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spk08: Thank you, everybody, for joining us, and welcome to SL Green Realty Corp's second quarter 2021 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. You should not rely on forward-looking statements as predictions of future events as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today. Additional information regarding the risks, uncertainties, and other factors that could cause such differences appear in the Risk Factors and M&A section of the company's latest form, 10-K, and other subsequent reports filed by the company with the Securities Exchange Commission. Also during today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act. The gap financial measure most directly comparable to each non-gap financial measure discussed and the reconciliation of the differences between each non-gap financial measure and the comparable gap financial measure can be found on both the company's website at www.slgreen.com by selecting the press release regarding the company's second quarter 2021 earnings. and in our supplemental information filed with our current report on Form 8K relating to our second quarter of 2021 earnings. Before turning the call over to Mark 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 yourselves to two questions per person. Thank you. I will now turn the call over to Mark Holliday. Please go ahead, Mark.
spk06: Thank you and good afternoon, everyone. We appreciate you joining the call today and giving us an opportunity to review the second quarter earnings with you. I have some items that I'll open up with and obviously we'll then turn it over for some questions and answers to whatever is on everyone's mind today. But, you know, starting with the quarter, we accomplished quite a bit in these three months. Since our last call with you, we successfully completed several asset sales, a significant joint venture that we closed this morning, an important fee acquisition, over half a million square feet of office leasing, over 2 million shares of stock buybacks, and maybe most notably, a record-setting $3 billion SASB financing of One Vanderbilt. Our first half accomplishments have exceeded much of our earlier goals and objectives, and we are now very well situated to benefit from what we believe will be an even better market environment in the second half of this year. At the beginning of and throughout the year, I shared my optimism with you for a sharply rebounding New York, and when I survey where we are mid-year, I think that optimism was well-founded. With the year-to-date total return exceeding 30 percent through yesterday's close, Our stock has performed very well as the market is resetting its views of the New York economy after COVID-related restrictions were lifted on May 19th. Average physical occupancy in SLG's portfolio is approaching 25% as tenants are reopening their doors and more and more workers return to the office. Business leaders are now more than ever voicing their strong support, preference, and adherence to continued work-from-home model. I'm sorry, continued work-from-office model. I see a lot of raised eyebrows here. Continued work-from-office model in a collaborative, communicative, and physically present manner. The majority of our tenants are planning for their workers to return after Labor Day, and more importantly, we do not see any material trends in hot desking or shrinking footprints. To the contrary, we see a trend of businesses availing themselves at this moment in time in the market to lock in space and make investments in improved work environments, technology, and amenities as a way of competing for talent and making a compelling case to their employees for work from office. The space plans we are reviewing today that are submitted by tenants as they begin their build-outs have decidedly more common space, amenities, food and beverage offerings, collaborative meeting spaces, specialty areas, de-densified workstations, breakout rooms for privacy, and generally more thoughtful and efficient and healthy use of space. Within our portfolio, this has led to almost 1 million square feet of new and renewal office leasing at rents that are generally flat with expiring escalated rents and TI packages that are marginally higher than pre-COVID levels. We are currently tracking about half a percentage point higher in occupancy than originally projected at the beginning of the year. And with over 600,000 square feet of additional leasing and pipeline, we hope to maintain outperformance through year end. Foot traffic at our properties has increased considerably in response to a strong underlying New York City business economy, calls for return to office, and a slow but steady jobs recovery. There are about 6 to 7,000 new office jobs being created monthly, which trend is expected to continue and result in reattaining pre-COVID office employment levels by mid-2022. Interestingly, the job creators to date are being led by information and technology and professional business services, while the greatest amount of leasing demand seems to be coming from the finance sector. Wall Street profits, which ended 2020 with a near record $51 billion in profits, has already posted $18 billion in profits in just the first quarter. And the big five banks reported 150% increase in second quarter earnings year over year, and last year was a good year for the banks. There is now essentially a war for talent among large companies and high-growth businesses, a competition that New York City will win given its diverse, educated, and highly skilled workforce and deep talent pool. It should come as no surprise that New York City personal and corporate income tax collections are at all-time record levels of $15 billion and $5 billion, respectively. It is in this economic backdrop, with record low interest rates and substantial investment capital for deployment, that we believe New York City is situated to outperform other major markets, on a near and long-term basis. Looking forward into the coming quarter, we've got many milestones and achievements that we are busy to, you know, to be able to report positive movement on next time we speak, such as making ready for workers returning to the office after Labor Day, completion of demo, and all the column reinforcements for the commencement of vertical construction next month at 1 Madison. The commencement of marketing all of the residential units at 185 Broadway will begin next week. The commencement of full demolition of 760 Madison Avenue, now that we just received our DOB permit, to make way for the new Giorgio Armani retail boutique and condominiums. We have planned additional asset sales that we expect to achieve in the third and fourth quarters of the year. with much of the proceeds going towards additional stock buybacks consistent with the original plan. And certainly, and maybe most excitedly, the grand opening of Summit One Vanderbilt on October 21st. It's something that we've been working on for three years, and we fully expect and hope it will become one of the top performing and most visited experiential attractions in New York City once it opens. And that now is well within our sights and looking forward to the opening of Summit. So with that, I would say the third quarter financial results were all in line. Second quarter financial results were all in line with our expectations. And we're happy to open it up now to take questions on any of the specifics.
