Thank you everybody for joining us, and welcome to SL Green Realty Corp's fourth quarter 2023 earnings results conference call. This conference call is being recorded. At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. You should not rely on forward-looking statements as predictions of the future events, as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today. Additional information regarding the risks, 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 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 measures most directly comparable to each non-GAAP financial measure discussed, and the reconciliation of the differences between each non-GAAP financial measures and the comparable GAAP financial measures can be found on both the company's website at www.slgreen.com, by selecting the press release regarding the company's fourth quarter 2023 earnings, and in our supplemental information included in our current report on Form 8-K, relating to our fourth quarter 2023 earnings. Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I would like to ask those of you participating in the question and answer session of the call, please limit your questions to 2 per person. Thank you. I would like to turn the call over to Marc Holliday. Please go ahead, Marc. Okay, thank you. Good afternoon, and glad everybody could join us today. I'm extremely happy, and I'm extremely proud with how we ended 2023, navigating what was a challenging year and showing that we have turned the corner going into 2024. We're just a few weeks into the year and only seven weeks on from our investor conference, but we already have so much new activity that we want to talk about and share with you today. Normally, I don't like to repeat the earnings press release. Most of you have it, you've read it, and I don't like to do that on these calls, but I think today is different. I think it deserves a moment to reflect on what we have achieved in the fourth quarter and at the outset of the year during these first few weeks. At 2 Herald, we increased our ownership in a well-located asset and fully resolved a $182.5 million leasehold mortgage, all of which was accomplished for very little out-of-pocket. There's more work to be done, for sure, but we are on our way to stabilizing this asset. There was seismic news in New York City retail this month, with Jeff Sutton, our long-term partner and friend, and among the best retail deal makers in the city. Wait, Jeff, if you're listening in, I know what you're thinking. The best retail deal maker in the city pulled off not one, but two amazing deals. 717 Fifth Avenue sold for $963 million, generating full repayment of the capital stack, plus distributions to Sutton and ourselves, equating to approximately $8,000 per sq ft of sale price. To prove this isn't an outlier, right across the street, add another legacy SL Green asset. Prada bought 720 and 724 Fifth Avenue for $835 million, a deal that was also just recently closed. These deals developed, you know, quickly and confidently, and I think it's very, very exciting for the city. We had a third great example of user acquisitions in the retail space in the past 30 days, with the Swiss retailer, Akris, buying the entire retail condo that we owned at 21 East 66th Street for over $40 million and exceeding $7,000 per sq ft, thereby putting an exclamation point on the trend of retailers making permanent commitments to New York City through the purchase of desirable retail assets. This is Akris' second purchase from SL Green over the past year. We expect this trend to continue as we are already aware of another transaction in the works in that part of town. Obviously, 717 wasn't an anomaly in confidence, and Fifth Avenue and high street retail in New York City is once again on the rise. But let me remind you, some of the headlines, just from the past few years, relatively recent headlines. When FT declared the death of high street retail, Crain's talked about a retail apocalypse on Fifth, and New York Times concluded that retail has abandoned Manhattan. My point here is simply that people often underestimate how quickly things can change from these sort of hysterical media headlines to record-setting transactions just a few years later. I urge you all to keep this in mind when you read similar headlines about the office sector. Speaking of office, we ended the year strong with over 500,000 sq ft of New York office leasing in the fourth quarter, which enabled us to report an uptick in occupancy for the second consecutive quarter, after having stated publicly last summer that we believe the market had essentially hit bottom. JLL recently reported that SL Green signed the greatest number of triple-digit leases in all of New York City last year. There's good news on the debt front as well. We gave you a business plan in early December with ambitious plans to extend, modify upwards of $5 billion in debt, which certainly gives new meaning to the definition of stretch goal. Happy to report that even before the year ended, we put the first one on the board with 7 Dey, which we successfully extended for three years, at terms that are favorable for the asset and should help us get our JV done on that asset. Another aspirational goal we set of $1 billion of debt reduction this year on the heels of $1 billion of debt reduction last year, and we've accomplished already over $200 million of that reduction, sitting here in, you know, sort of mid-January. So not to be overshadowed by all this great news, our premier development on 760 Madison Avenue, which has really set, I think, a new standard for Upper East Side, bespoke New York luxury, and we just signed a contract this morning for the ninth floor, bringing us to 6 out of 10 units spoken for with a contract out on a seventh. So we're off to a great start, certainly confident in our business plan and optimistic about the city's continued recovery, where we have some positive indicators