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spk26: Thank you everybody for joining us and welcome to the SL Green Realty Corp First Quarter 2023 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 belief as of today. Additional information regarding the risk, uncertainties, and other factors that could cause such differences 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 Security and Exchange Commission. Also, During today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP 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 2023 earnings and our supplemental information included in our current report on Form 8K relating to our first quarter 2023 earnings. Before turning the call over to Mark Holliday, Chairman and Chief Executive Officer of SL Green Realty, 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 Mark Holliday. Please go ahead, Mark.
spk07: Okay. Good afternoon, everyone, and welcome to SL Green's earnings call. Thank you for joining us today as we review the first quarter's results and discuss improving trends we see in New York City as the office sector continues its recovery from the unprecedented three years of a pandemic economy. The commercial real estate sector seems to dominate much of the headlines these days, amplifying messages of doom and gloom and creating what I believe to be an over anxiety in the market that is most acutely felt in New York City where many of the market opinion makers reside. Overly negative voices are overshadowing some of the positive signs that portend of a slow but steady recovery for a market that offers what employers want most, a highly educated, diverse, youthful, and talented workforce. Midtown Manhattan also offers the most highly commutable office inventory with many buildings that are highly improved and amenitized and are at the forefront of innovation. It is clear that we are now in another moment of significant change as businesses rethink their office needs and cities around the world adapt to how pandemic has changed central business districts in a way no one could have predicted. However, one thing we know is that New York is resilient. The city has reinvented its economy time and time again, whether it's responding to crises like 9-11 or identifying trends to attract and accelerate the growth of new industries and sectors like technology and venture capital. We always find a way to remain a global capital, attracting the talent that leading and growing companies need in times of change There's no better place to be than here in New York City. The future of this great city relies on rethinking the arc of the workday and how we experience our CBDs, transforming them into vibrant 24-7 destinations. Our lives can no longer be neatly separated into work and leisure and entertainment, and there's an expectation that people coming into the office will have access to compelling experiences that make the trip worthwhile before, during, and after the workday. There are a number of positive indicators and developing trends that give reason for pragmatic optimism, though clearly to challenging environment. A rapid run-up in interest rates sent the chill through the real estate debt markets as lenders became concerned with decreasing interest coverage and refinance-ability maturing loans. One month SOFR today stands at 501, up from just a quarter, percent a year ago. But as the core inflation numbers begin to normalize and the labor market begins to cool, expectations, as evidenced by the forward curve, show one month term SOFR receding to just 3.11 percent by the end of 2024. And similarly, the 10-year SOFR swap rate, which peaked at 3.97 percent just six months ago, has already come in 73 basis points. And the forward curve implies now a 10-year silver swap rate of 3.03% by the end of 2024. So clearly moderating interest rates will have a positive impact on the real estate debt and equity capital markets. In the meantime, SL Green has hedged most of its interest rate exposure through strategic debt repayment and the use of derivative instruments like interest rate swaps, caps, and collars. New York City employment is another area that I think is showing signs of significant improvement. The labor market in New York City has shown resiliency as businesses that employ office workers have erased all COVID era losses. There is recent evidence of higher office utilization within our portfolio as physical occupancy regularly exceeds 60% on many work days. And the MTA announced that Metro North Railroad reached pandemic era ridership record two days ago with 195,000 riders, or 74% of the pre-pandemic average. So it's the highest single-day ridership since the beginning of pandemic. And during the seven days between April 9 and April 15, Long Island Railroad carried an average of 170,000 daily commuters, the best seven-day average in over three years. So there's an increasing drumbeat optimism about return to work and you know we hear it from you know more and more companies that are doing business you know here in the city but you know national and global companies that are man dating people come back anywhere between three to five days a week all within the past three months or so JP Morgan Disney Twitter Google Goldman Sachs Salesforce Apple Many others have come out with, you know, very definitive statements about, you know, a recognition that, you know, these businesses can be only at their most efficient and best when people are together in, you know, purpose-built collaborative office space and, you know, not home or remotely. And I think, you know, that's why, you know, there has been this experiment over the past three years. Clearly, the major companies that span all different office sectors have concluded that the experiment is not working and thus requiring their people to come back, as I said, anywhere between three to five days a week. And that trend is something that we see on the streets, in the buildings, on mass transportation, and we think it's only going to get you know, uh, you know, more and more momentum as this year weighs on, uh, because it makes sense and it makes sense for business. It makes sense for competitiveness. It makes sense for the re-imagination of our CBDs. Uh, and it, you know, it's, it's what people have done and it's how people are at their best. So, uh, we're very optimistic in that regard. Um, you know, took longer than we expected, but you know, we now feel like, uh, things are coming around in the right direction. In terms of safety, New York City is becoming safer with crime stats heading in the right direction, including declines in overall crime and violent crime in the first few months of 23. We're also anticipating that there'll be some level of additional bail reform to be included in the state budget, which will give judges clearer discretion over the imposition of bail. So while other cities are having difficulty, uh getting a handle on crime or you know some other major cities are having difficulty getting a handle on crime new york city clearly has a plan uh that is working and uh you know for 23 new york city is on track to welcome 63 million visitors including more than 10 million international travelers that puts projected tourism within five percent of the prior peak in 2019 which represents a remarkable recovery summits high attendance and first quarter results, which eclipsed our projections for the first quarter, certainly demonstrates that domestic and foreign tourism is back in a big way with the prime travel months still ahead of us. Perhaps one of the most important developments of the year is the completion of East Side Access, now known as Grand Central Madison. Long Island commuters now have access on a direct basis into Grand Central. The new terminal spans 43rd to 48th Street along Park and Madison Avenue corridors where much of the SL Green portfolio is situated. So with all that, I'm pleased with the start to the year we are having. Our results for the quarter were ahead of our expectations in several key areas. Mark-to-market rents and same-store NOI were both in excess of 5%. Our same-store office occupancy was slightly ahead of what we internally forecasted at just over 90%, and leasing volume of $504,000 square feet also outperformed our expectations. But the real highlight is forward-looking as we are building leasing pipeline at a steady pace. The pipeline of leases now stands at 1.2 million square feet, which is up 70% from our earnings call just three months ago. I think it was end of January. And to give you a flavor for the pipeline and preempt, what I know will undoubtedly be someone's question later on, The pipeline is 80% financial services, includes 18 individual deals that we are working on at Graybar, and includes 1 million square feet of space in same-store properties, which would absorb over 300,000 square feet of space of vacancy in those same properties. While overall vacancy, sublet, and availability is not yet declining in Manhattan overall, Our leasing results and current pipeline is indicative of the fact that the Park Avenue East Midtown corridor is highest performing in Manhattan, and tenants are responding to our well-located, repositioned, and highly amenitized buildings in a very positive way. We are also benefiting from brokers and tenants who are scrutinizing much more carefully the financial wherewithal of landlords and the stability of the capital stacks in individual buildings that tenants want to locate in, These are areas where SL Green shines the most. In the investment marketplace, there are signs that demand is forming for high-quality commercial assets in Midtown, and we expect to see transactions announced over the next two quarters. Initially, these transactions will be for the well-located assets, some with financing in place and some with financing that will be arranged, and generally involve buildings that are already fully repositioned and amenitized or are in the process of doing so. There is also more activity than usual in the user buyer market, as evidenced by the recent sales totaling over $725 million to users like Hyundai, Dyson, and Memorial Sloan Kettering. And we are aware of several other pending transactions for purchase or long-term capital leases by users. Taken together, these developing trends bode well for our 2023 business plan. and we are working hard to execute on a series of sales, joint ventures, and financings. With that, I'd like to open it up for questions.
spk26: And thank you. And one moment, please. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And we would like to remind you to limit your questions to two questions. Please limit yourself to two questions. And one moment for our first question.
spk24: And our first question comes from John Kim from BMO.
spk26: Your line is now open.
spk30: Thank you. Good afternoon. I was wondering if you could provide an update on the $2 billion of dispositions that you have planned this year, highlighted by 245 Park. I know that it's top of mind for a lot of people on this call, but any update that you can provide on those kind of conversations right now?
spk07: Well, I mean, I don't think we're going to go through the whole $2 billion pipeline, but we're working, as I mentioned in my speech, I think that We feel, you know, pretty good about where we stand right now in terms of, you know, completing JV sales and financings that we, you know, that form a part of the 202.3 business plan. 919 financing, I think, is imminent, and we're working hard on 245 Park, which, you know, that development is coming along amazingly well. The plan we have for it, I think, is going to make it, you know, among the best, you on Park, but we'll be able to lease it at rents that are going to be well into the triple digits. We have a lot of activity there. We're trading paper with a couple of tenants and our discussions there are good. So we feel good about that. And then there's obviously other transactions we're working on. It's still got a long way to go this year. you know, I think the market is coming around and I think the assets we've selected are the right ones that we'll be able to, uh, you know, uh, either, you know, monetize and via sale via joint ventures, uh, they're in the right locations and, uh, you know, we're working hard to get it all done.
spk30: Okay. Uh, my second question is on some of your secured debt that recently expired. Uh, it remains on your books. They were on their last quarter as well. And you talked about having a resolution with the lenders. I'm wondering if you could provide any color in what the resolution looks like and if defaulting on debt is an option for you and or your partners.
spk08: What's your question on secured debt?