spk08: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Caitlin Burrows from Goldman Sachs. Your line is now open.
spk07: Oh, hi. Good afternoon. You commented on the first quarter call that lease concessions had stabilized, and it appears from the fine leasing data you provided that this was indeed the case in the second quarter. So, just wondering if you could go through what you're seeing on the concession side. Have they stabilized, and are they perhaps even improving yet?
spk01: Yeah, I don't – I certainly don't think they've improved, but they've stabilized. You know, we saw stabilization. starting in the fourth quarter of last year, and that's carried forward through today. And it's, you know, it's very important that when you look at the numbers quarter over quarter, you really need to dig into it and understand the complexion of the deals that are signed in any one particular quarter, whether heavily weighted towards raw space or space that's been retrofitted, renewal deals versus new deals. But on balance, What we've seen is TIs for raw space long-term deals, generally in that 110 to 130 range. That's been consistent for the past six to nine months. And free rents anywhere from 12 to 14 months, typically for new deals, inclusive of construction time. And then obviously, you know, depending on whether it's a renewal deal or shorter term, duration, then those concessions can be dramatically less than raw space.
spk06: Yeah, Caitlin, I just want to add to that. I see a lot of commentary about TIs and what the brokers are saying about TIs. I would caution in a couple of ways. One, brokers talking up the book for their client-tenant saying TIs are going up and up is, I think you have to be very discerning when you look at that data versus what we disclose on a quarterly basis. Matt can take you through the actual TI disclosures for the quarter, but on over half a million square feet of leasing, our TIs were, I think, relatively efficient. And as I said in my commentary, at or marginally above pre-COVID levels for both new and renewal deals. And we don't buy up rent. So you have to, TI's have to be talked about in connection with the rents. Our rents, which I also said in the commentary, are marginally flat with previous escalated rents. Those rents could be higher if we bought the rents up with more TI. And that is a strategy that some of our competition will do. It's not good or bad. It's just not what we do. We meet the market on rents, and we try and keep the TIs as efficient as possible. And you have to look at the two in tandem. So for a you know, for the commentary out there to be on these, you know, vastly escalating TIs, I think you have to compare it to what we actually have done for the quarter and the year. Matt, can you sort of review again what those numbers are?
spk09: Yeah. So we reported last night that for the second quarter, this is all excluding the one Vanderbilt leasing since the numbers are dramatically different at one Vanderbilt. On the rest of the portfolio, you know, TIs were $17 a foot, and that compared to significantly higher number last quarter but to Steve's point on you know never look at quarter to quarter because it depends on the buildings and the spaces and also the blend between new and renewal you know we had a significant portion of our leasing this quarter renewal leasing and the TI there was almost zero on one lease it was zero a hundred thousand foot lease on the new leases it's $59 a foot so it's it's a blend every quarter for the for the year Our TIs on the comparable space is $40 a foot, and that is pretty close to the historical average, maybe marginally higher, and all dependent on the blend between new and renewal and what building is releasing it.
spk07: Got it. Okay, thanks for that. And then maybe just a question on one Vanderbilt. You guys have clearly made a lot of progress there on leasing up. So just wondering if you could give some comments on the rents there and how the rents and concessions are trending relative to your underwriting and versus recent quarters.
