Thank you everybody for joining us, and welcome to the SL Green Realty Corp second 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 beliefs as of today. Additional information regarding the risks, 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 G under the Securities Act. The GAAP financial measure 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 second quarter 2023 earnings, and in our supplemental information included in our current report on Form 8-K, relating to our second quarter 2023 earnings. Before turning the call over to Marc 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 like to turn the call over to Marc Holliday. Please go ahead, Marc. Thank you and good afternoon, everyone. Welcome to SL Green's earnings call. I want to thank all of you for joining us today as we review the second quarter's results and discuss our progress on our 2023 business plan. I want to begin by commending the entire SL Green team on a very strong half of year, this first half, particularly as we were confronted by the dual challenges of a partially remote workforce and increasing interest rates. Headwinds notwithstanding, our team added to the year's accomplishments in meaningful ways during this second quarter. No one in the business works harder for shareholders than the men and women of SL Green, who lead by example and show what can be achieved by a 300 person corporate workforce that is present, productive, and positive every single day of the week. By the numbers, it was a solid quarter, as our FFO was above expectations. We leased another 410,000 sq ft of office space. Our same store NOI increased by 3.6%, and our same store office occupancy at quarter's end was slightly ahead of our original projections back in December. These performance stats are in stark contrast with the negative drumbeat of media coverage proclaiming the demise of office space. We continue to see demand building as businesses who hit the pause button during the prior three years are more and more frequently acting on plans for future growth, particularly in the finance sector, which accounted for about 38% of market leasing during the second quarter, as well as business services, healthcare, and education sectors, all of which continue to be active and all of which help to mitigate the pause in the tech sector. While overall leasing in the market in the first half of the year was below historical average, SL Green has garnered more than its fair share and has now entered into year-to-date leases totaling 950,000 sq ft of space leased. We are trading paper with a lot more tenants, evidenced by our 1.1 million sq ft leasing pipeline, more than 2/3 of which represents new leasing activity. Midtown continues to outperform with the lowest availability rate and the highest leasing volume among all Manhattan submarkets. This affirms our core property strategy and should enable us to gain occupancy during the second half of the year from what we believe to be our current low point. However, the financial stats only tell part of the story, as significant progress was also made on the property front. Of course, the highlight for the quarter was the completion of our joint venture partnership with Mori Trust. The transaction culminates years of relationship building, affirms the global allure of investing in trophy assets in prime corridors, and now fully resets ownership and capital stack in what is a case study of opportunistic investment, enforcement, and recapitalization of an important asset on Park Avenue. We continue to evaluate and refine different redevelopment scenarios and hope to commence physical work towards the end of this year. Want to acknowledge the extraordinary efforts of our Chief Investment Officer, Harrison Sitomer, who was backed up by Young Hahn, our SVP of Investments. They literally worked day and night for months on end to ensure the successful completion of an important component of our business plan. This is our first partnership with Mori Trust, and they have already proven themselves to be excellent partners. We are making great progress on other fronts as well. At One Madison, we now believe we can obtain a TCO for the project in September of this year, a full three months ahead of schedule, and open our doors to tenants in the second quarter of 2024. The ability for us once again to deliver ahead of schedule and under budget, is a testament to the efforts of Robert Schiffer, Robert DeWitt, our amazing Head of Construction, and John Krush, our Project Executive, along with our partners at Hines. Additionally, it accelerates the receipt of $577 million from our partners on the project, which is triggered upon the TCO of the project later this next quarter. I'm also pleased to report that during the second quarter, we topped out 760 Madison and began marketing that project. The project is absolutely spectacular. Excited to show it to shareholders who have not yet seen it. Please walk by, check it out. It's already impacted the skyline in the historical district of Upper East Side, Madison Avenue, in a very positive way. It's been extremely well received by the market. We're proud to have, you know, initiated this project and fostered along with our partners at Giorgio Armani. We already have several units under contract, with significant interest on the balance of the units at prices which will be market leading for Upper East Side condos, a testament to the power of the SL Green and Giorgio Armani brands and vision. We expect to turn over the retail to Armani by end of September. Rent would start right away. First closings on residential units will commence in June of next year, with all net proceeds of sale available for use by us, as there is no indebtedness against the project. We'll have more commentary on the sales effort and pricing metrics on our earnings on our next