Good morning, and welcome to the Vornado Realty Trust First Quarter 2021 Earnings Call. My name is Vanessa, and I will be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen-only mode. Our speakers will address your questions at the end of the presentation during the question- and- answer session. At that time, please press star then one on your touchtone phone. I will now turn the call over to Ms. Cathy Creswell, Director of Investor Relations. Please go ahead. Thank you. Welcome to Vornado Realty Trust First Quarter Earnings Call. Yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. These documents, as well as our supplemental financial information package, are available on our website, www.vno.com, under the investor relations section. In these documents and during today's call, we will discuss certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q, and financial supplement. Please be aware that statements made during this call may be deemed forward-looking statements, and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31st, 2020, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward-looking statements. On the call today from management for our opening comments are Steven Roth, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions. I will now turn the call over to Steven Roth. Thank you, Cathy. Good morning to everyone. I hope all of you continue to be safe and healthy, and that you're all vaccinated or on your way to being vaccinated. We are full speed ahead on the Penn District and are confident of its success. Farley is well along. We delivered half of Facebook's 730,000 sq ft on January 1st, and we will deliver the second half on June 1st, just one month from now. At PENN 1, we will deliver the 34th Street lobby in July, the building's enormous amenity package in October, and the 33rd Street lobby at year-end. PENN 2 and the Long Island Rail Road Concourse developments are now under full-scale construction. This transformation will take over a couple of years to complete. The decision to permanently close the Hotel Pennsylvania will allow us to get this site ready for development in less than two years from now, which is perfect timing for the next phase of our Penn District mega project. I believe that the Hotel Penn site will be the best development site in town. Notwithstanding that we will be delivering for tenants the most robust and unique amenitized offering in the city with the added convenience of being directly on top of New York's main transportation hub. Our strategy here is to price PENN 1 and PENN 2 below our neighbors to the west under their price umbrella. Since we are coming off $60 rents, this will be an outstanding outcome. Over time, as we continue to remake the Penn District, I fully expect rents will aggressively rise to the premium that they deserve. Over the summer and into the early fall, New York will be reopening and returning to normal. All of our tenants are telling us that they are anxious to bring their employees back to the office, and we are anxious to welcome them back. We remain strong in our belief that working from the office will be the preferred mode of work for companies and their employees post-pandemic. The kitchen table may be a place for some, but I continue to believe the urban office is the workplace of the future. As I have said, I believe we will come out of this difficult year in an economic boom fueled by a tsunami of government stimulus, of which New York is a very major beneficiary. The financial sector is now booming. Tech is now booming. Healthcare is now booming. Retailers like Walmart, Target, and Home Depot are now booming, and there is enormous pent-up demand from consumers eager to travel, read tourists returning to New York, and spend on all manner of goods and services. This is beginning to happen all across the country. Importantly, the major tech companies are telling us that they intend to continue growing their office footprints in New York, and that New York's deep and diverse talent pool is unrivaled anywhere. As you can tell, we are very bullish on New York. Finally, a word about ESG. We filed our 2020 ESG report on Form 8-K on April 12th. We continue to demonstrate our leadership here, and we're proud of the many awards and recognitions we have received. This is an important topic that we believe in. Please do take a look at this important report. Now over to Michael for comment on our numbers and our businesses. Thank you, Steve. Good morning, everyone. I too hope you're all safe and healthy and look forward to seeing you again in person soon. Let me start with our first quarter financial results. I'll end with a few comments on the leasing capital markets. First quarter comparable FFO, as adjusted, was $0.65 per share. Compared to $0.77 for last year's first quarter. A decrease of $0.12 primarily due to the effects of the COVID shutdown. One change you will note is that the Hotel Pennsylvania results were moved to non-comparable, given our decision to permanently close the hotel. The decrease this quarter is reconciled for you in our earnings release on page four and in our financial supplement on page six, was driven by the following items. $0.04 from our variable businesses, trade shows, signage, garages, and BMS still being offline. $0.07 from tenant vacancies and bad debts, primarily the JCPenney and New York & Company lease rejections last year. $0.03 from Penn District space taken out of service. $0.03 from Macy's lease cancellation income in last year's first quarter, partially offset by $0.05 from G&A and interest savings. These items are not new news and are right in line with our statements over the past few quarters. Most of these are temporary and the income will return over time. Furthermore, the first quarter results are consistent with a sequential fourth quarter run rate we discussed last quarter, adjusted for the accelerated vesting of equity awards for retirement age executives in the first quarter. With respect to rent collections, in the first quarter, overall rent collections were 96%, a continued improvement from the prior quarters. We collected 97% of office rents and 90% of retail rents. April collections ran at the same level. While the aggregate headline same-store cash NOI numbers for the first quarter are negative on their face, excluding the variable businesses, our core New York office business actually was + 3.9%. Blending in Chicago and San Francisco, our office business overall was a + 1.9%. The big takeaway here is that our core office business, representing over 80% of the company, is continuing to hold its own in this challenging environment, protected by long-term leases with credit tenants. While the retail same-store numbers are down, overall retail NOI is flat