spk09: Yeah. What's the question? Resolution of secured debt positions that were in past maturity.
spk13: Which ones in particular? 717 5th and 11 West 34th Street. Yes, John.
spk07: Which ones, John, which pieces that are you talking about so we can hit it?
spk30: I apologize. I've gone through the supplement, but there was some debt that expired in December, February, this year, April.
spk19: Both 717 and 11 West 34th Street are high street retail positions where we are far from that. We do not control the borrower, and we have basically passive positions. 717, as you know, we have taken all of our investment and profit out of the asset. We have a 10% passive position in that, and 11 Westward, 30% of that position. We don't control it. So, you know, we're getting updates from our partners, but those are, you know, those are investments that we continue to evaluate. And, you know, as I said on the prior quarter's calls, lenders are either going to work with us on those assets or they're not.
spk13: And, John, to Andrew's point, Matt, you referenced the December 22 maturity. That was 1552 Broadway, and as you'll note in the supplemental, that matured in December. We worked with the lender and just executed an extension through to 2024.
spk30: The other one was 650 Fifth Avenue, which expires this month.
spk07: Yeah, these are tiny. We should take it offline. These are assets which I think have no book. These are small retail assets in which we have the minimus ownership, passive interest, No consequence to the earnings and balance sheet of any magnitude that I think.
spk19: No, that's absolutely right.
spk07: Is that what you're referring to or something else?
spk19: If defaulting is an option, it's really up to the lender in these situations, which I said last quarter and I'll reiterate again. The lenders are going to determine whether there are defaults or not.
spk07: Yeah, but again, the consequence of that determination, unless I don't want to understate it, Matt, is not material.
spk13: There's no NAV, there's no book value, there's no earnings from the asset. From your perspective, it's okay.
spk07: And I call that immaterial in my book. I don't want to – I'm not trying to undermine the question, John. I'm just saying these are – what Matt said is right. You've highlighted assets which we sort of look at as carry and look at as zero and have no contribution to earnings. So it's just not the focus of what my commentary is about. That's all I'm saying.
spk30: Any commentary on your partners, though, because you may have to be aligned with them?
spk15: No. Well, we'd rather, you know, that's. We have no commentary. Yeah. Okay.
spk25: Thank you. Thank you.
spk24: And one moment for our next question. And our next question comes from Steve Sokwa from Evercore ISI.
spk26: Your line is now open.
spk20: Great. Thanks. Good afternoon. Mark, or maybe Steve Durrell, could you just talk a little bit more about that $1.2 million? I guess what I'm trying to figure out, Mark, is are these tenants kind of expanding? Are they staying the same? Are they shrinking? If they come into your portfolio, that's great. I'm trying to just think about the impact on the overall market and just trying to get a sense for how these tenants are thinking about space needs and what the density is.
spk07: I gave so much disclosure on it. There's like 40 or 50 deals in there. There's a lot of expansions. There's a lot that are staying the same. There are a lot that are less. I mentioned that over 300,000 square feet is for vacant space within the same store portfolio. And there's over 500,000 feet that's for vacancy within the portfolio generally, same store and non-same store. Mostly financial tenants, some growing, some shrinking, many staying the same, you know, all in line with our projections, probably slightly above in terms of velocity, and clearly the first quarter we were ahead on mark-to-market and same-store. But, you know, there's dozens and, you know, there's 18 deals alone at Graybar, and there's, you know, there's probably, I don't have any deals in total on there, but what, about 40?
spk03: Well, it's of the 1,200,000 square feet, just to give you a sense of it, Steve, 900,000 square feet are our new deals, 274,000 square feet of renewal deals. Mark talked about what was filling vacancy, both same store and throughout the entire portfolio. That's 45% of the 1.2 million was filling vacant space. And I think to build on what Mark said about the gray bar, that I think is as big a news as anything. What we're seeing is a broad diversity of tenant sizes at all price points. So the narrative of all the leasing activity now taking place or previously taking place being at the very top end of the market, I think is increasingly, is rapidly changing. We're seeing more velocity, certainly on the proposal stage and tour activity in the more price sensitive part of the market than we've seen in the past three years. And I think that's a reawakening of the marketplace. I think we're seeing the small and the mid-sized tenants come back to the market. And, you know, to have a healthy 400 million square foot market, that's what we need. And it's a good news day to be able to say that.
spk20: Okay, great. Maybe just moving on to one, Madison. Are you still expecting the TCO in the fourth quarter? And I guess, Matt, when you do get the proceeds in from the joint venture partner, you know, how do we think about the applicability of those proceeds, which I think are just shy of 600 million?
spk13: Yeah, we are getting $577 million from our partners down at One Madison. When we get TCO, we are running ahead of schedule on the construction there, so we had it slated for fourth quarter, hopefully early fourth quarter. Those proceeds immediately go to pay down corporate debt. The first $425 million goes to pay down a short-term unsecured facility we put in place last year, and the increment above that, another $150 million or so, goes to either the line of credit or other corporate debt.
spk29: Great. Thank you.
spk24: And thank you. And one moment for our next question. And our next question comes from Alexander Goldfarb from Piper Sandler.
spk26: Your line is now open.
spk42: Thank you. Good afternoon. Matt, maybe just moving on from Steve's question. I think he was on the TCO for One Vanderbilt. I think you're getting, I think you just mentioned that, the sort of $570 million. But you guys also have potential for JVs, I think, further. Well, JVs at 245 Park. I think you may or may not do more at One Madison. There's the condos uptown that you guys are doing. So net, can you just sort of lay out in total, obviously the one Vanderbilt is, is pretty much certainty, correct. But what the potential of cash proceeds that you guys are looking at taking in this year, potentially through the different JV sales or outright condo sales that are contemplated.
spk13: So I'm going to just correct on the addresses a bit there, you know, where the proceeds are coming in from our partners at one Madison on TCO. Okay. There's no other contemplated partners down at one Madison. And we had talked about potentially an additional partner. at one Vanderbilt. We talked about it for the last couple of years, and we may or may not do that this year. I don't want to step through every component of our business plan, and that business plan obviously changes over time. 245 is the most significant, and we are working hard on that, as Mark said earlier. And then we have some other assets, either wholly owned or outright sales, JV interests, other things that we are working on. But I'm not going to step through every one of those. except to say we're focused on trying to get to our $2 billion target, the most significant component of which is 245 Park.
spk42: Okay, and then you also have the 570 from One Vanderbilt that's later this year as well, correct?
spk13: Yes. The only condition of that is completing One Madison. That's obviously happening.
spk42: Okay, great. And then second question is, the Real Deal had an article on a few weeks ago with the latest on, you know, 625 Madison had a little, you know, as they always do, a little extra color. But maybe you guys could just provide us an update where the litigation or negotiation stands, you know, what any pending resolution, any sort of update that you can provide.
spk19: Well, with respect to the leasehold position there, we expect the rent reset arbitration to conclude imminently. As we've discussed in prior quarters, we may update our business strategy for that leasehold position following the resolution of that rental reset process. And if we ultimately decide to adopt a different strategy for that leasehold position, that could impact the carrying value of that leasehold position going forward, obviously.
spk42: So what does that mean, impact the value? That's up, down? What does that mean?
spk19: It depends on the rent arbitration. You know, it's up to the arbitrator.
spk07: Yeah, I mean, Alex, it's a fairly binary outcome. You know, there's a wide disparity of view as to what that rent should be. We've been, you know, it's been the subject of a disagreement for a while now. And there'll be a conclusion, we think, imminently. And then based on that conclusion, you know, at least with respect to the leasehold, that'll – you know, clarify for us the direction we're going to go with it, whether it's something, you know, we feel, you know, we can stay with or whether, you know, if you get a rent amount that's non-economic, then we'll have to deal with that. But, you know, that's an investment that we've had, you know, 15 years plus. It's net lease to Polo. We've taken, you know, we've certainly, as Andrew mentioned with 717, we've redeemed all our capital on that investment.
spk19: It's been a successful investment.
spk07: And in addition to that leasehold position, we have our mezzanine interests on the fee position as well, also related to 625 medicine asset.
spk19: And that's a different investment, and we don't anticipate any impact on the value of that investment based on the outcome of the rent reset arbitration.
spk41: Okay, cool. Listen, thank you.
spk24: And thank you. And one moment for our next question.
spk26: And our next question comes from Anthony Pallone from J.P. Morgan. Your line is now open.
spk05: Great. Thank you. Good afternoon. I guess first question, on green loan servicing, just wondering, like, maybe you could talk about that or how we should be thinking about that because it seems like that could be a good business at the moment and wondering if you think about that as just a fee generator or if there's something more strategic in terms of that potentially helping you, you know, find investment opportunities or other, you know, strategic benefits.
spk19: No, and I think it's primarily a fee generator. Obviously we have to service every loan to the servicing standards. So we can't sort of consider our own interests when we service loans as a, as a third party. as a fiduciary. So, uh, it's, it's a good active business. We have a great staff and team that runs that business. Uh, and you know, we've been, we've had a lot of successful resolutions on behalf of our clients and customers there. And we, we do intend to grow that business, uh, you know, for sure as we, there's more situations that sort of need servicing and special servicing.
spk05: Okay. And then just my second one, I know it's early, but any thoughts on Credit Suisse and their space at 11 Madison and what I guess UBS may ultimately do with that or how you're thinking about it?