earnings call, which I guess is in October. Finally, we received our TCO for 15 Beekman this month and plan to turn over the project fully to Pace University in August. The props here go to the SL Green team of Peter Flynt, John Hefferon, and Jason Pastuzyn. If that weren't enough, a reminder that in April, just after our last earnings call, we closed the refinancing of 919 Third Avenue, proof that the credit markets are still available for the highest quality office assets and reputable sponsors. The first half of the year is now in the books, no rest for the team. We're going to continue to forge ahead through the rest of the summer to set the table for a successful second half of year. Management is completely aligned with our shareholders. We will work hard to create value, generate earnings, and protect the dividend. Thank you. Operator, we can take some questions. Certainly. Ladies and gentlemen, if you would like to ask a question at this time, please press star one one on your touchtone telephone. Again, for any questions, please press star one one. We do ask that you please limit yourself to two questions. One moment while we take our first question. Our first question will come from Michael Lewis of Truist Securities. Your line is open. Great, thank you. My first question is for Matt. I want to ask about your debt coverage ratios, particularly the fixed charge coverage ratio, relative to your covenants, because it keeps coming up in conversation. Your fixed charge coverage fell to 1.7 x this quarter, the covenant's 1.4 x. Can you just maybe discuss the mechanics and how close you expect that ratio to get to the covenant over the next two quarters? Yeah, sure. I've read some of the commentary about it. I'm, you know, somewhat surprised that it gets that much attention. It's a pretty simple calc. It's consolidated only calc. This is just the covenant, and it's been impacted, one, by rates. Rates are up, but also been impacted by 245 Park being a wholly owned consolidated asset for about three quarters now. Now that that is a JV, it rolls out of that calculation, and that in and of itself improves the calc. You know, we obviously watch all of our covenants and our metrics very, very closely and are not as fussed about that one as people seem to be out in the market. Great. Notwithstanding a big move in rates, I guess, I mean, should we expect the coverage ratio to improve from here? Is it troughing, or do you think it gets a little tighter before it goes back up? It'll get tighter before it gets better because the effect of 245 has to work its way through as a trailing twelve calc. It goes lower before it gets better. Just by having 245 in the JV, as a JV, that alone improves it because that was a sub 1 coverage asset. Okay, got it. Thank you. My second question about portfolio occupancy. You could correct me if I'm wrong. I think you said at your Investor Day in December, you'd trough around 90% in 2Q and rebound to about 92% in the second half of the year. I think what we're talking about is your lease percentage, which was 89.8, so just about exactly what you predicted. My question is, you know, do you still expect to reach that 92% this year, or has that expectation changed? Maybe you could tie in, you know, I know the leasing pipeline had been building in the early part of the year. You know, what are you seeing on kind of conversion and turning that into leases? Yeah, just want to make sure I understand the question. I mean, I think we were $0.898 or something for the quarter. We expect that to be a low point. I think I said that in my commentary. Yeah. We expect to gain occupancy from here, you know, regardless of which direction the market goes, just based on our pipeline and visibility. I mean, you know, we set out 21 goals a year. They're all stretch goals. You know, we never make all, but we generally make, you know, most or certainly more than half. You know, we're going to do everything possible. I forget the exact metric on the occupancy stat for the year was? 92.4. 92.4. You know, we're going to try and end the year certainly, you know, there, as close to there as possible. We've got a big pipeline. If everything falls into place, then, you know, I think we have a chance of doing it, and if it doesn't, we'll be damn close. I mean, that's why we call it stretch goals. We don't make them easy. You know, to be anywhere above 90 in a market that's, you know, 18% vacant, I think is enormous testament to Steve Durels and his team. Thank you. One moment for our next question. Our next question will come from Steve Sakwa of Evercore ISI. Your line is open, Steve. Great, thanks. Good afternoon. Mark, maybe you could just touch on the dispositions and, you know, what, you know, what your expectations are for other further sales at One Vanderbilt, you know, what your plans are potentially for additional sales at 245, and maybe other assets that you've got on the market today? Well, you know, I think our big focus now is on One Vanderbilt. The, you know, the reception there is very good, as you would expect. You know, I consider One Vanderbilt, just objectively, although it's hard not to be biased, you know, one of the, you know, best office buildings of its ilk, you know, in the city, and it's got an amazing blue-chip rent roll. It's got great embedded financing, low rate financing in place. It's just a wonderful asset, and as you would expect, the reception in the investment community has been high level of interest, and I'd say that that's gonna get a lot of our attention now through the end of the year. That's that. On the, on the One Madison front. I'm sorry, on the 245 Park front, which I think is the other asset you mentioned, I don't know. I think, you know, the redevelopment program that we are designing and working through is so good, and I think now, with the