quarter-over-quarter. Again, consistent with our recent guidance. Finally, we have planted the seeds for significant growth as the pandemic recedes and the city returns to a normal level of activity. In addition to the savings we will realize from the previously announced overhead reduction program, we expect significant growth from the return of our variable businesses. From the Farley Building fully coming online in 2022, followed by the delivery of PENN 1 and PENN 2, and reduced interest costs as we roll over our debt. One of the analysts even predicted that Vornado will have the highest growth rate in our sector over the next several years. Turning to the leasing markets. We are seeing improved conditions in the office leasing market, with the pace of activity up nicely in the past 60 days. The phones are ringing, tour volume is up, proposals are coming in, and leases are being signed, with the flight to quality trend accelerating. According to the brokerage houses, leasing volume is certainly up versus 2020 numbers. The first quarter had the most activity of any since the fourth quarter of 2019, with most of the action occurring in Midtown. An encouraging sign, sublease space has recently come down some. Almost 600,000 sq ft of sublease space has been removed from the market by occupiers who plan to reoccupy the space. Moreover, a substantial portion of the sublease inventory is challenge space, either physically by way of the over tenant having poor credit quality or term constraint. Roughly a quarter of the sublease space in the market today has less than three years of term remaining. During the first quarter, we completed 12 office leases totaling 208,000 sq ft. The two largest leases of the quarter were both new to our portfolio. Young Adult Institute for 74,000 sq ft at 825 Seventh Avenue for the new state-of-the-art schooling facility, and fuboTV Inc., a new world content streaming platform coming off their successful IPO launch for 55,000 sq ft in the base of 1290 Avenue of the Americas. Both of these leases represented expansion from their prior locations. We are currently negotiating paper on 300,000 sq ft, of which 200,000 sq ft is with new tenants. In addition, we have a growing pipeline of 1.4 million sq ft, which is up meaningfully from recent quarters. Last year, we completed the two largest leases of the year, Facebook and NYU. The current sweet spot for deal-making in the market is with small to mid-size firms looking to relocate into new or redeveloped assets. Remember, all of our space is redeveloped or in the Penn District, which is under redevelopment. This dynamic matches up well with our current vacancy, where our largest available blocks are only 180,000 sq ft at 330 West 34th Street and 117,000 sq ft at 85 10th Avenue. As a reminder, our office expirations in 2021 and 2022 are very modest, with less than 5% of our space rolling each year and a portion of this in PENN 1. Our leasing team is now in full stride in the Penn District with multiple presentations, tours, and meetings each day with brokers and tenants across all industry types. Using our new Penn District Experience Center to showcase PENN 1, PENN 2, and our grand plans for the Penn District really brings everything to life. The reception to our vision for the district and our best-in-market differentiated project offerings has been nothing short of phenomenal. Turning now to Chicago and San Francisco. In Chicago, we are also seeing more activity in the market. During the first quarter, we completed 85,000 sq ft of leases, including a 45,000 sq ft office renewal, along with 18 showroom transactions totaling 40,000 sq ft, of which 15 were renewals. We currently have a 90,000 sq ft renewal lease in negotiation and a pipeline of 500,000 sq ft showing real interest in the property. Importantly, we'll be restarting the trade show business in October this year with the NeoCon show, beginning to bring back that income stream. In San Francisco, 555 California continues to be in a league of its own. Coming off the heels of our recent large renewals with both Bank of America and Goldman Sachs, in April, we executed a lease renewal with KKR in the triple digits for its 50,000 sq ft in the tower. Our occupancy here is 98%, with minimal expirations until 2023. Turning to retail now. Retail leasing in New York City is beginning to come out of a period of inactivity to a phase where retailers who are succeeding and even thriving are now looking for opportunity. All current leasing activity is very price-driven. The tourist-driven high-rent markets of Fifth Avenue and Times Square have seen the least activity, as retailers remain on pause until there is greater visibility on when the 60+ million tourists will return. During the quarter, we completed 11 retail leases for 46,000 sq ft. These included two long-term renewals at 1290 Avenue of the Americas, including a lease with JPMorgan Chase for a flagship branch, and a seven-year extension with the luxury retailer, Tod's, at 650 Madison Avenue. Our leasing also included another six leases signed at the Farley Concourse, where demand remains strong, and we are in negotiations with tenants to fill the balance of the concourse space. Overall, we are upbeat about the future of our markets, our leading position in them, and our prospects for creating value. Turning to the capital markets now. First, let me congratulate Jan LaChapelle on her promotion to Executive Vice President, Head of Capital Markets. The real estate financing markets continue to improve, with both the CMBS market wide open and banks beginning to lend again on high-quality office. Spreads and all-in coupons are at very attractive levels, as evidenced by our recent strong refinancings at One Park and 909 Third Avenue, both of which were at significantly reduced rates. The unsecured market for real estate companies also continues to be very strong, and it is likely that we may shift over time to a more balanced approach between unsecured and secured debt. Finally, our current liquidity is a strong $3.94 billion, including $1.76 billion of cash and restricted cash and $2.18 billion undrawn under our $2.75 billion revolving credit facilities. With that, I'll turn it over to the operator for Q&A. Thank you. We will now begin the question- and- answer session. If you have a question, please press star then one on your touch tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speakerphone, please pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch tone phone. Each caller will be allowed to ask one question and one follow-up question before we move to the next caller. We have our first question from Steve Sakwa with Evercore ISI. Thanks. Good morning. Michael, I was wondering if you could just spend a little more time