to report. The city's OMB forecast for 2024 is hot off the press and looks really good, with over 90,000 private sector jobs forecasted for this year and another 97,000 jobs forecasted for 2025, certainly continuing to bring New York's employment base to record highs. As, more importantly, after a year where we saw slippage in the office-using employment, the city is forecasting a robust reversal that will more than make up for those losses, with 42,000 office-using jobs projected for this year, and that would also set an office-using record in 2024. So kudos to the Adams and Hochul administrations and all involved for helping to bring back tourism, improve security, and implement pro-business policies. As a result of all that, we are launching our fundraising efforts to amass a minimum of a $1 billion capital allocation to become active participants in this city's ongoing recovery and resiliency. In fact, after we get off the phone, we're heading to the airport, and we're on a plane to Asia to formally kick off those efforts. We're excited about the prospects of this. Got a lot of excellent response and inbound inquiries on these efforts. Most importantly, what we're doing, along with other announced deals, shows that new capital is forming in this market. The second indicator that we passed the bottom, of course, the first indicator being our statements to you in July of last year. With that, happy to open it up for questions. Thank you. Thank you. If you have a question, if you would like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. If you would like to withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Steve Sakwa with Evercore ISI. Your line is open. Please go ahead. Yes, thanks. Good afternoon. Marc, I was just wondering if you could provide a little bit more color on the Two Herald transaction. I think just what the bank did in effectively, you know, letting you basically pay off that mortgage for close to zero is... You know, it's a great deal for you. I think everyone here is just trying to understand kind of the hows and the whys and, you know, how that deal ultimately kind of unfolds and how you're thinking about the economics of that deal. Well, I take that as kudos for getting a great job done on that deal. I think that, you know, everybody in this market is, you know, trying to come together to, you know, make sure that these assets have a safe landing. This is a great asset. I love the location. I think it's, well, I know it's Ulta's number one location in sales per foot in its entire 400-store portfolio throughout the country. 1,500. 1,500. Sorry, 1,500 throughout the country. Number one, I mean, that, that says something, but it also says that, you know, it's an asset that we're gonna have to, you know, really start to think about what's the best use. The beauty is there's a lot of different options and alternatives that we could look at here. It's great for office. It's an unbelievable retail location, right, you know, across Macy's. It's in a part of town that's seeing a lot of capital investment and upgrade. It has the ability to flex as residential, both dormitory, which we've actually seen because Mercy College is, is there, and, you know, potentially for, you know, some conversion to other residential use. A lot of options, and that's what we like. You know, we like deals that give us optionality. We got to roll up our sleeves here, and, you know, writing the capital stack is just part one, but executing the business plan over time will be part two. And hopefully, all of us, you know, including our partners and others, will come out of this with something good to talk about in the future. ... Okay, and my second question, I think at the Investor Day, you talked about mark-to-market being in the 2%-5% range for 2024. However, when I look at the disclosure that you have towards the back of the supplemental, where you provide your lease expiration schedule and your expectations of asking rents today, it looks like the 2024 leases in both wholly owned and unconsolidated show roll downs. And I realize these are just asking rents, and they're different from maybe what gets signed. But is there just any way to kind of tie those two together, or what are we missing, kind of, on this schedule on page 40 and what you provided at the Investor Day? Steve, it's Steven Durels. So, you know, as we look at our pipeline right now and the mark-to-market associated with the pending transactions or the prospective deals that we think are likely to convert to deals, it's the mark-to-market on any particular deal is kind of all over the board. I'd say half of them are positive up, half of them are down, to varying degrees. But they're within our current 1.4 million sq ft pipeline. You know, there are enough large deals with very significant mark-to-markets that are positive, that will drive the overall average up. Got it. Thank you. Thank you. One moment as we move on to our next question. Our next question is going to come from the line of Alexander Goldfarb with Piper Sandler. Your line is open. Please, go ahead. Hey, thank you. Good afternoon, and, yeah, congrats on Two Herald. Marc, you know, before you get on that plane to Asia, just want to understand better how investors, the international or domestic institutional investors are thinking about investing in your debt fund versus investing in real estate directly. I mean, you're out with potentially a One Vanderbilt stake, but you're also out with a debt fund. And just trying to understand how private capital is thinking about those two options. Yeah, it's a good question, Alex. I mean, it's different flavors for different investors. You know, some investors have different pockets for both. It's not exclusive. I didn't mean to imply that, just, you know, FYI. We're going. The debt fund is, you know, one element of what we're having meetings about. I think we've got over 20 some odd meetings lined up over a 