spk06: Well, you know, the trending is it's basically we're almost stabilized. We're at about 90% leased. We have a couple of leases in pipeline that we hope to get done in the next one to three or, you know, one to three weeks or so, bring us over 90%. At that point, obviously, we're going to work hard to get to full occupancy, but, you know, we'll be very selective about how we finish off essentially the top of the building, those two or three or four floors at the top, which are, you know, higher-rent floors and very special floors, and we're so far ahead in terms of velocity, whether, you know, that may be a 22 event. We'll see. I mean... hopefully sooner, but certainly we haven't planned for sooner. And the NOI and the rental levels are right on top of underwriting, maybe certainly slightly ahead on velocity, probably right on top on economics. We've gone through every December what those underlying assumptions are, what those NOI goalposts are. We're trending towards the high end of those goalposts with an expected NOI at stabilization, I think, of close to 215 million, I think, is the, you know, is that 220?
spk09: Yeah, between 200 and 215, yeah.
spk06: Between 200 and 215 million, depending on, you know, which year you pick. But that's in the next, you know, two years or so. So, you know, the valuation of that stream of flow supported a $5 billion-plus appraisal and a $3 billion financing execution. And it closes out the chapter pretty much on what was just a transformational project for the company.
spk07: Got it. Thank you.
spk08: Thank you. Our next question comes from the line of Alex Goldfarb from Piper Sandler. Your line is now open.
spk11: Oh, thank you. Hey, good afternoon. So two questions. Steve, maybe I'll start with you. With everything that's gone on, you know, we're reading articles about, you know, Delta variant and companies like Apple delaying return to office. You guys obviously are pretty active on the leasing front, but the gap of the least rate versus occupancy, you know, has widened. In your view, in totality, when do you think the market will stop the negative absorption? Do you think that's You know, at the end of this year, do you think that's 22, or do you think it's going to take longer than that?
spk01: Boy, I mean, that's so speculative, Alex, that I don't think I'm going to venture a guess as to, like, exactly when we turn. I will say this. I think the trend line, I think the general consensus from our position and supported by the brokerage community is that the first – quarter of this year, the market hit its bottom. And the trend line is that with increasing velocity and a strong economy and an expectation of tenants and employees reoccupying the spaces after Labor Day, that it's sort of all green lights at this point as far as the market repairing itself. How long that process takes, I'm not, that's a crystal ball I don't have. But, you know, from our position, as we sit with a portfolio that's well leased and well positioned in the marketplace, I think that we'll outperform the market in total. And certainly our experience at One Vanderbilt and what we're seeing in the rest of our portfolio would support that expectation.
spk11: Okay. And then on the asset scale front, can you guys just give an update on the Kenneth Cole site? I think you guys had potentially looked at that maybe for a life science conversion, whether you guys do that or sell it. We had heard from just conversations that perhaps the site could be conceived as a last mile warehouse site. So can you give just sort of your sense on that? Because it seems like that could be a potential source of some meaningful dollars.
spk00: Well, it is in a life sciences corridor for the city. And We're in the process of, you know, applying for a ULRP on the site, which would be a significant increase to the potential square footage of that asset. And, you know, at the same time, we had a sale process that was ongoing and continues, and we're evaluating offers for the asset through that sale process. So, you know, it's a small asset for us, but one that is getting a lot of focus just because it's in an area of the city that's very hot right now, and we're working on a couple of different options to try to maximize value there.
spk11: Eddie, Andrew, you think that's a second half resolution, or that spills into next year?
spk00: Well, the ULRP would be an 18-month process, so I'm not sure if it'll be a resolution in the second half, a sale or joint venture, or if we decide to hold it and take it down the ULRP path it'd be a longer-term redevelopment asset.
spk11: Okay. Thank you.
spk08: Thank you. Our next question comes from the line of Michael Lewis from Truett Securities. Your line is now open.
spk02: Thank you. My first question, I guess following up on something that Alex asked about, you know, as I talked to investors today, I heard a lot about, you know, Apple pushing back their, you know, their return to office and a lot about the Delta variant. You know, maybe, Maybe help us set the goalposts. You know, I heard this concern that, you know, post-Labor Day, you know, maybe it becomes a bust if everybody starts pushing back. I mean, maybe help us, you know, what's the expectation for physical occupancy post-Labor Day where you would say, you know, things are trending in the right direction versus, you know, what that number might be that could cause some concern? You know, kind of an expectation post-Labor Day, what the office physical occupancy would look like.