on leasing. You gave a lot of detail there. Maybe talk about the terms that you're seeing in terms of TI, free rent, and then length of lease that tenants are looking for today in the market? You want to take that one? Steve, can you just repeat it? You cut out for about 10 seconds. Sorry. I guess the question was really around lease term, TIs, leasing commissions, free rent. How are you seeing some of the impact, not just in phase rents, but some of the concessionary items? What are tenants looking for from a length of lease term? The first thing I'll tell you is lease term, we're seeing a lot of long-term lease commitments, 10 years, 15 years. We actually just completed a lease this quarter for 30 years with the school at 825 Seventh. We're seeing lease terms long. We're seeing commitments for sure. We've seen no change in that as we go quarter to quarter. TIs are elevated, and free rents are elevated. Net effectives, we're off, but I think they've stabilized at this point. Right now, if you want to lease space, meet the market, you have to give the TIs to fill the space, and that's what we're doing. They have stabilized over the past, I'd say, two to three months for sure. Okay, maybe as a follow-up, I don't know if this is for Michael or for somebody else. I know there's been some discussion around the refinancing of 555 California, and there was an article recently about north of a $1 billion new mortgage there. To the extent that you did refinance at that level, how do you think about the excess proceeds and what would that be used for? Steve, it's Steve. I don't think we're going to comment on that other than just to tell you that generally speaking, where there's smoke, there's fire. We won't comment on anything about that transaction at the current time. Okay, thanks. That's it for me. Thank you. We have our next question from Manny Korchman with Citi. Please proceed. Hey, everyone. Good morning. Just wondering how progressive conversations are with tenants at Penn, both for the large blocks available at the current Penn buildings as well as at PENN 15. If that's true of your decision to take the hotel offline and move forward with the larger redevelopment there. Hi, it's Glen. I'll tell you, we're in this experience center down at PENN 1 multiple times a day showing all the projects. I will tell you the action at PENN 1 from a leasing standpoint is absolutely on fire. We do not have any real large blocks there, but in the tower we have some single and two-floor deals happening at rents that are at our underwriting. We're performing very well there. The reception's been excellent. We are also beginning to showcase PENN 2 into the market also daily. A lot of great presentations and incomings, but we're going to go slow with PENN 2. We just started up on the physical construction, and as this thing keeps going on a construction standpoint and the tenants can see it physically, it will just get better and better in terms of the incomings and people's reception. Yes, on PENN 15, we are beginning to show people our plans. The announcement of knocking down the Hotel Pennsylvania has brought a lot of incoming calls and emails. We're starting to talk to folks about PENN 15 as well, as we get into it. Thanks, Glen. I don't know if this one's for you or for Michael, but if we think about the occupancy trajectory through the rest of the year here, do you anticipate that this is sort of the bottom for New York City office occupancy or vacancy? Do you think there's a little bit more to come from a net absorption perspective? I don't have the exact numbers in front of me, Manny. I can't tell you, it may move around a little bit here or there. I think we're pretty close to the bottom. Again, I'm not going to tell you it won't tick a little bit, but I think we're basically there. Manny, anecdotally, I will tell you that Glen told me that several of the brokerage houses have told their folks and their clients to get into the market now that this is the bottom, and that they expect a turn from a tenant market to a landlord's market to happen over the next six months. That's anecdotal information, but it's important information. Thanks, everyone. Thank you. Our next question comes from John Kim with BMO Capital Markets. Please proceed. Thank you. The announcements and the news flow of New York City reopening is very fluid, and even this morning, Goldman Sachs announced plans to come back next month. Are there any more details that you could share as far as what's happening in your portfolio today, as far as more details on lease proposals, what you expect to be signed as far as leases in the second and third quarter, and potentially also traffic in your street retail portfolio? I'll take the office. It's Glen. Michael remarked in the script, in his opening remarks, our pipeline is robust. We have over 300,000 ft of leases in negotiation. We have another 1.4 million ft of deals that are in discussion. I'll tell you, things are picking up a lot, not a little. Tenants are coming out of the woodwork. Many are looking for new space to better quality product. We're seeing a huge uptick in office leasing activity as we sit here right now. In terms of the utilization of the building, that's also upticking week to week. On a percentage basis, we're now in the teens at all the buildings. Most of our tenants are telling us returning starting in June through Labor Day. Certainly, the narrative is unwinding quickly. We're feeling it, we're seeing it, and we're hearing it. Okay. You want to comment on retail? In retail, we're seeing a major uptick in conversations that's primarily due to the fact that the survivors of the pandemic in retail have actually been thriving. New York City is probably the last on the list to be opportunistic because the rest of the country has been booming. New York City is suffering from the lack of our 60 million tourists being in the streets, but the smart retailers are now in the market being opportunistic, and I don't think New York retail has ever offered a better value than it's offering today in terms of prime spaces at better rents. That's very helpful. Thank you. My second question is on the tracking stock that, Steve, you mentioned in the chairman's letter. Are there any more details you could share at this time as far as the timing, whether or not you plan to raise capital through it, and will you be stripping out the financials of the Penn redevelopments from Vornado going forward? I really don't think it's appropriate to comment on this. We're working very hard on it. It's a very exciting project that we're very excited about. We're targeting hopefully year-end. Other than that, I don't think it would be premature to get into any details. I'll give you a little bit of what our thinking