SL Green Realty Corp

Thank you, everyone, for joining us and welcome to SL Green Realty Corps' First Quarter 2025 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 predictors of future events, as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today. Additional information regarding the risks, uncertainties, and other factors that could cause such differences to appear or 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-GAP financial measures as defined by Regulation G under the Securities Act, the GAP financial measure most directly comparable to each non-GAP financial measure discussed, and the reconciliation of the differences between each non-GAP financial measure and the comparable GAP financial measure can be found on both the company's website at .slgreen.com by selecting the press release regarding the company's first quarter 2025 earnings and in our supplemental information included in our current report on Form 8-K relating to our first quarter 2025 earnings. Before turning the call over to Mark Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you. I will now turn the call over to Mark Holliday. Please go ahead, Mark.

Thank you. Good afternoon, everyone, and thank you very much for joining us today. Given all that's transpired in the global markets since our last call, I was especially happy with our first quarter's earnings that we announced yesterday. In particular, and as a result of the hard work of the entire SL Green team, the company's earnings for the quarter exceeded the street's expectations and our own internal projections by a significant margin. Our NOI was on top of our forecasts, our leasing results were well ahead, and our profits generated by our debt-related businesses were very strong. This should come as no surprise to anyone, given my commentary in December at our investor conference which focused on an opportunity-rich commercial debt market. I highlighted that new originations, secondary market purchases, distressed opportunities, the new debt fund, and our special servicing business was going to take center stage in And Q1 performance in this area is certainly an affirmation of that belief with much, much more to come. We laid out our thesis in this point in the cycle for making equity-like returns in credit investments, something that has been our stock and trade for over a quarter of a century. No one has made more subordinate investments on Manhattan office buildings over that period of time than we have. Particularly in the early years of a recovery, our realized returns are typically far higher than the average returns we normally experience, and we expect 2025 and 2026 to be no different. The recent volatility in the credit markets benefits this business and our new debt fund and substantial liquidity gives us the ability to selectively identify investments with attractive returns and protect the downside. In just the past nine months, we've closed on nearly $200 million worth of DPE investments with the more recent one slated for the fund, and we are actively negotiating on a pipeline of over $1.2 billion of new debt investments. To categorize our debt-related earnings as either non-recurring, one-off, noisy, or confusing is, in my opinion, to miss the point. Our debt platform is a meaningful component of who we are. Our expertise and track record in this area is well established. Given the opportunity set in front of us, I do expect that our debt-related businesses will account for increasing profits to our shareholders, and I expect we are already at the higher end of our guidance range, a range we will reassess next quarter with an successful in closing all of the business now in front of us. And that's not to say we aren't also concentrating on growing our equity portfolio. In the first quarter, we closed on the acquisition of 500 Park, and weeks later, we signed a lease bringing the building to 100% occupancy. Now we are designing an improvement program with elevated finishes and amenities to materially move the rents up as tenants renew and roll. Also in the first quarter, we bought out our partner in 100 Park, acquiring a 50% position on attractive terms in a building that is now 97% leased. We've owned 100 Park for approximately 25 years, and it continues to be a solid performer for the company. Finally, Summit One Vanderbilt was the number one intended experience of its type in the first quarter, according to a recently published report. In just over three years, the Summit has become one of the most sought after experiential attractions in New York City. I know there was a question raised regarding the impact that reduced international tourism might have on Summit's attendance, and I would simply note that last week we set a ticket pre-sale record with over half a million dollars of advance ticket revenues sold in one day. In closing, I'd just like to say in uncertain times, SL Green shines. Thank you.

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. In the interest of time, we ask that you please limit your questions to two per person. Please stand by while we compile the Q&A roster. And our first question comes from Alexander Goldfarb of Piper Sandler.

Hey, good afternoon down there. So two questions. First, Steve, can you just talk a little bit more about pre-built since it's a topic that we're hearing further from you guys from other landlords. Just curious how that has gone in winning tenants, what the economic rent potential is versus raw space, and how that's been going versus the market in general.