5-day period, and there's a lot to talk about. You know, on the, the debt fund is certainly exciting, as are some of our, you know, JV and equity opportunities that we'll be talking about, in addition to, some of the other things that we're involved with in the entertainment and hospitality world. So we've got a full agenda. You know, certain of these investors are credit-oriented, and that's the way they want to play it. Others are, you know, sort of high-end, long-term, equity oriented investors. And, you know, the ones, the best are both, you know? And trust me, we'll be, you know, putting lots of opportunities out there. The key is to make sure that this, you know, all these meetings, not just this, is just one leg of many legs that we'll be doing over the next couple of months. Trips, both domestically and internationally, not just to talk about the fund, but to talk about what's going on in New York City. You know, on the office front, on the retail front, on the credit opportunities, you know, tourism, hotels, or, you know, ADRs and occupancy going, you know, up significantly, job growth. I think there were 24,000 new businesses since pandemic created in New York. That's more than most cities even have. So, you know, it's like an amazing story that I think needs to be told, because on the comments I made earlier, if you rely only on the headlines, you get sort of a different impression of what's taking place on the ground. Okay, and the second question is, Matt, you know, just thinking about Two Herald as a template for other deals, potentially for those 10 standalone strategic assets, can you give us a sense of how many of your loans are held directly versus in CMBS? Just trying to understand, you know, your ability to negotiate. Can you negotiate as well with a CMBS special servicer as you can if it's being held directly by a financial institution? Yeah, it's Matt. I'm going to kick this one over to, to Harrison. To answer the first question, off the top of my head, I think it's about four or five loans that sit in the CMBS, as opposed to balance sheet. And we've had, you know, good negotiations with both, CMBS lenders and the special servicers, as well as balance sheet. So, I wouldn't say that either option is restrictive to us. You know, there are obviously some more complexities when working with CMBS lenders, but, we're working through that on a few loans now as part of the $5 billion plan, and we're well underway in those negotiations. Thank you. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Tom Catherwood with BTIG. Your line is open. Please go ahead. Thank you, and good afternoon, everyone. Steve, maybe going back to your answer to a previous question, you mentioned kind of several large leases that should bump up the mark-to-market average for the year. You know, a bulk of your activity in 2023, at least earlier in 2023, was more small and mid-sized leases. What are you seeing as far as tenant sizes in the pipeline? Has that— Is that starting to skew? You're starting to see kind of larger tenants coming back in the market, or is it still mainly dominated by those smaller requirements? ... Well, we've got. I'll make a couple points. Right now, our pipeline is almost 1,400,000 sq ft. That's up over 100,000 sq ft where we were at investor conference, and in the face of signing over 100,000 sq ft of leases since that time period as well. I would say probably 60% or more of the deals pending right now are financial services businesses. I don't think that's necessarily a commentary as if they're the sole driver in the market. As a matter of fact, we're seeing a lot of tour activity from law firms, government, education, even some tech firms right now. It just happens to be a reflection of where we have availability within our portfolio, and it's a pretty broad range of sizes. A lot of activity in some of the, you know, more moderate-priced buildings, like Graybar Building and some of the Third Avenue buildings that are kind of small to mid-size requirements. But then on some of the bigger financial service tenants, we've got, you know, a number of notably large deals that are in negotiation, and every single one of them is driven by those tenants having a growth component of their space requirement. Thanks. Appreciate that, Steve. For second question, maybe Marc or Matt. First off, congrats on getting the refinancing done at One Vanderbilt. Marc, you'd mentioned the $5 billion of refinancings you had laid out in the investor conference. I know we're early in the year, but kind of what are the next priorities on your list when it comes to refinancings, and how are those conversations trending so far? Well, I think, you know, just for brevity, you know, for conciseness, we set out asset by asset in December, you know, which we've never done before, our plan. And, you know, we noted in each case where we thought we would be able to be successful in getting some kind of modification extension done on, you know, debt that has maturities mostly in 2024, 2025, 2026. We want to try and take care of almost, you know, all of certainly 2024 and 2025, and, you know, with the goal of getting new maturity dates of 2027, end of 2027 and beyond, so really 2028. And so in terms of like, you know, next priority, that group of assets is all the priority. I think there's 5 or 6 in total that we're probably working on in various stages. You know, and it's, look, like nothing's easy in this market, for sure, but between what we showed you last year and, you know, and what we continue to show in this quarter, is, there's gonna be differentiation in this market between, you know, sponsors that partners and lenders are gonna want to work with, and, sponsors, where lenders and partners, may not want to. I mean, it's, it happens every time you get a bit of a market dislocation like this. It's-- There's a, there's a weeding out process, and then the market recovers and, you know, sometime