is. By the way, a tracking stock is something that has been used very successfully by folks like John Malone at Liberty and his sidekick Greg Maffei, and Barry Diller, for example. Generally, what it's used is where you have a business inside of your core, which is different, and which has a different rate of growth and different characteristics We feel that the Penn District megaproject that we have is different than our core assets. We feel that investors would benefit enormously by being able to invest in the Penn District and its characteristics. By the way, do remember it's a development company, for better or for worse, and our core assets. The differentiating aspects of the Penn District is at what we consider to be the epicenter of the new New York. It's directly on top of the major transportation hub, which means all of the subways and all of the railroads, all of them, come into that hub. That's an extraordinary statement because you can get in and out of Penn Station no matter where you are in the New York City region on one ride. The most important part of it is. By the way, it's enormous. When you look at the number of assets and the scale of the assets and the number of blocks that we encompass, it's enormous. The most interesting part of it, I think from my point of view and Glen's point of view is, it's a cluster of buildings that are interconnected, generally underground. What that means is that a tenant who has a 300,000 sq ft requirement, and I've written about this, who goes into a 500,000 sq ft building is locked in. There's no place to go. But a 300,000 sq ft tenant in our 5 million sq ft growing to 10 million sq ft, growing to 15 million sq ft complex has enormous opportunities to grow should they want to in the same building or in adjacent buildings. I believe that a strategy which involves a cluster of buildings in a campus, which also will allow for an enormous series of amenities that somebody who has even a giant million-foot building can't afford to do, makes us totally unique. We're seeing very much the same thing down in Northern Virginia, where our spin co, JBG SMITH, has this enormous concentration of buildings, and land, et cetera, in the Crystal City complex that Vornado contributed to that company when we did the spin in 2017. We've now attracted Amazon HQ to there, mainly because of the concentration of assets that we have, and obviously because it's a great labor market. The same is true of our New York Penn District. What we're trying to do, and the objective is to take businesses which are different, meaning the Penn District is different than a core office building on even Park Avenue, and allow investors to have the choice. We're very excited about it. It's a very important work in process. More details will be coming as we advance it and when we announce it. I think somebody said in their reports last night that it was not well received by investors, which is troublesome to me because that's totally contrary to my feelings about it and our company's feelings about it. If that's the case, then we have some work to do to talk to our investors and make everybody understand exactly what we're thinking about. We couldn't be more excited, and I think that's it for now. When you list the key attributes to invest in Vornado, arguably Penn District would come up as number one. Have you gotten feedback that this really isn't that different to the reason to invest in the company? I don't understand the question, John. I get your point that you're stripping out something that's different, when in reality, it's just a redevelopment of your existing assets that is a key reason to invest in Vornado today. I'm just wondering why you think it's different. Well, I can say what I said for the last five minutes over again, the answer is that it's totally different in many different ways. It's real estate, it's totally different. The other thing is when you think about stock performance, we don't think that our stock could go. We're getting no credit in the Vornado stock and trading price for the Penn District or basically anything else. What will happen is that we think that the corpus of Vornado will, the price of Vornado will be unaffected or maybe even rise hopefully, whereas the Penn District stock will get to its true value. We don't agree with you. We think it's totally different. Got it. Thank you. We have our next question from Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, good morning, Steve. Morning, Michael. I'm going to take a different tack with my questioning this quarter. I'm going to focus on two what I perceive to be positives in your portfolio. Steve, in your chairman's letter, you outlined your Netflix binging and the fact that studios are now on your radar. It would seem with the JC Penney space at Manhattan Mall and the Penn Station Penn District redevelopment, both of those assets have huge loading docks, huge amounts of potential space that can be carved out, and obviously being in the city is incredibly convenient for studios versus people having to trek out to Queens or some of the outer boroughs. What are your thoughts on converting either of those two assets or some of your other existing that have those sorts of attributes to studios? This all began with two things. Number one, all of us have become Netflix addicts. Number two, we have got incomings from entities that are in the soundstage business or that need soundstages. What's happened is that the streaming business and the entertainment business has become an unbelievably powerful, dynamically growing business, and it's consolidating. The companies that are in that business are huge financial entities. They all have a hankering and even a strong desire to be in New York. Apparently, there is a significant, maybe even dominant, concentration of talent in New York. It's really basically, they say, in three places, New York, Southern California, and I guess in one of the European cities. The point being is that there is a tremendous amount of unserved demand. We're responding to incomings, and so we have assets that could service that demand. I could make a way too aggressive statement that says the Penn District could become Hollywood East. Don't take that to the bank, by the way. There's a great deal of interest in some of our assets that we are working on. Okay. Nothing imminent. We're just responding to where we see pockets of unique demand in the marketplace. Look, that's good. Obviously, it's something new, and it would seem to be something that's good to repurpose, especially large blocks of space that have come back to you recently. We feel we have assets that could be adapted to those kinds of uses. Okay. The second question, Steve, is going back to Penn Station, you guys for over