leasing, being probably ahead of where we expected to be at this point, both in terms of Steve, the leases we signed with, give me the leases, you know, 245. EQ. EQT. 75,000 sq ft, and then we expanded by 10,000 sq ft. Annual growth. Annual. Yeah. Okay, we have others pending. We're trading papers. Six proposals out. Six proposals out. You know, not unlike One Vanderbilt, where we initially went out to sell, I think it was down by up to 40%. We wound up selling 30%, now we're going out for an additional 10%. We may do the other 25% towards the end of this year. We may hold back and get some more leasing done. We'll see. Okay. I'm just wondering if you can provide any color on the 625 Madison situation. I know, there's been a lot of back and forth with different defaults and the ground leases and the land position. Is there anything you can sort of provide us on that front today? It's always, you know, until there's some ongoing litigation, surrounding this asset, you know that there was a rent reset. I think we talked about on the last call or no, was that? It happened after the last call, but we disclosed in our Q. In the Q. Okay. There was a rent reset. It was somewhat higher than we had anticipated, although, you know, far, far below, I think, what the fee owner had been putting into the market at that point, which was actually very deleterious to our position because there was discussions of rent levels of double or more, which were, you know, really never to be the case. You know, we took a write-down on the leasehold portion of the asset in this quarter. You know, on the other side, you know from previous commentary that we have a mezzanine position on the fee, which has come due, and we'll see how things shake out there. There is a foreclosure date scheduled for August 8th on that asset, so we'll know quite soon how things will shake out there. One moment for our next question. Our next question will be coming from Alexander Goldfarb of Piper Sandler. Your line is open, Alexander. Great. Good afternoon. Thank you. Marc, in your end of your commentary at the start, you said, you know, that you guys are working hard on and to protect the dividend. You know, just wanna explore that a bit more. I know, Matt, you always say: Hey, dividend gets reassessed at the end of the year, and you'll probably tell me the same thing right now. You guys seem to be on the plan for this year. You've done the 245 sale. Seems like 245 leasing is going well. One Vanderbilt is next up for disposition. Doesn't seem like anything's out of whack. Should we take your comment, Marc, about the dividend, that we should think about the current level being maintained into next year? Was the comment more just a holistic point that, hey, you guys were in charge of shareholders' capital, you husband it to the best that you can, you do everything to preserve, the dividend, but obviously, you know, things could change. I'm just trying to understand which way to read the comment. Okay, well, yeah, that's there's a lot of ways I guess you can read it. The way, the way I meant it to be, because it's the way we approach it and believe in the dividend is, I guess, you know, akin to what you just said, Alex, which is that, you know, we think when people invest in SL Green and buy our stock, it's a, it's a blended play. People want current return, and they want evidence of our ability to, you know, be able to generate, you know, cash flow, either through ordinary operations or gain on assets, and, you know, be able to reward shareholders throughout the year with a dividend, in addition to, doing our redevelopments and developments and creating growth and driving, share value. You know, in most years, that's reflected. In some years, like we have today, where the market sentiment is very negative, you know, we just work our way through that. I think what I wanted to, you know, state, is that we believe that a dividend is an important component of the overall investment thesis for anybody who invests in the stock. We all own the stock at the managerial level. For most of us, it is the largest, if not almost the exclusive source of our net worth, is the stock that we own. We want to create value, and we want to create cash flow and see distributions in the form of dividends. We are, you know, very comfortable with where the dividend is today, given the earnings that we're generating and the gains that we're generating on some of these very important sales. We'll do next year's business plan next year. You know, we'll have a sit-down in November, December, and we'll roll that entire plan out with our objectives and our earnings levels, et cetera. Suffice it to say, which is what I said earlier, is, you know, we take all of those points very seriously, and our goal is as best as possible to, you know, maintain the levels as much as we can. Okay. The next question is on compensation. You know, every year it, you know, for whatever reason, you know, it seems to always be a big topic ahead of the shareholder meeting. This year, you guys put out some really interesting data just showing the fact that, like, Marc, you know, your comp was 40% lower than the stated value, the rest of the team, 30% lower. Here's the rub, is that shareholders are sort of disserviced because you guys expense 100%. You realize, you know, 30% or 40% less than you're expensing. You know, people obviously don't get paid. It's sort of disrewarding. Is there, is there something better that, like, the consultants or people can put in place that better ties, you know, you guys to performance, but something that actually is more directly correlates, not only to you guys being paid for results delivered, but also to the P&L? Because right now, FFO is being penalized because you know, it's not paying. It just seems like the current system doesn't seem to be an ideal