in the future, it happens again. So, I'm just happy and feel fortunate that as a company, we've got the reputation and the platform and the resources to be able to, you know, work productively with our counterparties. You know, always trying to come up with solutions that are, you know, sort of the best available solutions for all. Sometimes they're great solutions, sometimes they're, you know, you know, you know, more painful solutions, but we're always trying to do it, you know, in a way that knowing that these counterparties are people in this market we have to deal with year after year after year, and, you know, what comes around, you know, from these efforts, I think pay off for us in the future. So I feel pretty good about where we are and, the job we have ahead of us this year and next to get, all of, that debt, you know, sort of firmly landed, restructured, extended on terms that we can, that we can manage. But, it's only January. Appreciate it. Thanks, Marc. Thank you. One moment as we move on to our next question. Our next question is gonna come from the line of John Kim with BMO Capital Markets. Your line is open. Please go ahead. Thank you. Kudos on Two Herald Square. But going forward, the cost to carry is still pretty high given the ground lease, and it sounds like if you're going to reposition it, it's gonna be fairly capital intensive. At this point, are you more inclined to sell it or joint venture the asset, or do you plan to keep it on balance sheet? And will this stay in your Alternative Strategy Portfolio? This is Harry. You know, right now we're working through various avenues. We got through the first path of this, which is with the leasehold lender. But we have a lot of time here. We've got a lot of time. We're working through the asset. We know it very well. We've owned it for a few years now. And we're working through the avenues, and we'll present it to you, you know, over the coming quarters. Yeah, I think this is a business plan that we'll be developing over the course of the year. It's not one we highlighted for you guys in December. You know, our priorities were elsewhere. Now it's, you know, now that there's a reordering of the capital stack, it's now feasible to start thinking about long-term value. But, you know, we can't do it in a day or two. I mean, this is something we're gonna study, and we're gonna be testing the market. And certainly by, by, you know-... 6-12 months, we're gonna have a game plan for this asset, and we're gonna try to, you know, on a reset basis, something that might not have worked in the old, you know, formula, will work now, and that's the process we're going through on, you know, in this situation. Will this stay in your ASP, and should we just view this as option value going forward? Yeah, for now, John, that'll stay in ASP. Okay. My second question is on your month-to-month leases, or holdover. It looks like it was 200,000 sq ft combined, which is higher than previous quarters. I was wondering if you could just comment on the likelihood of these tenants moving out versus renewing or just remaining in the, in the month-to-month portfolio? I think a lot of that is driven by some of the tenancy at 625 Madison Avenue. That's right. Yeah, the leases there have technically been terminated. Yeah. They're holdovers. So, you know, that building, as you know, is in contract for sale, so it's not really an indicator of anything else that's going on in the broader market. Right. Okay, thank you. Thank you. And one moment as we move on to our next question. Our next question is gonna come from the line of Anthony Paolone with JP Morgan. Your line is open. Please go ahead. Yeah, thank you. You know, Marc, you talked about the big retail trades that occurred earlier in your comments. Can you just talk about any shift in sentiment, though, that you've picked up in terms of investing in office and whether that's changed much? Well, I think that goes back to the pools of capital that I was referring to. So yeah, I'd say it's changed a lot because there's like, I don't know how many, you know, billions and billions of dollars of announced capital forming for credit and equity. You know, targeting, not exclusively, but certainly a significant amount is gonna be targeted towards the office sector, including our own efforts. And that's the first sign of... You know, this is a playbook you guys have seen a couple of times before. It's not anybody's first rodeo, and you know, it's already been 4 years since pandemic, you know, and the business fundamentals in this city are very strong, and people are, you know, back to work, and, you know, it's time for a lot of investors who have been, you know, sort of off, you know, to office, except for what I'll call, you know, sort of the special assets in great locations, et cetera. I mean, those kinds of assets rode through this period of time like champs. But, you know, there's a lot of other, you know, buildings out there that, you know, need to be attended to, and I think you're gonna see the liquidity break. You know, the first step are these, you know, capital pools forming, and then the institutions will follow right behind, in my opinion. Okay. And then just the second one, I, you may have given this out, and maybe I missed it, but on the debt fund, how much is gonna be SL Green's, I guess, co-investment? Well, we know, but I think that's TBD in terms of announcement. So- Okay. I would say stand by, I guess, is. You know, it's, it's not a question. I mean, we, you know, we, as you know, we, we tend to like to have, you know, real skin in the game. I mean, we're investors as much as we're, you know, managers of monies for others. So, you know, we'll have real skin in this game, but, you know, it has to fit within our overall liquidity program for the year. And, you know, we, we feel very good about the levels we're going out with, will, you know, show our, confidence and belief in this, in this