two decades have been talking about Penn Station. We all know the issues about the streetscape and the neighborhood and the desire to see that improve. When you look at Grand Central, that area is already there. East Side Access is clearly going to siphon away a huge chunk of Long Island commuters. You guys have 350 Park. It would seem that 350 Park is almost a better site than Hotel Pennsylvania, just given that the neighborhood is already there, and there are a lot more people being excited by the commuter hub, and you have East Side Access coming in the next few years. What are your thoughts on accelerating 350 Park, and where does that fit in your pipeline as you guys or Glen market anchoring a Hotel Penn versus getting tenants to anchor a 350 Park? We're an equal opportunity employer. Wherever the tenants want to go, that's where we want to put them. Obviously, we have an enormous amount of respect for our 350 Park Avenue asset. It's a great asset. It's kind of bite-sized. It's a 500,000 sq ft asset. It's obviously a candidate for a tear down and rebuild, but a tear down and rebuild is a combination, and we can grow the site too, by the way, as has been speculated in the press. We could grow it so that it's more than a 2 million sq ft building if we wanted to, or just focus on our own site without growing it, which would be a 1 million sq ft building. That is an immense financial undertaking, which would require record rents, which we have talked to several tenants about, and we may do that, but the likelihood is we will not do that. The more likely outcome is that we will rent up the existing 350 Park Avenue at very favorable rent and sort of postpone it for a cycle, and retain the option of doing a new build on it or continuing to rent the existing building over time. It's more likely that we will not do a tear down on that site and rent it out for one more cycle and focus our efforts on the Penn Station District. That's the more likely outcome. Although we couldn't be more delighted to. If we decided that we wanted to sell that asset with all of its optionality in terms of a new build or whatever, we think we could get an extraordinary price for it, but that's not something that's high on our agenda right now. Okay. Thank you, Steve. Thanks, Alexander. Thank you. We have our next question from Jamie Feldman with Bank of America. Please proceed. Thank you. Good morning. Steve, I want to go back to a comment you made at the outset of the call where you said major tech companies plan to continue growing their office footprint in New York City. Can you talk more about exactly what you're seeing? I think our understanding is that a lot of the big leases have been signed. I'm curious if there's a lot more behind it. The answer is, I'm really not going to comment on our sort of confidential conversations with our customers whom we cherish. We respect their confidences. We deal with all of these folks. We obviously have them all in our portfolio, all the way from Facebook to Apple to Amazon, et cetera. We can only tell you this is first-hand information. They love New York. For most of these folks, New York is their second largest outpost and center. What they love about New York is, first of all, their employees love New York. There is a very large and very importantly, a diverse workforce. That's very important to these clients. They have their fingers on the pulse of New York. They follow the real estate in New York as closely as we do. They all have very professional real estate organizations that we are in contact with frequently, almost daily. The answer is that I stand by my statement. They are very aggressively interested in New York. Their interest in New York continues unabated, and we think that's a very exciting thing. By the way, their interest in New York is basically almost exclusively to the West Side of New York. That's where their employees want to be, and that's where their culture says they want to be. We think we're very well positioned for that. We think that bodes very well for the future of New York and for the future of Vornado. If you think about the tech business, right, you'd start with the big four or five. I mean stunning the earnings that they recently posted, the growth rates they continue to have, and the aspirations they continue to have. You have an entire segment of companies that have now either gone public and graduated to the point where they're mid-cap companies, even large-cap companies in New York. These companies have got significant ambition. They need people to execute on those ambitions. They need to be in person, right? Huge amount of engineering talent, collaborations required, et cetera. Both from our own tenants and others that are in the market that are continuing to expand. Obviously, we just brought, for example, fuboTV, who just went public, into our portfolio. These companies have significant aspirations on growing their business. As Steve said, New York is a central aspect of that. I think that's very positive for this marketplace. Michael brings up a very important point, and that is the newbies and the aspirants who are high-growth people, they want to be in the same cluster and in the same neighborhood as the established huge tech tenants are. What Glen likes the best about the new tenants is they are enormous growers, and they look to locate in cluster, in buildings which have the potential where they can add 50,000 ft, add 100,000 ft. I mean, when we started with Facebook When did we start with Facebook? Seven, eight years ago? 2010. They started with a couple 100,000 feet, and then they grew to 700,000 feet over a three- to four-year period. That's the kind of client that Glen loves, and that's the kind of occupancy that we seek. Thank you. That's very helpful. The 1.4 million sq ft pipeline, how would you divide that up by those types of growing tech tenants versus kind of upgrade relocations, or if there's any other meaningful category you'd split that into? Yeah, I'll tell you, Jamie, it's a very diverse industry sector mix and a very good mix of important renewal transactions as we look towards our expirations the next three to four years, along with very good new tenant activity, a lot in the Penn District, but also throughout our other assets. It's a very healthy mix of new renewals, some expansions, and really every type of industry sector. The one industry that's really leading the charge right now is the financial tenants. They're busy as I've ever seen it. Our financial-oriented buildings are really busy. We have backup deals on deals at 888 Seventh Avenue, 280 Park Avenue. They're leading the charge, but in terms of the mix, we feel really good about really covering everyone out there right now in that pipeline we've talked