one. Just, I didn't know if you guys have thoughts around that, but I thought I'd ask. Got it. I'm gonna let Matt address the accounting issues with respect to that. I'll just give you the philosophy is, at the top levels of the company, our EVPs, and, you know, even down to the SVP ranks for sure, we're big believers in creating the alignment and having a large portion of total compensation in the form of stock. You know, in some cases it's a very, very high percentage. I don't have it at my fingertips, but, you know, in some of our cases, it might be 75%, 80%, 85% of our total compensation, and in other cases, maybe half, but in all cases, material. I think that makes sense. You know, I mean, if I were, you know... I am a shareholder, as a shareholder and as, in all my different hats I wear, I think that it is the best at creating the alignment I referred to earlier. You know, I don't see us moving away from what I would call, you know, proportionately more stock compensation as you move up the ranks as a component of total compensation. How those plans are structured and the charges that are taken upfront versus charges that could be taken later, fixed charges, variable charges, I leave to Matt. Yeah, you make a good point, Alex. I mean, the challenge with the accounting for these plans is, once the charges, or the cost of the plans from an accounting perspective, are established, day one, they do not change. The plans are valued. We're talking, you know, stock plans or outperformance plans, which have, you know, multi-year measurement periods, investing periods. The accounting rules say you value that plan day one, and if it's worth full value to the recipient at the end, the accounting charge is what it is. If it's worth zero or close to zero to the recipients, the charge is still the same. Of late, these plans have not been paying anywhere near what they're expected to, so they're not a retention tool, but the charge is still flowing through G&A, and more than 50% of our G&A is non-cash, primarily related to stock-based compensation, because we do believe it's an important part of the program. The challenge is finding the right form of stock-based compensation, so that the expense to the company is mitigated and actually more closely mirrors the benefit to the recipient, because these plans, you know, I'll say it again, largely hit expense in a disproportionate way in this environment, than they benefit the recipient. Thank you. One moment for our next question. Our next question will come from Tom Catherwood of BTIG. Tom, your line is open. Excellent. Thanks so much. maybe one for Steve to start out. nice uptick in leasing, a percent leased a number of your buildings. One that jumped out to us was Graybar, and I this probably, you know, reflects the pickup in small tenant demand that you've referenced over the last few quarters. On the other side of that, what's the market like for large block demand right now? Are there specific submarkets or buildings in your portfolio that are garnering more of that large block demand? Yeah, it's a great question. Because, you know, what we, what we saw in the first half of the year, in particular, if you read a lot of the market reports from some of the brokerage houses that are out there, is that, you know, leasing overall velocity in the marketplace has been very modest year to date, despite the success that we've had within our portfolio. A lot of the leasing leases that have been signed this year have really been on the smaller side of the market. We started off the year with very few larger size requirements active in the market. Having said that, in the past 30-45 days, we've seen a lot of increase, both in tenant tours and in proposals that we've received, for larger sized tenants. That's the good news. You know, just to put a little meat on the bone, we've got 16 active proposals that we're trading paper with right now, that range between 45,000 and 300,000 sq ft. Eight of those proposals came across our door only within the past two weeks. Only three of those 16 proposals, of good sized tenant requirements, are in our 1.1 million sq ft pipeline. It shows you there's a growing wave of larger tenants that have reentered the market, and hopefully that's going to pay off for, you know, better leasing success for the overall marketplace, and certainly within our portfolio as we go into the second half of the year. Got it. Appreciate that, Steve. Then kind of second one for me, maybe Marc, over on One Madison, you mentioned the early completion and how that gets you access to your JV partner's contribution, sooner rather than later. What kind of two-parter there? First, when is the new expected TCO date? Second, in the press release, you mentioned restructuring the loan so that you could invest more in amenities and invest some of the savings. What's envisioned amenity wise, and kind of what more does that building need from an investment standpoint? Okay, first question, I think the original completion date was December of 2023. That was for TCO. We moved that forward and later, you know, when we kicked off and got our GMP under our belt a few years ago to November of 2023, and then we internally kind of felt like we can maybe hit October. Now, the team is pushing hard for September, middle-ish to end of September. When do we expect it? You know, we expect it as soon as possible. I don't know we're aiming for middle to end of September. I hope we get there. We should get there, but you got weather and all sorts of other issues. We should get there. Regardless, the bigger point is, we ran a great project, we're at the, you know, final, whatever, two, three, four-yard line, almost done. Property looks great. We're way ahead of schedule, thanks to the good work of the people I mentioned and hundreds or thousands of others who worked very hard