Sure. I mean, it's, you know, pre-builds, or also known as -to-suits where we do a custom build for a new tenant coming into the portfolio, have been around for a considerable amount of time. And I would say broadly speaking, in order to be competitive in the market, if you're transacting with a tenant that's called certainly 10,000 square feet or less, it's almost mandatory that the space be built or that the landlord is willing to build the space for a variety of reasons. Tenants want to take out the mystery of cost. They want to accelerate the decision or the timeline from decision to move in. And, you know, for us, having the expertise in-house with design and construction, and we're very well practiced at doing these pre-builds, I think it's a big competitive advantage to do the pre-builds in a way that we execute in a very high design manner and do it throughout on all price points of product.

And then the second question is, obviously, everyone's focused on tariffs and the impact on leasing. You know, everyone's trying to figure out their crystal balls. As you look back in time when the market has gone through sell-offs like we are, is there some sort of, you know, lag and you're like, you know, after three months of a market sell-off, you see the impact on leasing activity slowing down after two months? How do you, how can we gain comfort? Obviously, you've done well year to date, but how do we get comfort of how long the market remains disrupted in the stock market before, you know, there's a potential to start seeing discussions in your pipeline slow?

Well, you know, it's an impossible answer as to how long it would take to have absolute clarity, you know, and prior disruptions. It's really what is the cause of the disruption as to, is a function of how fast we see the impact in the marketplace. But I think what's most telling, and give me a second sort of tell the story, if you go back in our pipeline three weeks ago, so pre-announcement of tariffs, we had 62 tenants in the pipeline versus today we have 64 tenants in the pipeline. Of those 64 tenants, 44% of them have an expansion requirement as part of the deal that they're negotiating. Of the tenants that we replaced over the past three weeks, 18 tenants were replaced by 20 new tenants. And of those 18 that were replaced, 14 were replaced because leases were signed. So I only lost four tenants and those were done really because the tenant chose a different building or we elected a different tenant to replace that tenant for space we're negotiating. So point being, we haven't seen a slowdown yet. We haven't seen any commentary from the marketplace and we haven't seen any pullback from any decisions in our portfolio yet. And that I think over those three weeks gives a very good indicator of where, why we feel, you know, cautiously optimistic, but time will tell.

Thank you.

Thank you. Our next question comes from Nick Uliko of Scotiabank. Your line is open.

Hi, thanks. The first question is I was hoping you could just talk a little bit more about, you know, the trends you're seeing in the overall debt financing markets and, you know, if you have a sense for it. You know, I know the CNBS market was very strong heading into, you know, the tariff announcements and I think now it's mostly on hold, but any update on just sort of, you know, roadmap of how that could be functioning, sort of functioning better again? Thanks.

Yeah, I think, you know, with the credit markets in general, we certainly can expect to see some turbulence as a result of the macro environment across the country, but I expect New York City to mostly be immune from that. There is a fight to quality in moments like this and New York City has demonstrated an ability to stand out from every other market. At the end of the day, capital needs to be put to work by investors and our market is experiencing positive momentum as a result of a weaker U.S. dollar demand for tangible assets, the reopened CNBS market we've seen since the beginning of this year and prospect of rate relief and all that's paired with, you know, fundamental and sentiment recovery that we've seen that's really at a five-year high. Looking at the CNBS data, 2025 year to date, we've seen $6.9 billion of New York City office CNBS completed. That's versus zero in 2023 and $300 million in 2024 during the same exact period. And in addition to that, we've also already eclipsed the full 2024 levels. So on the balance sheet side, I'd say we saw recently the five Manhattan West deal get done at $1.25 billion and we're going to be watching closely the transactions at 300 Park, 590 MAD and 1345 6 in the coming weeks and use that to gauge how the markets are reacting from some of the macro news.

