SL Green Realty Corp

Ladies and gentlemen, thank you for standing by. Please stand by. Your conference will begin here momentarily. Again, ladies and gentlemen, thank you for standing by. Your conference will begin momentarily. Thank you, everybody, for joining us, and welcome to SL Green Realty Corp's fourth 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 the future events as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today. Additional information regarding the risk uncertainties and other factors that could cause such differences to appear are set forth in the risk factors and MD&A section of the company's latest Form 10-K and other subsequent reports filed by the company with the 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 measures and the comparable GAAP financial measures can be found on both the company's website at www.slgreen.com by selecting the press release regarding the company's fourth quarter 2023 earnings and in our supplemental information included in our current report on Form 8K relating to our fourth quarter 2023 earnings. Before turning the call over to Mark Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp, I would like to ask those of you participating in the question and answer session

of the call please limit your questions to two per person thank you i would like to turn the call over to mark holiday please go ahead mark okay uh thank you good afternoon and uh glad everybody could join us today i'm extremely happy and i'm extremely proud with how we ended 2023 navigating what was a challenging year and showing that we have turned the corner going into 2024. We're just a few weeks into the year and only seven weeks on from our investor conference, but we already have so much new activity that we want to talk about and share with you today. Normally I don't like to repeat the earnings press release. Most of you have it, you've read it. Um, and I don't like to do that on these calls, but I think today is different. I think it deserves a moment to reflect on what we have achieved in the fourth quarter. and at the outset of the year during these first few weeks. At Two Herald, we increased our ownership in a well-located asset and fully resolved a 182.5 million leasehold mortgage, all of which was accomplished for very little out of pocket. There's more work to be done for sure, but we are on our way to stabilizing this asset. There was seismic news in New York City retail this month where Jeff Sutton, our long-term partner and friend, and among the best retail dealmakers in the city. Wait, Jeff, if you're listening in, I know what you're thinking. The best retail dealmaker in the city pulled off not one, but two amazing deals. 717 Fifth Avenue sold for $963 million, generating full repayment of the capital stack, plus distributions to Sutton and ourselves, equating to approximately $8,000 per square foot of sale price. And to prove this isn't an outlier, right across the street, at another legacy Green Wharton asset, Prada bought 720 and 724 Fifth Ave for $835 million, a deal that was also just recently closed. And these deals developed, you know, quickly and confidently. And I think it's very, very exciting for the city. We had a third great example. of user acquisitions in the retail space in the past 30 days, with the Swiss retailer Acree buying the entire retail condo that we owned at 21 East 66th Street for over $40 million and exceeding $7,000 per square foot, thereby putting an exclamation point on the trend of retailers making permanent commitments to New York City through the purchase of desirable retail assets. This is Accree's second purchase from SL Green over the past year. We expect this trend to continue as we are already aware of another transaction in the works in that part of town. Obviously, 717 wasn't an anomaly in confidence in Fifth Avenue and high street retail in New York City is once again on the rise. But let me remind you some of the headlines from the past few years. relatively recent headlines. When FT declared the death of high street retail, Crain's talked about a retail apocalypse on 5th. And New York Times concluded that retail has abandoned Manhattan. My point here is simply that people often underestimate how quickly things can change from these sort of hysterical media headlines to record setting transactions just a few years later. I urge you all to keep this in mind when you read similar headlines about the office sector. Speaking of office, we ended the year strong with over 500,000 square feet of New York office leasing in the fourth quarter, which enabled us to report an uptick in occupancy for the second consecutive quarter after having stated publicly last summer that we believe the market had essentially hit bottom. And JLO recently reported that SL Green signed the greatest number of triple-digit leases in all of New York City last year. There's good news on the debt front as well. We gave you a business plan in early December with ambitious plans to extend, modify upwards of $5 billion in debt, which certainly gives new meaning to the definition of stretch goal. Happy to report that even before the year ended, we put the first one on the board with seven day, which we successfully extended for three years at terms that are favorable for the asset and should help us get our JV done on that asset. Another aspirational goal we set of a billion dollars of debt reduction this year on the heels of a billion dollars of debt reduction last year. And we've accomplished already over 200 million of that reduction sitting here in sort of mid-Jan. So not to be overshadowed by all this great news, our premier development on 760 Madison, which has really set, I think, a new standard for Upper East Side bespoke New York luxury. And we just signed a contract this morning for the ninth floor, bringing us to six out of 10 units spoken for with a contract out on a seventh. So we're off to a great start, certainly confident in our business plan and optimistic about the city's continued recovery, where we have some positive indicators to report. The city's OMB forecast for 2024 is hot off the press and looks really good. with over 90,000 private sector jobs forecasted for this year and another 97,000 jobs forecasted for 2025, certainly continuing to bring New York's employment base to record highs. As more importantly, after a year where we saw slippage in the office using employment, the city is forecasting a robust reversal that will more than make up for those losses with 42,000 office using jobs projected for this year and that would also set an office-using record in 2024. So kudos to the Adams and Hochul administrations and all involved for helping to bring back tourism, improve security, and implement pro-business policies. As a result of all that, we are launching our fundraising efforts to amass a minimum of a $1 billion capital allocation to become active participants in this city's ongoing recovery and resiliency In fact, after we get off the phone, we're heading to the airport and we're on a plane to Asia to formally kick off those efforts. We're excited about the prospects of this. Got a lot of excellent response and inbound inquiries on these efforts. Most importantly, what we're doing, along with other announced deals, shows that new capital is forming in this market. The second indicator that we passed the bottom, of course, the first indicator being our statements to you in July of last year. With that, Happy to open it up for questions. Thank you.

Thank you. If you have a question, if you would like to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. If you would like to withdraw your question, please press star 11 again. One moment while we compile our Q&A roster. And our first question is going to come from the line of Steve Sacqua with Evercore ISI. Your line is open. Please go ahead.