Q1 2025 SL Green Realty Corp Earnings Call
Speaker Change: Please stand by, your SL Green Realty Corps conference will begin momentarily. Once again, please stand by, your conference will begin momentarily. And thank you for your patience.
Speaker Change: Thank you everyone for joining us and welcome to SL Green Realty Corb's First Quarter 2025 Earnings Results Conference Call. This conference call is being recorded. At this time the company would like to remind listeners that during the call, management may make forward-looking statements. Thank you everyone for joining us and welcome to SL Green Realty Corb. Thank you everyone for joining us and welcome to SL Green Realty Corb.
Speaker Change: You should not rely on forward-looking statements as predictors of future events, as actual results and events may differ from any forward-looking statements that management may make today
Speaker Change: Additional information regarding the risks, uncertainties, and other factors that could cause such differences to appear are set forth in the risk factors and MDNA sections of the company's latest form 10K and other subsequent reports filed by the company with the Securities and Exchange Commission.
Speaker Change: Also during today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act
Speaker Change: The Gat Financial Measure, most directly comparable to each non-gat financial measure discussed, and the reconciliation of the differences between each non-gat financial measure and the comparable Gat Financial Measure can be found on both the company's website at www.slgreen.com by selecting the press release regarding the company's first quarter 2025 earnings, and in our supplemental
Speaker Change: Information included in our current report on form 8K, relating to our first quarter, 2025 earnings.
Speaker Change: Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp, I ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc. Thank you, Marc.
Speaker Change: Thank you. Good afternoon everyone and thank you very much for joining us today given all that's transpired in the global markets since our last call. I was especially happy with our first quarters earnings that we announced yesterday.
Speaker Change: In particular, and as a result of the hard work of the entire SL Green team, the company's earnings for the quarter exceeded the streets expectations and our own internal projections by a significant margin.
Speaker Change: Our NOI was on top of our forecast, our leasing results were well ahead.
Speaker Change: and our profits generated by our debt-related businesses were very strong. This should come as no surprise to anyone given my commentary in December at our investor conference which focused on an opportunity-rich commercial debt market.
Speaker Change: I highlighted that new originations, secondary market purchases, distressed opportunities, the new debt fund, and our special servicing business.
Speaker Change: was going to take center stage in 2025 and Q1 performance in this area is certainly an affirmation
Speaker Change: We laid out our thesis in this point in the cycle for making equity-like returns in credit investments, something that has been our stock and trade for over a quarter of a century.
Speaker Change: Particularly, in the early years of a recovery, our realized returns are typically far higher than the average returns we normally experience. And we expect 2025 and 2026 to be no different.
Speaker Change: The recent volatility in the credit markets benefits this business and our new debt fund and substantial liquidity gives us the ability to selectively identify investments with attractive returns and protect the downside.
Speaker Change: In just the past nine months, we've closed on nearly $200 million worth of DPE investments with the more recent ones slated for the fund, and we are actively negotiating on a pipeline of over $1.2 billion of new debt investments.
Speaker Change: To categorize our debt-related earnings as either non-recurring, one-off, noisier confusing, is in my opinion to miss the point.
Speaker Change: Our debt platform is a meaningful component of who we are. Our expertise and track record in this area is well established.
Speaker Change: Given the opportunity set in front of us, I do expect that our debt-related businesses will account for increasing profits to our shareholders and I expect we are already at the higher end of our guidance range, arrange where we will reassess next quarter.
Speaker Change: with an upward bias if we are successful in closing all of the business now in front of us.
Speaker Change: And that's not to say we aren't also concentrating on growing our equity portfolio.
Speaker Change: In the first quarter, we closed on the acquisition of 500 park and weeks later we signed a lease bringing the building to 100% occupancy [inaudible]
Speaker Change: Now we are designing an improvement program with elevated finishes and amenities to materially move the rents up as tenants renew and roll.
Speaker Change: Also in the first quarter we bought out our partner in a hundred park, acquiring a 50% position on attractive terms in a building that is now 97% least.
Speaker Change: We've owned a hundred park for approximately 25 years and it continues to be a solid performer for the company.
