SL Green Realty Corp

Today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Thank you. Thank you. Thank you. Thank you, everybody, for joining us, and welcome to SL Green Realty Corp's first quarter 2022 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 to appear are set forth in the risk factors and MD&A sections of the company's latest form, 10-K, and other subsequent reports filed by the company with the Securities and Exchange Commission. Also, during today's conference calls, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act. The GAAP financial measure most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on both the company's website at www.gsa.gov. at slgreen.com by selecting the press release regarding the company's first quarter 2022 earnings and in our supplemental information, followed with our current report on Form 8K relating to our first quarter 2022 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 your questions to two per person. Thank you. I will now turn the call to Mark Holliday. Please go ahead, Mark.

Thank you. Good afternoon, everyone, and I appreciate you joining us all today for SL Green's first quarter conference call. We very much appreciate the opportunity to discuss with you the company's results and activities and provide some of our thoughts on the overall state of the commercial market in New York City. I'm happy to say, notwithstanding the challenging operating environment of the recent past, SL Green's portfolio is dramatically outperforming the overall Manhattan office market, reaffirming its place as New York's leading commercial real estate company, and demonstrating its ability to adapt to an ever-changing market. We've done over 4 million square feet of leasing in our office portfolio since the beginning of 2020, keeping our occupancy at approximately 93%, which is more than 10 full percentage points higher than the overall Manhattan office market. and it's expected to rise above 94% by the end of 2022. Focusing on current results, SL Green signed nearly 900,000 square feet of leases in the first three and a half months of 2022 alone, including the blockbuster announcement of IBM's 328,000 square foot long-term anchor lease at our transformative One Madison Avenue development, a new lease to a global information services company, encompassing 236,000 square feet for their new headquarters at 100 Park Avenue, and to sign lease with UN Women for an 85,000 square foot renewal at 220 East 42nd Street, more commonly known as the News Building. Even after all that activity, we still have an impressive pipeline of leases totaling another 900,000 square feet, which we hope and expect to execute upon throughout the remainder of the year, in addition to building new pipeline throughout. With one Vanderbilt Avenue now 97% leased, the demand we are experiencing and leases we are signing is not just for new space, but rather for highly improved, amenitized, and well-located space, which comprises the entirety of our portfolio. The success of our portfolio through the pandemic is the direct result of a multi-year strategy to narrow our focus on the best buildings in the best locations. And as a result, our portfolio is without question the strongest it's ever been and getting even better with the announcement yesterday of the addition of 450 Park Avenue to our roster of premier buildings. We have worked incredibly hard over the past five years to transform our portfolio into the force that it is today. concentrated within resurgent East Midtown with all the attributes that tenants have come to demand, health and wellness, exceptional amenities, great location, easy commutability, and high design. Looking at our portfolio today, we are lean, strong, and highly concentrated in our core prime assets. Over the past several years, we've dramatically reduced or entirely eliminated ancillary business lines selling off our suburban portfolio, minimizing our retail and residential portfolios, and halving our debt and preferred equity book. Our core office portfolio remains a similar size from when we embarked at the outset, but we've replaced many smaller non-core assets with fewer, bigger, higher quality properties, thus giving us an edge on efficiency. And new developments in is now a much bigger component of our portfolio and will only grow as 1 Madison, 760 Madison, 7 Day and 15 Beekman move towards completion and stabilization. And at the center of it all is 1 Vanderbilt, a triumphant development and the most successful building of 2021, leading an East Midtown renaissance and defining a new standard for office in New York and around the world. The response has been overwhelming with more than 375,000 square feet of leases signed in 2021 at record-breaking rents. The success of OVA has sparked a broader East Midtown revival with massive investment taking place across the district now as the city's strongest leasing, which is occurring in core East Midtown. The building itself has become the locus of activity in Midtown, helping to draw people back. Last year, as you know, we opened Danielle Ballou's La Pavillon at One Vanderbilt, signaling the return of the New York restaurant scene in Midtown. We knew the demand was there, but we've been completely blown away with the reaction, as every dinner table has been taken since opening, with long wait lists to boot. In October, we upped the ante, celebrating the launch of Summit One Vanderbilt, an immersive experience unlike anything else in New York. This was another major milestone for New York, signaling to domestic and global tourists alike that the city is open for entertainment and new and exciting things can come out of even the most trying of circumstances. In just 149 days of operations, Summit One Vanderbilt generated over 550,000 total visitors from 57 countries around the globe, quickly becoming the hottest new attraction in New York City within a competitive landscape for entertainment attractions. Looking ahead, One Madison is poised to transform Midtown South, just as One Vanderbilt sparked a resurgence of East Midtown. IBM's decision to sign on as an anchor tenant is massive for New York City, signaling the long-term health of the city and the ongoing attraction of Midtown South. One Madison follows the One Vanderbilt playbook by leveraging its retail space and to bring an amenity to the building, tenants that adds value with Chelsea Piers, delivering a 56,000 square foot fitness facility. When Madison responds in every way to the ongoing rapid transformation in work culture that has brought a heightened desire for healthy, productive, hospitality-focused work environments. We're bringing this same approach to a series of new development projects including 760 Madison, 7 Day, 15 Beekman, all centered around modern and luxurious design, curated amenities, and outdoor space offerings. In looking to the future, there is reason for optimism based on the continuing job growth in New York City. Eighty-four percent of office jobs have already been recovered, and full recovery is projected by OMB to occur by middle of 2023 with 24,000 office-using jobs expected to be created in 2022 alone. Every day we see and feel New York City coming alive. We are proud to be a part of New York City's comeback, and we'll continue to look for ways to capitalize on the current market environment to deliver value to our shareholders. Thank you, and we are happy now to take your questions.

Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. As a reminder, we ask questions to two per person. Our first question comes from Alexander Goldfarb with Piper Sandler. Your line is open.