of our high quality portfolio. We continue to make progress on our availability in New York, where leasing activity during the quarter totaled approximately 178,000 square feet.

Albert Behler: Thank you, Tom, and thank you all for joining us today. Yesterday, we reported core FFO of 20 cents per share for the second quarter, in line with consensus. Operationally, we had another solid quarter of leasing activity. We executed leases of approximately 198,500 square feet, bringing our year-to-date leasing volume to about 475,000 square feet. This represents our strongest second quarter and first half of leasing since 2020, demonstrating the continued strength and appeal of our high-quality portfolio.

Albert: Thank you Tom and thank you all for joining us today.

Albert: Yesterday, we reported core <unk> of 20 cents per share for the second quarter in line with consensus.

Albert: Operationally, we had another solid quarter of leasing activity, we executed leases of approximately 198500 square feet, bringing our year to date leasing volume to about 475000 square feet.

Tom Hennessy: This represents our strongest second quarter and first half of leasing since 2020, demonstrating the continued strength and appeal of our high quality portfolio.

Albert Behler: We continue to make progress on our availability in New York, where leasing activity during the quarter totaled approximately 178,000 square feet. We are particularly encouraged by the steady flow of inquiries and tours we are seeing, which we believe will continue to translate into further leasing success in the coming quarters. We are seeing strong demand from a diverse range of tenants, especially financial services and law firms. The momentum we are experiencing across our New York portfolio reinforces our confidence in the enduring appeal of high-quality, well-located office space in prime submarkets. I can announce that we officially opened Paramount Club at 13016 Avenue during the second quarter.

Tom Hennessy: We continued to make progress on our availability in New York, where leasing activity during the quarter totaled approximately 178000 square feet.

Albert Behler: We are particularly encouraged by the steady flow of inquiries and tours we are seeing, which we believe will continue to translate into further leasing success in the coming quarters. We are seeing strong demand from a diverse range of tenants, especially financial services and law firms. The momentum we are experiencing across our New York portfolio reinforces our confidence in the enduring appeal of high quality, well-located office spaces in prime submarkets.

Tom Hennessy: We are particularly encouraged by the steady flow of inquiries and tours were seeing which we believe will continue to translate into further leasing success in the coming quarters.

Tom Hennessy: We are seeing strong demand from a diverse range of tenants, especially financial services and law firms.

Tom Hennessy: Momentum, we are experiencing across our new York portfolio reinforces our confidence in the enduring appeal of high quality, well located office spaces and Prime Submarkets.

Albert Behler: I can announce that we officially opened Paramount Club at 13016 Avenue during the second quarter. This exclusive amenity offering has been extremely well received by our tenants and is proving to be a significant differentiator in the market. Paramount Club is not only enhancing the workplace experience for our existing tenants but is also playing a crucial role in attracting new tenants to our portfolio. Our ability to attract and retain top tier tenants is a testament to the strength of our portfolio and our team's leasing expertise.

Tom Hennessy: I can announce it we officially opened Paramount club at 31 six Avenue during the second quarter.

Albert Behler: This exclusive amenity offering has been extremely well received by our tenants and is proving to be a significant differentiator in the market. Paramount Club is not only enhancing the workplace experience for our existing tenants but is also playing a crucial role in attracting new tenants to our portfolio. Our ability to attract and retain top-tier tenants is a testament to the strength of our portfolio and our team's leasing expertise. I'm also thrilled to share that on July 18th, we celebrated the grand opening of the highly anticipated Michelin-starred Din Tai Fung restaurant. Set under the iconic glass cube in the plaza of our headquarters at 1633 Broadway, Din Tai Fung adds a new layer of excitement to our curated offerings. The buzz surrounding the opening has been tremendous, and we couldn't be happier. We invite you to visit and experience the culinary sensation firsthand.

Tom Hennessy: This exclusive amenity offering has been extremely well received by our tenants and is proving to be a significant differentiator in the market.

Tom Hennessy: Paramount club is not only enhancing the workplace experience for all of our existing tenants, but is also playing a crucial role in attracting new tenants to our portfolio.

Tom Hennessy: Our ability to attract and retain top tier tenants is a testament to the strength of our portfolio and our teams leasing expertise.

Albert Behler: I'm also thrilled to share that on July 18th, we celebrated the grand opening of the highly anticipated Michelin star-rated Dintai Fang restaurant. Set under the iconic glass cube in the plaza of our headquarters at 1633 Broadway, Dintai Fang adds a new layer of excitement to our curated offerings. The bus surrounding the opening has been tremendous, and we couldn't be happier. We invite you to visit and experience a culinary sensation firsthand. The opening of these two unique and outstanding amenities will further enhance the tenant experience and elevate our portfolio in ways that are distinguishing it for both our current tenants and prospective tenants alike.

Tom Hennessy: I'm also thrilled to share that on July 18th we celebrated the Grand opening of the highly anticipated Michelin star rated didn't tie.

Tom Hennessy: Restaurant.

Tom Hennessy: No the iconic glass cube and the Plaza headquarters.

Tom Hennessy: Headquarters at 16, 33 Broadway Din Tai Fung, it's a new layer of excitement to our curated offerings. The buzz surrounding the opening has been tremendous and we couldnt be happier.

Tom Hennessy: We invite you to visit and experience equivalent aerie sensation firsthand.

Albert Behler: The opening of these two unique and outstanding amenities will further enhance the tenant experience and elevate our portfolio in ways that distinguish it for both our current tenants and prospective tenants alike. These are the types of exclusive amenities that resonate with today's discerning tenants. As the flight to quality persists, we believe our portfolio is well positioned to capture a disproportionate share of demand, driving occupancy improvement and at times allowing us to push rents across our New York portfolio.

Speaker Change: The opening of these two unique and outstanding amenities will further enhance the tenant experience and elevate our portfolio in ways that are distinguishing it for both our current tenants and prospective tenants alike.

Albert Behler: These are the types of exclusive amenities that resonate with today's discerning tenants. As a flight to quality persists, we believe our portfolio is well positioned to capture a disproportionate share of demand, driving occupancy improvement and, at times, allowing us to push rents across our New York portfolio.

Speaker Change: These are the types of exclusive amenities that resonate with today's discerning tenants.

Tom Hennessy: As a flight to quality persists, we believe our portfolio is well positioned to capture a disproportionate share of demand driving occupancy improvement.

Speaker Change: <unk>, allowing us to push rents across our New York portfolio.

Albert Behler: As in New York, the ongoing flight to quality in the office market continues to play to our strength in San Francisco. There we are seeing a clear preference for class A and many to reach buildings in prime locations. Precisely the type of assets in our portfolio. Our properties with the state-of-the-art infrastructure, large and efficient floor plates, and desirable locations are increasingly attractive to tenants seeking to upgrade their office space. The market in San Francisco remains tough in behind New York. During the quarter, we signed approximately 20,500 square feet of leases in San Francisco, which resulted in total leases executed during the first half of the year of approximately 180,000 square feet.

Albert Behler: As in New York, the ongoing flight to quality in the office market continues to play to our strength in San Francisco. There, we are seeing a clear preference for Class A, amenity-rich buildings in prime locations, precisely the type of assets in our portfolio. Our properties, with their state-of-the-art infrastructure, large and efficient floor plates, and desirable locations, are increasingly attractive to tenants seeking to upgrade their office space. However, the market in San Francisco remains tough and behind New York.

Tom Hennessy: As in New York, the ongoing flight to quality in the office market continues to play to our strengths in San Francisco.

Tom Hennessy: There we are seeing a clear preference for class eight.

Tom Hennessy: Amenity rich buildings in prime locations.

Tom Hennessy: <unk> the type of assets in our portfolio.

Tom Hennessy: Our properties with a state of the art infrastructure large and efficient floor plates and desirable locations I increasingly attractive to tenants seeking to upgrade their office space.

Tom Hennessy: The market in San Francisco remains tough and behind New York.

Albert Behler: During the quarter, we signed approximately 20,500 square feet of leases in San Francisco, which resulted in total leases executed during the first half of the year of approximately 180,000 square feet. While leasing velocity remains below long-term averages, we are seeing some encouraging signs that demand is picking up. San Francisco remains a center for premier tech talent with high growth potential and is a clear global frontrunner for VC funding for AI companies.

Tom Hennessy: During the quarter, we signed approximately 20500 square feet of leases in San Francisco, which resulted in total leases executed during the first half of the year of approximately 180000 square feet.

Albert Behler: While leasing velocity remains below long-term averages, we are seeing some encouraging signs that demand is picking up. 10 Francisco remains the center for premier tech talent with high growth potential and is a clear global front runner for VC funding to AI companies. Our high quality portfolio is well positioned to capture outside market share as the recovery persists.

Tom Hennessy: While leasing velocity remains below long term averages we are seeing some encouraging signs that demand is picking up.

Tom Hennessy: San Francisco remains a center for Premier Tech talent with high growth potential.

Tom Hennessy: The clear global front runner for VC funding to AI companies.

Albert Behler: Our high-quality portfolio is well-positioned to capture outsized market share as the recovery persists. Turning to our balance sheet, We continue to maintain a strong liquidity position with approximately $409 million in cash and restricted cash at our common share, excluding non-core assets, along with the full $750 million available on our revolving credit facility. While the broader transaction market remains subdued, we are beginning to see early signs of increased activity. The volume of potential deals in the pipeline is gradually expanding, suggesting a possible shift towards a more dynamic environment in the coming year. We anticipate that the wide bid-ask spreads, which have historically kept many market participants on the sidelines, may start to converge. This could potentially unlock more transaction opportunities.

Tom Hennessy: Our high quality portfolio is well positioned to capture outsized market share as it were.

Tom Hennessy: Recovery persists.

Albert Behler: Turning to one sheet, we continue to maintain a strong liquidity position with approximately 409 million in cash and restricted cash at our share, excluding non-core assets, along with the full 750 million available on our revolving credit facility. While the broader transaction market remains subdued, we are beginning to see early signs of increased activity. The volume of potential deals in the pipeline is gradually expanding, suggesting a possible shift towards a more dynamic environment in the coming year. We anticipate that the white bit-ass spreads, which have historically kept many market participants on the sidelines, may start to converge.

Tom Hennessy: Turning to our balance sheet.

Tom Hennessy: We continue to maintain a strong liquidity position was approximately $409 million in cash.

Tom Hennessy: Restricted cash at our share excluding noncore assets, along with the full 750 million available on our revolving credit facility.