Speaker Change: Finally, Summit One Vanderbilt was the number one attended experience of its type in the first quarter, according to a recently published report in the fourth quarter.
Speaker Change: In just over three years, the summit has become one of the most sought after experiential attractions in New York City.
Speaker Change: I know there was a question raised regarding the impact that reduced international tourism might have on summit's attendance.
Speaker Change: and I would simply note that last week we set a ticket pre-sale record with over a half a million dollars of advance ticket revenues sold in one day. In closing I'd just like to say in uncertain times, SL Green Shines. Thank you.
Speaker Change: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star one one again In the interest of time, we ask that you please limit your questions to two per person Please stand by while we compile the Q&A roster [inaudible]
Speaker Change: And our first question comes from Alexander Goldfarb of Piper Sandler.
Hey, good afternoon, down there. God.
So two questions.
First, Steve. David.
Speaker Change: Can you just talk a little bit more about pre-built, it's a topic that we're hearing from further from you guys from other landlords, just curious how that has gone in winning tenants what the economic potential is versus raw space and how that's been going versus the market in general.
Sure, I mean it's it's you know
pre-builds
We're also known as built-to-suits where we...
Speaker Change: Do a custom build for a Lieutenant coming into the portfolio, have been around for a considerable amount of time, and I would say broadly speaking in order to be competitive in the markets.
Speaker Change: If you're transacting with a tenant that's called, certainly, 10,000 square feet or less [inaudible]
Speaker Change: It's almost mandatory that the space be built or the landlords willing to build the space. [inaudible]
Speaker Change: for a variety of reasons. Tennis want to take out the mystery of cost. They want to …
Speaker Change: accelerate the decision or the timeline from decision to move in.
And...
for us having the expertise in-house.
with design and construction.
Speaker Change: and we're very well practiced at doing these pre-builds. I think it's a big competitive advantage.
Speaker Change: to do the pre-built in a way that we execute in a very high design manner and do it throughout the portfolio on all price points of product.
Speaker Change: And then the second question is obviously everyone's focused on tariffs and the impact on leasing.
You know, everyone's trying to figure out their crystal balls. [inaudible]
Speaker Change: As you look back in time when the market has gone through sell-offs like we are, is there some sort of you know lag and you're like you know after three months of a market sell-off [inaudible]
Speaker Change: UCD Impact on leasing activity slowing down after two months. [inaudible]
Well, you know, that's an impossible answer as to...
Speaker Change: How long would take to have absolute clarity with prior disruptions? [inaudible]
Speaker Change: It's really what is the cause of the disruption as to is a function of how fast we see the impact in the marketplace but I think what's most telling and give me a second sort of tell the story. If you go back in our pipeline three weeks ago so pre-announcement of tariffs.
Speaker Change: We had 62 tenants in the pipeline, versus today, we have 64 tenants in the pipeline. Of those 64 tenants.
Speaker Change: 44% of them have an expansion requirement as part of the deal that they're negotiating.
Speaker Change: of the tenants that we replaced over the past three weeks. [inaudible]
18 tenants were replaced by 20 new tenants. [inaudible]
and of those 18 that were replaced. [inaudible]
Speaker Change: Fourteen were replaced because leases were signed so I only lost four tenets [inaudible]
Speaker Change: And those were done really because the tenant chose a different building or we elected a different tenant to replace that tenant for space where negotiating. [inaudible]
Speaker Change: So point being we haven't seen a slowdown yet, we haven't seen any commentary from the marketplace and we haven't seen any pullback from any decisions in our portfolio yet. And that I think over those three weeks gives a very good indicator of where, why we feel, you know...
Cautiously optimistic, but time will tell.
Thank you [inaudible]
Thank you [inaudible]
Nick Ulico: Our next question comes from Nick Yulico of Scotia Bank. Your line is open.
Nick Ulico: Hi, thanks. First question is, I was hoping you could just talk a little bit more about, you know, the trend you're seeing in the overall debt financing markets and...
Nick Ulico: You know, if you have a sense for it, you know, I know the CNBS market was very strong heading into, you know, the tariff announcements and I think now it's mostly on hold but, you know, any update on just sort of, you know, roadmap of how that could be functioning, started functioning better again, thanks.