spk07: Well, I mean, it's a long-term lease. You know, I mean, it was announced Credit Suisse is merging with UBS. UBS is going to be the surviving entity. I think we look at that as credit upgrade to the lease, although Credit Suisse was a good tenant of ours for over 15 years, so I think the merged entity will just be that much stronger. And in terms of what they may or may not do with their space, we don't have any visibility into, but it is, I don't know, you guys have the expiration on that? It's a lease that expires in 2037. So I guess another, you know, 14 years or so to run. And, you know, so therefore that'll be up to them. But, you know, the lease is intact and we think, you know, we think the building's in good shape.
spk25: Okay. Thank you. And thank you.
spk24: And one moment for our next question.
spk26: And our next question comes from Tom Catherwood from BTIG. Your line is now open.
spk14: Thank you. Good afternoon, everyone. First, Steve, maybe just pivoting back to the leasing pipeline. I think in the second half of last year, you had talked about some deals coming off the market as tenants were kind of evaluating the economic situation and evaluating their businesses. Is some of this jump up in pipeline since you know, earning January, let's call it. Is that the 2022 deals reengaging with the market, or do you have a sense that this is kind of incremental new leasing above and beyond that?
spk03: I think it's both. I think it's clearly, you know, whatever pause that we saw by tenants who got sort of spooked in the fourth quarter with rising interest rates and threatening recession environment and things like that, and they put their searches on hold, that explains kind of the leasing slowdown. But then, you know, we came out of it pretty strong. We certainly did in our portfolio. 500,000 square feet in the first quarter, I think, is a significant print. And I think the growing pipeline is both tenants that have confidence in their business, clarity on the overall economic situation, and Add to that the return to the office. I mean, that narrative is prevalent today, whether you're a small business or you're taking your cue from the leaders of major businesses across the country. So we're seeing it both in the small, medium, and large tenant marketplace. Then add to that financial services, the private equity hedge fund world still continues to be a driver on leasing. And we're seeing up and down Park Avenue a lot of demand. You know, I could have easily rationalized another five to six hundred thousand square feet of pipeline, you know, addition to that pipeline based upon term sheets that we're exchanging, but are just too early in the process to really have clarity on. And so I think that's a, you know, a good harbinger as to where the market's headed.
spk14: Appreciate that. Thanks, Steve. And then kind of focusing on a specific asset here, you moved to Herald into the redevelopment bucket this quarter. You've talked about WeWork leaving 180,000 plus square feet there and potentially looking at either extended stay or dormitory use. Can you talk to the timing of the expected vacancy there and any updates on the redevelopment?
spk13: As to vacancy, WeWork is out. They vacated earlier in the first quarter, and we're evaluating the redevelopment opportunities for the asset right now.
spk24: Got it. Thanks, everyone. And thank you. And one moment for our next question.
spk26: And our next question comes from Camille Bonnell from Bank of America. Your line is now open.
spk12: More of a big picture question. On a least percent, your exposure to tech is growing. Just given this industry has been accelerating layoffs and pushing to bring employees back into the office, but it continues to lag, how do you think about your overall exposure to this industry? And from your experience of managing overall tenant risk, is there a particular industry mix you envision for the portfolio?
spk07: I think our Yeah, I look at our exposure to tech as good exposure. You know, I think it has been and continues to be a big positive within our portfolio, and I assume the question is within the portfolio as opposed to market-wide. You know, IBM is a great example of a recent deal we did over at One Madison. Kendrell is a deal we did over here at One Vanderbilt. See, we got some Bloomberg at Bloomberg, you know, media and tech over at 919. You know, they expanded, I think, last year, if I'm not mistaken.
spk23: Yeah, they're a big footprint.
spk07: So I think in general, you know, one, I think we have marginally less exposure to tech, depending how you define tech, than most others in the city. Although, you know, we'd welcome more, and we think that, you know, that sector – went from literally nothing about a decade ago to being a major player in the city, right up there with business services and financial. Now, obviously, they're taking a pause. There are announced layoffs, but I think those global national announcements tend to hit Manhattan less so than other markets that they've expanded into because this Workforce, I think, is more the type of workforce that they'll be retaining in engineering, et cetera, and less so skewed solely to marketing, like in many other smaller markets around the country. So I think that so far, when you look at the jobs picture in New York, I mentioned it earlier, we're at 1.5 million office-using jobs. Tech falls into that. category, information services. So there hasn't been any material showings to date of concern over bodies in the tech world. And even if there is some trimming there, it's been equally made up for by finance and business services. So I don't know if that answers the question, but I think Tech's been, you know, I think tech will grow again. They're going through a right sizing right now as everybody does after the tens of millions of square feet that they consumed in Manhattan. And, you know, once that right sizing occurs, you know, I think growth will happen again and they'll be, you know, they're here to stay and we're excited by that.
spk12: Okay. And for my second question, You've made good progress versus your initial targets on the leasing and revenue front. But like you mentioned, it doesn't seem like investors are willing to attribute any credit to this performance. I wanted to get your thoughts on what you think is being priced into the equity markets today. And at these valuation levels, do you see potential for equity to equity consolidation in this backdrop?
spk07: Well, I said earlier, I do think that you know, what I term over anxiety. You know, we've been, as a company, we've been at this for 26 years, and many of us have been in it for 30, 35 years, almost all of it in New York. So we've been here before. This has a lot of the, you know, rhythms of, you know, what happens first, the narrative, then the debt markets freeze up You know, then, you know, there's little shoots of deals, generally smaller ones first, bigger ones later. And, you know, the market, you know, by most standards, I would consider this, you know, a relatively good market because we've got the jobs. We still have good occupancy, at least within our portfolio, and I'd say within the better buildings and better submarkets of Manhattan. you know, rates are much higher than they were, but on absolute terms, they're still relatively low. And lenders seem to be working, by and large, with their borrowers to extend in situations where, you know, good borrowers, good properties need another year or two or three to, you know, to ride things out. You know, we're on... Sometimes we're there as servicer, sometimes we're there as lender, sometimes we're there as borrower. So, you know, we see that as a trend. And... You know, so I can't really, you know, respond to how people, what people are pricing, what they're not. But I do think, you know, the battery of headlines, the doom and gloom, the, you know, the pessimism, you know, we think is overblown just based on our results and our pipeline. I mean, that's, you know, our business is sort of a simple business at the end of the day. We, you know, we buy space, we develop space, we improve it to best of class or as high end as we can, and we lease it to users. And between that which we've leased and that which we hope to lease in our pipeline, we think we're getting things done. And hopefully the debt markets will start to thaw a little bit. And once it does, I think you'll see things snap back quickly.
spk22: Thank you.
spk24: And thank you. And one moment for our next question. And our next question comes from Blaine Heck from Wells Fargo.
spk26: Your line is now open.
spk35: Great, thanks. Good afternoon. Just following up on the asset recycling front, is there any color you can give on the pricing of some of those sales that you're looking at for this year? Has your expected pricing on the sales, especially 245 Park, changed at all? in the last kind of few months?
spk07: I don't think we're going to go through pricing asset by asset. You know, we're shooting for, you know, best execution. You know, we think everything we set out for in the year is very reasonable. I would say historically low, you know, I mean, compared to where pricing was a year or two ago. I think there's a lot of equity out there. that is looking at this moment in time as a way to enter or reenter Manhattan at, you know, pretty attractive levels. I mean, you know, we've all been doing the rounds, traveling domestically and overseas. There's a lot of interest in New York City. You know, I don't know if that's something that, you know, the market definitely feels or appreciates. But, you know, in terms of investing within the U.S., There's a lot of foreign capital, I think, and domestic capital that is looking at today's environment like a good entry point. We've got reasonable expectations on everything that we're looking to accomplish. We don't set unrealistic expectations. We set things where we think are market clearing levels, and it's up to us to execute.
spk35: So following up on that, Mark, and just based on your conversations that you guys are having, can you talk about kind of the return hurdles that those foreign capital entities and foreign wealth funds and maybe just private equity?
spk07: I'd rather do it when the deals are done. There's no reason to speculate. I mean, we have a firm handle on where we think that market is. So let us go execute, and then it'll all be illuminated.
spk33: All right, fair enough. Thanks, guys. And thank you.
spk24: And one moment for our next question. And our next question comes from Derek Johnston from Deutsche Bank.
spk26: Your line is now open.
spk31: Hi, everyone. Thanks for taking the question. And I guess this may be for Andrew. you know, can we get a sense of the mark to market value or perhaps fair value of the DPE book? And, you know, secondly, you know, what percentage of the loans in the book are coming due over the next two years?
spk19: I mean, hey, Derek, in terms of mark to market value, I would say it's our carrying value for the loans. We make that evaluation with the accountants quarterly. The DPE book obviously, as you know, is paid down pretty significantly to a couple of large positions, 625 being, Madison being the largest of it. It's residential and office assets. And, you know, the second part was... What was the second part, Derek? Earning value, and then what did you say?
spk31: I was hoping to just understand, you know, given this environment, you know, what percentage of the book is where the loans are coming due over the next two years?
spk13: There's a maturity table in the supplemental, Derek, that has all of the... maturities. Most of them are short-term.
spk07: DPE has always been a short-term book, one to three years. So I'd say over the next two years, the majority will.