Tom Hennessy: While the broader transaction market remains subdued we are beginning to see early signs of increased activity.

Tom Hennessy: The volume of potential deals in the pipeline is gradually expanding suggesting a possible shift towards a more dynamic environment in the coming year.

Tom Hennessy: We anticipate that the wide bid ask spreads which have historically kept many market participants on the sidelines may start to converge.

Albert Behler: This could potentially unlock more transaction opportunities. Furthermore, the prolonged period of elevated interest rates may lead to an uptick in distressed assets coming to market, potentially creating attractive acquisition prospects.

Tom Hennessy: This could potentially unlock more transaction opportunities.

Albert Behler: Furthermore, the prolonged period of elevated interest rates may lead to an uptick in distressed assets coming to market, potentially creating attractive acquisition prospects. In this evolving landscape, we maintain our disciplined approach to capital allocation. We are strategically positioned to capitalize on external growth opportunities, particularly those in partnership with third parties, where we can leverage our extensive market knowledge and disciplined investment approach. Our strong balance sheet and ample liquidity position us well to act on attractive opportunities should they arise.

Tom Hennessy: Tomorrow, the prolonged period of elevated interest rates may lead to an uptick in distressed assets coming to market potentially creating attractive acquisition prospects.

Albert Behler: In this evolving landscape, we maintain our disciplined approach to capital allocation. We are strategically positioned to capitalize on external growth opportunities, particularly those in partnership with third parties where we can leverage our extensive market knowledge and disciplined investment approach. Our strong balance sheet and ample liquidity position as well to act on attractive opportunities should they arise.

Tom Hennessy: In this evolving landscape, we maintain our disciplined approach to capital allocation.

Tom Hennessy: We are strategically positioned to capitalize on external growth opportunities, particularly those in partnership with third parties, where we can leverage our extensive market knowledge and disciplined investment approach.

Tom Hennessy: Our strong balance sheet and ample liquidity position.

Tom Hennessy: Well to act on attractive opportunities should they arise.

Albert Behler: In closing, we had a solid performance this quarter and remained confident in our strategy. Our high-quality assets and prime locations continue to outperform the broader market and be well-positioned to capitalize on the ongoing flight to quality in our core markets.

Albert Behler: In closing, we had a solid performance this quarter and remain confident in our strategy. Our high-quality assets in prime locations continue to outperform the broader market, and we are well-positioned to capitalize on the ongoing flight to quality in our core markets. With that, I will turn the call over to Peter.

Tom Hennessy: In closing.

Tom Hennessy: We had a solid performance this quarter and remain confident in our strategy.

Tom Hennessy: Our high quality assets in prime locations continued to outperform the broader market.

Tom Hennessy: <unk> well positioned to capitalize on the ongoing flight to quality in our core markets.

Peter Brindley: With that, I will turn the call over to Peter. Thanks, Albert, and good morning. During the second quarter, we leased approximately 198,500 square feet, with approximately 178,000 square feet in New York and approximately 20,500 square feet in San Francisco. A weighted average term of leases signed during the second quarter was 8.6 years. During the second quarter, three of the leases we completed occurred at 1301 Avenue of the Americas, totaling more than 92,000 square feet. Two of which were with new financial service-based companies, and the third was with a law firm that continues to expand in the building.

Tom Hennessy: With that I will turn the call over to Peter.

Peter Brindley: Thanks, Albert, and good morning. During the second quarter, we leased approximately 198,500 square feet, with approximately 178,000 square feet in New York and approximately 20,500 square feet in San Francisco. The weighted average term of leases signed during the second quarter was 8.6 years. In the second quarter, three of the leases we completed occurred at 1301 Avenue of the Americas, totaling more than 92,000 square feet, two of which were with new financial service-based companies, and the third was with a law firm that continues to expand in the building.

Peter Brindley: Thanks, Albert and good morning.

Peter Brindley: During the second quarter, we leased approximately 198500 square feet with approximately 178000 square feet in New York and approximately 20500 square feet in San Francisco.

Peter Brindley: The weighted average term of leases signed during the second quarter was eight six years.

Speaker Change: During the second quarter three of the leases. We completed occurred at 13, one Avenue of the Americas totaling more than 92000 square feet, two of which were with new financial service based companies and the third was with a law firm that continues to expand in the building.

Peter Brindley: Approximately 60% of this leasing activity was on vacant space, and the balance was on space that was otherwise scheduled to expire in 2025. Over the past 12 months, we have made substantial progress at 1301 Avenue of the Americas, with least occupancy at the building improving from 79.8% leased to 89.5%, or 970 basis points. In both New York and San Francisco, tenants continue to pursue premium, centrally located, amenity-rich buildings run by best-in-class, well-regarded, and well-capitalized owners. This accelerating trend endures to our benefit, enabling us to capitalize on these market dynamics and expand our leasing pipeline. Our priorities remain centered on maintaining exceptional tenant relationships, securing renewals for upcoming lease explorations, and leasing our vacant space.

Peter Brindley: Approximately 60% of this leasing activity was on vacant space, and the balance was on space that was otherwise scheduled to expire in 2025. Over the past 12 months, we have made substantial progress at 1301 Avenue of the Americas, with leased occupancy at the building improving from 79.8% to 89.5% or 970 basis points. In both New York and San Francisco, tenants continue to pursue premium, centrally located, amenity-rich buildings run by best-in-class, well-regarded, and well-capitalized owners.

Speaker Change: Approximately 60% of this leasing activity was on vacant space and the balance was on space that was otherwise scheduled to expire in 2025.

Speaker Change: Over the past 12 months, we have made substantial progress at 13 O. One Avenue of the Americas with leased occupancy at the building improving from 79, 8% leased to 89, 5% or 900 970 basis points.

Tom Hennessy: In both New York and San Francisco tenants continue to pursue premium essentially located amenity rich buildings run by best in class, well regarded and well capitalized owners.

Peter Brindley: This accelerating trend inures to our benefit, enabling us to capitalize on these market dynamics and expand our leasing pipeline. Our priorities remain centered on maintaining exceptional tenant relationships, securing renewals for upcoming lease expirations, and leasing our vacant space. At quarter end, our same-store portfolio-wide least occupancy rate at share, excluding non-core assets, was 86.3 percent, down 280 basis points from last quarter and down 440 basis points year over year, driven by the previously discussed and known move-out of our second-largest tenant at share, Clifford Chance, at 31 West 52nd Street.

Tom Hennessy: This accelerating trend in Newark to our benefit enabling us to capitalize on these market dynamics and expand our leasing pipeline.

Speaker Change: Our priorities remain centered on maintaining exceptional tenant relationships securing renewals for upcoming lease expirations and leasing our vacant space.

Peter Brindley: At quarter end, our same store portfolio-wide lease occupancy rate at share, excluding non-core assets, was 86.3%, down 280 basis points from last quarter, and down 40 basis points year over year, driven by the previously discussed and known move out of our second largest tenant at share, Clifford Chance at 31 West 52nd Street. Turning to our markets, mid-town second quarter leasing activity of approximately 4 million square feet, excluding renewals, surpassed the five-year quarterly average by 21%. Leasing activity during the second quarter exceeded the five-year quarterly average for the third consecutive quarter, the first three-quarter streaks since 2018.

Speaker Change: At quarter end, our same store portfolio wide leased occupancy rate at share excluding noncore assets was 86, 3% down 280 basis points from last quarter and down 400 basis 440 basis points year over year driven by the previously discussed.

Speaker Change: And known move out of our second largest tenant at share Clifford chance at 31, West 50 <unk> Street.

Peter Brindley: Turning to our markets, Midtown's second-quarter leasing activity of approximately 4 million square feet, excluding renewals, surpassed the five-year quarterly average by 21 percent. Additionally, leasing activity during the second quarter exceeded the five-year quarterly average for the third consecutive quarter, the first three-quarter streak since 2018. The steady improvement of the demand profile in Midtown has been most evident within Midtown's core submarkets as tenants increasingly pursue the highest quality real estate with close proximity to public transportation.

Speaker Change: Turning to our markets Midtown second quarter leasing activity of approximately 4 million square feet, excluding renewals surpassed the five year quarterly average by 21%.

Speaker Change: Leasing activity during the second quarter exceeded the five year quarterly average for the third consecutive quarter. The first three quarter streak since 2018.

Peter Brindley: The steady improvement of the demand profile in Midtown has been most evident within Midtown's core submarkets as tenants increasingly pursue the highest quality real estate with close proximity to public transportation. Availability in Midtown remains elevated at 18.2%; however, the tightening of supply on upper floors has resulted in upward pressure on rents for view space, particularly in Midtown's core submarkets. The recently opened Paramount Club at 1301 Avenue of the Americas has proven to be a key differentiator in attracting and retaining tenants. Membership is offered to tenants in our New York portfolio, many of whom have offered rave reviews in the early going.

Speaker Change: The steady improvement of the demand profile in Midtown has been most evident within Midtown core submarkets as tenants increasingly pursue the highest quality real estate with close proximity to public transportation.

Peter Brindley: Availability in Midtown remains elevated at 18.2 percent. However, the tightening of supply on upper floors has resulted in upward pressure on rents for view space, particularly in Midtown's core sub-market. The recently opened Paramount Club at 1301 Avenue of the Americas has proven to be a key differentiator in attracting and retaining tenants. Membership is offered to tenants in our New York portfolio, many of whom have offered rave reviews in the early going.

Tom Hennessy: Availability in Midtown remains elevated at 18, 2%, however, a tightening of supply on upper floors as resulted in upward pressure on rents for view space, particularly in Midtown core sub markets.

Tom Hennessy: The recently opened Paramount clause at 13, one Avenue of the Americas has proven to be a key differentiator in attracting and retaining tenants.

Speaker Change: Membership is offered to tenants in our New York portfolio, many of whom have offered rave reviews in the early going.

Peter Brindley: Brokers and prospective tenants alike have offered similar feedback, referring to it as best in class, unlike anything else in the market. The club is busy, irrespective of the time of day, as members take full advantage and incorporate the club into their workday.

Peter Brindley: Brokers and prospective tenants alike have offered similar feedback, referring to it as best-in-class, unlike anything else in the market. The club is bustling irrespective of the time of day as members take full advantage and incorporate the club into their work day. Our New York portfolio is currently 86.9% leased on a same-store basis at share, down 320 basis points quarter of a quarter, and down 360 basis points year over year.