Nick Ulico: Yeah, I think, you know, with the credit markets in general, we certainly can expect to see some turbulence as a result of the macro environment across the country but I expect New York City to mostly be immune from that [inaudible]
Nick Ulico: There is a fight to quality in moments like this, and New York City has demonstrated...
Nick Ulico: An ability to stand out from every other market. At the end of the day, capital needs to be put to work by investors.
Nick Ulico: and our market is experiencing positive momentum as a result of a weaker US dollar demand for tangible assets. The reopened CNBS market we've seen since the beginning of this year. [inaudible]
and Prospective Rate Relief, and all that's paired with...
Nick Ulico: in a fundamental and sentiment recovery that we've seen that's really at a five-year high.
Nick Ulico: You know, looking at the CNBS data, 2025 year to date, we've seen $6.9 billion of New York City office CNBS.
Nick Ulico: Completed, that's versus zero in 2023 and $300 million in 2024 during the same exact period. So and in addition to that we've also already eclipsed the full 2024 levels.
Nick Ulico: and we're going to be watching closely the transactions at 300 park, 590 mad and 1345 sixth in the coming weeks and use that to gauge how the markets are reacting from some of the macro news.
Yeah, I would just, just say it's it and distinguished. I wish.
Nick Ulico: What I think you're going to see in New York and the deals that Harry just mentioned. [inaudible]
Nick Ulico: is going to be more pricing related. I mean, you know, clearly pricing is gapped out, but that's not the same as what we experienced. [inaudible]
Nick Ulico: in 22 and 23, where there was just an absence of deals. [inaudible]
There were no buyers [inaudible]
Nick Ulico: There's a lot of buyers, there's a lot of capital out there. [inaudible]
Nick Ulico: There's a lot of capital I want to put their money into CNBS. You know, the risk premium they made demand that was going to be higher and you'll see that I think, you know, in higher rates the deal just got done this week. At, you know, rates that probably are higher than what would have been done. [inaudible]
You know, a month ago, but...
Nick Ulico: You know, there's a dramatic difference in, you know, market stability when you talk about buyers who want more premium versus lack of buyers. And I think
As Harry said in New York, you're going to see...
Nick Ulico: Durels get done and there'll be some price discovery and hopefully that you know price discovery will compress
Nick Ulico: as prestige comments, the market evidence is itself that there's still great demand out there for all this product, but I wouldn't relate this to what we saw previously in prior years where there was no activity. [inaudible]
Marc Holliday: Alright, that's helpful, thanks, and then second question is just, I think Markey said...
Marc Holliday: Something about, you know, upward bias to guidance and I wasn't sure if that was just predicated on, you know, getting more sort of investments done on the debt side. I want to be clear on that and then maybe on the other side of that in terms of your FFO guidance range.
Marc Holliday: Right now for the year, Matt, if there's any downside protection, we should think about, if we're heading into a weaker economy or anything else, you still feel good about the guidance range there. Thanks.
Marc Holliday: Yeah, going in reverse order, certainly comfortable with where we are right now as we highlight in December , you know, the balance sheet is very insulated. Did we?
Marc Holliday: Termed out all of our debt last year, we're hedged on all but three or four percent of our floating rate debt so rates can move around and the markets can fluctuate and we're insulated there so it's certainly comfortable from the downside.
Marc Holliday: and upward revisions, but we typically don't revisit that in the first quarter, we get at least six months of...
Marc Holliday: Activity behind us and reevaluate, but you know the prospects. Thanks.
Marc Holliday: Are good, as we sit here now. Yeah, and not just debt-related, I think that was part of your first part of your question. Is that all related to debt? No, we've got, we've got like, you know, a lot in front of us right now.
Equity, debt, free-oriented. [inaudible]
Marc Holliday: Leasing Deal is working on this. There's a lot of contributors and my point was simply... [inaudible]
Marc Holliday: If we get it all done, and you know, that's our goal, is to get it all done, then, you know, we will need to sit and revisit. But, you know, that will be a topic for three months from now.
All right. Thanks, everyone.