spk06: You know, look, I don't think we're in a position, and I think that's what Steve said to Alex as well. You know, we survey our tenants. We've also seen larger surveys, like there was a Goldman Research survey that surveyed a much broader swath of tenants. And I think we can only speak to what the current expectations are. But, you know, I don't know that we can modify those expectations and by what a Delta variant may or may not portend in the fall. The consensus in the reports, which is echoed by our tenant base, is very decisive, whereas 80 percent of workers expect to be essentially back to a full work week by no later than early 22, starting in earnest after Labor Day. And that's kind of what we've been saying for six months now. You know, the work week was never five days a week. The work week was kind of, you know, four, four and a quarter days a week, four and a half maybe. And that may shrink to an in-office work week to like 4-0 or 4-1. There's no narrative within our portfolio where we speak to people going to, you know, five, four, three days a week at home. It really, and this is what we said on the last call, is more in the nature of might there be floating work-from-home days and flexibility built into a schedule, but it doesn't reduce desks, and it doesn't, more importantly, reduce the recognition by the business leaders you see, notwithstanding Apple may want to push back their return by a month, but if they push it back by a month, they push it back by a month. The commentary you're hearing from us is commentary you should think about over a period of years to come, not September versus October, because that really has no bearing on our performance or portfolio. We'll be prepared for return for workers more robust than we have today come right after Labor Day because that's what our tenants are telling us. Whether the Delta variant is going to cause that to be delayed by a month or so, I don't know. But even if we did know, it really wouldn't change anything we're doing here, you know, in our business. And I don't think it would change anything that tenants are doing for their five- and ten-year long-term planning, because that really is evidenced by the ink on the leases, which was a million square foot of leases done in the first half, 600,000 pending. everybody's fully familiar with the Delta variant. I mean, I don't think it's a secret. Everyone knows it's out there and we're going to take precautions against it. The incidence of COVID in our portfolio as workers have returned is almost, I'll say, none to negligible. So I continue to maintain the safest place to be is in healthy offices, which have policies and protocols in place. And where the spread may be taking place, It's not within the SL Green portfolio. That I can tell you. And I don't think it's going to cause people not to return to offices. New York City is about 60% vaccinated. Hopefully that number goes up. I think the office population is more highly vaccinated. If you take our office as a barometer of that, it's much higher than 60%. It's higher than 80%. We're just not in a position to comment on Delta variant, but we are in a position to say that everything we see and hear leads us to believe that businesses are awaiting the opportunity to get everybody in and that the plans are to commence in September.
spk00: Michael, I would just add, we're signing leases, many leases, with companies that are not back in the office yet. Are the people you're talking to saying those people are signing leases and never coming back to the office?
spk02: No, I don't think that's the case.
spk00: Okay. So we're looking at lease velocity.
spk06: Yeah. So, you know, look, if they're, you know, the tenants, I think business leaders have spoken. There's no illusion that Fortune 500 companies are going five days a week work from home. And for those that do, I think they'll competitively suffer. But that's my opinion.
spk02: That all makes sense and actually answers a couple of my questions. Maybe I'll ask, I think we're about one year out from the reset on the ground lease on 625 Madison. I know you've been asked about this from time to time. I don't know if there's any update or indication of what that rent increase would be, but also maybe the timing of when we'll know what that will be.
spk00: No update in status there. You know, the rent reset is the middle of next year, and the rent will be known before then, but there's no update in status there.
spk06: I would say, you know, we're actively engaged in, you know, with our team on the process surrounding the rent revaluation. So the process is underway. The team is hard at work on it, and it is about a one-year process. That's just the way it works.
spk02: Thank you.
spk08: Thank you. Our next question comes from the line of Blaine Heck from Wells Fargo. Your line is now open.
spk03: Great, thanks. Good afternoon. Probably for Mark or Steve, I wanted to follow up on some of the nuances in the return to office, if possible. Are you guys seeing any major difference in the pace of the increase in utilization or physical occupancy between newer, higher quality buildings that have better overall office environments versus, you know, more commodity buildings that maybe weren't really updated much during the pandemic and may have less of an energetic feel for lack of a better way of phrasing it.
spk01: Yeah, I mean, there's no doubt that tenants and their employees are gravitating towards better quality buildings with better healthier work environments, which is why you've seen in our portfolio, certainly at one Vanderbilt where we're, you know, we're starting to see the tenants on board as they finish their construction, but throughout the rest of the portfolio where we put so much effort into upgrading air filtration with, you know, MERV 14, 15, and 16 level of filtration such that it produces, you know, the healthiest work environment possible and enhanced cleaning and other protocols that we've implemented. But, you know, as the months have gone by, essentially we've seen almost a 1% increase in physical occupancy as each week goes by. You know, last week we were at 22% occupied throughout the portfolio. And, you know, two, three months ago we were as low as 11%. So there's a wave of tenants that are coming back and their employees are coming back. But clearly, you know, they favor the healthier buildings and their employees want to see it and feel it.