Speaker Change: Brokers and prospective tenants alike have offered similar feedback referring to it as best in class Unlike anything else in the market.

Speaker Change: The club is bustling irrespective of the time of day as members take full advantage and incorporate the club into their workday.

Peter Brindley: Our New York portfolio is currently 86.9% leased on a same-store basis at share, down 320 basis points quarter over quarter and down 360 basis points year over year. Shifting our focus to San Francisco, San Francisco recorded more than 1.6 million square feet of leasing during the second quarter, approximately one-third of which was made up of new-to-market tenants, primarily AI companies. Tenants in the market demand have grown to more than 6.5 million square feet, the highest it has been since Q4 2019.

Speaker Change: Our New York portfolio is currently 86, 9% leased on a same store basis at share.

Speaker Change: Down 320 basis points quarter over quarter, and down 360 basis points year over year.

Peter Brindley: Shifting our focus to San Francisco, San Francisco recorded more than 1.6 million square feet of leasing during the second quarter, approximately one-third of which was made up of new-to-market tenants, primarily AI companies. Tenants in the market demand has grown to more than 6.5 million square feet, the highest it has been in Q4 2019. This increase continues to be driven by the emergence of newly funded San Francisco-based AI companies, which have become an increasingly large percentage of the demand pipeline in San Francisco. In fact, VC funding in San Francisco is on pace to reach 2022 levels, north of $30 billion, much of which is going toward AI companies.

Speaker Change: Shifting our focus to San Francisco, San Francisco recorded more than one 6 million square feet of leasing during the second quarter approximately one third of which was made up of new to market tenants, primarily AI companies.

Speaker Change: Tenants in the market demand has grown to more than $6 5 million square feet. The highest it has been since Q4 2019.

Peter Brindley: This increase continues to be driven by the emergence of newly funded San Francisco-based AI companies, which have become an increasingly large percentage of the demand pipeline in San Francisco. In fact, VC funding in San Francisco is on pace to reach 2022 levels, north of $30 billion, much of which is going toward AI companies. Despite challenges in the market, including a record high availability of 37.1%, San Francisco remains a hotbed for top tech talent with high growth potential.

Speaker Change: This increase continues to be driven by the emergence of newly funded San Francisco based AI companies, which have become an increasingly large percentage of the demand pipeline in San Francisco.

Tom Hennessy: In fact, VC funding in San Francisco is on pace to reach 2022 levels north of $30 billion.

Tom Hennessy: Much of which is going towards AI companies.

Peter Brindley: Despite challenges in the market, including a record high availability of 37.1%, San Francisco remains a hotbed for top tech talent with high growth potential. Our high-quality portfolio is well positioned to capture outsized market share as the recovery continues in San Francisco. At quarter-end, our San Francisco portfolio was 84.2% leased on a same-store basis as that share, down 130 basis points quarter-over-quarter and down 740 basis points year-over-year.

Tom Hennessy: Despite challenges in the market, including a record high availability of 37, 1% San Francisco remains a hotbed for top tech talent with high growth potential.

Peter Brindley: Our high-quality portfolio is well-positioned to capture outsized market share as the recovery continues in San Francisco. At quarter end, our San Francisco portfolio was 84.2% leased on a same-store basis at share, down 130 basis points quarter over quarter and down 740 basis points year over year. We look forward to updating you on our progress. With that summary, I will turn the call over to Wilbur, who will discuss the financial results.

Tom Hennessy: Our high quality portfolio is well positioned to capture outsized market share as the recovery continues in San Francisco.

Tom Hennessy: At quarter end, our San Francisco portfolio was 84, 2% leased on a same store basis that share.

Tom Hennessy: Down 130 basis points quarter over quarter, and down 740 basis points year over year.

Peter Brindley: We look forward to updating you on our progress.

Tom Hennessy: We look forward to updating you on our progress with that summary, I will turn the call over to Wilbur who will discuss the financial results.

Wilbur Paes: But that summary, I will turn the call over to Wilbur, who will discuss the financial results. Thank you, Peter, and good morning, everyone. Yesterday, we reported CoreFFO of 20 cents per share, which is in line with 2nd quarter Wall Street consensus estimates. Same-store growth in the quarter was essentially flat, up 0.1% on a cash basis, and slightly negative at 1.3% on a GAAP basis. During the 2nd quarter, we executed 15 leases, totaling 198,505 square feet at a weighted average starting rent of $74.55 per square foot, and for a weighted average lease term of 8.6 years.

Wilbur Paes: Thank you, Peter, and good morning, everyone. Yesterday, we reported core FFO of $0.20 per share, which is in line with second quarter Wall Street consensus estimates. Same-sale growth in the quarter was essentially flat, up 0.1% on a cash basis and slightly negative at 1.3% on a gap basis. During the second quarter, we executed 15 leases totaling 198,505 square feet at a weighted average starting rent of $74.55 per square foot and for a weighted average lease term of 8.6 years.

Wilbur: Thank you Peter and good morning, everyone, Yes.

Wilbur: Yesterday, we reported core <unk> of <unk> 20 per share, which is in line with second quarter Wall Street consensus estimates.

Wilbur: Same store growth in the quarter was essentially flat up <unk>, 1% on a cash basis and slightly negative at one 3% on a GAAP basis.

Speaker Change: During the second quarter, we executed 15 leases totaling 198505 square feet at a weighted average starting rent of $74 55 per square foot.

Wilbur: And for a weighted average lease term of eight six years.

Wilbur Paes: Marked to markets on 98,862 square feet of 2nd generation space was positive 1% on a cash basis, and negative 3.4% on a gap basis. This marked to market data represents only a New York portfolio as the 20,647 square feet released in our San Francisco portfolio represented leases executed within our non-core assets at Market Center and 111 Southern Street. Turning to our balance sheet, our liquidity position remains strong at over 1.1 billion. We ended the quarter with little over 409 million of cash and restricted cash and a full 750 million of undrawn capacity under our revolver.

Wilbur Paes: Mark-to-market values on 98,862 square feet of second-generation space were positive 1% on a cash basis and negative 3.4% on a gap basis. This mark-to-market data represents only our New York portfolio, as the 20,647 square feet leased in our San Francisco portfolio represented leases executed within our non-core assets at Market Center and 111 Sutter Street. Turning to our balance sheet, our liquidity position remains strong at over $1.1 billion. We ended the quarter with a little over $409 million of cash and restricted cash and a full $750 million of undrawn capacity under our revolver.

Tom Hennessy: Mark to market on 98862 square feet of second generation space was positive 1% on a cash basis and negative three 4% on a GAAP basis.

Tom Hennessy: This is mark to market data represents only our new York portfolio as the 20647 square feet leased and our San Francisco portfolio represented leases executed within our non core assets at market Center and 111 Sutter Street.

Speaker Change: Turning to our balance sheet, our liquidity position remains strong at over $1 1 billion. We ended the quarter with little over $409 million of cash and restricted cash and the full $750 million of undrawn capacity under our revolver.

Wilbur Paes: Our share of the 409 million of cash and restricted cash excludes amounts from non-core assets. During the quarter, we once again extended the mortgage loan on 111 Southern Street and pushed out the maturity to December 2025. We did this on the same terms as the previous extension, namely that all interest shortfalls will continue to accrete to the principal balance of the loan, with the lender funding all capital needed to stabilize the asset, thereby protecting our balance sheet, all while preserving optionality for our shareholders. Outstanding debt at quarter end was 3.6 billion at a weighted average interest rate of 3.92% and a weighted average maturity of 3.1 years.

Wilbur Paes: Our share of the $409 million of cash and restricted cash excludes amounts from non-core assets. During the quarter, we once again extended the mortgage loan on 111 Sutter Street and pushed out the maturity to December 2025.

Tom Hennessy: Our share of the $409 million of cash and restricted cash excludes amounts from non core assets.

Tom Hennessy: During the quarter, we once again extended the mortgage loan on 111, Sutter Street and pushed out the maturity to December 2025.

Wilbur Paes: We did this on the same terms as the previous extension, namely that all interest shortfalls will continue to accumulate on the principal balance of the loan with the lender funding all capital needed to stabilize the asset, thereby protecting our balance sheet and all while preserving optionality for our shareholders. outstanding debt at quarter end was $3.6 billion at a weighted average interest rate of 3.92% and a weighted average maturity of 3.1 years. 87% of our debt is fixed and has a weighted average interest rate of 3.31%, and the remaining 13% is floating and has a weighted average interest rate of 8.01%.

Tom Hennessy: We did this on the same terms as the previous extension, namely that all interest shortfalls will continue to accrete to the principal balance of the loan with the lender funding all capital needed to stabilize the asset, thereby protecting our balance sheet, all while preserving optionality.

Tom Hennessy: <unk> for our shareholders.

Tom Hennessy: Outstanding debt at quarter end was $3 6 billion at a weighted average interest rate of 392% and a weighted average maturity of three one years.

Wilbur Paes: 87% of our debt is fixed and has a weighted average interest rate of 3.31%, and the remaining 13% is floating and has a weighted average interest rate of 8.01%. These figures, of course, include the debt on the known core assets. Excluding debt on non-core assets, outstanding debt was $3.24 billion at a weighted average interest rate of 3.89% and a weighted average maturity of 3.4 years. And we have no debt until 2026. Please refer to page 39 in our supplemental package for the impact of non-core debt on our capital structure to additional information.

Speaker Change: 87% of our debt is fixed and has a weighted average interest rate of 331% and the remaining 13% is floating and has a weighted average interest rate of eight point or 1%.

Speaker Change: These figures of course include the debt on the non core assets.

Wilbur Paes: These figures, of course, include the debt on non-core assets. Excluding debt on non-core assets, our outstanding debt was $3.24 billion at a weighted average interest rate of 3.89% and a weighted average maturity of 3.4 years. And we have no debt maturities until 2026.

Speaker Change: Excluding debt on noncore assets outstanding debt was $3 two 4 billion at a weighted average interest rate of 389% and a weighted average maturity of three four years and we have no debt maturities until 2026.

Wilbur Paes: Please refer to page 39 in our supplemental package for the impact of non-co-debt on our capital structure for additional information. Turning now to our 2020 full guidance. Based on our year-to-date results, as well as our outlook for the remainder of the year, we have improved our same-store cash and GAP NOI growth outlook by 100 basis points and 50 basis points, respectively. However, the improvement in our same-store results is offset by slightly higher interest and G&A expense.