spk19: Yeah, we have one large PREF equity position, which is February 27. We have a $20 million residential position, which is December 29. And then the balance are, you know, in the relatively near term.
spk13: And Derek, it's Matt. I just want to, you know, make, you know, expand on the Mark to market question. You know, accounting doesn't require us to mark to market the book. So the carrying value is representative of accounting carrying values, but the mark to market is pretty close to the carrying value of the debt, of the deposition.
spk31: Okay. Thanks, Matt. That's helpful. That would be it for me, guys. Thank you.
spk06: Thank you.
spk24: And thank you.
spk22: And one moment for our next question.
spk24: And our next question comes from Tao Axanana from Credit Suisse.
spk26: Your line is now open.
spk27: Yes. Good afternoon, everyone. Thanks for all the color around just, you know, how you're progressing with the asset sales. I'm just curious. I mean, if credit markets remain tough, if it's hard for anyone to get financing, to kind of pull this off. How do you kind of think about, if I may use the word, plan B in regards to trying to either deliver the balance sheet, kind of looking for an alternative source of capital? Like, can you just kind of help us think through what plan B would be?
spk07: I'd say we're, Tayo, we're focused on plan A. But, you know, the skepticism in the market is, like, evident on this call. It's, you know, I mean... you know, we feel like we're going to get stuff done. So, I mean, sure, there's Plan B, C's, whatever, but, you know, I think what you're hearing from us now is we're going to, you know, we've got, you know, I mean, it's not like, I'd say we have eight months, but we have whatever time we need, you know. I mean, maybe we'll get this stuff done in the next three or four months, five or six months, seven, eight months, or it could be nine months, but whatever it is, we have premier assets in that have a lot of institutional domestic and foreign attraction. And, you know, we're keeping them well leased. They're highly improved. And what you're hearing from us is, you know, there's a market for that. And it's up to us to go out there and, you know, and do it. So we'll do whatever we have to do to get, you know, things done. And, you know, that's what we're working on. But, you know, When you say a plan B, that sort of implies that there's no plan A, and that's what we're focused on right now. So, I mean, there's a myriad or countless amount of other plans or strategies or capital or forms of capital that one could avail themselves on, but we're very simple about this. We have certain assets we're going to look to sell like we do every year and have done for 25 years. We have other ones. great core holdings, long-term holdings for us, that we will look to JV with premier partners. You know, and then I think we have one financing. No, is it just 990? I mean, it's just one financing, which I said in my commentary we thought was imminent. So I can't really give more color than that, other than that one financing I think is imminent. So there's no plan B for that. But, you know, let's – yeah, we'll – We will regroup in three months and we'll give you a further update on these things. Hopefully we'll have a couple of announcements between now and then. And we're going to keep going.
spk21: Fair enough. Thank you gentlemen.
spk07: Thank you.
spk21: And thank you.
spk24: And one moment for our next question. And our next question comes from Peter Abramovitz from Jefferies.
spk26: Your line is now open.
spk36: Thank you. I just wanted to ask about 919. I know you probably can't speak in any detail, but I guess how's the pricing kind of coming out relative to what you were expecting?
spk07: Well, you know, that sort of goes back to the question I was asked earlier about parameters and pricing. As soon as we have something to announce, you'll have the announcement of the pricing. It's just it's not typical for us to talk about transactions in the market that we're working. We've never done it, and I wouldn't do it now. Sure. There's no reason. But, you know, as soon as we announce it, because it's imminent, you will have the pricing.
spk36: Right. But I guess curious to kind of what you were planning for and what you're hoping for. You know, I don't think you have to give a number, but relative to that, have you learned anything through the process relative to what you thought of the market before? I guess the question is getting what we plan for.
spk07: You know, I'd say if we have a successful conclusion, then, you know, what we'll, you know, learn or reaffirm is that, you know, for good sponsors, good assets, good locations, with relatively low LTVs, there's a market to consummate that deals. You know, I don't want to say we've learned that. I'd say that would just maybe be confirmatory if we can get that done.
spk36: Sure. And then, I guess, just in general, how are lenders thinking about LTV in general, just over the last, you know?
spk07: I think, you know, the lenders are probably in about, you know, 5 to 10 percentage points from, you know, let's call it the peak of the liquid market. So, you know, much more in that 50 to 55% LTV range.
spk36: Got it. That's helpful. That's all for me. Thanks.
spk22: Thank you.
spk24: And thank you.
spk22: And one moment for our next question.
spk26: And our next question comes from Ronald Camden from Morgan Stanley. Your line is now open.
spk28: Great. A couple quick ones. So the quarter had a lot of sort of moving pieces. You know, the $0.29 judgment proceeds, $0.10 in lost reserves. And, you know, you mentioned in the press release that it was $0.13 ahead of expectations. So I know you don't really update, haven't commented on updated guidance, but is there, when you're thinking about that guidance you put out for the year, is there any other sort of takeaways that we should think about about all these moving pieces and how that changes your views or doesn't change your views at all? And should we view this as sort of a $0.13 raise, essentially?
spk13: So let's talk about the quarter real quick. You know, we had a couple of things we highlighted in there. The resolution of the situation with Victoria's Secret is a huge win, a huge positive. You know, that's $20 million into the cash coffers. $0.13 of that was not in guidance, offsetting that. That was $0.10 of reserves, also not in our guidance. So you're net three positive results. there, the remainder of the beat for the quarter is the best quality beat you can have. It's all out of NOI. Our properties significantly outperformed expectations. You saw that in same-store cash NOI. You saw that in earnings. That's on the revenue side and also even more significantly on the operating expense side where our operations team did a spectacular job saving on overhead costs, and we also benefited from lower utilities. So all that said, We were ahead of our expectations for the quarter, but we give a $0.30 range for guidance. So we sit within that range. We're still watching very closely the forward curve. We only have less than 10% floating rate debt at this point, so it's not as impactful, but we're very focused on it. And so that's why we keep our range as wide as we do when we launch at the beginning of the year. And three months in, we're not going to touch that. We'll reevaluate in three months.
spk28: Okay, but is there a way to figure out if you're getting closer to the higher end or the lower end or you're just keeping the whole range? That's what ranges are for.
spk11: Keeping the whole range.
spk28: All righty. So the next question was, you know, I had a question on 919 3rd Avenue as well, but maybe since you can't comment if it's imminent, just a broader sort of thought in terms of the refinancing environment. Any sense we can get some... some specific numbers in terms of rates, you know, LTV that I think you touched on a little bit before, potentially more collateral, just any sort of color of what the environment looks like and how it's changed over the past month or two would be helpful.
spk07: Well, it feels like we're sort of the same territory. But, you know, look, banks had breakout earnings, you know, earlier this week or last week. So, yeah, I think, you know, it's all iterative. You know, first, the leasing is a big, I think it's going to be a big help. I think the fact that the banks, at least, you know, the bigger banks that, you know, provide a lot of the liquidity, at least here in, you know, Manhattan for Manhattan deals, having, you know, a big top line is very positive. And I think, you know, eventually, and not, too distant, they'll be back, you know, buying the triple A's, double A's, all the, you know, all the secure tranches of the debt. And I think, you know, the liquidity dries up quickly. It comes back quickly. We've seen it, you know, just time and time and time again. So, you know, it's going to change weekly. But the only thing I can say to you as you're looking for trend direction is I think it's headed in the right direction. You know, hopefully we've seen, you know, you know, the worst of the pause. And I do think as deals get done, they set marks, and then more deals get done. And before you know it, we're back, you know, to an equilibrium market. So, you know, we'll see. I mean, I think what you're hearing is let's wait another three months and reassess on the next call, and hopefully we'll be able to give you a lot more specific data.
spk28: Helpful. If I could seek one quick and any update on sort of the casino license, because I don't think it's been asked. where that stands, how you guys are thinking about it. Thanks so much.
spk07: Well, I mean, look, we're, you know, we're, as I mentioned on other calls, there's really no update from the last call, which I think is mostly what you're asking about. But, you know, we are, you know, pursuing it vigorously, full gaming license in Times Square. We firmly believe that a world-class gaming entertainment hotel industry destination like we've planned in the heart of Times Square is to everybody's benefit. You know, everybody. Businesses, residents, and Broadway would benefit from, you know, the type of multibillion-dollar development that's planned, us in conjunction with Caesars, Entertainment, and Roc Nation. It would be an enormous catalyst for revitalizing and reinvigorating, you know, what's New York's, and I'd argue the world's number one most important tourist destination. And, you know, we've got the support of an ever-growing coalition of small businesses, labor, restaurants. We've got hotels. We've got many local residents. And I feel we're in, you know, we're in a good position to compete for one of those three licenses. Now, where the process stands, you know, we are – we've – you know, in the process of the request for applications. Questions were submitted, I want to say, back in February. And, you know, we're, you know, I think everyone is awaiting state feedback on next steps.
spk06: Thanks so much. Helpful. Thanks.
spk37: And thank you.
spk06: I think we're going to take one more.
spk26: Well, I'm actually showing no further questions, so I would now like to go ahead and turn the call back over to Mark Holliday for closing remarks.
spk07: Okay. Well, you know, I want to thank all of you who, you know, made it to the end here of the call. And, you know, I'm looking forward more than most to getting on the call the next three months from now. And, you know, hopefully a lot of – What you're hearing now we'll be able to, you know, speak about in more detail then and, you know, appreciate the continued support of our shareholders. Thanks.