program. Okay, thank you. Thank you. And one moment as we move on to our next question. Our next question is gonna come from the line of Zach Silverberg with Mizuho. Your line is open. Please go ahead. Thanks for taking the questions. I just wanted to maybe Steve Durels or even Matt, just you talked a lot about, you know, market improvement, you know, the job outlook picture looking better and return to work and all that. I'm just trying to square that with, if you look at the leasing pipeline that you mentioned, plus the expirations and factor and renewal rates, I'm just trying to square all that with your latest thoughts on occupancy, and then tying that occupancy back, Matt, perhaps to ultimate FAD cash flow generation. It just seems like there could be a big lag between all the leads up, the known move-outs, et cetera, before you actually see a meaningful inflection in underlying FAD generation. Thanks. Yeah, you know, the, obviously, you know, sitting here in January, having given guidance about seven weeks ago, we will say we're on plan. The pipeline is actually probably a little bigger, as Steve said, than it was back in the investor conference, even after signing, you know, 100,000 sq ft in January, 100,000 sq ft back in December, the pipeline still grow. So it puts us, and based on what's in the pipeline, puts us squarely on our targets for occupancy increase, which was going from, you know, 90% at the end of the year, with a goal of 91.6%, by the end of 2024, with a goal of 2 million sq ft of leasing. You know, this is, you know, a great start towards those goals. As to how that translates back through to FAD, yeah, of course, there's a lag. Particularly when you're doing new leasing, and you've seen that over the last couple of years, it lags- ... when occupancy is going down, the roll down takes time to roll through, and the same thing will happen on the roll up. So do we see the biggest benefit of going from 90 to 91.6 in the 2024 FFO? No, it'll roll through, you know, in the coming years. But we are on the right trajectory and consistent with the plan we laid out in December. Got it. Okay. And then just so I go back to, I know you've had a lot of questions on Two Herald, but you just two, two clarifications. One, can you give us any color or maybe even just based on precedent, like how should we think about the ground lease reset? I believe it's 2027. And then, you know, related to that, you mentioned there are a variety of strategies that, you know, you have in mind, but I'm... Perhaps you can give us some thought about timeline, because, you know, today, if you look at a lot of office buildings, just where debt is, where values are, you would argue, like, equity value has been diminished tremendously, and you need to sort of take perhaps a long enough time frame to think about value creation. Given this building, I think is what, 20% or 30% leased, it seems like there's a very heavy lift. I'm just trying to get a more thought around how you're thinking about A, the ground lease and then B, value creation. Well, the value creation question is, I tried to address earlier. I mean, step one is come up with our plan. I can't, you know, that's just really as far as I can go with that at this moment, is, you know, this is an asset, now, we've probably been involved with redevelop and maximize assets like this for the last 27 years. And, you know, I think we've done 124 million sq ft of investment, almost all of which is exclusively Midtown, much of which is like Two Herald. So this doesn't present, in my opinion, the unique challenges you might be referring to. We look at this as opportunity. I love the flexibility, and I like the location, and we'll come up with a plan. The comment about it's gonna take a very long time, yeah, I don't know about that. I mean, I heard a lot of that on 625 Madison, and that turned into a very, you know, excellent resolution for this company in a very quick period of time. So I wouldn't, I wouldn't, subscribe to the notion that it's gonna take a long period or a short period of time. We're gonna, you know, just manage it the way we manage the other 30 million sq ft we're involved with, and I have no particular concern, about anything unique to this asset. I think it's a very good asset. It's, it's vacant because we had a tenant go out. I mean, it's, it's like no mystery. I think prior to the tenant going out, it was, like, very well leased. So buildings sometimes go from well leased to, you know, having some vacancy when a tenant rolls out, but then you, you know, resolve that vacancy, and I mentioned we can do it a number of different ways, and we're gonna look to optimize this. this. That's that. On the ground lease, there's a reset. I don't know if there's much to talk about there because it's early, but there is a reset. I don't know, do anyone have the details on that reset? 27 is correct. I would just say we have a well-aligned fee owner here. They want to see us maximize and create value. I'm sure you won't be surprised to hear we're in active negotiations with them, you know, to give us the opportunity to maximize the value here. So, you know, we're working through that, and it'll be part of the updates as we get through the year. No, that, that was helpful. Yeah, my comment, I guess, just I was wondering if there was something more specific, because- No, not at the moment. I was surprised the lender- I would say stay tuned- I was surprised the lender would. I would stay tuned, and in June, or on the next call, actually, it won't be on this call. I would say give us six months, and we may have more to come on a business plan, but we don't have it yet. Just be- No, I was just, I was just surprised, like, in general from the lender, that, like, there was a $180 million loan. Okay. And like, the way you described it, it sounded like there was a lot of optionality. So I was just surprised- Yeah ... that the lender was okay with