Speaker Change: Please refer to page 39 in our supplemental package for the impact of noncore depth on our capital structure for additional information.

Wilbur Paes: Turning now to our 2024 guidance, based on our year-to-date results, as well as our outlook for the remainder of the year, we have improved our seems to cash and gap NOI growth outlook by 100 basis points and 50 basis points, respectively. The improvement in our same store results is offset by slightly higher interest and GNA expense. As such, we have maintained the midpoint of our core FFO guidance of $0.78 per year by narrowing the range to be between $0.76 and $0.80 per year.

Speaker Change: Turning now to our 2020 full guidance.

Speaker Change: Based on our year to date results as well as our outlook for the remainder of the year. We have improved our same store cash and GAAP NOI growth outlook by 100 basis points and 50 basis points respectively.

Speaker Change: The improvement in our same store results is offset by slightly higher interest and G&A expense as such we have maintained the midpoint of our core <unk> guidance of 78 per share by narrowing the range to be between 76, and <unk> 80 per share.

Wilbur Paes: As such, we have maintained the midpoint of our core FFO guidance of $0.78 per share by narrowing the range to be between $0.76 and $0.80 per share. Please refer to page 6 of our supplemental package for additional information regarding the changes and assumptions underlying our guidance. With that, Operator, please open the lines for questions.

Wilbur Paes: Please refer to page 6 of our supplemental package for additional information regarding the changes and assumptions underlying our guidance.

Speaker Change: Please refer to page six of our supplemental package for additional information regarding the changes in assumptions underlying our guidance.

Operator: Would that operator please open the line for questions? Thank you.

Tom Hennessy: With that operator, please open the lines for questions.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 under the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: You May press star two if you'd like to remove your question from the Q4.

Speaker Change: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Stephen Sakwa: Our first question comes from the line of seed Sakwa with ever core ISI. Please proceed with your question. Thanks, good morning.

Speaker Change: Our first question comes from the line of Steve Sochua with Evercore ISI. Please proceed with your question.

Steve Sakwa: Thanks, good morning. Either for Peter or Wilbur; I guess it's kind of a two-parter. Number one, can you just kind of remind us some of the large known vacants that you guys have maybe between now and the end of 25? And if there are some things that are not necessarily resolved, maybe just remind us kind of what are some potential things that could become known vacants over the next 18 months? And I guess the corollary to that is, can you just help us think through the sign lease not commence figure as we try and think about the occupancy bridge over the next 18 months?

Steve Sochua: Thanks, Good morning.

Peter Brindley: Either for Peter or Wilbur, I guess it's kind of a two-parter. Number one, can you just kind of remind us some of the large known vacates that you guys have maybe between now and the end of 25. And if there are some things that are not necessarily resolved, maybe just remind us kind of what are some potential things that could become known vacates over the next 18 months. And I guess the corollary to that is, can you just help us think through the sign lease, not commence figure as we try and think about the occupancy bridge over the next 18 months.

Steve Sochua: Either for Peter or Wilbur I guess, it's kind of a two parter number one can you just kind of remind us some of the large known vacates that you guys have maybe between now and the end of 'twenty five and if there are some things that are not necessarily resolved, maybe just remind us kind of what are.

Steve Sochua: Some potential things that could become known Vacates over the next 18 months and I guess the corollary to that is.

Speaker Change: Can you just help us think through the signed leases not commenced figure as we try and think about the occupancy bridge over the next 18 months.

Peter Brindley: Good morning, Steve.

Peter Brindley: Morning, Steve. This is Peter.

Steve Sochua: Good morning, Steve This is Peter I'll start by saying that Google and JP Morgan make up 40% of our 2025 lease explorations and as we now know Google will vacate the entirety of one market which is rough.

Peter Brindley: This is Peter. I'll start by saying that Google and JP Morgan make up 40% of our 2025 lease explorations. And as we've we now know, Google will vacate the entirety of one market, which is roughly 340,000 square feet, 168,000 square feet at share. And as it relates to JP Morgan at One Front Street, we are in discussions with them. We don't expect to keep them in the entirety of the 241,000 square feet that expires in 2025. We do expect to keep them in a portion of it. But that is the largest block you see will when you think about our 2025 lease expiration.

Peter Brindley: I'll start by saying that Google and JP Morgan make up 40% of our 2025 lease expirations. And as we now know, Google will vacate the entirety of one market, which is roughly 340,000 square feet, 168,000 square feet at share. And as it relates to JP Morgan at One Front Street, we are in discussions with them.

Speaker Change: 340000 square feet of 168000 square feet at share and as it relates to Jpmorgan at one front Street.

Steve Sochua: We are in discussions with them, we don't expect to keep them in the entirety of the 241000 square feet that expires in 2025, we do expect to keep them in a portion of it.

Peter Brindley: We don't expect to keep them in the entirety of the 241,000 square feet that expires in 2025, but we do expect to keep them in a portion of it. But that is the largest block, if you will, when you think about our 2025 lease expiration. Beyond that, we are having constructive conversations with a number of tenants that have lease expirations in 2025 and working very hard. And we believe we will be successful in keeping a good portion of the remaining 25 lease expirations.

Speaker Change: But that is the largest block if you will when you think about our 2025 lease.

Steve Sochua: Lease exploration beyond that we are having constructive conversations with a number of tenants that have lease expirations in 2025, and working very hard and we believe we will be successful to keep a good portion of the remaining.

Peter Brindley: And beyond that, we are having constructive conversations with a number of tenants that have lease explorations in 2025 and working very hard. And we believe we will be successful to keep a good portion of the remaining 25 lease expirations.

Steve Sochua: 25 lease explorations.

Wilbur Paes: And Steve, to the second part of your question, as far as sign leases, you'll see there's a big delta; I'm sure you've seen between 1301 least and occupied percentage and also at 31 West.

Wilbur Paes: Sure. And Steve, to the second part of your question, as far as, you know, signed leases go, you'll see there's a big delta, as I'm sure you've seen, between 1301 leased and occupied percentage and also at 31 West. That will start to narrow through the end of the year relative to those signed leases and start to hit really hard in the early part of 25. At 1301, it's the big Citizens Bank deal that was done. At 1325, it was the large Wilson-Sonsini expansion that was done there.

Speaker Change: John and Steve to the second part of your question as far as signed leases Youll.

Speaker Change: Youll see Theres, a theres, a big Delta and I'm sure you've seen between <unk> leased and occupied percentage.

Steve Sochua: And also at 31 west.

Wilbur Paes: That will start to narrow through the end of the year relative to those signed leases and start to hit really in the early part of 25 at 1301. It's the big Citizen Bank deal that was done at 1325. It was the large Wilson Sonsini expansion that was done there.

Speaker Change: That will start to narrow through the end of the year relative to those signed leases and start to hit really in the early part of 'twenty five.

Speaker Change: At <unk>, the Big citizens Bank deal that was done at 13 25. It was the large Wilson sonsini expansion that was done there.

Speaker Change: Yeah.

Wilbur Paes: So is there just kind of a rough figure, Wilbur, or should we just kind of extrapolate between the occupancy and the leased and assume some of that but not all of that will commence over the next kind of say 12 months. Yeah, I think you will need to extrapolate, Steve.

Wilbur Paes: So is that just kind of a rough figure, Wilbur, or should we just kind of extrapolate between the occupancy and the lease and assume some of that but not all of that will commence over the next, kind of say, 12 months?

Speaker Change: So is there just kind of a rough figure of Wellbore or should we just kind of extrapolate between the occupancy and the least and assume some of that but not all of that will commence over the next kind of say 12 months.

Speaker Change: Sure.

Wilbur Paes: Yeah, I think you will need to extrapolate, Steve. I don't want to get into precise figures of what that contribution will be.

Speaker Change: Yes, I think you will need to extrapolate Steve I don't want to get into precise figures of what that contribution will be.

Wilbur Paes: I don't want to get into precise figures of what that contribution will be. Okay, thanks.

Albert Behler: Okay, thanks. And then, maybe, Albert, you mentioned, you know, still the dislocation in the capital markets and the transaction market, but you're starting to see more potential things come to market. I'm just giving, excuse me, given your kind of capital structure sits today and kind of where your stock price is, I'm sure you wouldn't want to issue equity to do deals at these levels. But, you know, how would you think about funding deals and, you know, just, I guess, what would the economics of the deal sort of have to look like to kind of get you guys to jump in?

Speaker Change: Okay. Thanks, and then maybe Albert you mentioned.

Albert Behler: And then maybe Albert, you mentioned, you know, still the dislocation in the capital markets, transaction market, but you're starting to see more potential things come to market. I'm just given, excuse me, given your, where your kind of capital structure sits today and kind of where your stock prices, I'm sure you wouldn't want to issue equity to do deals, excuse me, at these levels, but you know, how would you think about funding deals and, you know, just I guess what would the economics of the deals sort of have to look like to kind of get you guys to jump in.

Albert: So the dislocation in the capital markets transaction market, but you're starting to see more of potential things come to market.

Speaker Change: Just given excuse me given your where your kind of capital structure sits today and kind of where your stock prices I'm sure you wouldn't want to issue equity to do deals.

Speaker Change: It was me at these levels, but you know how would you think about funding deals.

Albert: And.

Speaker Change: Just I guess, what would the economics of the deal sort of have to look like to kind of get you guys to jump in.

Albert Behler: Yeah, Steve, we said over the last couple of early schools we are looking at potential opportunities very carefully in the class A. That's where we are interested in and trophy. There are various few transactions happening so far. There's still a big gap, a bit ask, which seems to be narrowing. And, and we will not be using a lot of our equity of our liquidity that we currently have on balance sheet. So we will invest asset light, as we call it, and use outside venture capital that seems to be more interested at this point in the cycle.

Albert Behler: Yeah, I see. As I said over the last couple of earnings calls, we are looking at potential opportunities very carefully. In Class A, that's where we are interested in Trophy.

Steve Sochua: Yes, Steve.

Steve Sochua: We said over the last couple of news calls.

Steve Sochua: Looking at potential.

Steve Sochua: Opportunities very carefully.

Speaker Change: In the class eight Thats, where we are interested in the trophy.