about. Okay. Can you quantify how much of that's renewals of the 1.4 million sq ft? I'd rather not get into the exactness of the numbers. Okay. No, that's fair. I guess another question for you, Steve. You had commented on the boom. I'm just curious what your thoughts are on the benefit to New York City from the Biden plan and the outcome. I know it's still early, the mayoral race kind of What should we be thinking about, either the risks or the rewards based on who's in the game? Let's see. Your question is, how will New York benefit from the boom? What's going on with the mayoralty race, is that correct, Jamie? Well, just what are your thoughts on the Biden plan, and how you think that really could trickle through to New York? How should we be thinking about either the risks or the benefits from the mayoral race? First of all, I think it's pretty clear the country's in a boom. The only thing that I'm uncomfortable about talking about it is that's the consensus feeling amongst almost everybody. Consensus is something to be concerned about. Normally, I like to be on the other side of that, but it is the consensus, and that is also what I believe, and I think it's happening. If you go to other places around the country, which have not been as shut down as New York, it's happening now. You go to Texas, et cetera, where they have been more lenient in the restrictions. You go into a Target store, and the shelves are empty. You go into some of the luxury retailers across the country, and the shelves are empty. The demand is amazing. They can't build enough houses, et cetera. I think that's pretty clear. Biden's policies, together with the fact that the majority leader of the Senate is from New York, there is a significant, and fair, by the way, in terms of when you look at distribution of these programs across the nation. There is a significant amount of financial benefit that's coming to New York in terms of the stimulus package. First, in terms of closing the budget deficits for the city and state, which is a universal program across the country, it's good that we're getting it, and other benefits to our population. We think that the stimulus will be an enormous benefit to New York, and I think that's proving out. With respect to the mayoral race, that's a different kettle of fish. The oddity about politics in New York is that more than 75% of the registered voters are Democrat in the city. Therefore, the mayoral race is not the election, it's the primary. Almost invariably, whoever wins the Democrat primary is elected mayor in the general election. There's double-digit number of candidates. Interestingly, there's really no candidate which has a defining lead. We also have ranked choice voting for the first time, nobody really quite knows how that works. The two or three or four leading candidates are certainly all in the race. I'm hopeful that the candidates will all believe in a couple of principles that I think we believe in. First, that the quality of life is, if not the single biggest issue, the biggest issue, and that is safe streets, clean streets. For example, the homeless situation has to be handled. Quality of life issues are very important, and they're number one on my list. On my list, the second is that we need to be a growing city with employment growing, which I think everybody subscribes to, which means we have to be a business-friendly city. Every once in a while we have flunked on that. The Amazon disaster a couple of years ago in Long Island City is probably the number one example of that. Quality of life, safe cities, the homeless situation, being business friendly, are my number one and two. We then have income inequality, racial inequality. We have to be a fair city. Those are the major issues, I think, in the campaign. I believe that the three or four candidates who look like they have the best chance of being elected are all well qualified with respect to that. I think one of the very interesting things about elections is that this is a time when the political leadership or the political aspirants actually listen to the population. I think that the message that I just said, and I think it's the universal message that's going from the voters to the politicians. It may be some groups of voters may say income inequality and racial inequality is more important. Others may say business friendly and quality of life. Those four major points are the issues, I think, in our city and every other great city, probably in the world right now. I'm very hopeful that we will get a mayor, one of the two or three or four leading candidates, that will be well qualified in that regard. All right. That's really helpful, caller. Thank you. Thank you. Our next question is from Vikram Malhotra with Morgan Stanley. Thanks so much for taking the question. Good morning, everyone. Maybe just first one, Steve, you talked, obviously, there's a lot of activity on the development front and future development. I'm just wondering, in the past, you've made comments about the right time to buy. I know distress has not been plentiful, given the bullish view on office over a multi-year period, can you maybe walk us through how you're thinking about value-added opportunities in the New York area? As I think you have heard today and over the years, we are extremely bullish on New York. We are, as they say, loaded up on New York, and we like our position. I am disappointed that there has not been, in this period, unique opportunities to add value by buying distress, which is something that we have been able to do in past cycles. That's not the way this has worked out. This has kind of been a weird period. We've gone through a recession, a COVID-caused recession. It really didn't hurt our main businesses in terms of our occupancies and our revenue, but it did nick our income by $200 million because certain of our businesses were shut down, like signage and garages, et cetera. On the other hand, and the other benefit of that is interest rates are historically low, chronically low, and looks like they're going to be low forever, which is something I think we have to be a little bit thoughtful about before we subscribe to that. There really hasn't been very much in terms of distress that we've been able to buy, although we've been looking very hard. I'm disappointed in that, but what is. I do believe that the best opportunity that we have for capital in our business by far and away is investing in the Penn District, which I think if one has a five and even a 10-year view, is going to be one of the great investments and one of the great developments out there. That's my view. Okay. Thank you. Two more real quick ones. Just on street retail and particularly the vacancies on Fifth Avenue, can you maybe talk to us about where are