Yeah, I would just add that and distinguish what I think you're going to see in New York and the deals that Harry just mentioned is going to be more pricing related. I mean, you know, clearly pricing is gapped out, but that's not the same as what we experienced in 22 and 23 where there was just an absence of deals. There were no buyers. There's a lot of buyers. There's a lot of capital out there and there's a lot of capital that wants to put their money into CNBS. You know, the risk premium they may demand now is going to be higher and you'll see that I think, you know, in higher rates, the deal just got done this week at rates that probably are higher than what would have been done a month ago. But, you know, there's a dramatic difference in market stability when you talk about buyers who want more premium versus lack of buyers. And I think, as Harry said, in New York, you're going to see deals get done and there'll be price discovery and hopefully that price discovery will compress. As, you know, per Steve's comments, the market evidence is itself that there's still great demand out there for all this product. But, you know, there's no I wouldn't relate this to what we saw previously in prior years where there just, you know, was no activity.

All right. That's helpful. Thanks. And then second question is just I think, Mark, you said something about, you know, upward bias to guidance and I wasn't sure if that was just predicated on, you know, getting more sort of investments done on the debt side. I want to be clear on that. And then maybe on the other side of that, in terms of your FFO guidance range right now for the year, Matt, you know, if there's any downside protection we should think about, you know, if we're heading into a weaker economy or anything else, you know, do you still feel good about the guidance range there? Thanks.

Yeah, going in reverse order, certainly comfortable with where we are right now as we highlighted in December, you know, the balance sheet is very insulated. We termed out all of our debt last year. We're hedged on at all but three or four percent of our floating rate debt. So rates can move around and the markets can fluctuate and we're insulated there. So certainly comfortable from the downside. The upside bias is, you know, Mark talked about investment opportunities. We have some other stuff we're working on. Could result in in upward revisions. But, you know, we typically don't revisit that in the first quarter. We get at least six months of activity behind us and reevaluate. But, you know, the prospects are good as we sit here now.

Yeah. And not just debt related. I think that was part of your first part of your question. Is that all related to debt? No, we've got we've got like, you know, a lot in front of us right now. Um, equity debt fee oriented, you know, leasing deals working on this. There's a lot of contributors. And my point was simply if we get it all done and, you know, that's our goal is to get it all done. And, you know, we will need to sit and revisit. But, you know, well, that'll be a topic for three months from now.

All right. Thanks, everyone.

Thank you. Our next question comes from Steve Sackwa of Evercore ISI. Your line is open.

Thanks. Good afternoon, Mark. I know at the investor day and on other calls you've talked about wanting to try and secure a new high quality development site in Midtown. I'm just curious, given kind of what's going on in the macro and the uncertainty over tariffs and costs, how challenging is that to try and pencil out today? And, you know, is that something you'd still be looking at, say, this year? Or maybe that's something more for for next year?

I think it's completely delinked, Steve. You know, these development projects are five to seven year journeys. And, you know, when when you when we take a pen and pencil or computer to underwriting, you know, we are, you know, this is not a question of two months ago we were excited about development and two months later we're not. And next month we are. And next month we're not based on the stock market or or, you know, we're tariffs. There is a enormous scarcity of high quality office development sites that can be delivered over the next four or five years and any a city like New York that is, you know, that the pivotal CBD in this country and is growing and, you know, is reaching all sorts of records on employment, on Wall Street profits, on bank earnings. You know, there's a confidence we have in the long term viability of this market that we would absolutely welcome the prospect of developing a significant new site in core Midtown Manhattan in our market, you know, in SL green territory. That's that's for sure. And that hasn't that hasn't changed, in my opinion, or mine in the past three months. You know, my pricing goes back to what I said earlier, my on the bond question, my pricing change one way or the other. Maybe. Do I think rents have changed for that product? Absolutely not. In this building alone at one Vanderbilt, we have a constant flow of inquiries for expansion because we have great tenants here and elsewhere through the portfolio. And notwithstanding, you know, what you're seeing in the market, there's still companies that are growing and taking advantage of this market and need more space. This isn't anecdotal. These are these are tenants who are ringing, you know, ringing our doorbells and saying, you know, we need to grow. This isn't like modest growth. This is some of these requirements are significant. And the issue I have right now is not tariffs. The issue I have right now is delivering, you know, one and a half to two million square feet of brand new class, a one Vanderbilt like, you know, styled office space to, you know, the most sophisticated base of tenants in the country that want to grow. And I'm as committed to that today as I was in December.