Albert Behler: There are very few transactions happening so far. There's still a big gap, a bid-ask gap, which seems to be narrowing. And we will not... be using a lot of our equity, of our liquidity that we currently have on balance sheets. So we will invest asset light, as we call it, and use outside venture capital that seems to be more interested at this point in the cycle, a number of, I would say especially foreign, but especially also private investors, less institutional ones who are considering getting into the market.

Speaker Change: They are very few.

Speaker Change: Transactions happening so far there is still a big gap bid ask which seems to be narrowing.

Steve Sochua: And we will not.

Steve Sochua: We're using a lot of our equity.

Steve Sochua: All of our liquidity that we currently have a balance sheets. So we will invest asset light as we call it and the Jews outside venture capital that seems to be more interested.

Steve Sochua: At this point.

Steve Sochua: In the cycle.

Albert Behler: There are a number of, I would say, especially foreign, but especially also private investors, less institutional ones who are considering to get into the market. And we will use these relationships that we have developed over the last many years to look at investment opportunities. It's at a lower point in San Francisco at this point, and you have to have the hope that San Francisco is coming back, which I think is behind with in comparison to New York. So we are looking at both markets, but we will be very, very capo before we pose the trigger.

Speaker Change: A number of I would say, especially foreign but.

Steve Sochua: Especially also private investors.

Steve Sochua: Institutional ones, who are considering two two.

Steve Sochua: To get into the market and we will use these relationships that we have developed over the last.

Albert Behler: And we will use these relationships that we have developed over the last It's been many years to look at investment opportunities at a lower point in San Francisco at this point, and you have to have the hope that San Francisco is coming back, which I think is behind in comparison to New York. So we are looking at both markets. But we will be very, very careful before we pull the trigger.

Steve Sochua: Many years.

Steve Sochua: To look at investment opportunities.

Steve Sochua: It's.

Steve Sochua: At a lower point in San Francisco at this point and.

Steve Sochua: You have to have.

Steve Sochua: The hope that San Francisco is coming back, which I think is behind.

Steve Sochua: In comparison to New York So we.

Steve Sochua: We are looking at both markets.

Steve Sochua: But.

Steve Sochua: We will be very very careful.

Steve Sochua: Before we pull the trigger.

Steve Sochua: Yeah.

Albert Behler: Thank you.

Steve Sakwa: Okay, thanks. That's it for me.

Steve Sochua: Okay. Thanks, that's it for me.

Albert Behler: Okay, thanks.

Albert Behler: That's it from me.

Albert Behler: Thank you, Steve.

Steve Sochua: Thank you Steve.

Albert Behler: Thank you.

Vikram Malhotra: Thank you. Our next question comes from the line of Vikram Malhotra with Missouho. Please proceed with your question. Good morning.

Speaker Change: Thank you. Our next question comes from the line of Vikram Malhotra with Mizuho. Please proceed with your question.

Vikram Malhotra: Our next question comes from the line of Vikram Malhotra. Where's it from? Please proceed with your question. Good morning. Thanks, Steve. The question.

Vikram Malhotra: Morning. Thanks for taking the question. I guess just first on two specific properties: I think at 1633, Showtime has a bunch of space on the sublet market. I'm just wondering if you've had any discussions on, you know, their plans. I know the lease doesn't come up for a while, but just curious given the size at 1633. And then any update on the retail block on Fifth Avenue? It's fairly large, but I know there are a few large blocks there so any update would be

Vikram Malhotra: Morning, Thanks for taking the question I guess, just first on two specific properties.

Vikram Malhotra: I guess this first on two specific properties. I think it's 1633. Showtime has a bunch of space on the sublet market. I'm just wondering if you've had any discussions on, you know, their plans. I know the lease doesn't come up for a while, but just curious given the size at 1633.

Vikram Malhotra: <unk> 16, 33 short time has a bunch of space on the sublet market I'm just wondering if you've had any discussions on.

Steve Sochua: Their plans I know the lease doesn't come up for a while but just curious given the size.

Steve Sochua: At 16, 33, and then any update on the retail block on fifth Avenue at fairly large, but I know there are few large blocks. There. So any update would be helpful on leasing prospects.

Vikram Malhotra: And then any update on the retail block on this avenue. It's fairly large, but I know there are few large blocks there. So that any update would be helpful on the leading process.

Peter Brindley: Hi, Vikram. We have more activity on that retail space at 712 Fifth Avenue than at any point since we began marketing it. Certainly, there's been a lot of productive deals that have transpired on Upper Fifth. And there's not a whole lot of supply. Certainly, nothing like ours is, I think everybody would agree. So nothing to report just yet in this regard, but we feel like there's really very nice activity. And we may have an opportunity to convert with a really exciting couple of channels. So more to come up. Vikram, as mentioned, again, a couple of times before we released a nice part of that retail after any vendor moved out to Harry Vincent.

Peter Brindley: Hi Vikram, we have more activity in that retail space at 712 5th Avenue than at any point since we began marketing it. Certainly, there's been a lot of productive deals that have transpired on Upper Fifth, and there's not a whole lot of supplies, certainly nothing like ours, as I think everybody would agree. So, nothing to report just yet in this regard, but we feel like...

Vikram: Hi, Vikram.

Speaker Change: We have more activity on that retail space at 712 fifth Avenue.

Speaker Change: Then at any point since we began marketing it.

Speaker Change: Certainly theres been a lot of productive.

Speaker Change: Deals that have transpired on upper fifth and Theres not a whole lot of supply certainly nothing like ours is I think everybody would agree. So so nothing to report just yet in this regard, but we feel like.

Albert Behler: There's really very nice activity, and we may have an opportunity to convert with a really exciting couple of tenants, so more to come. Vikram, as mentioned a couple of times before, we leased a nice part of that retail after Henry Vandell moved out to Harry Winston. And the rent we got is nearly at the level that Henry Vandell had paid previously. We want to be very careful to find the right tenant.

Steve Sochua: There is really very nice activity and we may have an opportunity to convert.

Speaker Change: With a really exciting couple of tenants.

Speaker Change: More to come up.

Speaker Change: As mentioned again, a couple of times before.

Speaker Change: We leased.

Speaker Change: Nice part of that that retail after and had been moved out to Harry Winston.

Peter Brindley: And the rent we got is nearly at the level that Harry that and we've been now had paid previously.

Speaker Change: And the rent we got.

Speaker Change: Nearly at the level that Terry.

Speaker Change: And we had bendel had paid previously.

Albert Behler: It's probably in the luxury segment, and it has to fit the asset class of the rest of the office building, and Peter and his team have a very decent interest because there's not much square footage available in fifths of that kind of quality.

Peter Brindley: We want to be very careful to find the right tenant. It's most probably in the luxury segment. And it has to fit the asset class of the rest of the office building, and Peter and his team have might have very decent interest because there's not much of where footage available on on fifths of that kind of quality.

Speaker Change: We're going to be very careful.

Speaker Change: To find the right tenant it's most probably in the luxury segment and.

Speaker Change: It has to fit.

Speaker Change: The asset class of the rest of the office building and.

Peter Brindley: Peter and his team.

Steve Sochua: Yep.

Steve Sochua: <unk>.

Steve Sochua: They have very decent interest because is not much of square footage available on five so that kind of quality.

Steve Sochua: Yeah.

Peter Brindley: Thanks so much. And maybe just one more. Peter, you alluded to maybe some early signs of improvement in San Francisco in particular. And you know, just generally from your peers, things seem very slow. Pipeline wise, leaving velocity wise. I'm just wondering, can you elaborate on whether it's AI or traditional tech? What sort of what are you looking for? What green shoots? I mean, you'd be seeing. Thanks. The green shoots, Vikram, or that the demand pipeline, the tenants in the market continues to increase. Venture capital funding continues to find its way to San Francisco based companies.

Vikram Malhotra: Thanks so much. Maybe just one more.

Speaker Change: Thanks, so much and maybe just one more.

Peter Brindley: Peter, you alluded to maybe some early signs of improvement in San Francisco in particular, and just generally from your peers, things seem very slow, pipeline-wise, and leaving velocity-wise. I'm just wondering, can you elaborate on whether it's AI or traditional tech, what sort of what are you looking for, what green shoots may you be seeing?

Steve Sochua: Peter you alluded to maybe some some early signs of improvement in San Francisco in particular, and just generally from your peers seem very slow.

Speaker Change: Pipeline, while leasing velocity wise I'm, just wondering can you elaborate on whether it's AI or traditional tech.

Speaker Change: That's sort of what are you looking for what green shoots.

Speaker Change: UPC. Thanks.

Peter Brindley: The green shoots, Vikram, are that the demand pipeline, the number of tenants in the market, continues to increase. Venture capital funding continues to find its way to San Francisco-based companies. There are new companies entering the market. In fact, a third of the leasing activity in the second quarter was made up of new tenants to the market.

Speaker Change: The green shoots.

Vikram Malhotra: Vikram are that the demand pipeline of tenants in the market continues to increase venture capital funding continues to find its way to San Francisco based companies. There are new companies entering the market in fact, a third of the leasing activity in the second quarter was made up of.

Peter Brindley: There are new companies entering the market. In fact, a third of the leasing activity in the second quarter was made up of new tenants to the market. AI-based companies, of course, we're all talking about. I think the most important thing is that they acknowledge the importance of the office. They are, in fact, looking to secure office space to allow for collaboration in order to execute on their lofty plans. Of course, so I think that is all trending very nicely. We, of course, are working our way through a lot of availability in this market to return it to healthier fundamentals.

Speaker Change: New tenants to the market AI based companies of course, we're all talking about I think the most important thing is that they acknowledge the importance of the office. They are in fact looking to secure office space.

Peter Brindley: AI-based companies, of course, are what we're all talking about. I think the most important thing is that they acknowledge the importance of the office. They are, in fact, looking to secure office space to allow for collaboration in order to execute on their lofty plans, of course. So I think that is all trending very nicely.

Speaker Change: To allow for collaboration in order to execute on their lofty plans of course, so I think that is all trending very nicely. We of course are working our way through a lot of availability in this market to return it to a healthier fundamentals, but directionally what I.

Peter Brindley: We, of course, are working our way through a lot of availability in this market to return it to healthier fundamentals. But directionally, what I am experiencing, what we as a team are experiencing in our properties is increased tour activity, and increased proposals. We have nice activity on the Google block of floors that we'll be getting back next year. And so, for those reasons, we feel more optimistic today than we did going back, call it six months. And so, directionally, San Francisco seems to be moving in a better direction.