spk03: Great. That's helpful, Steve. And maybe one more quick one for you. I know it's still somewhat early in your process, but can you give us any color on the interest from prospective tenants at One Madison?
spk06: Yes, Steve. I would say that for where we stand in the deal, in the development, which is three plus years ahead of completion, relative to that same point in time on one Vanderbilt, the interest level, the early interest level is far higher. Large tenants are the ones that are moving fairly decisively within just a small selective band, I think, of competitive properties that can meet their needs for end of 2023, beginning of 2024 move-in. Obviously, we have 1.4 million square feet. to offer. But the beauty of One Madison is we've got sort of, you know, building within a building. We've got 93,000 square foot podium floors that are relatively more affordably priced. And then we've got state of the art, you know, even more efficient tower floors at 35,000 feet that appeal towards a different segment of the market. So we're seeing activity on both right now. We're seeing activity, I would say, in a volume ahead of what we would have expected from large tenants over three years out from completion. I would say that some of the interest is not, you know, it's fairly serious interest in terms of people taking hard looks and, you know, even some paper being passed back and forth. So with that said, we have no anticipation of signing a lease in 2020. One, it was not in our guidance. We really, I think, on the numbers we had put out there in December, had talked about mid, second half of 22. So, I would say that where we sit today, I still feel very good about that guidance. We'll obviously try and exceed it. And based, the most importantly, based on the early feedback, I think we have the right product. It's the right product. in the right area with the right amenity mix that I believe strongly is going to be leased and is going to be leased consistent with our projections. So, you know, the early feedback is good, and I'd say we're, you know, marginally ahead of where we expect to be, but I wouldn't think that's going to translate into anything announceable in 21, nor did we expect it to.
spk03: Great. Thanks, Mark.
spk08: Thank you. Our next question comes from the line of Manny Corkman from Citi. Your line is now open.
spk10: Hey, good afternoon, everyone. I don't know who this one's for, maybe Mark, but on the sale of 220 East 42nd, did anything change in the market that made you want to JV that rather than sell it outright as you had planned to a few months ago?
spk06: Andrew, why don't you, I mean, that was entirely, I was resolved to own it long term. So, Andrew, why don't you sort of, you know, the evolution of how we got to where we got to, which was, you know, again, an above average, above expected execution.
spk00: I think the, we were able to achieve, you know, a price that was equivalent to the pre-COVID price if you adjust for the deposit that we retained on the sale and we're pretty optimistic about the prospects for the building because it has a great base of very long-term lease space and some low rent rolling space that I would say our view for that, the prospects for that space has gotten more positive over the last couple of years. So whereas it was a price we were willing to sell, we're quite happy to hold 50% of the building We got great financing done, you know, last April, May on the asset. And we just decided there was upside in the rent roll that we wanted to continue mining.
spk06: I think it's another great data point about the global appetite for, you know, well-positioned midtown real estate. You know, it's a sizable deal. I think it's reflective of this disconnect between a private market that really is looking for yield, looking for high credit yield, which obviously the news building affords. It's, as Andrew said, very well financed. And in this market, there seems to be no shortage of capital that wants to deploy into deals like that. So, you know, good data point for the market, good data point for our portfolio. And, you know, I wouldn't take it in isolation. I would combine that with the success we achieved at 1,200 afoot on 6-35, 6-41-6, and the deal we did at the end of last year at 4-10-10, you know, which was nearly a billion dollars for, you know, a newly completed asset. And, you know, a plethora of other deals that we've kind of started and finished in a, you know, in a post-COVID world.
spk10: Thanks for that additional comment, Mark. Just to dig into your point on capital out there for a second, do you think that there's as big an appetite for taking out, whether it be a larger single asset or a larger portfolio of assets, or do you really think that the capital sources today are focused on sort of more, you know, swallowable single asset deals that don't take that larger commitment of capital?
spk06: Well, you know, just to put some meat on the bones, you know, large or smaller, it's, you know, I think the largest, I think the largest investments, you know, for single assets, maybe small portfolios, is in that check range of $500 million, I think is a sweet spot for large deals. I think if it approaches a billion, you start to, you know, thin out very rapidly as to who can write that check. And it's not commentary, I don't think, on the attractiveness of the opportunity or maybe even the desire. It's just that, you know, billion-dollar-plus checks are, you know, rarer to come by, and anything between $500 million and a billion will normally – take care of even the largest of New York City assets on an outright purchase or JV. And, you know, to aggregate up buildings to make a portfolio deal, you can do it. And for people who can write that check, I think it's an enormous opportunity. There's just less people and less groups that can handle it at those levels.