Great. Thanks. I guess secondly, and I don't know how much you can comment on this, but just, you know, where are we kind of in the whole casino, downstate, you've seen a license plan and, you know, is that something that you still expect? I guess the state to kind of get concluded by the end of this year, or might that process get delayed?

This is Brett. How you doing? The process has been full speed ahead since December of last year when the state for the first time in four years reached out to all the bidders and said, we'd like you to start the environmental review process. That was new. We took it very seriously. Great sign. And we commenced immediately. We're an as of right project. There's two or three other as of right projects that are out there also starting their environmental process. We expect that given the amount of expenditure, the requests of the state to engage professionals for that review that June 27th will be the on track day to submit the license for the state's review. We're looking at from there a end of September local approval process and hopefully a year end award of that license. The state has acted much differently this year than it has in all four prior years. And we're very ready for it. We're excited. We're eager. We've been ready for the past two or three years and can't wait to launch out there publicly and get going.

Thank you. Our next question comes from Janet Gallen of Bank of America Securities. Your line is open. Hi.

Good afternoon. Thanks for taking my question. Going back to the active leasing pipeline, your press release noted 1.1 million square feet. Would you say they're kind of following the typical leasing deal timeline or is there evidence that corporate decision making is pausing or is it just kind of the tightness in the market? There's more urgency and corporates are tuning out the macro uncertainty.

You know, it's really a function of the types of tenants that we're negotiating with at a time. And I think there's certainly no sense of tenants feeling pressured to make an accelerated decision. And maybe there's, you know, they slow down a little bit because we're working on a bunch of big deals. But I don't think this is a material change in people's sentiment or how they're conducting themselves or how their third party consultants are conducting themselves. So I don't think there's really a lot of color commentary as to, you know, what we're seeing right now versus how it's been over the past several months.

Okay. And then on the free rents and TI's came down in 1Q. Can you talk a little bit more about how you kind of see that through the course of the year and what tenants are accepting?

Yeah, that's just really a function of, you know, the basket of individual transactions for the quarter. I think, you know, broadly speaking, concessions have been stable for really all through last year coming into this year. We haven't seen a material change. If anything, I would say, you know, there's a good chance in certain submarkets, like on Park Avenue and Sixth Avenue, where you see real pockets of strength in the Midtown Market, that you'll see some tightening of concessions. I don't know it's enough to really move the needle, but as certainly the face rents are going up, and I think, you know, we've seen the rents go up on Park Avenue, and I think the entire community is expecting Sixth Avenue rents to go up because it's been a tremendous amount of leasing and there's a number of large deals pending on Sixth Avenue. And that's going to drive face rents as we look into the rest of the year. So the natural extension after that is, you know, after rents go up, then they'll start to get pressure on trying to push concessions down. But I think it'll be, you know, some market by some market, not broadly across all of the Manhattan market.

Thank you. Thank you. And our next question comes from John Kim of BMO Capital Markets. Your line is open.

Thank you. I wanted to ask about a couple of your objectives for the year, which includes 2 million square feet of leasing and .2% year-end leased occupancy. So in the first quarter, you're ahead of the pace, but occupancy did go down. And I'm wondering, just given all the uncertainty in the markets today, if you still feel comfortable with those targets?

We're comfortable. You know, our budget, you know, our living budget at the moment is in excess of 2 million feet. And that's as of like an hour ago. So, you know, that'll go up and down. I feel pretty good about 2 million. We had a good start first quarter. We're already, I think, over 100,000 feet leased year to date. Well, April to date, quarter to date. And, you know, Steve's already talked about the pipeline. So, you know, look, we're going to monitor closely, as we always do, you know, the pipeline to, you know, evaluate trends and sentiment and whatever. But on the one hand, you've got geopolitical. On the other hand, you have tenants with real need for space, you know, and that's not abating that we see yet. You know, we did so much in the first quarter, you know, we would hope to be at around a million feet for the second quarter. And we think by year end, we could eclipse that 2 million feet. And, you know, a lot of that's just driven by return to office. You know, you had, you know, years of people, you know, on a hybrid work model. And, you know, now this is a competitive environment. People are back. People are focused. People need space. And it's like, you know, we're just seeing that all over the market. And, you know, if ever there's a moment we don't, you know, we'll be the first to tell, you know, you guys and your shareholders. But at the moment where, you know, we're feeling good about both the occupancy level and the volume.