Thank you [inaudible]
Thanks for watching!
Speaker Change: Our next question comes from Steve Sakwa of Evercore ISI. Your line is open.
Steve Saqua: Thanks, good afternoon. Marc, I know at the investor day and on other calls you've talked about wanting to try and secure a new high quality development site in Midtown
Speaker Change: I'm just curious, given kind of what's going on in the macro and the uncertainty over tariffs and costs, you know, how challenging is that to try and pencil out today, and you know, is that something you'd still be looking at say this year, maybe that's something more for next year?
Steve Saqua: I think it's completely de-linked, Steve. You know, these development projects...
Speaker Change: when we take a pen and pencil or computer to underwriting.
Speaker Change: You know, we are, you know, this is not a question of two months ago, we were excited about development and two months later, we're not, and next month we are, and next month we're not based on the stock market or, or,
You know, we're terrorists. [inaudible]
There is a enormous scarcity.
Speaker Change: of High Quality Office Development Sites that can be delivered over the next four or five years, and any a city like New York.
that is, you know, that, that, that, that.
The pivotal CBD in this country.
and his growing and... [inaudible]
you know, is reaching all sorts of records on employment.
on Wall Street Profits, on bank earnings.
Speaker Change: You know, there's a confidence we have in the long-term viability of this market.
Speaker Change: that we would absolutely welcome the prospect of developing a significant new site in Corb Midtown, Manhattan, in our market, you know, in SL Green Territory. That's for sure, and that hasn't...
Speaker Change: That hasn't changed in my opinion or mine in the past three months [inaudible]
Speaker Change: You know, my pricing goes back to what I said earlier, on the bond question, my pricing change one way or the other, maybe, do I think rents have changed for that product?
Speaker Change: Absolutely not. In this building alone at One Vanderbilt, we have a constant flow of inquiries for expansion.
There's still companies that are...
Speaker Change: and just growing and taking advantage of this market and need more space. This isn't anecdotal, these are tenants who are ringing, you know,
Speaker Change: Bringing our doorbells and saying, you know, we need to grow. And this isn't like modest growth. Some of these requirements are significant.
Speaker Change: And the issue I have right now is not tariffs, the issue I have right now is delivering one and a half to two million square feet, a brand new class A, one Vanderbilt style office space.
Speaker Change: to the most sophisticated base of tenants in the country that want to grow. And I'm as committed to that today as I was in December .
Speaker Change: Great, thanks. I guess secondly, and I don't know how much you can comment on this, but just, you know, where are we kind of in the whole casino, downstate casino license plan, and you know, is that something that you still expect, I guess the state to kind of get concluded by the end of this year or might that process get delayed? Thank you, David.
This is Brett Adewick.
Speaker Change: The process has been full speed ahead since all of December of last year when the state for the first time in four years reached out to all the bidders and said we'd like you to start the environmental review process.
That was new. We took it very seriously.
Great sign
Speaker Change: and we commence immediately. Where it has the right project, there's two or three other azure bright projects.
Speaker Change: that are out there also, starting their environmental process. We expect that given the amount of expenditure, the requests of the state to engage professionals for that review that June 27th [inaudible]
Speaker Change: We'll be the on track day to submit the license for the state's review. We're looking at from there a end of September local approval process and hopefully a year end award about license.
Speaker Change: The state has acted much differently this year than it has in all four prior years and we're very ready for it. We're excited, we're eager. We've been ready for, you know, past two or three years and can't wait to launch out there publicly and get going.
Thank you!
Thank you.
Speaker Change: Our next question comes from Jane Gallon of Bank of America Securities who line is open.
Hi, good afternoon. Thanks for taking my question.
Speaker Change: Going back to the active leasing pipeline, your pressure lease noted 1.1 million square feet, would you say they're kind of following the typical leasing deal timeline? Or is there evidence that corporate decision making is pausing? Or is it just kind of the tightness in the market, there's more urgency and corporates are tuning out the macro uncertainty? Yeah, I think so.
You know, I-
Speaker Change: It's really a function of the types of tennis that we're negotiating with at a point in time, and I think there's certainly no...