to get the building to this point. The primary mission is get the job done right, but the secondary mission is get it done, you know, expediently, so we can, you know, button it up and get tenants moved in and open the building and have it be a great addition to the neighborhood. In terms of the amenities, I think we had something on the order of $60 million of construction cost savings. That was, you know, the ultimate cost of the project that we are now projecting relative to the original GMP. A lot of saved contingency and other components, which is great. Some of that obviously is being retained. Some will go to defray higher interest expense. We took a very significant amount of that, and we are constructing an amazing rooftop, indoor-outdoor rooftop venue that I think will rival some of the great rooftops in and around the city. That'll be there as both a tenant amenity and also as some very attractive and exclusive event space that can be activated evenings and weekends, as well as I mentioned earlier, being, I think, a world-class amenity for the building. The amount of investment we're making in One Madison amenities overall, that which was planned and that which we added, exceeds that of what we did at One Vanderbilt, and I think One Vanderbilt is recognized as having an amazing amenity program. This, you know, at its completion with the market and the Daniel Boulud steak place and an exclusive tenant commons in the Chelsea Piers four-level fitness center, and upstairs, this kind of, you know, pièce de résistance, this Rockwell, David Rockwell group-designed rooftop amenity in the aggregate is going to make One Madison just an amazing destination and experience. Got it. Can't wait to see it. Thanks, all. Next summer. One moment for our next question. Our next question will come from John Kim of BMO Capital Markets. John, your line is open. Thank you. I suppose you had your mic drop moment with the 245 Park sale, now that that's done and you're expecting proceeds in One Madison, potentially a JV sale at One Vanderbilt, in your view, is that enough to avoid a credit rating downgrade from Moody's? You know, it's a question I can't answer definitively because, you know, they have moved somewhat as a result of the market, not just as a result of us. I'll say this as it relates to the ratings, I mean, we're focused on a business plan that puts us in a financial position that we feel is prudent and we want to be in. It is not a stated objective to, you know, satisfy Moody's or any one of the other rating agencies. You know, our ratings are important, but the fixed income market has not been a reliable source of funding for us. You know, the ratings will come back as a byproduct of an execution of the business plan, but it's not the goal of the business plan. you know, if Moody's makes a move, that's fine. If they don't, that's fine as well. We think we're executing on a prudent business plan for our business and for the shareholder base. I would add to the mic drop moments, not just capital transaction, but leasing of space. I mean, you know, we're at these levels with increased interest costs and, you know, a vacancy rate that, as I said before, was our low point. We, we now think we're, you know, gonna be able to turn the tide and start building occupancy again. As we do, that has as much or more effect, if you will, on an improving ratio as any of the other things you mentioned. You know, I would say stay tuned. We've got a big pipeline, and we think the market is starting to, you know, come around, and we're believers in this market, and, you know, that'll be as big a help as anything. Another asset that you've had some leasing success with, I think with GIC, was at 280 Park, but there are still some tenant departures, scheduled and a debt maturity next year. How confident are you that you'll be able to refinance that asset on economically viable terms for you? Andrew, you want to, you want to address, Again, I know you've been involved with 280. Yeah. The refinancing. Fortunately, 280, you know, sits in the hottest submarket in Manhattan, Park Avenue Corridor. We have a strong interest in the space that's coming available, and we're, you know, constantly in discussions with the existing lenders on the property and, obviously other lenders around the world, like we accessed for 919 Third Avenue. We think we have a great business plan with Vornado on that asset. You know, Steve and Glen Weiss are working on it day in, day out, and, you know, I think there's some very positive developments that are possible, given the building's location and its, you know, the renovation we did there. And you know, it's getting a lot of attention because of the profile of the asset, and I think we're confident that there's a good future for us with that asset. Appreciate it. Thank you. One moment for our next question. Our next question will come from Blaine Heck of Wells Fargo. Blaine, your line is open. Great, thanks. Can you talk in general about asset pricing in the market? What sort of cap rates and IRRs are potential investors targeting, and how large is the bifurcation between well-positioned assets, like 245 Park versus more commodity-type buildings? Andrew? Well, I think we've probably never seen a gap as high as currently in terms of, you know, well-located and amenitized buildings, versus, you know, more called Class B and C buildings, which, you know, fortunately, we really have rotated the SL Green portfolio out of. You know, we still have submarkets that are struggling, the Financial District, for sure. You know, Third Avenue, just a lot of inventory, but investors are very attuned to that. I think you saw that with the 245 Park transaction. You'll see it in further transactions where they're willing to, pay up for the stability of, you know, improved amenitized assets. You know, if