Okay, switching gears to 500 Park. I realize it wasn't a huge lease, but you got it to 100% occupancy. And I'm wondering what that implies for the mark to market of that asset. And if there's any update on this .8% cap rate that you acquired it at.

Well, so on mark to market, I think we have to look at it in two ways. The lease we signed relative to, you know, both the in place and the current market. But more interesting to me is where those rents will be after we finish a 20 million dollar plus improvement program that we have commenced. We've selected our architect. We're going to be doing work in the plaza, where in the amenity lobby, some other improvements, bringing sort of elevated hospitality to the building. And, you know, in that regard, you know, we're projecting rents up off of today rents by at least $15 a foot on average, you know, for what I'll call the, you know, the repositioning program. But if the question is specifically, where was that lease relative to market? So

that one, I don't think had a mark to market calculation because it was filling vacant space at the time of acquisition. But I can tell you that the rent that we signed on that lease was $10 a foot higher than the prior sponsor was asking for the space the day before we acquired the building.

And where does the yield go to? Compared to the 6.8 that you bought it at?

We sit today at about a 7.2%. That 6.8 you referenced from our investor conference is now 7.2%.

Got it. Thank you. Thank you. Our next question comes from Ronald Camdom of Morgan Stanley. Your line is open.

Yep. Two quick ones for me. Just starting on the disposition targets of a billion. Just how are you thinking about sort of that? What are you seeing in the markets? Thanks.

Yeah, look, the plan is on track. And we feel confident based on the meetings and negotiations we're having. I think it's important for everyone here to realize that, you know, our team has navigated through the past five years of COVID, negative office bias, and high interest rates. And through that period, we completed approximately $9 billion of gross sales at share at a blended cap rate of .3% and $1,400 a foot. Just demonstrating that our portfolio is liquid and investible in even the toughest of markets that you can imagine. So yeah, sure, there are challenges in front of us as a result of some macro conditions, but it's far less than what we've experienced the past five years. And so we're on track for the plan this year.

Great. And then my second question, just going back to that million one square feet of pipeline, just a little color on how much of that is non-financial, right? And then the second piece of it, how much of that is outside of Park Avenue and Grand Central, which have been pretty strong?

Well, let's see, the easy one is the first part of your question. There's a quarter million square feet of TAMI tenants in that pipeline, which I think is pretty notable because that's probably as much square footage as we've seen from that industry over the past couple of years. Within our portfolio. And certainly TAMI, broadly speaking in the market, has doubled the number of active tenant searches year over year. And then as far as Grand Central, the majority of our portfolio sits within the Grand Central area. So it's safe to say that the majority of the pipeline is within the Grand Central market, which has proven to be one of the one or two most active sub markets over the past year. Thanks so much.

Thank you. Our next question comes from Blaine Heck of Wells Fargo. Your line is open.

Great. Thanks. Just a follow up on the last question. Can you give a little bit more color on the profile of the kind of most active TAMI tenants and whether that activity is driven by relocations from other markets or kind of organic growth from tech and media companies that already have a presence in the New York market?

All of them are relocations. And as best I recall, all of them are driven by growth. And in that growth, some of those tenants are AI related businesses. And I don't know what other color I can give you on it. But yeah, I mean, it's growth, it's relocation, their household names, and we're seeing an AI name attached to a lot of these tenants.

Got it. That's helpful. And then maybe a different angle on tariffs and uncertainty. I guess, can you talk about the profile of potential capital partners that are showing interest in JD Deals or even the debt fund at this point? And in particular, whether there's been any notable change in demand from foreign investors given the recent macro uncertainty and trade disagreements?