Speaker Change: Sense of tennis feeling pressured to make accelerated decision and maybe there's you know they slow down a little bit because we're working on a bunch of big deals. But I don't think this is a material change in. [inaudible]
Speaker Change: People sentiment, or how they're conducting themselves, or how they're third party consultants are conducting themselves. So, I don't think there's really a lot of color commentaries. Let's do it.
Speaker Change: You know, what we're seeing right now versus how it's been in over the past several months.
Speaker Change: Can you talk a little bit more about how you kind of see that through the course of the year and what kind of things are accepting? Yeah, that's just really a function of, you know, the basket of individual transactions for the quarter. I think, you know, broadly speaking...
Speaker Change: Concessions have been stable for really all through last year coming into this year. We haven't seen a material change.
Speaker Change: If anything, I would say there's a good chance that in certain submarkets, like on Park Avenue, in 6th Avenue, where you'll see real pockets of strength in the midtown market, that you'll see some tightening of concessions. I don't know it's enough to really move the needle, but...
Speaker Change: as certainly the face rents are going up. And I think, you know, we've seen the rents go up on Park Avenue and I think the entire...
Speaker Change: Community is expecting Sixth Avenue rents to go up because it's been a tremendous model leasing and there's a number of large deals pending on Sixth Avenue.
Speaker Change: and that's going to drive face rents as we look into the rest of the year. So the natural extension after that is, you know, after rents go up, then they'll start to get pressure on trying to push concessions down. But I think it'll be, you know, some market by some market, not broadly across all the Manhattan market. [inaudible]
Thank you. Thank you.
Speaker Change: And our next question comes from John Kim of BMO Capital Market, Jarlynas Open.
John Kim: Thank you. I want to ask about a couple of your objectives for the year, which includes two million square feet of leasing and 93.2% your own leased occupancy. So in the first quarter you're ahead of the pace but occupancy did go down.
John Kim: and I'm wondering just given all the uncertainty in the markets today if you still feel comfortable with those targets.
John Kim: We're comfortable, our living budget at the moment is in excess of two million feet.
and that's as of like...
An hour ago, so.
John Kim: You know, that'll go up and down. I feel pretty good, about 2 million, we had a good start first quarter. We're already, I think, over 100,000 feet leased year to day, well April to date, quarter to day.
Speaker Change: and Steve's already talked about the pipeline. So look, we're going to monitor closely, as we always do, the pipeline to evaluate trends and sentiment and whatever. But on the one hand, you've got geopolitical, on the other hand, you have tenants with real need for space. We're going to monitor the pipeline to evaluate trends and sentiment and whatever. We're going to monitor the pipeline to evaluate trends and sentiment and whatever.
You know, and that's not abating that we see yet. [inaudible]
Speaker Change: You know, we did so much in the first quarter, you know, we would hope to be at around a million feet for the second quarter, and we think by year end we could...
Speaker Change: Eclipse that two million feet, and a lot of that's just driven by a return to office, you know, you had...
Speaker Change: You know, years of people, you know, on a hybrid work model. And, you know, now...
Speaker Change: This is a competitive environment, people are back, people are focused, people need space and it's like we're just seeing that all over the market and if ever there's a moment we don't, we'll be the first to...
Speaker Change: to tell you guys and your shareholders, but at the moment we're feeling good about both the occupancy level and the volume.
Speaker Change: 100% occupancy, and I'm wondering what that implies for the marked market of that asset.
Speaker Change: and if there's any update on this 6.8% cap rate that you acquired it at? Well, so on March to market, I think we have to look at it in two ways. The least we signed relative to
Speaker Change: You know both the in place and the current market but more interesting to me is where those rents will be after we finish a $20 million plus improvement program that we have. [inaudible]
Commence, we selected our architect. [inaudible]
Speaker Change: We're going to be doing work in the plaza, in the amenity lobby, some other improvements.
Speaker Change: Bringing sort of elevated hospitality to the building and you know in that regard you know we're projecting [inaudible]
Rents Up, Off of Today Rents
Speaker Change: by at least $15 a foot on average. You know, for what I'll call the-
Speaker Change: You know, the repositioning program, but if the question is specifically where was that lease relative to March? So that one I don't think had a mark to mark the calculation because it was it was
Speaker Change: It was filling vacant space at the time of acquisition, but I can tell you that the rent that we signed on that lease was $10 a foot higher than the prior sponsor was asking for the space the day before we acquired the building.