spk10: Thanks for that.
spk08: Thank you. Our next question goes in the line of Frank Lee from BMO. Your line is now open.
spk05: Hi. Good afternoon, everyone. First question is for Steve. Can you provide any additional color on the 600,000 leasing pipeline? What's the breakdown between new versus renewal? What type of tenants are in the pipeline and if you're able to provide the average lease term?
spk01: So we have 355,000 square feet of either leases in execution or in negotiation, and another 264,000 square feet of term sheets, which we think have a high degree of probability of conversion over to a lease. And of the leases that are out, there's roughly 300,000 square feet of new tenants and about 35,000 square feet of renewal tenants. And then on the term sheets, it's roughly 200,000 square feet of new and 68,000 square feet of renewal tenants. And then as far as the complexion of the tenants, with the leases that are either out or out for signature, 39% of the square footage are legal tenants, legal law firms, 29% are financial service tenants, and 17% are tech tenants, which by and large mirrors what we've seen in leasing velocity year to date. A little flip-flop on the legal versus financial services, whereas financial services has clearly led the market to date. But in our pipeline, we've got one larger law firm deal that skews that down a little bit. But just to broaden the answer a little bit, I'd say where we're seeing most activity in the marketplace is financial services throughout the portfolio. We have a disproportionate number of leases, maybe not telescope footage, but disproportionate number of leases that are out with financial service tenants.
spk05: Okay, thanks. So it sounds like the majority of the leasing pipeline is coming from new leases. Do you have a sense of what's driving this? Are these tenants looking to upgrade space or just simply looking to relocate?
spk01: Yeah, I think you've seen across the market, you've seen a pivot by tenants that have sort of moved away from the short-term renewals, not to say that there aren't short-term renewals, but, you know, there's a lot more activity with tenants that are making long-term new lease commitments as they, you know, get back to business as usual, looking to create new work environments, restack, you know, changed the densification of how they operate their companies. And, you know, tenants are going more on the offensive where they're, you know, they're not just hibernating in place, scared of the world. But now that they're getting past COVID, they're getting back to business as usual, and that velocity is picking up, and that's why we're seeing more relocations.
spk05: Okay, great. Thank you.
spk08: Thank you. Our next question comes from the line of Steve Sacqua from Evercore ISI. Your line is now open.
spk12: Thanks. Mark, I was just wondering if you could comment. I know leasing spreads bounce around quarter to quarter, and same story on OI is choppy and can have some unusual comparisons. But your leasing spreads year-to-date are only down maybe 1% or 2%. I know your expectation was down 5% to 10% at the investor day. same-store NOI growth is a little weaker than you had projected. So do you just have any comments about the back half on either of those trends and anything that may be playing out as expected or better than you thought?
spk06: Well, I mean, again, we don't – I look at everything over the course of a year. I mean, we budget based on the course of a year. We do our re-forecast, which we just finished up, based on the balance of the year. And on that basis – we feel like most of our goals and objectives, we are either on track or we hope to exceed. I mean, there's 18 of them. So, you know, I'm just, you know, in general, there are obviously going to be ones that were stretched. We may or may not hit or we may miss by a little. But I'd say by and large, we're on track or ahead. I wouldn't, you know, whether we're a couple of points above or below in July, we have our numbers run out through the end of the year. I think mark-to-market, we're pretty much on track with that or maybe slightly ahead of our projections. As with velocity, Matt can address the same story.
spk09: Yeah, same story. Like the other metrics, we are on a full-year basis. On our expectations, maybe slightly ahead. You've got to remember the first half of this year is comping to mostly a pre-COVID comp the first six months of last year, whereas the last six months will comp to 2020. you know, post-COVID last six months of last year. So the comps will be better, and that will trend us what looks to be off from our expectations in the first half of the year. That will put us back on our expectations for the back half of the year.
spk06: The other thing I would say, and I alluded to it earlier, you can't really just look at the rent because you've got to take that capital into play. I think we're probably ahead on net effective relative to budget because our capital in Q2 – you know, was down. So, I mean, we sit here talking about, well, you know, is TI up 30%, 20%, 10%? You know, our TIs were down in the second quarter. Now, they may be up again the third and fourth, and, you know, we feel like for the full year, we're on or ahead of schedule relative to what our TI capital budget was, meaning, you know,
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