SL Green Realty Corp

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Thank you, everybody, for joining us, and welcome to SL Green Realty Corp's second quarter 2024 earning results conference call. This conference call is being recorded. At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. You should not rely on forward-looking statements as predictions of future events as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today. Additional information regarding the risks and uncertainties and other factors that could cause such differences to appear are set forth in the risk factors and MD&A sections of the company's latest Form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission. Also during today's conference call, the company may discuss non-GAAP financial measures as defined by regulation 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 second quarter 2024 earnings and our supplemental information included our current report on form 8K relating to our second quarter 2024 earnings. Before turning the call over to Mark Holliday, Chairman and Chief Executive Officer of SL Green Reality Corp, I ask that those of you participating in the Q&A portion of the call to please let me know your questions to two per person. Thank you. I'll now turn the call over to Mark Holliday. Please go ahead, Mark.

Thank you. Good afternoon and appreciate everybody joining in today. I think this was, by all measures, a great quarter for SL Green, even by our own lofty standards. I want to lead off by expressing my sincere appreciation for the SL Green team who have massively contributed to our company's impressive results for this quarter and throughout the most challenging times of recent. The extremely talented men and women of SL Green work seven days a week, believe in New York City, care deeply about what we are doing, and are simply the best in the business. We could not print these results against the tide of negativity and defeatism without the dedication and loyalty of the 300 plus SL Green corporate employees and another thousand plus who work in the buildings day, night, weekends, and holidays. We are extremely lucky to have such a diverse and talented team of professionals, and it's the biggest reason for our performance in the office sector over the past one, three, and five years. And it should be the deciding factor in making an investment in SL Green the knowledge that we can outperform in good markets and bad, and that we will always put the shareholders first in making strategic decisions. This year-to-date achievement illustrates something far greater than simply a market in recovery because we are vastly outperforming a still unsettled commercial real estate market. It is the result of a deliberate plan we laid out years ago to improve the quality of our portfolio by physically improving and amenitizing our properties, focusing our efforts along the Park Avenue spine in East Midtown, selling assets that didn't fit that profile, and then monetizing our best assets to fund our new development activity. What you are now seeing is the positive consequence of the execution of that plan, and I believe we are now on a path to seeing sequential quarterly improvement in our operating and financial metrics into the foreseeable future. When others gave up on New York, we believed. People said that the financial sector was picking up and moving to Florida, but what we've seen is significant sector growth right here in our hometown, fueled in part by the $12 billion of Wall Street profits in just the first quarter of 2024, and that's as compared to $26 billion for all of last year. Growth in South Florida and elsewhere doesn't mean contraction here in New York. In fact, it's been the opposite. Companies like Blackstone, Citadel, Wells Fargo, and Bloomberg are all expanding their footprint here, and it appears that JP Morgan is buying the neighboring building at 250 Park Avenue as they continue to report extremely strong profits. But the demand for space goes far beyond Park Avenue. And I think the best illustration of that is looking at our current pipeline of office leasing, which is 1.2 million square feet. This is after all the activity we announced yesterday, totaling 1.4 million square feet of leases signed to date. There's another 1.2 million square feet of identifiable leases pending, term sheets out for signature that we have in our sites. after that activity and interestingly more than 80 percent of that activity is not on park avenue but rather it's on you know radiating outwards through east midtown everywhere from sixth avenue on over to third avenue fairly evenly dispersed lots of mid-market deals lots of strength in the middle not just the big deals and uh i think it's you know one of the more exciting elements of what we have to look forward to for the balance of this year. You know, everyone wrote off retail in New York City, but you saw our release yesterday, and it very clearly is back. Retail is back. Yesterday, we announced that One Madison retail is now 100% leased, curated in a way that brings real value to our tenants at the building and to the residents of the Flatiron neighborhood. And naysayers wrote off New York as a global destination. But tourism is beating expectations again. Well over 60 million tourists expected this year in New York. Hotel average daily rates up 3% year over year. Occupancy is approaching 90% in Manhattan. And the result of this is because of limits on Airbnbs and conversion of some hotel properties to supportive housing. If this trend continues, Midtown is likely going to be under-hoteled again soon. There is no better evidence of this surge of tourism than right upstairs from us at Summit, where attendance numbers are up again this year over the outperformance attendance we had last year. It's just proving again and again that this has become one of New York City's most compelling destination experiences and was a contributor to our quarterly results and, you know, more to come on that. But I want to end on an even higher note. Today, I'm excited to announce that we have secured our first new summit global location and we are expanding to Paris. More details to come on that in the fall today. But today I can say to everyone listening in in Paris, a bientot. And see you soon. And thank you all for listening. And we'll take questions.