Speaker Change: And where does the yield go to? The branch of the 6-8 if you bought it out.
Speaker Change: We sit today at about a 7.2% That 6.8% you reference from our investor conference is now 7.2% Got it. Thank you.
Thank you [inaudible]
Speaker Change: Our next question comes from Ronald Kamdem of Morgan Stanley . Your line is open. Yep, two quick ones for me. Just starting on the disposition targets of a billion. Just how are you thinking about sort of that? What are you seeing in the markets? Thanks.
here.
Speaker Change: Yeah, look, the plan is on track, and we feel confident based on the meetings and negotiations we're having. I think it's important for everyone here to realize that our team has navigated through the past five years of…
Covid, negative office bias, [inaudible]
Speaker Change: and high interest rates. And through that period, we completed approximately $9 billion of gross sales at share at a blended cap rate of 4.3% and $1,400 of foot.
Speaker Change: Just demonstrating that our portfolio is liquid and investable in even the toughest of markets that you can imagine. So yeah, sure, there are challenges in front of us as a result of some macro conditions, but it's far less than what we've experienced in the past five years, and so we're on track for the plan this year.
Speaker Change: Great, and then my second question, just going back to that million-one square feet of pipeline, just a little color on how much is that is non-financial, right? And then the second piece of it, how much is that is outside of Park Avenue and Grand Central, which have been pretty strong? Let's go.
Speaker Change: Well, let's see, the easy one is the first party question. There's a quarter million square feet of Tammy tenants in that pipeline.
Speaker Change: which I think is pretty notable because that's probably as much square footage as we've seen from that industry over the past couple of years within our portfolio.
Speaker Change: and certainly Tammy broadly speaking in the market has doubled the number of active tenant searches.
Year over year.
Speaker Change: and then, as far as Grand Central, you know, the majority of our portfolios sits within the Grand Central area, so it's...
Speaker Change: It's safe to say that the majority of the pipeline is within the Grand Central Market, which has proven to be, you know, one of the one or two most active submarkets over the past year.
Thank you [inaudible]
Speaker Change: Our next question comes from Blaine Heck of Wells Fargo, Your Line is Open. [inaudible]
Blaine Heck: Great things. Just a follow-up on the last question. Can you give a little bit more color on the profile of the kind of most active Tammy Tennant's and whether that activity is driven by relocations from other markets or kind of organic growth from tech and media companies that already have a presence in the New York market?
All of them are relocations. [inaudible]
Blaine Heck: As best I recall, all of them are driven by growth. [inaudible]
In that growth, some of those tenets are AI related businesses.
Blaine Heck: and I don't know what other color I can give you on it, but, you know, yeah, I mean it's gross, it's relocation.
Blaine Heck: Their household names and we're seeing an AI name attached to a lot of these times.
Blaine Heck: Got it, that's helpful. And then maybe a different angle on tariffs and uncertainty. I guess, can you talk about the profile of the potential capital partners that are showing interest in JD deals, or even the debt fund at this point? And in particular, whether there's been any notable change in demand from foreign investors given the recent macro uncertainty and trade disagreements? [inaudible]
Blaine Heck: We haven't seen it yet. You know, I would note countering what you just mentioned is the weaker US dollar.
Blaine Heck: One thing that we experienced in 23 and 24 was the US dollar moving against us for those two years.
Blaine Heck: with the dollar getting weaker. It makes it much easier to have some of the conversations we're having. On the fundraising side for the fund, our group of investors are institutional, both domestic and international representing almost every region across the world. [inaudible]
Blaine Heck: I guess the main point to make there I think, if I understand your question, is we have not seen a drop-off in
Blaine Heck: Foreign Investor, Demand for the debt fund or for product. Now with respect to the dispositions, the proof will be when we close them.
Blaine Heck: and we just started the year so we're in the process of doing that and hope to knock those off in the second half of the year, contract, first half, close second half.