Peter Brindley: But, directionally, what I am experiencing, what we as a team are experiencing in our properties, is increased tour activity, increased proposals. We have nice activity on the Google block of floors that we'll be getting back next year.

Speaker Change: And experiencing what we as a team are experiencing in our properties is increased tour activity increased proposals, we have nice activity on the Google block of floors that will be getting back next year.

Peter Brindley: And so, for those reasons, we feel more optimistic today than we did going back, call it six months. And so, directionally, San Francisco seems to be moving in a better direction.

Speaker Change: So.

Speaker Change: Those reasons, we feel more optimistic today than we did.

Speaker Change: Going back call it six months.

Speaker Change: And so.

Speaker Change: Directionally, San Francisco seems to be moving in a better direction.

Camille Bonnell: Thank you. Our next question comes from the line of Camille Bonnell with Bank of America. Please proceed with your question.

Camille Bonnell: Thank you.

Neil <unk>: Thank you. Our next question comes from the line of Neil <unk> with Bank of America. Please proceed with your question.

Camille Bonnell: Our next question comes from the line of Camille Bonnell with Bank of America. Please pursue with your question. Good morning, everyone. I saw you tap the leasing target for the year, and momentum seems to be picking up in New York City, but your signed activity is still tracking below the low end of guidance so far. So I was wondering if you could provide more details on how much San Francisco leasing was factored into your guidance. And if you feel anything on the demand front into July has really changed versus your expectations at the beginning of the year.

Camille Bonnell: Good morning, everyone. I saw you kept the leasing target for the year, and momentum seems to be picking up in New York City, but your signed activity is still tracking below the low end of guidance so far. So I was wondering if you could provide more details on how much San Francisco leasing was factored into your guidance and if you feel anything on the demand front in July has really changed versus your expectations at the beginning.

Neil <unk>: Good morning, everyone.

Neil: So you kept the leasing target for the year and momentum seems to be picking up in New York City, but youre signed activity is still tracking below the low end of guidance. So far. So I was wondering if you could provide more details on how much San Francisco leasing what's factored into your guidance.

Speaker Change: You feel anything on the demand front into July has really changed versus your expectations at the beginning of the year.

Wilbur Paes: Camille, maybe I'll just start.

Wilbur Paes: Camille, maybe I'll just start. I don't think your statement about it trending at the low end of the guidance is true. We have leased 475,000 square feet here to date. To get to the midpoint, you need to lease 168,000 square feet per quarter if it was linear, and obviously, both the first and the second quarter were well ahead of those figures.

Speaker Change: Maybe I'll just start.

Wilbur Paes: I don't think your statement about it trending at the low end of the guidance is true. We have leased for 175,000 square feet year to date. To get to the midpoint, you need to lease 168,000 square feet per quarter if it was linear, and obviously, both the first and the second quarter were well ahead of those figures.

Speaker Change: Don't think Youll statement about it trending at the low end of the guidance is true we have leased 475000 square feet year to date to get to the midpoint you move to lease.

Speaker Change: <unk> hundred 68000 square feet per quarter, if it was linear and obviously, both the first and the second quarter well ahead of those figures.

Speaker Change: Okay.

Wilbur Paes: Okay, thanks for clarifying, Wilbur.

Wilbur Paes: Okay, thanks for clarifying, Wilbur. And Wilbur, while I have you, can you provide an update on what assumptions are factored into your interest expense guidance following the increase in this quarter? Because statements from the Fed yesterday seem to be increasing the odds of a September cut. So are you baking any of this in?

Speaker Change: Okay. Thanks for clarifying welfare.

Wilbur Paes: And Wilbur, while I have you, can you provide an update on what assumptions are factored into your interest expense guiding following the increase in this quarter? Because statements from the Fed yesterday seem to be increasing the odds of a September cut. So are you baking any of this in? Yes.

Speaker Change: And while I have you can you provide an update on what assumptions are factored into your interest expense guidance. Following the increase in this quarter because statements from the fed yesterday seem to be increasing the odds of a September cut. So are you baking any of this in.

Wilbur Paes: Yes. So, you know, just to put this in perspective, obviously, when we did come up with interest expense guidance in February. As you can imagine, at that point, there was a lot of chatter about four to five cuts in the year that did not come to fruition. Hence, you know, we're tweaking assumptions based on where the Fed's speech is now based on the expectation of rate cuts for the duration of the year, but it is incrementally higher relative to what we provided in the guidance. You also know the rate cap and the swap at 1301 expire in August, and that was factored into that equation as well.

Speaker Change: Yes, so just to put this in perspective, obviously, when we did come off the interest expense guidance that was in February as you can imagine at that point there was a lot of chatter between four to five cuts in the that did not come to fruition.

Wilbur Paes: So, you know, just to put this in perspective, obviously, when we did come up with interest expense guidance that was in February, as you can imagine, at that point there was a lot of chatter between, you know, four to five cuts in the year. That did not come to fruition. Hence, you know, we're tweaking assumptions based on where the Fed speak is now, based on the expectation of rate cuts for the duration of the year, but it is incrementally higher relative to what we provided in the guidance. You also know the rate cap and the swap at one expires in August, and that was factored into that equation as well.

Speaker Change: Hence, we're tweaking assumptions based on where the fed speak is now based on the expectation of rate cuts for the duration of the year, but it is incrementally higher relative to what we provided in the guidance.

Speaker Change: You also know.

Speaker Change: The rate cap and the swap at 13 O. One expires in August and that was factored into into that equation as well.

Wilbur Paes: Okay, thanks for walking through that.

Speaker Change: Okay. Thanks for walking through that and we ran a bottoms up analysis of office assets across New York City to see how the rates rank relative to each other in your portfolio comes up as one of the top three platform.

Camille Bonnell: Okay, thanks for walking through that. And we ran a bottoms-up analysis of office assets across New York City to see how the rates rank relative to each other. And your portfolio comes up as one of the top three platforms. But we see when demand pulls back, you can really see how the high concentration in buildings and large tenants can have a large impact on your operations. So as we look forward, can you talk about how you think about balancing this risk versus the benefits of diversification? And is there anything the team is doing to mitigate this risk? Well, we think so.

Wilbur Paes: And we ran a bottoms-up analysis of office assets across New York City to see how the rates rank relative to each other, and your portfolio comes up as one of the top three platforms. But we see when demand pulls back, you can really see how the high concentration in buildings and large tenants can have a large impact to your operation.

Speaker Change: But we see when demand pulls back you can really see how the high concentration in buildings and large tenants can have a large impact to your operations.

Albert Behler: So, as we look forward, can you talk about how you think about balancing this risk versus the benefits of diversification? And is there anything the team's doing to mitigate this risk? Well, we, I think our portfolio is pretty diversified. And if you look at the New York market historically, it has been more and more diversified over the years. You might not remember not being around. Many years ago, New York didn't have entertainment. It was depending mainly on fire tenants. And today, and that means mainly finance and insurance. And today, it's a very, very diversified tenant mix.

Speaker Change: As we look forward can you talk about how you think about balancing the risks versus the benefits of diversification and is there anything in the team is doing to mitigate this risk.

Albert Behler: Well, I think our portfolio is pretty diversified, and if you look at the New York market historically, it has been more and more diversified over the years. You might not remember me being around.

Speaker Change: Well.

Speaker Change: I think our portfolio is pretty diversified.

Speaker Change: And if you look at the New York market historically.

Speaker Change: It has been.

Speaker Change: More and more diversified over the years.

Albert Behler: Many years ago, New York didn't have entertainment. It depended mainly on fire tenants, and today that means mainly finance and insurance. And today, it's a very, very diversified tenant mix, and we have tech included as well. And so, I think our portfolio is also quite diversified across the board. Each building is different, and we like it that way, and that's typical for. For office buildings in this market, if you have smaller floor plates, it's catering to a different demand or a different tendency than larger buildings, and I think we did it pretty well.

Speaker Change: You might not remember not being around.

Speaker Change: Many years ago, New York didn't have entertainment it was depending mainly on fire attendance and today it's.

Speaker Change: And that means may be finance.

Speaker Change: <unk>.

Speaker Change: In insurance and today, it's a very very diversified tenant mix and we have tech included as well.

Albert Behler: And we have tack included as well. And so, I think our portfolio is also quite diversified across the board. Each building is different. And we like it that way. And that's typical for office buildings in this market. If you have small upflow pledge, it's catering to a different demand or a different tendency than larger buildings, and I think we managed it pretty well.

Speaker Change: And.

Speaker Change: So.

Speaker Change: I think our portfolio is also.

Speaker Change: Quite diversified across the board each building is different.

Speaker Change: And we like it that way and Thats typical for.

Speaker Change: For office buildings in this market if you have smaller floor plates, it's catering to a different demand.

Speaker Change: Different tenancy than than larger buildings, and I think we managed it pretty well.

Albert Behler: Thank you for your thoughts.

Speaker Change: Thank you for your thoughts.

Speaker Change: Thank you.

Blaine Heck: Thank you. Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Blaine Heck: Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question. Great. Thanks. Good morning. I was hoping to get some color on the drivers of the increase in St.

Blaine Heck: Great. Thanks, Good morning, I was hoping to get some color on the drivers of the increase in same store NOI expectations, given that lease percentage outlook didn't change so any details there would be helpful.

Blaine Heck: Stuart and I expectations given that the least percentage outlook didn't change, so any details there would be helpful. Sure, Blaine. As you point out, we bumped St. Stuart cash and gap and I guidance 100 basis and 50 basis points respectively at the midpoint. You saw the results in the second quarter that aided in that and the expectation of reduced operating expenses in the second half of the year. That's really what drove the NOI increase. But, you know, we're trending relative to the year-to-date, Blaine.

Wilbur Paes: Sure, Blaine, and you know, we, as you point out, we bumped SameStore cash and gap NOI guidance by 100 basis points and 50 basis points, respectively, at the midpoint. You saw the results in the second quarter that, you know, aided in that and the expectation of reduced operating expenses in the second half of the year. That's really what drove the NOI increase. But, you know, recognize where we're trending

Speaker Change: Sure Blayne.

Speaker Change: As you as you pointed out we bumped same store cash and GAAP NOI guidance of 100 basis, and 50 basis points, respectively at the midpoint.

Blayne: You saw the results in the second quarter.

Speaker Change: That.

Speaker Change: Aided in that and the expectation of.

Speaker Change: Reduced operating expenses in the second half of the that's really what drove.

Speaker Change: The NOI.