we specifically on Fifth and just the more premium corridors, where are we in terms of rent levels that are low enough to attract retailers to really come back and start signing leases? Just wondering, how do you start to fill up some of the vacancies that you have in the portfolio? As Haim said a couple of minutes ago, this is a market cycle that we've been through many times. I think we can almost predict how these cycles go. By the way, this is a very difficult cycle because in addition to everything else, we have the secular change from brick-and-mortar retailing to internet shopping, which is a secular change which sort of makes this cycle much deeper. Nonetheless, it's a cycle. There's lots of vacancies. The first thing that happens is that the vacancies are scooped up by a group of tenants who realize the value and who have business models that can operate and thrive with reasonable rents. When the vacancies start to get to be absorbed, the rents rise. During the whole process, the highest quality space commands the highest rent and the highest demand. That's beginning to happen now. As Haim said a few moments ago, the retailers that have thrived are beginning to recognize that this is the bottom and are beginning to recognize that they want to add, and even in New York, aggressively add, at this price point, the unique, important, scarce site. An example of that is that we did a deal with Fendi on Madison Avenue and 57th Street recently. We extended a lease with Tod's on Madison Avenue and 60th Street recently, and there's multiple other examples of that. What's going to happen is I wouldn't focus on the spot rent today. That's meaningless. That rent will disappear in a year. What's happening is the smart players, the players who have a business model that works, are beginning to absorb the good space, and that will cause the market to shift. In a year or 18 months or so, you'll see a totally different market, and in three years from now, you'll see a monumentally different market, which will be thriving with much higher rents. Great. Just one quick clarification on Facebook. Can you maybe remind us the GAAP contribution that's there this year? Is some of that already recognized in the numbers? Just how does that ramp over the next six to 12 months? We're not going to comment on the details of the Facebook lease other than to say we are so pleased with our relationship, and they are pleased with us. The most recent deal that we did with Facebook was 730,000 sq ft in the very height of the pandemic, to give you a feel for the courage that it takes for even somebody of Facebook scale to sign a lease, multi-$100 million financial commitment. Last summer, if you remember that. The Facebook lease, which covers 730,000 sq ft in Moynihan and in Farley, is totally unique space that we believe, and I think they believe, is unique across the country for where it is in the city of New York and the scale of it being a low rise with 150,000 sq ft floor plate. We anecdotally talk to some of their occupiers, their engineers. They are very excited. They can't wait to get into the space. Other than that, we're not going to comment on the financial details. Thank you. Thank you. Thank you. We have our next question from Daniel Ismail with Green Street. Great. Thank you. Glen, I believe you mentioned a stabilization in office concessions. I was just curious, is that a reference to concessions maintaining their current level or a return to pre-COVID amounts? Now I'm referring to stabilizing as of during pandemic, not pre. We're not back to pre for sure. The goal is to get back to pre. We're not there yet, but they have stopped rising for sure I'm talking about in the current environment during the pandemic. Daniel, same comment about markets. The market has to tighten up a little bit. When the market tightens up, the concessions will tighten up as well. Got it. Then just a quick question from me on Penn. Any update on the ground lease at PENN 1? No. Got it. A bigger picture question on a few of the non-office assets you mentioned in the annual letter. How do you view non-office opportunities like studios, gaming, et cetera, as a% of the overall company? How big can some of these non-office opportunities be? That's an unanswerable question. The reason I put that in there was I think that our shareholders would like to know some of the things that are perking below the surface, even though they may not be that imminent. For example, gaming is an interesting thing. Everybody that follows New York knows that there are three gaming licenses that are yet to be issued in the New York enabling legislation, and that they are targeted for downstate. There's been a fair amount of news about that recently where people who are following, not our company, but following the basic ebb and flow of stuff in New York, knows about this. Those three licenses are scheduled to be released in 2023, but there has been a great deal of speculation in press that that may be accelerated earlier because of the budget deficits, et cetera. The urgency may be off that a little bit because the federal government's closed those deficits, but who knows? We have probably the largest portfolio, and we have been receiving multiple incomings from the gaming industry operators who will be applying for those licenses and competing for those licenses. The inquiries that we have gotten have been for Manhattan properties, and it turns out that it's consensus that our potential assets are probably the best. We have multiple assets, and they're probably the best suited for this kind of activity. We realize that there is, in the enabling legislation, which was passed four or five or six years ago, there's a prohibition against gaming in Manhattan. That's sort of a disconnect. Why are the operators coming in in multiple inquiries about our assets when there's a prohibition? The market is sort of saying, maybe that prohibition doesn't make a lot of sense, et cetera. When you think about it, if there's going to be three licenses issued, it does make sense that one would be to the east of Long Island region, one would be to the Westchester region, and then there's a third. As I wrote about this, fairly short, doesn't make a lot of sense for that third license to be issued in direct competition to one on Long Island or one in Westchester, and that leaves Manhattan, which may be the golden goose in terms of getting revenue for our school systems and what have you. It's impossible to predict how this comes out. We have multiple assets that are of high interest to these folks. This is a complicated political process, and all I can say is that we're just satisfying incoming interest. We'll see where that goes. You can discount that to zero in your spreadsheet. Although