Blaine Heck: which is our usual rhythm to that. But as we sit here, we look at the short list for the many different sales and JVs we're working on, I would still say a lot of the usual, I don't see suspects, are usual relationships. Yes.
are still steadfastly on that list. So, you know...
Blaine Heck: We'll more to come on that on the next call but we've not seen any drop off of interest there.
Very helpful.
Thank you
Speaker Change: Our next question comes from Omotayo, Okusanya, of Deutsche Bank, your line is open.
Speaker Change: Yes, good afternoon, everyone. On the yesterday, there was a lot of emphasis around...
Speaker Change: Omotayo, Omotayo, we're not here in Utah. You got to ask it again because you're breaking up.
Do you hear me? Now yes, now we can.
Speaker Change: Sorry about that, so we're seeing on the investor day there was quite a lot of emphasis on the...
Speaker Change: on the Office to Rezzy opportunity in New York, the amount in regulation was changing. Could you just give us an update in regards to that and how you are thinking about opportunities in your portfolio? Thank you.
Speaker Change: to do some of a potential more office-to-resil conversions. Yeah, so, you know, I would say that as we sit here, you know, three and a half or four months from...
Speaker Change: is anywhere between consistent or ahead of where we were and what we showed back in December . There's a lot.
of conversion candidates, particularly downtown, where the prices...
Speaker Change: of the, you know, bricks and mortar and land, enable conversion on an economic basis.
Speaker Change: We're seeing it on 3rd Avenue, you know, our own project, 753rd, as well as the old Pfizer headquarters, as well as 675, 3rd and 767, 3rd, which are...
for both recent trades for.
Speaker Change: So I mean there's four deals in that third avenue market and you can imagine how quickly a market for office can tighten when you take you know four you know very viable office buildings [inaudible]
Speaker Change: and take it off the market, which all four of those are essentially off the market now for office tendency, and that has a very firming effect if you will. There's going to be a lot in Midtown South as well due to...
Speaker Change: The zoning changes that were accomplished there as part of City of Yes.
Speaker Change: And I think it's a, you know, I think it's a significant...
Speaker Change: and one of those understated or not well-understood trends that will look back on in two or three years when this market really firms up and you see occupancy levels drop to, well vacancy levels drop to single digits . . .
Speaker Change: A big part of that, half of that's going to be net absorption and growing demand, half it's going to be resin conversion, so I think it's...
Speaker Change: I think it's taken root, there's projects underway, like ours. [inaudible]
Speaker Change: There's going to be thousands and thousands of units delivered and I think ultimately in excess of 25 million square feet of office is going to res me, you know, it'll take time to complete and deliver but it's fairly instantaneous in terms of its...
Exit out of the inventory of available space to lease. [inaudible]
Thank you.
Thank you!
Speaker Change: Our next question comes from Seth Birdie of City, your line is open.
Speaker Change: Hi guys, thanks for taking my question. Are you guys seeing any larger requirements for the remainder of one Madison and you touched a little bit on the supply picture, but can you talk about the demand for McDonald's Health? Yeah, you know, we've seen a market change in tour activity and
some early proposals that are on the table right now. [inaudible]
Speaker Change: I was sharing with Marc kind of a week to a go that the number of...
Speaker Change: Qualified, large prospects that have either toured or are in a diligence process focused on one medicine.
Speaker Change: Just over the past 30 days is probably more than we saw all of last year. So, I don't want to get too far out over his keys, but it certainly feels very promising at this moment compared to any time over the past 18 months. [inaudible]
Thank you.
Speaker Change: Thanks, and then just on the summit, kind of what person of visits are international visitors, and then kind of can you talk a little bit about what the booking window looks like for that? Question is, what person is international person? [inaudible]
Speaker Change: Attendance level for, when I say domestic, I'm talking Tri-State area, like local.
Speaker Change: It's like a third local, it's like two-third tourism. Within that tourism break, I mean the preponderances is domestic.
Speaker Change: But you know, when I go up there, you know, it feels to me like almost 35-40% is foreign tourists, so I don't have good stats on it, does anyone else have here?