you have a off the beaten path asset or an asset that's not been, you know, invested in and amenitized, it's honestly, you know, there's not a lot of comps out there. Most of the comps are, you know, lenders, lender and loan related rather than, you know, owners selling. It's a huge gap, you know, in answer to your question, but we do feel investor demand for the former, for, you know, well-located, amenitized, and improved continues to be there in New York City. Okay, great. For my second question, kind of related to that, it seems like we're still seeing the flight to quality trend play out with most net absorption and leasing activity taking place at higher rent buildings. Just curious if you're seeing any better activity at the lower rent buildings within your portfolio, or is it still relatively soft in that segment? No, it's, you know, I think as we've commented in maybe the last call, and certainly over the last several months, we've seen an increase in activity in the more price-sensitive buildings. You know, Graybar being a good barometer of that part of the marketplace, where our vacancy in that building right now is around 12%, and that's from a high of, we were up around 15%, 16%. We've had good velocity in that building. We're starting to see more deal flow in similar type buildings. A very good example of that is 1185 Sixth, which was very slow to lease, getting leasing traction last year, as a lot of the market attention was on the, you know, best-in-class buildings. Right now, 1185's got, I don't know, five, six, seven active proposals that are in negotiation for the building. That's a, you know, that's a price-sensitive, rent-sensitive type of building. It also sits in, you know, one of the two best submarkets in Manhattan right now, Park Avenue and the Sixth Avenue, Rock Center Quarter being the two best. You know, another stat worth knowing is that 62% of the leasing year-to-date in Manhattan has been done in, you know, what is termed as commodity-type buildings. Clearly, you've seen kind of a reawakening of that part. The market's got a long way to go before it's in a healthy place, but the good news, it's starting to happen. Great. Thanks, guys. One moment for our next question. Our next question will come from Anthony Paolone of JP Morgan. Your line is open, Anthony. Great, thank you. First question is just, I think your guidance, or at the investor day, I think your disposition guidance was $2 billion. I just wanted to understand, like, make sure, 245, are you treating that as a, $1 billion or the $174 million? Also things like the $570 million and change you'll get from your OMA partners, and then any cash from the DP book, maybe over the rest of the year as some of those mature. Like, does that all roll into the $2 billion? Just want to try to clarify, like, what's coming in the second half. The $2 billion, just use 245 as an example, it would be $1 billion. 50% of $2 billion. That's what would feed the goal. The $577 of proceeds on One Madison from our partners is not part of that. DPE is not part of that. It is, you know, pro rata share of sold assets that feed the calc. You know, getting to that goal will be a function of the assets we have in the market currently, as well as where we end up with One Vanderbilt, which we said is an opportunistic sale that we've had out there for the last couple of years. We're marketing an interest and would hope to get one done, but, you know, want to be opportunistic about it. With regard to another interest sale in 245 Park, you know, there's likely upside to where we sold the first interest. We may play that out a bit and watch the redevelopment and lease up. You know, leasing's been strong, we mentioned that earlier. Watch the redevelopment and lease up take place before we bring another interest to market. Well, with that being said, Matt, if the goal was $2 billion, and that's just what I'm hearing. Yeah from Anthony. Yeah. If we were to defer the second, the 25% on 245. We would not hit $2 billion. That would be $500 million? Yeah. Like, following year. there's, you know, I mean, that doesn't mean we won't identify other assets to solve for that. That, you know, that one, like I said, we're doing it out of a position of strength. I feel very good about 245, our capitalization there, our partner. You know, while we got the big part done this year, there's a smaller part to go, you know, this isn't about, you know, this is about making money for shareholders. If we think we're gonna do a lot better, you know, next year, after we get a lot more leasing traction, then we may defer it. That, you know, doesn't necessarily mean, we couldn't get there if we decided to go forward with it now. It just means we have to do what we think is best to optimize the returns. Okay. Understand. Even with that being said, that sounds like, you know, between the OMA, partner capital, and maybe some amount of sales, you'll have cash coming in over the second half of the year. That's pretty meaningful. My second question, just, you may remind us of the priorities of where you see that cash going, whether it's, you know, line of credit, buyback, other asset acquisitions, like whatever. Priority is debt repayment. We've earmarked the entire $577 coming in from our partners towards debt repayment. All of the proceeds from 245 went to debt repayment. We have still, you know, paused share buybacks since the middle of last year. That was largely a function of the rate environment and where leverage levels were. You know, where we have a goal to be, you know, more on offense as we get into later 2023, particularly 2024. That was the purpose of our business plan in 2023. Execute sales, increase liquidity, reduce leverage, and go back on offense. We are, you know, still on that program, for the time being, we need to get through the remainder of