We haven't seen it yet. I would note countering what you just mentioned is the weaker US dollar. One thing that we experienced in 23 and 24 was the US dollar moving against us for those two years. With the dollar getting weaker, it makes it much easier to have some of the conversations we're having. On the fundraising side for the fund, our group of investors are institutional, both domestic and international, representing almost every region across the world.

Great. I guess the main point to make there, I think, if I understand your question, is we have not seen a drop off in foreign investor demand for the debt fund or for product. With respect to the dispositions, the proof will be when we close them. And we just started the year, so we're in the process of doing that and hope to knock those off in the second half of the year, contract first half, close second half, which is our usual rhythm to that. But as we sit here, we look at the short list for the many different sales and JVs we're working on, I would still say a lot of the usual, I don't want to say suspects, our usual relationships are still steadfastly on that list. So, you know, more to come on that on the next call, but we've not seen any drop off of interest there.

Very helpful.

Thank you. Our next question comes from Amateo Okusanya of Deutsche Bank. Your line is open.

Yes, good afternoon everyone. On the investor day, there was a lot of emphasis around office to resume conversion and the opportunities in New York and

the war.

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not hearing you, Tayo.

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can. Okay. Sorry about that. So we're seeing on the investor day, there was quite a lot of emphasis on the office to resume opportunity in New York, how regulation was changing. Could you just give us an update in regards to that and how you are thinking about opportunities in your portfolio to do some of our potential more office to resume conversions?

Yeah. So, you know, I would say that as we sit here, you know, three and a half, four months from from our investor conference, I would say the volume of announced or planned deals is anywhere between consistent or ahead of where we were and what we showed back in December. There's a lot of conversion candidates, particularly downtown, where, you know, the prices of the bricks and mortar and land enable conversion on an economic basis. We're seeing it on Third Avenue, you know, our own project, 753rd, as well as the old Pfizer headquarters, as well as

675th and 767th, which are both recent trades for office to So, I

mean, there's four deals in that Third Avenue market. And you can imagine how quickly a market for office can tighten when you take, you know, four, you know, very viable office buildings and take it off the market, which all four of those are essentially off the market now for, you know, for office tenancy. And, you know, that has a very firming effect, if you will. There's going to be a lot in Midtown South as well, due to, you know, the zoning changes that were accomplished there as part of City of Yes. And I think it's a, you know, I think it's a significant and one of those understated or under, you know, not well understood trends that we'll look back on in two or three years when this market, you know, really firms up and you see, you know, occupancy levels drop to, well, vacancy levels drop to single digits. And a big part of that, you know, half of that's going to be net absorption and growing demand. Half it's going to be a residue conversion. So I think it's, I think it's taken root, you know, there's projects underway, you know, like ours, there's going to be thousands and thousands of units delivered. And I think ultimately, in excess of 25 million square feet of office is going to be a lot of work. It'll take time to complete and deliver, but it's fairly instantaneous in terms of its exit out of the inventory of available space to lease.

Thank you.

Thank you. Our next question comes from Seth Berge of City. Your line is open.

Hi, guys. Thanks for taking my question. Are you guys seeing any larger requirements for the remainder of One Madison? And you touched a little bit on the supply picture, but can you talk about the demand for Midtown South?

Yeah, you know, we've seen a marked change in tour activity and some early proposals that are on the table right now. I was sharing with Mark, I don't know, a week or two ago that the number of qualified large prospects that have either toured or are in a diligence process focused on One Madison just over the past 30 days is probably more than we saw all of last year. So, you know, I don't want to get too far out over our skis, but it certainly feels very promising at this moment compared to any time over the past 18 months.

Thanks. And then just on the summit, kind of what percent of visits are international visitors? And then kind of, can you talk a little bit about what the booking window looks like for that?