spk26: This concludes today's conference call.
spk24: Thank you for participating. You may now disconnect.
spk40: Thank you. you Music. Thank you. Thank you. music music you
spk26: Thank you everybody for joining us and welcome to the SL Green Realty Corp First Quarter 2023 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 belief as of today. Additional information regarding the risk, uncertainties, and other factors that could cause such differences 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 Security and Exchange Commission. Also, During today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP 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 2023 earnings and our supplemental information included in our current report on Form 8K relating to our first quarter 2023 earnings. Before turning the call over to Mark Holliday, Chairman and Chief Executive Officer of SL Green Realty, 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 Mark Holliday. Please go ahead, Mark.
spk07: Okay. Good afternoon, everyone, and welcome to SL Green's earnings call. Thank you for joining us today as we review the first quarter's results and discuss improving trends we see in New York City as the office sector continues its recovery from the unprecedented three years of a pandemic economy. The commercial real estate sector seems to dominate much of the headlines these days, amplifying messages of doom and gloom and creating what I believe to be an over anxiety in the market that is most acutely felt in New York City where many of the market opinion makers reside. Overly negative voices are overshadowing some of the positive signs that portend of a slow but steady recovery for a market that offers what employers want most, a highly educated, diverse, youthful, and talented workforce. Midtown Manhattan also offers the most highly commutable office inventory with many buildings that are highly improved and amenitized and are at the forefront of innovation. It is clear that we are now in another moment of significant change as businesses rethink their office needs and cities around the world adapt to how pandemic has changed central business districts in a way no one could have predicted. However, one thing we know is that New York is resilient. The city has reinvented its economy time and time again, whether it's responding to crises like 9-11 or identifying trends to attract and accelerate the growth of new industries and sectors like technology and venture capital. We always find a way to remain a global capital, attracting the talent that leading and growing companies need in times of change there's no better place to be than here in New York City. The future of this great city relies on rethinking the arc of the workday and how we experience our CBDs, transforming them into vibrant 24-7 destinations. Our lives can no longer be neatly separated into work and leisure and entertainment, and there's an expectation that people coming into the office will have access to compelling experiences that make the trip worthwhile before, during, and after the workday. There are a number of positive indicators and developing trends that give reason for pragmatic optimism, though clearly to challenging environment. A rapid run-up in interest rates sent the chill through the real estate debt markets as lenders became concerned with decreasing interest coverage and refinanceability maturing loans. One month SOFR today stands at 501, up from just a quarter percent a year ago. But As the core inflation numbers begin to normalize and the labor market begins to cool, expectations as evidenced by the forward curve show one month term SOFR receding to just 3.11% by the end of 2024. And similarly, the 10-year SOFR swap rate, which peaked at 3.97% just six months ago, has already come in 73 basis points. And the forward curve implies now a 10-year SOFR swap rate of 3.03% by the end of 2024. So clearly moderating interest rates will have a positive impact on the real estate debt and equity capital markets. In the meantime, SL Green has hedged most of its interest rate exposure through strategic debt repayment and the use of derivative instruments like interest rate swaps, caps and collars. New York City employment is another area that I think is showing signs of significant improvement. The labor market in New York City has shown resiliency as businesses that employ office workers have erased all COVID-era losses. There is recent evidence of higher office utilization within our portfolio as physical occupancy regularly exceeds 60% on many workdays, and the MTA announced that Metro North Railroad reached pandemic-era ridership record two days ago with 195,000 riders are 74% of the pre-pandemic average. So it's the highest single-day ridership since the beginning of pandemic. And during the seven days between April 9 and April 15, Long Island Railroad carried an average of 170,000 daily commuters, the best seven-day average in over three years. So there's an increasing drumbeat of optimism about return to work. And we hear it from more and more companies that are doing business here in the city, but national and global companies that are mandating people come back anywhere between three to five days a week, all within the past three months or so. JP Morgan, Disney, Twitter, Google, Goldman Sachs, Salesforce, Apple, many others have come out with very definitive statements about a recognition that these businesses can be only at their most efficient and best when people are together in purpose-built, collaborative office space and not home or remotely. And I think that's why there has been this experiment over the past three years. Clearly, the major companies that span all different office sectors have concluded that the experiment is not working and thus requiring their people to come back, as I said, anywhere between three to five days a week. And that trend is something that we see on the streets, in the buildings, on mass transportation. And we think it's only going to get more and more momentum as this year weighs on because it makes sense. And it makes sense for business. It makes sense for competitiveness. It makes sense for the re-imagination of our CBDs. Uh, and it, you know, it's, it's what people have done and it's how people are at their best. So, uh, we're very optimistic in that regard. Um, you know, took longer than we expected, but you know, we now feel like, uh, things are coming around in the right direction. Um, in terms of, uh, safety, New York city is becoming safer with crime stats heading in the right direction. including declines in overall crime and violent crime in the first few months of 23. We're also anticipating that there'll be some level of additional bail reform to be included in the state budget, which will give judges clearer discretion over the imposition of bail. So while other cities are having difficulty getting a handle on crime, or some other major cities are having difficulty getting a handle on crime, New York City clearly has a plan that is working. And for 23, New York City is on track to welcome 63 million visitors, including more than 10 million international travelers. That puts projected tourism within 5% of the prior peak in 2019, which represents a remarkable recovery. Summit's high attendance and first quarter results, which eclipsed our projections for the first quarter, certainly demonstrates that domestic and foreign tourism is back in a big way with the prime travel months still ahead of us. Perhaps one of the most important developments of the year is the completion of East Side Access, now known as Grand Central Madison. Long Island commuters now have access on a direct basis into Grand Central. The new terminal spans 43rd to 48th Street along Park and Madison Avenue corridors, where much of the SL Green portfolio is situated. So with all that, I'm pleased with the start to the year we are having. Our results for the quarter were ahead of our expectations in several key areas. Mark-to-market rents and same-store NOI were both in excess of 5%. Our same-store office occupancy was slightly ahead of what we internally forecasted at just over 90%. And leasing volume of 504,000 square feet also outperformed our expectations. But the real highlight is forward-looking as we are building leasing pipeline at a steady pace. The pipeline of leases now stands at 1.2 million square feet, which is up 70% from our earnings call just three months ago. I think it was end of January. And to give you a flavor for the pipeline and preempt what I know will undoubtedly be someone's question later on, the pipeline is 80% financial services, includes 18 individual deals that we are working on at Graybar, and includes 1 million square feet of space in same-store properties, which would absorb over 300,000 square feet of space of vacancy in those same properties. While overall vacancy, sublet, and availability is not yet declining in Manhattan overall, our leasing results and current pipeline is indicative of the fact that the Park Avenue East Midtown corridor is highest performing in Manhattan, and tenants are responding to our well-located, repositioned, and highly amenitized buildings in a very positive way. We are also benefiting from brokers and tenants who are scrutinizing much more carefully the financial wherewithal of landlords and the stability of the capital stacks in individual buildings that tenants want to locate in. These are areas where SL Green shines the most. In the investment marketplace, there are signs that demand is forming for high quality commercial assets in Midtown. and we expect to see transactions announced over the next two quarters. Initially, these transactions will be for the well-located assets, some with financing in place and some with financing that will be arranged, and generally involve buildings that are already fully repositioned and amenitized or are in the process of doing so. There is also more activity than usual in the user-buyer market, as evidenced by the recent sales totaling over $750 and $25 million to users like Hyundai, Dyson, and Memorial Sloan Kettering, and we are aware of several other pending transactions for purchase or long-term capital leases by users. Taken together, these developing trends bode well for our 2023 business plan, and we are working hard to execute on a series of sales, joint ventures, and financings. With that, I'd like to open it up for questions.
spk26: And thank you. And one moment, please. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And we would like to remind you to limit your questions to two questions, please. Limit yourself to two questions.
spk24: And one moment for our first question. And our first question comes from John Kim from BMO.
spk26: Your line is now open.
spk30: Thank you. Good afternoon. I was wondering if you could provide an update on the $2 billion of dispositions that you have planned this year, highlighted by 245 Park. I know that it's top of mind for a lot of people on this call, but any update that you can provide on those kind of conversations right now?
spk07: Well, I mean, I don't think we're going to go through the whole $2 billion pipeline, but, you know, we're working. As I mentioned in my speech, I think that we feel, you know, pretty good about where we stand right now in terms of, you know, completing JV sales and financings that we, you know, that form a part of the 202.3 business plan. 919 financing, I think, is imminent, and we're working hard on 245 Park, which is You know, that development is coming along amazingly well. The plan we have for it, I think, is going to make it, you know, among the best, you know, non-brand new construction buildings on park, but, you know, we'll be able to, you know, lease it at rents that are going to be, you know, well into the triple digits. We have a lot of activity there. We're trading paper with a couple of tenants, and our discussions there are, you know, are good, you know, so we You know, we feel good about that. And, you know, then there's obviously other transactions we're working on. It's still got a long way to go this year. And, you know, I think the market is coming around, and I think the assets we've selected are the right ones that we'll be able to, you know, either, you know, monetize via sale, via joint ventures. They're in the right locations. And, you know, we're working hard to get it all done.
spk30: Okay. My second question is on some of your secured debt that recently expired. It remains on your books. They were on their last quarter as well. And you talk about having a resolution with the lenders. I'm wondering if you could provide any color on what the resolution looks like and if defaulting on debt is an option for you and or your partners.