the 2023 business plan. Okay, thank you. Give one moment for our next question. Our next question will come from Ronald Kamdem of Morgan Stanley. Ronald, your line is open. Great, couple quick ones. Just to go back to the DPE book, I think you talked about $289 million of investments on nonaccrual. I appreciate $225 million of that is 625 Madison. I think you said on August 8th, there will be a resolution. Should we be expecting you to take over that asset, or what are some of the other scenarios there? The, the follow-up to that is the remaining, sort of $65 million or $55 million, plus or minus, on nonaccrual. Can you just comment on what the situation there and what the plan is? On 625, you know, we'll stick to what was said earlier. We have to be sensitive to, you know, what's going on with the asset. Needless to say, there is a foreclosure proceeding on August 8th, and, you know, if that went a certain direction, then, you know, that affects the investment. We said all we can say is $6.25. The remainder of the assets, you know, I think your question was what happens with those? Yeah, exactly. What's the plan on those that are on nonaccrual? Are you taking over? Just curious. Well, I don't think we can generalize. Right. Ronald. You know, every asset could be extended, could be restructured, modified, could be, you know, turned into equity. I don't want to generalize, and we're not going to go through asset by asset, because it's not what we do. You know, suffice it to say that the remaining book is quite small at this point, in terms of number of assets. It's not small in terms of dollars number, but I think like, more than 1/3 of it is represented by 625. For that, you'll just have to, you know, like all of us, wait and see what the outcome is after August 8th. Right? We've already said that. You know, for the balance, most of it is, on, performing, but for how much is nonperforming after this 625? 50, 60. I mean, for $50 million or $60 million, we'll see how it goes. I mean, we're going to do whatever we can to optimize, either restructure, extend, or possibly foreclose. Helpful. If I could just sneak one in for my follow-up. Just, going back to the 545 guided midpoint, you had the, you know, you had some other income come in this quarter. The forward curve has moved. Just, can you talk through how are you thinking about sort of that, the guidance for the year and some of the puts and takes and where it's trending? Thanks. Trending within the range. You know, if we were outside the range, we would have moved it. Given rates and the balance of the business plan to execute for the back half of the year, we feel good with the range where it is. Thank you. One moment for our next question. Our next question will come from Anthony Powell of Barclays. Anthony, your line is open. Hi, good afternoon. Just a question on the dividend, going back to the prior question. I noticed that the payout ratio of FAD went above 90%. Maybe if you can go over, I guess, what your medium-term dividend policy is, and is that a comfortable ratio for you? If you recall, we set a dividend level that's as every year, dividend level is based on taxable income. The popular measure, other than taxable income is FAD. We set our dividend at what was, at the time, 100% of FAD. Our FAD is slightly better than we projected, so maybe we're slightly under 100%. It all comes back to taxable income, and as I think we alluded to earlier, our program, you know, is in line with what we expected it to be, and therefore, the dividend is exactly where we expected it to be. Thanks. Maybe one more, if you can comment. I guess there were some reports about an asset in Chicago that may be turned over to you, an office building. If that's the case, would that be a potential sale or can't comment on that at all? Harry Sitomer has been handling the part of the 245 claim that doesn't really relate to the asset, but relates to the guarantees and the judgments we've received against the prior owner, HNA. If you recall, I think we discussed in prior calls, and certainly it's been publicized, that we received a $185 million judgment, which has grown, you know, far higher since, with interest and passage of time, et cetera, and additional claims. As a component of that claim, we've exercised against some assets, and Harry can shed some light on it. Sure. There's two assets that we currently have a line of sight to right now, as we continue to pursue additional assets under that $185 million judgment. The one that you referenced in Chicago, that asset is currently working through a bankruptcy process, and we're trying to monetize the position that we have there. The second asset is an asset in Orangetown, New York. That asset has no debt against it, and we're working with stakeholders in the town to monetize that position as well. Just to be clear, we have no basis in either of those positions and no liabilities that we've taken on at the corporate level. Okay, thank you. One moment for our next question. Our next question is going to come from Michael Griffin of Citi. Michael, your line is open. Great, thanks. Maybe just going to the leasing pipeline, the comments in Marc's prepared remarks about the 1.1 million sq ft, about 2/3 of those in new leases. Can you give us some more color on these? Are these expansions? Is it tenants looking to keep the same size? Then Durels, I think you mentioned in a previous question that you have a lot of large tenants that are in the pipeline. How likely are some of these to close? Any color on that would be appreciated. Well, start with the last part. Anything that's in the pipeline is, you know, a deal which we think has a high probability of either closing or if it's a proposal that's being negotiated, being converted over to a lease negotiation. Beyond the 1.1 million sq ft, there's a significant number of proposals that are being negotiated with prospective tenants, but it's, you know, early days in discussion with those tenants, they were premature for us to then, you know, make it part of the pipeline. You know, what composes the pipeline? 