What?
and a lot of reasons.
Speaker Change: Yeah, a lot of repeats for sure. You know, it's it's an unusual unusual.
Speaker Change: You know, it's a destination and it's thrilling. So for those that know it, you know what I'm talking about? For those that don't, you should get there right away. You know, in 2024, it was about closer to 50%
Speaker Change: Foreign visitor, I'm just getting that stat sent to me right now. [inaudible]
Speaker Change: So a little higher than I said, but, you know, a good balance and we see no drop-off and-
Any demand or change in composition through the first quarter? [inaudible]
Thank you.
Thank you. Thank you.
Thank you.
Speaker Change: Our next question comes from Vikram, the whole chat of Masooho, your line is open. Thank you very much.
Speaker Change: Thanks for sharing the question. Maybe just building up on the summit question in New York, I guess, you know, just can you talk a little bit about the opportunity in Paris where you are, you know, potential timeline for execution. Thank you very much.
Speaker Change: You know, a lot more to come on Paris between now and end of year, hopefully with some imagery that will be able to share with you as well which I think everyone will find extremely exciting, but...
Speaker Change: Robert Schiffer and I just, you know, came back from Paris about two weeks ago where we spent a lot of time with developers there and the site and the construction and our team. We have a big team that's already been assembled in Paris of engineers, designers.
Speaker Change: Expediders, et cetera, working on taking things from conceptual to design development.
and we expect to be open to public. Thank you very much.
Sometime at the end of Q127.
Speaker Change: So to me that's right around the corner because there's so much to do.
Speaker Change: We're going to be putting a team and a staff together out there that will be managed and run by this amazing team we put together.
here in New York, with obviously...
Speaker Change: You know, local senior people on the ground in summit, we've started some of that hiring already. I can only. Thank you.
Speaker Change: Staggeringly Beautiful, and it's going to be in the spirit of what we have upstairs, but very different, very unique.
Speaker Change: I am really excited to be able to cut that ribbon in 27.
Speaker Change: And then just on the FAD FAD guy, I didn't invest a day kind of relative to one queue. Can you just remind us sort of as we go through the year, I'm assuming there's more leading you did, that's converting to cash? [inaudible]
Speaker Change: Later in the year, is there like a ramp up as we go through here or anything kind of one time that we should do.
Marc Holliday, CEO Alphabet and Google
Buildout costs go down, that's typically our capital spend.
Speaker Change: as the projects get completed towards the end of the year. So, the FAD number for the first quarter was a solid one better than our expectations, but for the full year we're still seeing roughly in line with what we guided to in December . [inaudible]
Thank you [inaudible]
Peter, your line is open. [inaudible]
Speaker Change: Thank you. Yes, just wanted to ask quickly about 11 Madison. You have the the expiration in September . Just wondering if there are any kind of comparable deals you could point to to give us a night. Thank you.
Speaker Change: Maybe you would expect in the re-fi market in any comments on if you're considering doing something in the TMBS market rather than a bank deal.
Speaker Change: Yes, sure. I would sort of say this is an active. Thank you.
Speaker Change: Negotiation and deal that we're working on now. So I'd prefer not to comment on it with more to come later this year. Obviously we got our $5 billion plans on last year. We have a lot of reps now as to how to work with existing lenders and the market as to obtaining efficient financing for these assets.
Speaker Change: and I would say just stand by and we'll update you into the next call.
All right, that's all for me. Thanks
Speaker Change: Thank you. This concludes our question and answer session. I'd like to turn it back to Marc Holliday for closing remarks.
Ok, great, well, appreciate all the questions and um...
You know, like I said, [inaudible]
Speaker Change: Williams, just leave you with the notion that, you know, we're working very hard on all these...
Speaker Change: Different opportunities in front of us, but also very cognizant of the state of the markets right now.
Speaker Change: And we're going to stay very nimble and be very reactive to both opportunities [inaudible]
Speaker Change: You know, making sure we keep the buildings as least as possible and get the occupancies up and you know Matt will continue to steward the balance sheet so I think we're in great shape at this moment in time as really as good as I could have asked and we look forward to speaking to you again in three months.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.