spk08: What's your question? Secured debt?
spk09: Yeah. What's the question? Resolution of secure depositions that were in past maturity.
spk13: Which ones in particular? 717 5th and 11 West 34th Street. Yes, John.
spk07: Which ones, John, which pieces that are you talking about so we can hit it?
spk30: I apologize. I've going through the settlement. But there was some debt that expired in December, February, this year, April.
spk19: Both 717 and 11 West 34th Street are high street retail positions where we are far from that. We do not control the borrower and we have basically passive positions. 717, as you know, we have taken all of our investment and profit out of the asset and We have a 10% passive position in that, and 11 West, we're 30% of that position. We don't control it. So we're getting updates from our partners, but those are investments that we continue to evaluate. And as I said on the prior quarter's calls, lenders are either going to work with us on those assets or they're not.
spk13: And John, to Andrew's point, Matt, You referenced the December 22 maturity. That was 1552 Broadway, and as you'll note in the supplemental, that matured in December. We worked with the lender and just executed an extension through to 2024.
spk30: The other one was 650 Fifth Avenue, which expires this month.
spk07: Yeah, these are tiny – you know, these are – we should take it offline. These are assets which I think – have no book. These are small retail assets in which we have the minimus ownership, passive interest, no consequence to the earnings and balance sheet of any magnitude that I think. Is that what you're referring to or something else?
spk19: If defaulting is an option, it's really up to the lender in these situations, which I said last quarter and I'll reiterate again. The lenders are going to determine whether there are defaults or not.
spk07: Yeah, but again, the consequence of that determination, unless I don't want to understate it, Matt, is not material.
spk13: There's no NAV, there's no book value, there's no earnings from the assets. From your perspective, it's okay.
spk07: And I call that immaterial in my book. I don't want to, you know, I'm not trying to undermine the question, John. I'm just saying these are, you know, what Matt said is right. You've highlighted assets which we sort of look at as carry and look at as zero and have no contribution to earnings. So it's just not the focus of what my commentary is about. That's all I'm saying.
spk30: Any commentary on your partners, though, because, you know, you may have to be aligned with them?
spk15: No. Well, we'd rather, you know. We have no commentary. Yeah. Okay.
spk25: Thank you. Thank you.
spk24: And one moment for our next question.
spk26: And our next question comes from Steve Sokwa from Evercore ISI. Your line is now open.
spk20: Great. Thanks. Good afternoon. Mark, or maybe Steve Durells, could you just talk a little bit more about that $1.2 million? I guess what I'm trying to figure out, Mark, is are these tenants kind of expanding? Are they staying the same? Are they shrinking? If they come into your portfolio, that's great. I'm trying to just think about the impact on the overall market and Just trying to get a sense for how these tenants are thinking about space needs and what's the density.
spk07: I gave so much disclosure on it. There's like 40 or 50 deals, you know, in there. There's a lot of expansions. There's a lot that are staying the same. There are a lot that are less. I mentioned that over 300,000 square feet is for vacant space within the same store portfolio. And there's over 500,000 feet that's for vacancy within the portfolio generally, you know, same store and non-same store. mostly financial tenants, some growing, some shrinking, many staying the same, all in line with our projections, probably slightly above in terms of velocity. And clearly, the first quarter, we were ahead on mark-to-market and same store. But there's 18 deals alone at Graybar, and there's You know, there's probably, I don't know how many deals in total on there, but what about 40?
spk03: Well, it's of the 1,200,000 square feet, just to give you a sense of it, Steve, 900,000 square feet are new deals, 274,000 square feet are renewal deals. Mark talked about what was filling vacancy, both same store and throughout the entire portfolio. That's 45% of the 1,200,000 too is filling vacant space. And I think to build on what Mark said about the gray bar, That I think is as big a news as anything. What we're seeing is a broad diversity of tenant sizes at all price points. So that, you know, the narrative of all the leasing activity now taking place or previously taking place being at the very top end of the market, I think is increasingly, is rapidly changing. We're seeing more velocity, certainly on the proposal stage and tour activity, in the more price-sensitive part of the market than we've seen in the past three years. And I think that's a reawakening of the marketplace. I think we're seeing the small and the mid-sized tenants come back to the market. And to have a healthy 400 million square foot market, that's what we need. And it's a good news day to be able to say that.
spk20: Okay, great. Maybe just moving on to One Madison. Are you still expecting the TCO in the fourth quarter? And I guess, Matt, when you do get the proceeds in from the joint venture partner, how do we think about the applicability of those proceeds, which I think are just shy of $600 million?
spk13: Yeah, we are getting $577 million from our partners down at One Madison. When we get TCO, we are running ahead of schedule on the construction there. So We had it slated for fourth quarter, hopefully early fourth quarter. Those proceeds immediately go to pay down corporate debt. The first $425 million goes to pay down a short-term unsecured facility we put in place last year, and the increment above that, another $150 million or so, goes to either the line of credit or other corporate debt.
spk29: Great. Thank you.
spk24: And thank you. And one moment for our next question. And our next question comes from Alexander Goldfarb from Piper Sandler.
spk26: Your line is now open.
spk42: Thank you. Good afternoon. Matt, maybe just on moving on from Steve's question. I think he was on the TCO for one Vanderbilt. I think you're getting as I think you just mentioned that the sort of five hundred seventy million But you guys also have potential for JVs, I think, further. Well, JVs at 245 Park. I think you may or may not do more at 1 Madison. There's the condos uptown that you guys are doing. So, Ned, can you just sort of lay out in total? Obviously, the 1 Vanderbilt is pretty much certainty, correct? But what the potential of cash proceeds that you guys are looking at taking in this year potentially through the different JV sales or outright condo sales that are contemplated?
spk13: So I'm going to just correct on the addresses a bit there, you know, where the proceeds are coming in from our partners at one Madison on TCO. Okay. There's no other contemplated partners down at one Madison. And we had talked about potentially an additional partner at one Vanderbilt. We talked about it for the last couple of years and we may or may not do that this year. Um, I don't want to step through every component of our business plan and that business plan obviously changes over time. Two 45 is the most significant and we are working hard on that as Mark said earlier. And then we have some other assets, either wholly owned or outright sales, JV interests, other things that we are working on. But I'm not going to step through every one of those except to say we're focused on trying to get to our $2 billion target, the most significant component of which is 245 Park.
spk42: Okay. And then you also have the 570 from One Vanderbilt that's later this year as well, correct? Yes.
spk13: Yes. That is the only con the only condition of that is completing one Madison. That's obviously happening.
spk42: Okay, great. And then second question is, uh, the real deal had an article, uh, on a few weeks ago, uh, with the latest on, you know, six 25 Madison had a little, you know, as they always do a little extra color, but maybe you guys could just provide us an update where, where the litigation or negotiation stands, you know, what any pending resolution. any sort of update that you can provide?
spk19: Well, with respect to the leasehold position there, we expect the rent reset arbitration to conclude imminently. As we've discussed in prior quarters, we may update our business strategy for that leasehold position following the resolution of that rental reset process. And if we ultimately decide to adopt a different strategy for that leasehold position, That could impact the carrying value of that leasehold position going forward, obviously.
spk42: So what does that mean, impact the value? That's up, down? What does that mean?
spk19: It depends on the rent arbitration. It's up to the arbitrator.
spk07: It's a fairly binary outcome. There's a wide disparity of view as to what that rent should be. It's been the subject of a disagreement for a while now, and There'll be a conclusion, we think, imminently. And then based on that conclusion, you know, at least with respect to the leasehold, that'll, you know, clarify for us the direction we're going to go with it, whether it's something, you know, we feel, you know, we can stay with or whether, you know, if you get a rent amount that's non-economic, then we'll have to deal with that. But, you know, that's an investment that we've had, you know, 15 years plus. It's net lease to Polo. We've taken, you know, we've certainly, as Andrew mentioned with 717, we've, you know, redeemed all our capital on that investment.
spk19: It's been a successful investment.
spk07: You know, and in addition to that leasehold position, we have, you know, our mezzanine interests on the fee position as well, also related to 625 medicine asset.
spk19: And that's a different investment, and we don't anticipate any impact on the value of that investment based on the outcome of the rent reset arbitration.
spk41: Okay, cool. Listen, thank you.
spk24: And thank you. And one moment for our next question.
spk26: And our next question comes from Anthony Pallone from J.P. Morgan. Your line is now open.
spk05: Great. Thank you. Good afternoon. I guess first question, on green loan servicing, just wondering, like, maybe you could talk about that or how we should be thinking about that because it seems like that could be a good business at the moment and wondering if you think about that as just a fee generator or if there's something more strategic in terms of that potentially helping you find investment opportunities or other strategic benefits.
spk19: No, and I think it's primarily a fee generator. Obviously, we have to service every loan to the servicing standard, so we can't sort of consider our own interests when we service loans as a third party, as a fiduciary. So it's a good active business. We have a great staff and team that runs that business. And we've had a lot of successful resolutions on behalf of our clients and customers there. And we do intend to grow that business for sure as there's more situations that sort of need servicing and special servicing.
spk05: Okay. And then just my second one, I know it's early, but any thoughts on Credit Suisse and their space at 11 Madison and what I guess UBS may ultimately do with that or how you're thinking about it?