2/3 of it is financial service tenants, the balance being law firms and professional services. A little bit of education, a little bit of medical beyond that, but by and large, financial services is driving the train right now. Of our biggest proposals, what I referred to earlier, the 16 largest proposals that we're actively trading paper back and forth with seven of those tenants are from the FIRE sector and four from legal. You know, as far as whether expansions or not, it's a little bit of everything. I'd say a lot of the financial service guys are driven by expansion. A lot of the law firms are driven by either consolidations or lease expirations, and the balance of the tenancy is, you know, it's a mixed bag. Some are, you know, some are downsizing, some are upsizing, some are just being, replacing like in-kind, with no discernible trend one way or the other. That's helpful. Then maybe just a question on the balance sheet for Matt. I know you've got about $300 million of notional swaps burning off this month. Is the plan to leave that as floating? I know you've done a good job of managing your floating rate exposure, call it over the past year, but would you plan to swap that back for fixed? If you are, what kind of rate do you think you'd get on that? Thank you. There's actually a schedule of our derivatives now in the supplemental we added at last quarter. You'll see there that maturing swaps are replaced already with forward-starting swaps. We put those in place a while ago, we have no near-term swap maturities at all. Great. Thank you. Yep. One moment for our next question. Our next question will come from Caitlin Burrows of Goldman Sachs. Your line is open, Caitlin. Hi, good afternoon. Maybe just back to the fixed charge coverage ratio and the expected trend going forward. Matt, you mentioned that it would go down before, given that you now expect the One Madison JV partner proceeds during 3Q, I guess what makes it get worse before better? Well, I'm still being conservative. If we get the TCO in late September, those proceeds wouldn't come in until fourth quarter. Obviously those proceeds help it. It's a function of whether we get it in the third quarter or early fourth, that could be a matter of days. Got it. Okay. Once it's in, that should make the trough, and then it improves? Exactly. Okay. Just on dispositions, you mentioned earlier how your goals are generally a stretch, and it sounds like further sales at 245 Park and One Vanderbilt could be somewhat opportunistic. I guess as we think about the $2 billion goal, how important is it to you that you reach or get pretty close to that target? Yep. And- I just want to make a correction because, you know, if I don't, I don't want to get into the narrative. Yeah. I did not say One Vanderbilt was an opportunistic sale. I was asked the question earlier, and my commentary was that there was a lot of interest in One Vanderbilt. It's got primary amount of our focus right now, and we're going to do everything to get that deal done this year. I'm not. I think that's inconsistent with what I just heard. I just want to make that clarification. If you could add- Okay. If you could re-ask me the question. Yeah, I guess I was just thinking with the $2 billion goal, kind of what is the focus? Obviously, if One Vanderbilt gets done, that could be a decent piece of it, and whether that gets done or not, how does that kind of impact your focus on potential smaller assets? No, I'm still not getting it. Let me just because a lot of this was previously said. 245 is $1 billion of it. The $500 million on One Mad, we may choose to defer. 245. Let me see, 245, we may choose to defer. One Vanderbilt, we're moving ahead on, and there's a lot of interest. Got it. That's where we are. Then there were a couple other properties that you guys had pointed out, 753 Third or 7 Dey. Well, there's other, I mean, there's other deals we're working on, but those are. I don't want to say they're not, I mean, they're material, but they're not. I mean, I keep my eye on One Mad, 245, One Vanderbilt, the $577 million that's triggered to come in, you know, the condo proceeds we're going to be getting next year, the rent on Armani, that's going to be triggered on turnover on September 30. I mean, these are the big things. There's, you know, we're always in the mark. I mean, there's a retail deal we're working on right now. I don't know what you want to say anything, I mean, descriptively, Ben? There's been significant interest on some of the retail assets we own on Madison Avenue, and, there's one, that transaction that's in the works currently. Yeah, but Caitlin, that, I mean, we do that every quarter. That's not a, you know, I'm trying to just highlight the big things on this call. Got it. Okay, thanks for clearing those up. Thank you. Nick? One moment for our next question. Our last question will come from Nick Yulico of Scotiabank. Your line's open, Nick. Hi. Just a clarification question on page 19 of the sup, where you give the NOI breakdown of the portfolio. It went down sequentially. Was that all due to the one-time L Brands payment in the first quarter? Correct. Okay, great. Thank you. Okay. Is that it, operator? I'm showing no further questions. I would now like to hand the call back to management for closing remarks. Okay, 2:59. We did our job well. We appreciate all the questions. We thank you for listening in. We thank you for being shareholders. For those of you that aren't, we hope you'll become so. We'll look forward to speaking again in three months' time. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.