Speaker Change: Increase.

Speaker Change: But great Thats helpful.

Speaker Change: We're trending relative to the year to date Blaine it will be negative in the second half of the year.

Wilbur Paes: It will be negative in the second half of the year, and that comes as no surprise to everybody because, you know, Clifford Chance vacated in May of this year, so you're losing that. That was second largest tenant, so that New York will be more negative in the second half of the year because of that, and then you have the impending lease expiration of lease rank at 1301. Right. Okay. That's helpful.

Clifford Chance: And that comes as no surprise to everybody because Clifford chance vacated.

Speaker Change: In may of this year, so you're losing that that was our second largest tenant so that.

Speaker Change: New York will be more negative in the second half of the year because of that and then you have the impending lease exploration of Leerink at 13 O. One.

Wilbur Paes: Right. Okay. That's helpful. Thanks, Wilbur.

Speaker Change: Right. Okay. That's helpful. Thanks, Wilbur and then on the lease rate guidance itself. It looks like that implies about 80 bps of improvement between June 30, and the end of the year I guess, how much of that do you have strong visibility on and how much would you say is more kind of speculative at.

Wilbur Paes: Thanks, Wilder. And then on the lease rate, guidance itself, it looks like that implies about 80 bits of improvement between June 30th and the end of the year.

Wilbur Paes: I guess how much of that do you have strong visibility on, and how much would you say is more kind of speculative at this point? So, yeah, if you look at the lease rate, I mean, if you look at how much explorations we have throughout the rest of the year, it's about 170,000. In order to get to the midpoint of our guidance, you're talking about leasing, you know, in excess of 200,000 square feet on vacant space or about to expire space to be able to get that. I think Peter can dimension the pipeline and how much of that pipeline is on vacancy, but the reason we left that on change is because we feel good about reaching that level based on what we're seeing in the pipeline, yeah.

Speaker Change: At this point.

Wilbur Paes: And then on the lease rate guidance itself, it looks like that implies about 80 bps of improvement between June 30th and the end of the year. I guess, how much of that do you have strong visibility on? And how much would you say is more kind of speculative at this point?

Speaker Change: So yes, if you looked at the lease rate I mean, if you look at how much explorations we have.

Speaker Change: Throughout the rest of the year, it's about 170000.

Wilbur Paes: So, you know, if you look at the lease rate, I mean, if you look at how many expirations we have throughout the rest of the year, it's about 170,000. In order to get to the midpoint of our guidance, you're talking about leasing in excess of 200,000 square feet of vacant space or about to expire space to be able to get that. I think Peter can dimension the pipeline and how much of that pipeline is on vacancy, but the reason we left that unchanged is because we feel good about reaching that level based on what we're seeing in the pipeline. Yeah, I would.

Speaker Change: In order to get to the midpoint of our guidance Youre talking about leasing.

Speaker Change: In excess of 200000 square feet on vacant space or about to expire space to be able to get that I think Peter can dimension the pipeline and how much of that pipeline is on vacancy, but the reason we left that unchanged as because we feel good about reaching that.

Speaker Change: That level based on what we're seeing in the pipeline.

Peter Brindley: Yeah, I would dimension our pipeline as remaining very, very strong. Blaine, we have leases in negotiation and proposals in advanced stages for more than 300,000 square feet, a good portion of which, getting to your question, is on vacant space or soon-to-be vacant space. And given that we need to lease in excess of 200,000 square feet, what we refer to as occupancy-increasing transactions, we believe we will get to the midpoint based on what we're currently seeing in the pipeline.

Peter Brindley: Yeah, I would, I would dimension our pipeline as remaining very, very strong. Lane, we have leases in negotiation and proposals in advanced stages from more than 300,000 square feet, a good portion of which, getting to your question, is on vacant space or soon to be vacant space. Given that we need to lease an excess of 200,000 square feet, and what we refer to as occupancy increasing transactions, you know, we believe we will get to the midpoint based on what we're currently seeing in the pipeline.

Peter Brindley: I would dimension our pipeline is remaining very very strong lane, we have leases in negotiation and proposals and advanced stages for more than 300000 square feet. A good portion of which getting to your question is on vacant space or soon to be vacant space.

Blaine Heck: Great! That's really helpful.

Peter Brindley: And given that we need to lease in excess of 200000 square feet and what we refer to as occupancy increasing transactions.

Speaker Change: We believe we will get to the midpoint based on what we're currently seeing in the pipeline.

Albert Behler: Great, that's really helpful, and then last one, Albert, with respect to external growth through acquisitions, you talked about partnering with other investors for transactions. Can you just talk about the amount of demand you're seeing to co-invest on office investments? It sounds like these opportunities are a little bit more tangible at this point than maybe I perceived on past calls and in past meetings. Has that led a little of interest from institutional capital increased recently? Well, institutional capital is clearly not the front runner here. The capital that is looking more intensively to get into the market is private capital.

Albert Behler: And then last one, Albert, with respect to external growth through acquisitions, you talked about partnering with other investors for transactions. Can you just talk about the amount of demand you're seeing to co-invest in office investments? It sounds like these opportunities are a little bit more tangible at this point than maybe I perceived on past calls and in past meetings. Has that level of interest from institutional capital increased recently?

Albert: Great. That's really helpful. And then last one Albert with respect to external growth through acquisitions, you talked about partnering with other investors for transaction can you just talk about the amount of demand youre seeing to co invest on office investments. It sounds like these opportunities are a little bit more tangible at this point and maybe I perceived.

Speaker Change: On past calls and in the past meeting.

Speaker Change: Has that level of interest from institutional capital increased.

Speaker Change: <unk>.

Speaker Change: Well.

Albert Behler: Institutional capital is clearly not the front runner here. The capital that is looking more intensively to get into the market is private capital. You have to think about family offices, ultra-high net worth individuals, and especially office investors who have not been in office so far because many others are dealing with the issues that they have themselves. They just see the opportunity. They see the tremendous pricing advantage you have currently if you take an asset.

Speaker Change: Institutional capital is clearly not the <unk>.

Brian: Brian I hear the.

Brian: Capital that is looking.

Brian: More intensively.

Brian: Two to.

Speaker Change: Get into the market is private capital.

Albert Behler: You have to think about family offices, ultra high network, individuals, and especially office investors who have not been in office so far because many others are dealing with the issues that they have themselves. They just see the opportunity; they see the tremendous pricing advantage you have currently if you take an asset. That is getting more and more active because they have been on the sidelines for a while because the phenomenon in America of work from home has been very consistent for a while and surprisingly long. But it seems to be that the office attendance is improving, definitely in New York but also in San Francisco, and I think that's something that many especially foreign investors were surprised by for a long time.

Speaker Change: You have to think about family offices ultrahigh net worth individuals.

Speaker Change: And especially.

Speaker Change: Office investors, who have not been in office so far.

Speaker Change: Because many of those dealing with the issues that they have themselves. They just see the opportunity they see the.

Speaker Change: The tremendous.

Speaker Change: Pricing advantage you have currently if you if you had taken assets so.

Speaker Change: That is getting more and more active because.

Albert Behler: So that is getting more and more active because the phenomenon in America of work from home has been very consistent for a while and surprisingly long. But it seems to be that office attendance is improving, definitely in New York but also in San Francisco. And I think that is something that many, especially foreign ambassadors, were surprised by for a long time, how long that persisted because if you travel to other countries, especially in Asia, everybody is back to the office, and here it is taking a while. So that was, I think, the biggest negative that was shunning investors away from this market.

Speaker Change: They have been on the sidelines for a while because the.

Speaker Change: <unk> phenomenon.

Speaker Change: In America.

Speaker Change: Work from home has been very consistent for a while and surprisingly long, but it seems to be.

Speaker Change: It seems to be that the office.

Speaker Change: Attendance is.

Speaker Change: It is improving.

Speaker Change: Definitely in New York, but also in San Francisco and I think that's.

Speaker Change: Thats something that many especially foreign investors were surprised by for a long time how.

Albert Behler: How long that persisted because if you travel to other countries especially in Asia, everybody is back to the office and here it's taking a while, so that was I think the biggest negative that was shining investors away from this market.

Speaker Change: How long that persistence, because if you travel to other countries.

Speaker Change: Especially in Asia, everybody is back to the office.

Speaker Change: And here too.

Speaker Change: It's taking a while so that.

Speaker Change: That was I think the biggest negative that.

Speaker Change: Shunning investments away from this market.

Albert Behler: Great, thank you.

Speaker Change: Great. Thank you.

Albert Behler: Thank you.

Speaker Change: Thank you.

Ron Kamden: Thank you. Our next question comes from the line of Ron Kamden with Morgan Stanley. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Ron Camden with Morgan Stanley. Please proceed with your question.

Ronald Kamdem: Our next question comes from Ron Camden with Morgan Stanley. Please proceed with your question. Hey, just two quick ones for me. The commentary on the 25 expiration for San Francisco is super helpful. Can you sort of do the same thing for New York though? Whether it's Charter, Wilson, Cincinnati, Roberta's or any of those sort of known vacates or still negotiations, or what's the thinking there?

Ron Kamden: Hey, just two quick ones for me. The commentary on the 25 exploration for San Francisco was super helpful. Can you sort of do the same thing for New York, though, whether it's Charter or Wilson-Sincini or Veritas or any of those sort of known vacants or still negotiations or what's the thinking there?

Ron Camden: Hey, just two quick ones for me.

Ron Camden: Commentary on the.

Ron Camden: 25 exploration for San Francisco was Super helpful.

Ron Camden: Can you sort of do the same thing for New York, though.

Speaker Change: Or whether its charter or Wilson sonsini.

Speaker Change: However, it is are any of those sort of known vacates are still negotiations or whats the thinking there.

Peter Brindley: Sure, Ron. So we have what equates to about 450,000 square feet or 6.8% expiring at share in New York in 2025. I don't want to give away too much by way of specifics, but charter is a very important tentative ours most standing relationship. They expire for about 100,000 feet in 25. We're having constructive conversations with them. Wilson, Santini, as you may know, relocated to 31 West 52nd Street, which effectively disc, which helps the risk be the known move out of Clifford champs. But I can tell you that those two floors that they have vacated at 1301 are highly coveted, given that a lot of the availability in Midtown is disproportionately located on lower floors.