seven. Yep. That's why I thought there was something more specific to this asset- Okay, I understand. ... which was my comment, yeah. I understand. You know, thank you, and we'll definitely readdress it later this year. Thank you. Thank you. One moment as we move on to our next question. Our next question comes from the line of Camille Bonnell with Bank of America. Your line is open. Please go ahead. Hi. Impressive outcome on the 717 Fifth Avenue sale. Are you seeing third-party demand at these levels for high street retail beyond the user buyers we've seen in the deals that you've mentioned in your opening remarks? Yeah. No, that's, that's an excellent question. We've got Brett Herschenfeld, who you know, heads up all of our retail and strategic. Why don't you... So the question is, putting user demand aside, how's the sort of, you know, the high-end rental market looking like? The high-end rental market was really being driven by Madison Avenue to start. We had the likes of Valentino and Jimmy Choo and Dior and McQueen, Van Cleef, all sign big leases on Madison Avenue in the past year. Fifth Avenue is right behind and starting to pick up, and that'll be nice to see 717 filled on Fifth Avenue. In terms of, you know, investors, I mean, Related and their acquisition of 625 Madison, a big part of that transaction is value recognition of the retail. ... and, you know, they are an investor, you know, obviously not a user. So, there are more behind that, but, we'll be sharing that, you know, in the, months to come. Okay. And Matt, can you talk to how you're thinking about your floating rate exposure today? Guidance that was set out in December looked to reduce your exposure down to single digits by year-end 2023. Has anything changed on this front, and would you be comfortable operating at the current levels or higher? No, I think we're on the path we expected to be on. Most of the fixed rate debt that we have today is fixed even beyond the end of the year, so there's not much we can do with that. As to the other floating rate debt, a lot of that is what we expect to take out as we reduce debt over the course of the year. In fact, taking out 717 reduces our floating rate exposure by itself. Taking down the revolver addresses the rest. And, you know, we still wanna protect ourselves. Even though the rate environment has gotten a little bit more constructive and the forward curve looks to be coming down, we wanna be prudent and protective. We put a hedge on late last year, forward starting hedge, that's what's flowing through earnings. You know, rates were higher than they are today, which is why it had a negative mark-to-market, but it's a protective exercise for something we expect to execute at the end of the year. It's protecting the balance sheet. We, at this point, again, are optimistic about where the rate environment is headed, but we still wanna be prudent and keep that floating rate debt fairly low. Thank you. Thank you. One moment as we move on to our next question. Our next question is gonna come from the line of Blaine Heck with Wells Fargo. Your line is open. Please go ahead. Great. Thanks. Good afternoon. So we're hearing that the Park Avenue corridor has gotten really tight at this point, given the strong tenant interest in that submarket. Are you seeing a spillover effect in any specific submarkets or maybe buildings within your portfolio that are now seeing more interest, since, you know, that kind of tier one space is getting leased up? Yeah, I don't think it's unique to Park Avenue, but you're right. Park Avenue's got an availability that's like something like 9.4%. So by historical standards, you would say it's at least at equilibrium, if not tilting more back to the landlord and having more leverage on transactions because of the limited supply and lack of big blocks expected to come on the market anytime in the near future. But take it to a different level, which is you've seen with the absence of any new construction coming online in the short term, you've seen a lot of the new buildings and newer or heavily renovated buildings filling up. So the beneficiary of that has been Park Avenue, Sixth Avenue, Rock Center, you know, and anything around Grand Central Terminal is all seeing more tenant demand. So, I think it's more tenants are being forced to, you know, shop various parts of Midtown, but clearly, the tenant drive is for the majority of tenants to focus their attention on the Midtown market, as opposed to the Far West Side market or certainly the downtown market. And we're seeing that spill over in on all parts of our portfolio. Great. Thanks, Steve. And then the second one, just a quick one with respect to Two Herald Square. As it stands now, does the NOI at that asset cover the ground lease payment? What's the question? Does- I'm sorry, can you repeat that? Does the NOI and what- At the Two Herald Square, does that cover the ground lease payment that you guys have there? No. No, it doesn't in its current occupancy, Blaine. Okay. Part of the reason it's in the ASP portfolio. Great. Thank you. Thank you, and one moment as we move on to our next question. Our next question comes from the line of Peter Abramowitz with Jefferies. Your line is open. Please go ahead. Yes, thank you. So I think the EPS guidance raise was $1.38 in the range there, and the FFO guidance range was $1 on the nose. So I think you said it was mostly related to gains on the debt extinguishment, but just wondering if there's any offsetting items or any other moving pieces in there that caused the difference in the magnitude of the raise between those two? Yeah, the guidance adjustment for FFO is purely the gain off the Two Herald discounted debt extinguishment as offset by taking out the generic $20 million gain we had in there. So that math works out to exactly $1. The difference between the $1 of FFO and $1.38, I think, of net income is the gain we'll recognize on seven seventeen. That asset