Question is, what percent is international? You know, look, I don't want to mislead. I don't have those stats at my hand right now. I think traditionally it's about two-thirds tourism and one-third domestic. That's a very high domestic attendance level for, when I say domestic, I'm talking tri-state area, like local. It's like a third local, it's like two-third tourism. Within that tourism break, I mean, the preponderance is domestic. But, you know, when I go up there, you know, it feels to me like almost 35, 40 percent is foreign tourists. So, I don't have good stats on it. Does anyone else have here? A lot of repeats. Yeah, a lot of repeats, for sure. You know, it's an unusual in so much as people go back and back. It's only been open three and a half years. We've had people come back five, six, seven times. Because it's not an object. You know, it's an experience, it's an attraction. You know, it's a destination and it's thrilling. So, for those that know it, you know what I'm talking about. For those that don't, you should get there right away. You know, in 2024, it was about closer to 50 percent foreign visitor. I'm just getting that stat sent to me right now. So, a little higher than I said. But, you know, a good balance and we see no drop off in any demand or change in composition through the first quarter. Thanks.

Thank you. Our next question comes from Vikram Mahalcha of Masuho. Your line is open.

Thanks for the question. Maybe just building up on the summit question in New York. I guess, you know, just can you talk a little bit about the opportunity in Paris where you are, potential timeline for execution?

You know, a lot more to come on Paris between now and end of year. Hopefully, with some imagery that we'll be able to share with you as well, which I think everyone will find extremely exciting. But Rob Schiffer and I just, you know, came back from Paris about two weeks ago where we spent a lot of time with developers there and the site and the construction and our team. We have a big team that's already been assembled in Paris of engineers, designers, expeditors, etc., etc., working on our taking things from conceptual to design development. We expect to have possession of the floors for summit Paris sometime in Q1 of 26. And we expect to be open to public sometime at the end of Q1 27. So to me, that's right around the corner because there's so much to do. We're going to be putting a team and the staff together out there that will be managed and run by this amazing team we put together here in New York with obviously, you know, local senior people on the ground and summit. We've started some of that hiring already. I can only tease you with the fact that the early artistry coming out of Kenzo's shop is staggeringly beautiful. And it's going to be in the spirit of what we have upstairs, but very different, very unique, I think a nod towards Parisian abstraction. And I am really excited to be able to cut that ribbon in 27.

Great. And then just on the FAD, FAD guidance, the investor day kind of relative to 1Q, can you just remind us sort of as we go through the year, I'm assuming there's more leaving you did that's converting to cash later in the year? Is there like a ramp up as we go through the year anything kind of one time that we should model in for the rest of the year?

Yeah, two components of FAD over the course of the year, as we highlighted in a recent presentation, physical occupancy or commenced occupancy, whatever you want to call it, economic occupancy is increasing every quarter throughout the course of the year, such that we end up going from around 88, 89% at the end of last year to over 92% at the end of this year. So that'll help the revenue side on the cost side, obviously as the space is built, the build out costs go down. That said, typically our capital spend accelerates into the end of the year. It's lightest in the first quarter and heaviest in the fourth as the projects get completed towards the end of the year. So the FAD number for the first quarter was a solid one, better than our expectations, but for the full year we're still seeing roughly in line with what we guided to in December.

Thank you. Our next question comes from Peter Abramowitz of Jeffreys. Your line is open.

Thank you. Yes, just wanted to ask quickly about 11 Madison. You have the expiration in September. Just wondering if there are any kind of comparable deals you could point to to give us an idea of maybe you would expect in the refi market and any comments on if you're considering doing something in the CMBS market rather than a bank. Yeah,

sure. I would sort of say this is an active negotiation and deal that we're working on now. So I'd prefer not to comment on it with more to come later this year. Obviously we got our five billion dollar plans on last year. We have a lot of reps now as to how to work with existing lenders and the market as to obtaining efficient financing for these assets. And I would say just stand by and we'll update you into the next call.

All

right, that's all

for me.

Thanks. Thank you. This concludes our question and answer session. I'd like to turn it back to Mark Holliday for closing remarks.

Okay, great. Well, appreciate all the questions. And like I said, I wanted to just leave you with the notion that we're working very hard on all these different opportunities in front of us, but also very cognizant of the state of the markets right now. And we're going to stay very nimble and be very reactive to both opportunities, you know, making sure we keep the buildings as least as possible and get the occupancies up. And, you know, Matt will continue to steward the balance sheet. So I think we're in great shape at this moment in time, really as good as I could have asked. And we look forward to speaking to you again in three months.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.