SL Green Realty Corp

Thank you everybody for joining us and welcome to SL Green Realty Corp's third 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 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 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 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 third quarter 2025 earnings and in our supplemental information included in our current report on Form 8K relating to our third quarter 2025 earnings. Before turning the call over to Mark Holladay, 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 Holladay. Please go ahead, Mark.

Thank you for joining us this afternoon to recap what was undoubtedly a very busy and a very productive quarter. As the Wall Street Journal reported just this week, the New York office market is roaring back, and you can see it across every aspect of our business. We have now signed more than 1.9 million square feet of leases to date just this year, and we are trading paper on leases that will take us well over 2 million square feet with two and a half months of the year still to go. These are extraordinary numbers coming on the heels of such a big leasing year in 2026. It was over 3 million square feet of leasing and one of our highest leasing years ever. So back-to-back years, extraordinary result. And as a result, we've increased our occupancy significantly quarter over quarter, climbing above 92% as of the end of September. And we're on track to hit our goal of 93.2% by the end of this year. I'm especially proud of the incredible momentum at One Madison, where three huge leases this quarter have brought occupancy over 91% on that development project. And we're on track to reach 93% lease by end of year, at which point we expect to have just a single available floor left to lease, putting us in a position to execute a significant upsize refinancing in 2026. And the market outlook for the remainder of the year is good with the strong pace of leasing we saw in Midtown Manhattan during Q3, expected to continue on into Q4 and beyond. Accelerating office to residential conversions combined with limited new construction is creating a scarcity dynamic in the high-end space market, which is expected to drive market vacancy rates lower and net effective rents higher. With tenant demand and rents continuing to rise, particularly in the Park Avenue corridor. Last night, we announced the acquisition of Park Avenue Tower for $730 million. This is a very targeted marketplace, acquiring a well-leased asset with rents considerably under market and where we see significant near-term upside from rapidly increasing rents. We add Park Avenue Tower to our growing collection of premier Park Avenue assets. One Vanderbilt, 500 Park, 450 Park, 280 Park, 245 Park, 125 Park, 100 Park, not to mention all those just off of Park. No one can come close to this concentration of premier properties along our Park Avenue spine, nor our track record of profitable acquisitions over the past five years. We saw the heightened demand for well-located Park Avenue and Grand Central assets increase long before the competition, and now it's truly paying off. Earlier in the quarter, we delivered on our goal of identifying a major new development site, acquiring 346 Madison Avenue and 11 East 44th. Across the street from 1 Vanderbilt, this is the perfect place to build the next great building on the heels of what we accomplished at OVA and OMA. At a time there is Very little new quality office inventory being delivered in Midtown over the next five years, so this is the exact right time we want to be launching on this office development project. We think we can get this done by 2030. Delivering right behind two projects we expect will be completed and fully leased well before our delivery date, Extell's 575th Ave and BXP's 343 Madison Ave, both of which are in advanced negotiations with tenants covering much of the space they have available in those buildings. And that basically leaves little to no competition for what we'll be delivering on our new project in 2030. We're looking at a smaller floor plate building than one Vanderbilt geared to boutique financial tenants paying on average over $200 per square foot. We'll have more on this project in December. when hopefully we see many of you at our annual investor conference. I should note that we were very busy in the third quarter also in our debt business, and particularly with our SLG opportunistic debt fund, where closings now stand at a billion dollars, with additional closings expected in November before we finally close the fund to new investment. I'm also pleased to report that we've commenced deployments out of the fund, which amount to about $220 million as we speak, which is anticipated to rise to over $400 million by the end of this year. We are also beginning to plan for additional fundraising strategies for 2026 that we'll discuss in more detail at our December investor conference. And finally, we successfully completed a $1.4 billion refinancing at Eleven Madison with our joint venture partner, PGIM, at a rate of approximately 5.6%. which we were very happy with that outcome, and it's reflective of a deep pool of buyers for sizable quality Manhattan office SASB financings. I'd be remiss if I didn't mention the disappointment we felt in not advancing in the state process for a gaming license. You know we put our heart and soul into Caesars Palace Times Square, and it was an enormous loss for New York City and and for the large coalition of community stakeholders that stood to gain so much from this project. Despite the outcome, we cannot be prouder of the enormous effort that the entire company put behind this proposal. From the start of the project, it reflected SL Green at our best, bold, community-minded, and rooted in New York. It would have improved Times Square, created thousands of good jobs, and served as an economic engine for every business in the area for generations to come. We truly did leave it all on the field, and I have no regrets whatsoever about our proposal, but many regrets about the outcome of a process that put so much power in the hands of so few. There should be at least one casino in Manhattan. I think that's obvious, and Times Square was the exact right location, but the process was designed to make that impossible, at least for the time being. positive outcome is that we know we have an extremely valuable asset of 1515 Broadway whether its future is as office or as an entertainment and hospitality use we have plenty of time to sort that out since the building is fully leased through mid 2031 and you'll be hearing more about that in the near future before I open the line for questions I just want to say that this is an incredibly exciting time in the city and at the doorstep of the AI industrial revolution and especially exciting time in our company, housing the companies that are the new frontier of demand, both in tech and financial services. You can see that we are executing our business plan for the year with ruthless efficiency, taking advantage of dislocations in the market and reaping the rewards of an ideally located portfolio of properties expertly assembled over the years. I know you've heard this from us before, but it's increasingly undeniable. Demand for amenitized core midtown assets is literally off the charts, and the lack of supply is driving up rents for the foreseeable future. With that, I'd like to open it up for questions.

Thank you. 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. In fairness to all, we please ask that you limit yourself to two questions. One moment as 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.