Peter Brindley: Sure, Ron. So, we have what equates to about 450,000 square feet or 6.8 percent of the space expiring at a share in New York in 2025. I don't want to give away too much by way of specifics, but charter is a very important tenet of our long-standing relationship. They expire at about 100,000 feet in 2025. We're having constructive conversations with them. Wilson-Sonsini, as you may know, relocated to 31 West 52nd Street, which helped de-risk the known move out of Clifford Champs.

Speaker Change: Sure Ron So we have what equates to.

Peter Brindley: About 450000 square feet or six 8% expiring share in New York in 2025, I don't want to give away too much by way of specifics, but with charter is a very important tenant of ours longstanding relationship may expire for about 100000 feet and 25 were having constructive conversations with them Wilson Sonsini as you may know relocated.

Speaker Change: 31, West 50, <unk> Street, which effectively disk.

Ron Camden: Which helps derisk, the known move out of Clifford chance, but I can tell you that those two floors that they have vacated at 13, one are highly coveted given that a lot of the availability in Midtown is dish.

Peter Brindley: But I can tell you that those two floors that they have vacated at 1301 are highly coveted, given that a lot of the availability in Midtown is disproportionately located on lower floors. There's just not a whole lot of great space high up like those floors are. Virtus is now a tenet at 1301 Avenue of the Americas, so we will get those two floors back at 31 West. But they have chosen to remain with Paramount and have most recently transacted at 1301.

Speaker Change: Disproportionately located on lower floors, there's just not a whole lot of rate space.

Peter Brindley: There's just not a whole lot of rate space high up like those floors are. Vertuces now attended at 1301 Avenue of the Americas. So we will get those two floors back at 31 West, but they have chosen to remain with Paramounts and have most recently transacted at 1301. Those floors will be contiguous to the block of space that we're getting back from Clifford Champs and because of the quality of 31 West. We have a lot of confidence that will have success leasing up that block of space to credit tenants, and we're excited about the offering and excited about the current level of activity.

Speaker Change: Like those floors are.

Speaker Change: Virtuous is now a candidate <unk> hundred one avenue of the Americas. So we will get those two floors back at 31 west, but they have chosen to remain with Paramount and most recently transacted a third one.

Peter Brindley: Those floors will be contiguous to the block of space that we're getting back from Clifford Champs, and because of the quality of 31 West, we have a lot of confidence that we'll have success leasing that block of space to credit tenants. And we're excited about the offering and excited about the current level of activity. But you really called them out. Those are the biggest moving parts of the 450,000 square feet that we have coming back to us in 2025.

Speaker Change: Those floors will be contiguous to the block of space that we're getting back from Clifford chance and because of the quality of 31 west.

Ron Kamden: Okay, great. It's super helpful.

Ron Camden: A lot of confidence that we'll have success leasing up that block of space to credit tenants.

Ron Camden: And we're excited about the offering and excited about the current level of activity, but those are really you really called them out those are the biggest moving parts of the 450000 square feet that we have coming back to us in 'twenty five.

Peter Brindley: But those are really you. You really called them out. Those are the biggest moving parts of the 450,000 square feet that we have coming back to us in 25. Okay.

Albert Behler: And then on the, just on the non-core assets, and you know, 111 and Market Center, when do, like, when should we expect those to actually be off the books? Is that like, 2025? Or are there still negotiations? Just trying to figure out when do they actually, when can you actually take them off the books?

Speaker Change: Okay, Great Super helpful and then on the.

Peter Brindley: Great. Super helpful.

Wilbur Paes: And then on the just on the non-core assets and you know, when you live in market center. When do like when should we expect those to actually be off the books? Is that like a 2025, or are there still negotiations just trying to figure out when do they actually when can you actually be like take them off the books. Well, there's still negotiations.

Speaker Change: Just on the noncore assets and.

Speaker Change: Why do you have any market center, one dues like when should we expect those to actually be off the books is that like.

Speaker Change: 2025 or are there still negotiations just trying to figure out when do they actually when can you actually be like take them off the books.

Albert Behler: Well, there's still negotiations, so I don't think we want to predict at this point what's happening there. And the loan at 111 Shutter got extended for 18 months, so that's still open. What's happening there? Yeah.

Speaker Change: Well there are still negotiations so I don't think we want to predict at this point what's happening there.

Wilbur Paes: So I don't think we want to predict at this point what's happening there. Enter in the loan at 111. So I got extended for 18 months. So that that's still open.

Speaker Change: And the loan at 111, Southern got extended for 18 months. So.

Ron Camden: That's still to open whats happening though.

Wilbur Paes: What's happening there? Yeah, I was right. Obviously, 111. So that got extended to December 25 round Market Center. We are in negotiations. These things can take a while. You have multiple banks in these processes, and you have to first, you know, be in default, and then the banks have to, you know, notify that you're in the fault and reserve the rights and go through a process. Okay. Makes sense.

Ron Kamden: Yeah, Albert's right. Obviously, 111 Sutter, that got extended to December 25, Ron, Market Center. We are in negotiations. These things can take a while. You have multiple banks in these processes, and you have to first, you know, be in default, and then the banks have to, you know, notify that you're in default and reserve their rights and go through the process.

Speaker Change: Got it all right, obviously 111 setup.

Ron Camden: Got extended to December 25, Ron market Center, we are in negotiations.

Ron Kamden: Okay, that makes sense. That's it for me. Thank you so much.

Ron Camden: These things can take a while.

Speaker Change: Paul banks in these processes and you have to first be in default and then the banks have too.

Speaker Change: Notify that you are in default and reserved their rights and go through a process.

Speaker Change: Okay makes sense that's it for me. Thank you so much.

Wilbur Paes: That's it for me. Thank you so much. Thank you.

Speaker Change: Thank you.

Dylan Burzinski: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of Dylan Burzinski with Green Street. Please proceed with your question.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Dylan Burzinski: Ladies and gentlemen, as our reminder, if you'd like to join the question, please press star one on your telephone keypad. Our next question comes from the line of Dylan Brazinski with Green Street. Please proceed with your question. Thanks for taking the question. All just trying to look at sort of expectations for net effective rent over the next 12 months, two years. I mean, is it your expectation that we'll continue to see pressure on this front, or?

Speaker Change: Our next question comes from the line of Dylan Brzezinski with Green Street. Please proceed with your question.

Albert Behler: Thanks for taking the question, all. I'm trying to look at expectations for net effective rents over the next 12 months or two years. I mean, is it your expectation that we'll continue to see pressure on this front, or, and I guess it probably differs by whether it's in New York or San Francisco, but just trying to get a sense for where you guys' expectations for net effective rents are across your portfolio.

Dylan Brzezinski: Thanks for taking the question I'll just.

Dylan Brzezinski: Trying to look at sort of expectations for net effective rents over the next 12 months two years I mean is it your expectation that we will continue to see pressure on this front or and I guess, it's probably differs by market by whether it's in New York or San Francisco, but just sort of trying to get a sense for where your guidance expectations for net effective rents are across your portfolio.

Albert Behler: And I guess it's probably different by whether it's in New York or San Francisco, but just sort of trying to get a sense for where you guys' expectations for net effective friends are across your portfolio. So I would think that we are pretty close to maybe the bottom and New York already improving, especially for and you have to differentiate between Class A and Class B and then trophy and so the better and the difficult buildings. I think for the worst buildings, this will be still a struggle for longer to come in San Francisco. We might be a little bit behind, and that will take a little longer because also the vacancy for the entire market is at a higher level.

Albert Behler: So I would think that we are pretty close to maybe the bottom, and New York is already improving, especially for, and you have to differentiate between Class A and Class B, and trophy, and so the better and the difficult buildings. I think for the worst buildings, this will still be a struggle for longer to come. In San Francisco, we might be a little bit behind, and that will take a little longer, because the vacancy rate for the entire market is at a higher level. But even there, for Class A assets, it might be close to the bottom in San Francisco as well.

Speaker Change: So I would think that we.

Speaker Change: We are pretty close to maybe the bottom.

Speaker Change: And New York already improving especially for and do you have to differentiate between class a and class b.

Speaker Change: And then in trophy and.

Speaker Change: So the better and the difficult buildings I think for the for the worst buildings. This will be still a straw.

Speaker Change: For a longer to come in.

Speaker Change: San Francisco.

Speaker Change: You might be a little bit behind.

Ron Camden: And that will take a little longer because also the vacancy for the entire market is.

Speaker Change: Is it a higher level.

Albert Behler: But for even there for class A asset assets, it might be close to the bottom and San Francisco as well.

Speaker Change: But for even there for class a.

Speaker Change: Asset.

Ron Camden: Assets.

Ron Camden: <unk>.

Ron Camden: Might be close to the bottom in San Francisco as well.

Peter Brindley: Appreciate that color and then going back to JV Morgan's lease, realized that you guys are still in discussions with them, but I mean, do you sense that they'll give back more than 50% of their space or. Dylan, I think we at this point assume that it will be more than 50% of their 2025 space expiring, which is the 241,000 square feet. I do think it'll be probably more than 50%, but as I said, they will keep some component we believe in. Those are discussions that we're having. Great. Thanks, guys.

Dylan Burzinski: I appreciate that color. And then, going back to JPMorgan's lease, realize that you guys are still in discussions with them. But, I mean, do you sense that they'll give back more than 50% of their space or not?

Speaker Change: I appreciate that color and then going back to Jpmorgan. Please realize that you guys are still in discussions with them, but I mean, do you sense that they'll give back more than 50% of their space or.

Speaker Change: Okay.

Speaker Change: Dylan.

Speaker Change: I think we at this point assume that it will be more than 50% of their 2025 space expiring, which is the 241000 square feet.

Dylan: I do think it'll be probably more than 50%.

Speaker Change: But as I said, they will keep some component we believe those are the discussions that we're having.

Speaker Change: Great. Thanks, guys.

Peter Brindley: Thank you.

Speaker Change: Thank you.

Albert Behler: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Behler for any final comments.

Mr. <unk>: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. <unk> for any final comments.

Albert Behler: Ladies and gentlemen, that concludes our question-and-answer session.

Albert Behler: I'll turn the floor back to Mr. Behler for any final comments. Thank you all for joining us today. We really look forward to providing an update on our continuous progress when we report our third quarter 2024 results.

Mr. Behler: Thank you all for joining us today.

Speaker Change: We really look forward to providing an update on our continuous progress when we report our third quarter 2024 results.

Operator: Goodbye.

Speaker Change: Goodbye.

Operator: Thank you.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your party.