did not have a basis on the books, and so it's essentially all gain. Okay, got it. And then one other question on Two Herald. So I think you guys kind of covered everything from the lender's perspective. I guess from your partner's perspective, I mean, could you talk about the motivation for them? It seems like it was just a situation where they wanted to walk away from the asset, so you're taking over almost full control for, I think it said, no consideration in the press release. So you just kind of cover that and what the motivation was and the reasoning was from their perspective. ... Yeah, I appreciate the question. I don't wanna speak for our partner on this call and what their motivations were, so unfortunately, not much I can get into there. But, we'll continue to update you on Two Herald as we go on throughout the rest of the year. Right. I guess, put another way, anything that, you know, it's obviously a very favorable resolution for you. Anything specific to the situation that influenced that, I guess? Yeah, I mean, you know, as you know, they're still in the deal. It's a minority interest, but they still have an interest in the asset. And beyond that, I just, again, don't wanna get into how they're thinking about it and what their motivations were. Okay. Thank you. Thank you. Thank you. One moment as we move on to our next question. Our next question is gonna come from the line of Ronald Kamdem with Morgan Stanley. Your line is open. Please go ahead. Great. Hey, just two quick ones. So first is, just on the trips to Asia that you're talking about, after this call. Just wondering, was that sort of related to the One Vanderbilt or the 245 Park Avenue? And maybe can you provide an update how conversations were going and any, any sort of timing, Yeah If that deal is still for the first time? All of you know everything. I'd say our whole business plan is on the table, not just—I know there's a lot of questions I'm getting about this Asia trip because I mentioned it. We do this, like, every couple of weeks, you know, not to Asia, but, you know, all over the country and different parts of the world. We're visiting partners, lenders, and on these trips, you know, we make them targeted, but we're talking about everything that's part of our business plan, really for 2024. You know, that's how we got to get it done. I mean, it's, you got to start early if we want to get it done by end of year. And so things like OVA, 245, I don't know, 711, and everything else we talked about in December, yeah, I mean, there'll be, there'll be discussions we're having on each and every one of those. On OVA in particular, how you wanna give an update? Yeah. Consistent with, you know, the message we delivered in December, we're in active negotiations on the interest. You know, these negotiations that we're involved in, they're, they're confirming exactly what we said, what we said, which is there's global and domestic demand, for this, you know, it's a one-of-a-kind asset, and, and that's obvious to every investor we're speaking and negotiating with. And as Marc said, we're still on plan for, on plan for this year. Great. My second question is just taking a stab at Two Herald and taking a step back. The Alternative Strategy Portfolio has 10 assets, and, you know, this Two Herald, congrats on the deal, gets sort of done in what looks like it's an uneconomic sort of decision from the bank. The question is sort of like, out of all these other assets in the ASP, is Two Herald just unique, or are there other assets that look and feel the same, and which ones where, you know, you could have such an outcome? Thanks. Yeah, it's Matt. So first, I'll correct it. It's not 10 anymore, it's 9 assets, because 717 was in there, too, and that's, that's now sold. I got sold. But look, in creating this, you know, or segregating this portfolio, we said, you know, there's very little, if any, NAV carried for these assets on the street. They don't generate a lot, if any, earnings, don't have book value. So they kind of were unique from the rest of the core portfolio, but there's a lot of interesting opportunities that may come out of them. You know, 2 out of the 10 happened in the first, you know, 30 days of the year. It was, 717 and 2 Herald. I think there was one... Are there more opportunities to come out of there? Yeah, we're working on a couple other things, but working on a lot. So, you know, we're gonna—which is what we've been doing with these assets, and again, why we put them off in its own portfolio. I can't characterize whether any of them are exactly like a Two Herald or exactly like a 717, but the reason we are carrying these assets the way we are is because there's embedded value that might not be appreciated, and we're gonna look to mine it. Helpful. Thanks so much. Thank you, and one moment as we move on to our next question. Our next question is gonna come from the line of Michael Griffin with Citi. Your line is open. Please go ahead. Great, thanks. Maybe just a question on the leasing pipeline. Can you give us a sense if it's mostly new or renewal leases that are there? And then on the concession front, is it fair to say that it's stabilized or maybe even declined somewhat, particularly in a, you know, very high-performing sub-market like Park Avenue? I'll take the second part first. I don't think the concessions have come down. I think they've been stable for all of last year. I think there's a little more strength, particularly on Park Avenue, to your point, on the renewal side than there was versus new deals. But, you know, it's still expensive from a landlord's perspective as far as the concession packages go. But I think we hit the stabilization point, you know, early last year, so that's the good news of that story. And then as far as renewals versus new deals, it's driven sort of 50/50 between new and renewal, but each of a lot of our bigger renewals also have very significant expansion components