spk07: Well, I mean, it's a long-term lease. You know, I mean, it was announced Credit Suisse is merging with UBS and UBS is going to be the surviving entity. I think we look at that as credit upgrade, you know, to the lease, although, you know, Credit Suisse was a good tenant of ours for over 15 years, so I think the merged entity will just be, you know, that much stronger. And, you know, in terms of, you know, what they may or may not do with their space, we don't have any visibility into, but, you know, it is, I don't know, you guys have the exploration on that? 2037. It's a lease that expires in 2037. So I guess another, you know, 14 years or so to run. And, you know, so therefore that'll be up to them. But, you know, the lease is intact and we think, you know, we think the building's in good shape.
spk25: Okay. Thank you. And thank you.
spk24: And one moment for our next question.
spk26: And our next question comes from Tom Catherwood from VTIG. Your line is now open.
spk14: Thank you. Good afternoon, everyone. First, Steve, maybe just pivoting back to the leasing pipeline. I think in the second half of last year, you had talked about some deals coming off the market as tenants were kind of evaluating the economic situation and evaluating their businesses. Is some of this jump up in pipeline since you know, earning January, let's call it. Is that the 2022 deals reengaging with the market, or do you have a sense that this is kind of incremental new leasing above and beyond that?
spk03: I think it's both. I think it's clearly, you know, whatever pause that we saw by tenants who got sort of spooked in the fourth quarter with rising interest rates and threatening recession environment and things like that, and they put their searches on hold, that explains kind of the leasing slowdown. But then, you know, we came out of it pretty strong. We certainly did in our portfolio. 500,000 square feet in the first quarter, I think, is a significant print. And I think the growing pipeline is both tenants that have confidence in their business, clarity on the overall economic situation, and Add to that the return to the office. I mean, that narrative is prevalent today, whether you're a small business or you're taking your cue from the leaders of major businesses across the country. So we're seeing it both in the small, medium, and large tenant marketplace. Then add to that financial services, the private equity hedge fund world still continues to be a driver on leasing. and we're seeing up and down Park Avenue a lot of demand. You know, I could have easily rationalized another 500,000 to 600,000 square feet of pipeline, you know, addition to that pipeline based upon term sheets that we're exchanging but are just too early in the process to really have clarity on. And so I think that's a, you know, a good harbinger as to where the market's headed.
spk14: Appreciate that. Thanks, Steve. And then kind of focusing on a specific asset here, you moved to Herald into the redevelopment bucket this quarter. You've talked about WeWork leaving 180,000 plus square feet there and potentially looking at either extended stay or dormitory use. Can you talk to the timing of the expected vacancy there and any updates on the redevelopment?
spk13: As to vacancy, WeWork is out. They vacated earlier in the first quarter, and we're evaluating the redevelopment opportunities for the asset right now.
spk24: Got it. Thanks, everyone. And thank you. And one moment for our next question.
spk26: And our next question comes from Camille Bonnell from Bank of America. Your line is now open.
spk12: More of a big picture question. On a least percent, your exposure to tech is growing. Just given this industry has been accelerating layoffs and pushing to bring employees back into the office, but it continues to lag, how do you think about your overall exposure to this industry? And from your experience of managing overall tenant risk, is there a particular industry mix you envision for the portfolio?
spk07: I think our Yeah, I look at our exposure to tech as good exposure. You know, I think it has been and continues to be a big positive within our portfolio, and I assume the question is within the portfolio as opposed to market-wide. You know, IBM is a great example of a recent deal we did over at One Madison. Kendrell is a deal we did over here at One Vanderbilt. See, we've got Bloomberg, you know, Media and Tech over at 919. You know, they expanded, I think, last year, if I'm not mistaken.
spk23: Yeah, they have a big footprint.
spk07: So I think in general, you know, one, I think we have marginally less exposure to tech, depending how you define tech, than most others in the city. Although, you know, we'd welcome more, and we think that, you know, that sector – went from literally nothing about a decade ago to being a major player in the city, right up there with business services and financial. Now, obviously, they're taking a pause. There are announced layoffs, but I think those global national announcements tend to hit Manhattan less so than other markets that they've expanded into because this Workforce, I think, is more the type of workforce that they'll be retaining in engineering, et cetera, and less so skewed solely to marketing, like in many other smaller markets around the country. So I think that so far, when you look at the jobs picture in New York, I mentioned it earlier, we're at 1.5 million office-using jobs. Tech falls into that. category, information services. So there hasn't been any material showings to date of concern over bodies in the tech world. And even if there is some trimming there, it's been equally made up for by finance and business services. So I don't know if that answers the question, but I think Tech's been, you know, I think tech will grow again. They're going through a right sizing right now as everybody does after the tens of millions of square feet that they consumed in Manhattan. And, you know, once that right sizing occurs, you know, I think growth will happen again and they'll be, you know, they're here to stay and we're excited by that.
spk12: Okay. And for my second question, You've made good progress versus your initial targets on the leasing and revenue front. But like you mentioned, it doesn't seem like investors are willing to attribute any credit to this performance. I wanted to get your thoughts on what you think is being priced into the equity markets today. And at these valuation levels, do you see potential for equity to equity consolidation in this backdrop?
spk07: Well, I said earlier, I do think that There's what I term over-anxiety. As a company, we've been at this for 26 years, and many of us have been in it for 30, 35 years, almost all of it in New York. So we've been here before. This has a lot of the rhythms of what happens first, the narrative, then the debt markets freeze up. You know, then, you know, there's little shoots of deals, generally smaller ones first, bigger ones later. And, you know, the market, you know, by most standards, I would consider this, you know, a relatively good market because we've got the jobs. We still have good occupancy, at least within our portfolio, and I'd say within the better buildings and better submarkets of Manhattan. you know, rates are much higher than they were, but on absolute terms, they're still relatively low. And lenders seem to be working, by and large, with their borrowers to extend in situations where, you know, good borrowers, good properties need another year or two or three to, you know, to ride things out. You know, sometimes we're there as servicer, sometimes we're there as lender, sometimes we're there as borrower. So, you know, we see that as a trend. And, you know, You know, so I can't really, you know, respond to how people, what people are pricing, what they're not. But I do think, you know, that the battery of headlines, the doom and gloom, the, you know, the pessimism, you know, we think is overblown just based on our results and our pipeline. I mean, that's, you know, our business is sort of a simple business at the end of the day. We, you know, we buy space, we develop space, we improve it to best of class or as high end as we can, and we lease it to users. And between that which we've leased and that which we hope to lease in our pipeline, we think we're getting things done. And hopefully the debt markets will start to thaw a little bit. And once it does, I think you'll see things snap back quickly.
spk22: Thank you.
spk24: And thank you. And one moment for our next question. And our next question comes from Blaine Heck from Wells Fargo.
spk26: Your line is now open.
spk35: Great, thanks. Good afternoon. Just following up on the asset recycling front, is there any color you can give on the pricing of some of those sales that you're looking at for this year? Has your expected pricing on the sales, especially 245 Park, changed at all? in the last kind of few months?
spk07: I don't think we're going to go through pricing asset by asset. You know, that's a, you know, we're shooting for, you know, best execution. You know, we think everything we set out for in the year is very reasonable. I would say historically low, you know, I mean, compared to where pricing was a year or two ago. I think there's a lot of equity out there. that is looking at this moment in time as a way to enter or reenter Manhattan at pretty attractive levels. I mean, we've all been doing the rounds, traveling domestically and overseas. There's a lot of interest in New York City. I don't know if that's something that the market definitely feels or appreciates, but in terms of investing within the U.S., There's a lot of foreign capital, I think, and domestic capital that is looking at today's environment like a good entry point. We've got reasonable expectations on everything that we're looking to accomplish. We don't set unrealistic expectations. We set things where we think are market clearing levels, and it's up to us to execute.
spk35: So following up on that, Mark, and just based on your conversations that you guys are having, can you talk about kind of the return hurdles that those foreign capital entities and sovereign wealth funds and maybe just private equity?
spk07: I'd rather do it when the deals are done. There's no reason to speculate. I mean, we have a firm handle on where we think that market is. So let us go execute, and then it'll all be illuminated.
spk33: All right, fair enough. Thanks, guys. And thank you.
spk24: And one moment for our next question. And our next question comes from Derek Johnston from Deutsche Bank.
spk26: Your line is now open.
spk31: Hi, everyone. Thanks for taking the question. And I guess this may be for Andrew. you know, can we get a sense of the mark to market value or perhaps fair value of the DPE book? And, you know, secondly, you know, what percentage of the loans in the book are coming due over the next two years?
spk19: I mean, hey, Derek, in terms of mark to market value, I would say it's our carrying value for the loans. We make that evaluation with the accountants quarterly. The DPE book obviously, as you know, is paid down pretty significantly to a couple of large positions, 625 being, Madison being the largest of it. It's residential and office assets. And, you know, the second part was... What was the second part, Derek? Earning value, and then what did you say?
spk31: I was hoping to just understand, you know, given this environment, you know, what percentage of the book or the loans are coming due over the next two years?
spk13: There's a maturity table in the supplemental, Derek, that has all of the... maturities. Most of them are short-term.
spk07: DPE has always been a short-term book, one to three years. So I'd say over the next two years, the majority will.