if it did happen, it would be financially interesting. We have no interest in being in the gaming industry or being an operator or anything like that. We are a real estate vendor. That's what we do. With respect to the soundstage business, it's exactly the same story. We are a real estate vendor. We are not going Hollywood, although, I think some of us would like to have a bit part somewhere, whatever. We are responding to incomings from an industry, which is a streaming industry, which is unbelievably hot. They have a great deal of interest in being in Manhattan because that's where the talent is. These are nascent ideas, which I put into the letter because I think our shareholders are entitled to know some of the things that are going on in the background. These will undoubtedly not become large parts of our business, but who knows? Just remember I said, you can look at Penn. The Penn District could become Hollywood East. It won't, for sure, but it's an interesting thing to sort of fantasize about. Daniel, all these things that Steve referenced are, and I think to me, the key point for you guys, shareholders, et cetera, is our job is to maximize the value of our assets, right? We look under every rock how to do that. You got the streaming business, which is booming. Steve just talked about the gaming dynamics. Our objective every day when we come to work is how do we maximize the value of our assets. Every different direction. Anything we may do here would be accretive to what we have today, and that's what we do on every asset, right? A lot can't be repurposed, some things can be. Great. Appreciate the color. Just a very quick follow-up, if I may. You mentioned the budget deficit, Steve. Is there any potential, given the fiscal concerns, to potentially getting further density at or around Penn District? There is a GPP, a General Project Plan, which was introduced by the Empire State Development Corporation, which would take the assets that circle Penn Station and supply more density to them. That is a pending initiative which has been promulgated by the state. There are two things sort of involved in that. The first is that everybody is in favor of improving Penn Station from a logistics point of view, from a traffic point of view, from a usability point of view, and from an aesthetic point of view. The state government and the railroads are actively involved in multiple attempts to do that, which involves public money. In addition, it's a totally accepted land planning principle that the most density in any city should be at and surrounding the transit hub, and that's us. That's in process now. It's going through community comment periods, et cetera. There's a lot going on in that regard. Great. Thanks, everyone. Thank you. We have our last question in queue. It is from Alexander Goldfarb with Piper Sandler. Hey. Thank you, Steve. I just want to go back. You mentioned about Penn Station and the mayoral, I think it was Jamie Feldman who asked about the mayoral situation. When you look to Albany, they just passed $4 billion in taxes on the wealthy, which are really the business leaders, and those are the people who are leaving. At the same time, SALT repeal doesn't look likely. Steve, as you think about Penn Station, and you mentioned that there's some pushback on the tracking stock, how do you think about your putting billions of dollars of investment into the Penn Station area when Albany seems to be, and you couple it with the Amazon fiasco a few years ago, seems to almost be encouraging people to relocate. How do you sort of reconcile those two? My children want me to go to Puerto Rico. Look, New York, there will always be New York. New York will always be great. New York will always be a high-tax place to live. It will continue to be the center of commerce, and it will continue to be the business capital of the United States. Now, I agree with you that the folks in various governments By the way, the prize may come out of Washington in terms of taxation. Albany may be a second runner here. The point of it is that the loss of some very high earners who are at retirement age, by the way, is something that is happening. It's happening all around the country. It's happening more aggressively in California, by the way. California folks, they flee to Texas, and New York folks flee to Florida. What I'm saying basically is the backbone of New York is not the 20 or 30 hedge fund trillionaires, billionaires who are going to Florida or wherever. The backbone of New York is the three, $500,000, even $1 million earning management people in their prime, in their 40s, who are raising families, et cetera, who are not the heads of their businesses and can live anywhere, whose jobs and future depends upon being in New York, where they can do three times better than they can do anywhere else. As long as that holds, New York will be fine. As we see it, people like JPMorgan Chase building their new headquarters, building et cetera. The businesses I'm not talking about the entrepreneurs who can live anywhere, and they're a very small number of people, although they're very financially important. The mass of the talent that New York has pretty much is staying in New York, has to stay in New York, wants to stay in New York, loves to live in New York, and has to live in New York because that's where these unique jobs are. Yeah, Steve, when you look at New York's share of GDP, it was 11% two decades ago. Now it's down to seven, it's clear that the economic growth elsewhere is outpacing, that just seems to be something where New York depends on its historic laurels. That seems to be the biggest risk here. Well, the answer to that is that New York is not growing as fast as some of these other smaller places are growing, but it's certainly not contracting. We still think there will be a demand for our product. I'm going to set you up and get you a date to go up to Albany and talk to all my friends at Albany because I think you have a lot to say. That's why we like writing it in print. Listen, Steve. Thank you. Thanks, Alex. Thank you. We have no further questions in queue. I will now turn the call over to Mr. Steven Roth for closing remarks. Thanks, everybody. We appreciate your participation. We appreciate your interesting and provocative questions. We certainly appreciate your interest in our company. When's the next quarterly call? Tuesday, August 3rd. We will see you, if we don't see you before, and we're dying to see you in person. We're dying to see you in person and break bread with you and talk about all of the interesting things that are going on. Our next quarterly call is? Tuesday, August 3rd. Tuesday, August 3rd at 10:00 A.M. We'll see you then. Thank you. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.