in them. That's, I think, pretty noteworthy, because it's, if you really, you know, went through every one of our deals that are out there, to see so much growth, particularly within tenants in the financial, services sector, but also some of the law firm tenants that are coming through our door. We're seeing a lot more growth, a lot more confidence, a lot more willingness to commit significant capital by the tenant, as they look to rebuild and rebrand their spaces. So that makes us all feel pretty good about where we stand right now. Great. That's helpful. And then just on the DPE book, I'm curious if you're seeing any more appetite or opportunities for future originations, given the distress and dislocation that we've seen out in the market? Well, that's really the underpinnings of the Opportunity Fund that we're in the process of marketing and raising. We see a lot of opportunities. I mean, we see many, many opportunities, but obviously, no different than in prior markets, only select ones that we think are of, you know, interest to us and where we want to deploy our capital. But the opportunity set's so big that we wanna have some third parties alongside with us to take advantage fully, like we've done in past recoveries. Because I've always said, you know, a lot of the money is made in the first year or two coming out of recovery. I feel like that's where we are now. You know, wanna make sure we got our ducks lined up to take advantage of things. We very possibly may act preemptively and then backfill with the fund. We'll see how these things go. But yeah, we're seeing a lot right now, and I think that's the first step towards, you know, more normalized institutional participation once we can illuminate, you know, where values and levels are, especially in this environment where we've got falling rates, which I think will certainly, you know, ease the liquidity pipeline and get things going again. Great. That's it for me. Thanks for the time. Thanks. Thank you, and one moment as we move on to our next question. Our next question is gonna come from the line of Caitlin Burrows with Goldman Sachs. Your line is open. Please go ahead. Hi, good afternoon, everyone. Maybe just a question on leasing broadly. The starting rent per sq ft on the leases signed in the quarter was pretty high at $105 per sq ft and included, as you mentioned, some leasing at 280 Park and 245 Park. So I was wondering, could you talk more about how tenant activity and leasing activity is shaping up across the portfolio, including some of the more affordable buildings? Well, yeah, you know, the, the rents were high because we did some big deals on Park Avenue, and they were driven by some of our, you know, higher price point buildings. But as we see it right now, looking at the pipeline, you know, of the 400,000 sq ft of leases that we have out right now, I'm just looking at the list real quick. Every single one of those, with the exception of one moderate-sized deal, is in more of the moderate price point buildings. So, 485 Lexington Avenue, 1185 Sixth Avenue, Graybar Building, 711 Third Avenue, things like that. So those are rents that are generally in the, you know, $60-$70 price point, as opposed to the triple-digit rents that you saw us print on some of our Park Avenue buildings at the end of last year. Okay, got it. And maybe just as a follow-up to that kind of list of deals that you're looking at, do you have a sense for if those tenants are ones that are generally renewing space they were already in? And if they're alternatively, like, moving in from somewhere else, where they might have been coming from? Yeah. Well, I mentioned earlier that of the 1.4 million pipeline, it's roughly 50/50. It's between renewals and new tenants. And on the renewals, you know, 95% of those are tenants that are renewing in place as opposed to relocating to a different building or a different space within our portfolio. But what's not really articulated well, as far as just saying it's 50/50, is that a good number of our deals that we're working on right now have significant expansion components, whether they be renewal deals or new tenants coming into the portfolio. Sorry, by expansion component, you're saying they are expanding or they have an option to expand in the future? No, meaning they are making... They're searching for larger spaces. Got it. Thank you. Thank you, and one moment for our next question. Our next question comes from the line of Nick Yulico with Scotiabank. Your line is open. Please go ahead. Thanks. I just wanted to go back to Two Herald and be clear here. Did you already own any piece of the mortgage there or, you know, buy it at some point, like in the last year, and that's what's affecting the net payment number that you're citing? I don't understand the question. Did we, or is it third-party debt, or did we own any of it? Is that your question, Nick? Yeah, exactly. All, all third party. We didn't own any. Okay, thanks. And then just on the second part on—was there also any piece of like a mez or a pref piece there that also affected, you know, the ability to, you know, get higher equity in the joint venture? Is The Wall Street Journal asking? I'm just trying to clear up. It's not very, it's not very clear in the, Oh. in your press release here. What's the answer, Matt? No. The answer is no, none of that. None of that. Okay. Thank you. No problem. Thank you, and I would like now to turn the conference back over to Marc Holliday for closing remarks. Okay. This was a good Two Herald conference call. And I'm glad we got some other things in there as well that aren't in the ASP portfolio. And appreciate very much those that muscled through to the end. We thank you for the support, for listening in, getting to work on the fund, and we'll talk to you in three months. Thank you. This concludes today's conference call. Thank you for participating. 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