spk19: Yeah, we have one large PREF equity position, which is February 27. We have a $20 million residential position, which is December 29. And then the balance are in the relatively near term.
spk13: And Derek, it's Matt. I just want to expand on the Mark to market question. You know, accounting doesn't require us to mark to market the book. So the carrying value is representative of accounting carrying values, but the mark to market is pretty close to the carrying value of the debt, of the deposition.
spk31: Okay. Thanks, Matt. That's helpful. That would be it for me, guys. Thank you.
spk06: Thank you.
spk24: And thank you. And one moment for our next question. And our next question comes from Tao Axanana from Credit Suisse.
spk26: Your line is now open.
spk27: Yes, good afternoon, everyone. Thanks for all the color around just, you know, how you're progressing with the asset sales. I'm just curious, I mean, if credit markets remain tough, if it's hard for anyone to get financing, to kind of pull this off. How do you kind of think about, if I may use the word, plan B in regards to trying to either deliver the balance sheet, kind of looking for an alternative source of capital? Like, can you just kind of help us think through what plan B would be?
spk07: I'd say we're, Tayo, we're focused on plan A. But, you know, the skepticism in the market is, like, evident on this call. It's, you know, I mean... You know, we feel like we're going to get stuff done. So, I mean, sure, there's Plan B, C's, whatever, but, you know, I think what you're hearing from us now is we're going to, you know, we've got, you know, I mean, it's not like, I'd say we have eight months, but we have whatever time we need, you know. I mean, maybe we'll get this stuff done in the next three or four months, five or six months, seven, eight months, or it could be nine months, but whatever it is, we have premier assets in that have a lot of institutional domestic and foreign attraction. And, you know, we're keeping them well leased. They're highly improved. And what you're hearing from us is, you know, there's a market for that. And it's up to us to go out there and, you know, and do it. So we'll do whatever we have to do to get, you know, things done. And, you know, that's what we're working on. But, you know, When you say a plan B, that sort of implies that there's no plan A or plan A doesn't. And that's what we're focused on right now. So, I mean, there's a myriad or countless amount of other plans or strategies or capital or forms of capital that one could avail themselves on. But we're very simple about this. We have certain assets we're going to look to sell like we do every year and have done for 25 years. We have other ones. great core holdings, long-term holdings for us, that we will look to JV with Premier Partners. You know, and then I think we have one financing. No, is it just 990? I mean, it's just one financing, which I said in my commentary we thought was imminent. So I can't really give more color than that, other than that one financing I think is imminent. So there's no plan B for that. But, you know, let's, yeah, we'll... We will regroup in three months and we'll give you a further update on these things. Hopefully we'll have a couple of announcements between now and then. And we're going to keep going.
spk21: Fair enough. Thank you, gentlemen.
spk07: Thank you.
spk21: And thank you.
spk24: And one moment for our next question. And our next question comes from Peter Abramovitz from Jefferies.
spk26: Your line is now open.
spk36: Thank you. I just wanted to ask about 919. I know you probably can't speak in any detail, but I guess how's the pricing kind of coming out relative to what you were expecting?
spk07: Well, you know, that sort of goes back to the question I was asked earlier about parameters and pricing. As soon as we have something to announce, you'll have the announcement of the pricing. It's just, it's not typical for us to talk about transactions in the market that we're working. We've never done it, and I wouldn't do it now.
spk36: Sure.
spk07: There's no reason. But, you know, as soon as we announce it, because it's imminent, you will have the pricing.
spk36: Right. But I guess curious to kind of what you were planning for and what you're hoping for, you know, I don't think you have to give a number, but relative to, have you learned anything through the process relative to what you thought of the market before? I guess the question is getting what we plan for.
spk07: You know, I'd say if we have a successful conclusion, then, you know, what we'll, you know, learn or reaffirm is that, you know, for good sponsors, good assets, good locations, with relatively low LTVs, there's a market to consummate that deals. You know, I don't want to say we've learned that. I'd say that would just maybe be confirmatory if we can get that done.
spk36: Sure. And then, I guess, just in general, how are lenders thinking about LTV in general, just over the last, you know?
spk07: I think, you know, the lenders are probably in about, you know, 5 to 10 percentage points from, you know, let's call it the peak of the liquid market. So, you know, much more in that 50 to 55% LTV range.
spk36: Got it. That's helpful. That's all for me. Thanks.
spk22: Thank you.
spk24: And thank you.
spk22: And one moment for our next question.
spk26: And our next question comes from Ronald Camden from Morgan Stanley. Your line is now open.
spk28: Great. A couple quick ones. So the quarter had a lot of sort of moving pieces. you know, the 29 cents judgment proceeds, the 10 cents on lost reserves. And, you know, you mentioned in the press release that it was 13 cents ahead of expectations. So I know you don't really update, haven't commented on updated guidance, but is there, when you're thinking about that guidance you put out for the year, is there any other sort of takeaways that we should think about about all these moving pieces and how that changes your views or doesn't change your views at all? And should we view this as sort of a $0.13 raise, essentially?
spk13: So let's talk about the quarter real quick. You know, we had a couple of things we highlighted in there. The resolution of the situation with Victoria's Secret is a huge win, a huge positive. You know, that's $20 million into the cash coffers. $0.13 of that was not in guidance. Offsetting that, though, was $0.10 of reserves, also not in our guidance. So you see your net three positive results. there the remainder of the beat for the quarter is the best quality beat you can have it's all out of NOI our properties significantly outperformed expectations you saw that in same-store cash NOI you saw that in earnings that's on the revenue side and also even more significantly on the operating expense side where our operations team did a spectacular job saving on overhead costs and we also benefited from from lower utilities so all that said I We were ahead of our expectations for the quarter, but we give a $0.30 range for guidance. So we sit within that range. We're still watching very closely the forward curve. We only have less than 10% floating rate debt at this point, so it's not as impactful, but we're very focused on it. And so that's why we keep our range as wide as we do when we launch at the beginning of the year. And three months in, we're not going to touch that. We'll reevaluate in three months.
spk28: Okay, but is there a way to figure out if you're getting closer to the higher end or the lower end or you're just keeping the whole range? That's what ranges are for.
spk11: Keeping the whole range.
spk28: All righty. So the next question was, you know, I had a question on 919 3rd Avenue as well, but maybe since you can't comment if it's imminent, just a broader sort of thought in terms of the refinancing environment. Any sense we can get some... some specific numbers in terms of rates you know LTV that say I think you touched on a little bit before potentially more collateral just any sort of color what the environment looks like and how to change over the past month or two would be helpful feels like we're sort of the same territory but you know look banks banks had breakout earnings you know
spk07: earlier this week or last week. So, yeah, I think, you know, it's all iterative. You know, first, the leasing is a big, I think it's going to be a big help. I think the fact that the banks, at least, you know, the bigger banks that, you know, provide a lot of liquidity, at least here in, you know, Manhattan for Manhattan deals, having, you know, a big top line is very positive. And I think, you know, eventually, and not, too distant, they'll be back, you know, buying the triple A's, double A's, all the, you know, all the secure tranches of the debt. And I think, you know, the liquidity dries up quickly. It comes back quickly. We've seen it, you know, just time and time and time again. So, you know, it's going to change weekly. But the only thing I can say to you as you're looking for trend direction is I think it's headed in the right direction. You know, hopefully we've seen, you know, you know, the worst of the pause. And I do think as deals get done, they set marks, and then more deals get done. And before you know it, we're back, you know, to an equilibrium market. So, you know, we'll see. I mean, I think what you're hearing is let's wait another three months and reassess on the next call, and hopefully we'll be able to give you a lot more specific data.
spk28: Helpful. If I could seek one quick and any update on sort of the casino license, because I don't think it's been asked. where that stands, how you guys are thinking about it. Thanks so much.
spk07: Well, I mean, look, we're, you know, we're, as I mentioned on other calls, there's really no update from the last call, which I think is mostly what you're asking about. But, you know, we are, you know, pursuing it vigorously, full gaming license in Times Square. We firmly believe that a world-class gaming entertainment hotel industry Destination like we've planned in the heart of Times Square is is to everybody's benefit, you know everybody businesses Residents and Broadway would benefit from you know the type of Multi-billion dollar development that's planned us in conjunction with Caesars entertainment rock nation It would be an enormous catalyst for revitalizing and reinvigorating you know what's New York's and I'd argue the world's number one most important tourist destination. And, you know, we've got the support of an ever-growing coalition of small businesses, labor, restaurants. We've got hotels. We've got many local residents. And I feel we're in, you know, we're in a good position to compete for one of those three licenses. Now, where the process stands, you know, we are – we've – you know, in the process of the request for applications. Questions were submitted, I want to say, back in February. And, you know, we're, you know, I think everyone is awaiting state feedback on next steps.
spk06: Thanks so much. Helpful. Thanks.
spk37: And thank you.
spk06: I think we're going to take one more.
spk26: Well, I'm actually showing no further questions, so I would now like to go ahead and turn the call back over to Mark Holliday for closing remarks.
spk07: Okay. Well, you know, I want to thank all of you who, you know, made it to the end here of the call. And, you know, I'm looking forward more than most to getting on the call the next three months from now. And, you know, hopefully a lot of – What you're hearing now, we'll be able to speak about in more detail then and appreciate the continued support of our shareholders. Thanks.
spk26: This concludes today's conference call. Thank you for participating. You may now disconnect.
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