Good morning, and welcome to the Vornado Realty Trust fourth quarter 2021 earnings call. My name is Richard, and I'll 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 Mr. Steven Borenstein, Senior Vice President and Corporation Counsel. Please go ahead. Welcome to Vornado Realty Trust fourth quarter earnings call. Yesterday afternoon, we issued our fourth quarter earnings release and filed our annual report on Form 10-K 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. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-K, 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 31, 2021 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 statement. 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. Thanks, Steve, and good morning, everyone. By any measure, Vornado just reported an outstanding industry-leading quarter at the head of the class of our industry peers. Comparable FFO for the fourth quarter increased 19.1% from last year's fourth quarter. Company-wide, same-store cash NOI for the fourth quarter increased 10.1% from last year's fourth quarter. Same-store cash NOI from our New York business for the fourth quarter increased 11.3% from last year's fourth quarter. Company-wide, we leased 2.9 million sq ft for the year, of which 2.5 million sq ft was in New York, where our leasing teams landed the second and third largest office leases and the second largest retail lease. For the quarter, we leased 1,036,000 sq ft company-wide, of which 1,008,000 sq ft was in New York. You will hear more about our leasing activity in Michael Franco's comments shortly. New York office cash starting rents were $83 for the year and $88 for the quarter. New York office cash mark-to-markets were a positive 10.8% for the year and a positive 29.1% for the quarter. Importantly, our triple-digit Madison Square Garden anchor lease at PENN 2 and our current leasing successes at PENN 1 validate our Penn District program. Here's a short update on the Penn District. The acclaimed Moynihan Train Hall is open to the public. Our retail leasing in the train hall is nearly complete with 26 leases executed. The doubling in width and doubling in height of the Long Island Railroad Concourse is scheduled to be completed by year-end. We own the retail on both sides of the LIRR Concourse, all of which space was vacated to accommodate the construction. We are now finalizing with over 30 retailers for that space, many of them food-oriented, at terms that are better than pre-COVID lease levels. At Farley, we have turned over all of Facebook's 730,000 sq ft to them for tenant fit-out. At PENN 1, our brand new lobby and multi-floor amenity offerings are largely completed and open. Our amenities here are extensive. We believe them to be the largest amenity package in the city by far, and unique, tailored to the demographic of our workforce and is receiving rave reviews from tenants and brokers. After all, we are in the hospitality business, and that means pleasing our tenants and pleasing their employees. On the seventh floor of PENN 1, our experiential leasing center is open and busy. This 14,000-square-foot facility, complete with multiple scale models and floor-to-ceiling wall-to-wall videos, vividly illustrates and brings to life our vision and plans for the buildings, restaurants, retail, amenities, lifestyle, and work style that the Penn District will become. At PENN 2, we are give or take 25% into construction. Our construction operations in the Penn District span three full blocks, 31st Street to 34th Street along the west side of Seventh Avenue. In a few short months, everything in our Penn District will come to life as shiny modern curtain wall continues to be erected on the PENN 2 facades, as steel is erected giving shape to the massive two-block-long bustle, an architectural statement in scale and substance that will announce the entrance to Pennsylvania Station, Madison Square Garden, and our office building as the Hotel Penn across the street begins to come down, daylighting that unique site. My excitement and conviction about our Penn District grows quarter by quarter. I still believe that a winning strategy is to allow investors to choose between the high growth development-oriented Penn District or our other pretty terrific in their own right class A traditional core assets or both. Nonetheless, we have decided to pause the execution of a separation via tracker. This is a purely internal transaction with no counterparty or deadline, and I believe a delay until COVID is resolved and New Yorkers return en masse to the office is appropriate and warranted. A word about our retail business. The Manhattan retail market has definitely bottomed and activity is accelerating. For 2021, our retail cash NOI was $160.8 million, blowing away our guidance of $135 million. Further, we are increasing our 2022 retail cash NOI guidance by $15 million from $160 million- $175 million. While we own a very large and very important trophy quality asset in each of San Francisco and Chicago, Vornado is primarily a Manhattan-centric company. As we interact with our tenants, other occupiers, and market participants, our conviction about Manhattan's future performance, importance, and even dominance is stronger than ever. Case in point, Manhattan has become the second home to all of the tech giants, specifically the new West Side, and they continue to grow here. With inflation the topic du jour, I should point out that replacement costs for New York office buildings is rising pretty aggressively. I submit that replacement cost has always been a leading indicator, a leading indicator foretelling that our existing stock of office buildings will be increasing in value. In the same vein, the Manhattan residential market is, I believe, also a leading indicator. It went from 100% occupancy pre-COVID down to 70% at the height of COVID, and is now back to 100% at higher than pre-COVID rents, by the way, as New Yorkers have returned. Restaurants are full and standing room only. The city is full, but office buildings not so much. That last domino will be when employers and employees resolve hybrid work schedules and the office districts are again teeming with activity. I submit that will come sooner than you think. That concludes my remarks. Now to Michael. Thank you, Steve, and good morning, everyone. As Steve mentioned, we had an outstanding quarter and a strong year. Fourth quarter comparable FFO, as adjusted, was $0.81 per share compared to $0.68 for last year's fourth quarter, an increase of $0.13 or 19%. For the year, comparable FFO was $2.86 per share, up $0.24 or 9% from 2020. We have provided a quarter-over-quarter bridge in our earnings release on page four and in our financial supplement on page eight. We had several non-comparable items in the quarter, primarily 1290 Avenue of the Americas defeasance costs, and a TRS non-cash deferred tax liability, partially offset by 220 Central Park South gains, which in total reduced FFO by $0.08 per share. As we look ahead, we are expecting another strong year in 2022, with double-digit percentage FFO per share growth, driven primarily by previously signed leases in both office and retail, particularly Facebook at Farley, and the continued recovery of our variable businesses. With respect to our variable businesses, we continued to see a recovery in the fourth quarter. Our dominant signs in Times Square and the Penn District continue to attract disproportionate demand and have healthy signage bookings. BMS continued to perform near pre-pandemic levels. A number of trade shows have successfully taken place, albeit with lower attendance, primarily due to travel restrictions. Finally, we still expect our garages to be fully back in 2022. Other than Hotel Penn's income, we still expect to recover most of the income from our variable businesses in 2022, with the full return in 2023. Company-wide same-store cash NOI for the fourth quarter increased by a strong 10.1% over the prior year's fourth quarter. Our core New York office business was up 8.5%, and our retail same-store cash NOI was up 32.3%, primarily due to the rent commencement on new leases at 595 Madison Avenue, 4 Union Square South, 770 Broadway, and 689 Fifth Avenue. Our New York occupancies also continue to recover nicely. Our office occupancy ended the quarter at 92.2%, up 60 basis points from the third quarter and 110 basis points from the trough in the second quarter. Retail occupancy ended the quarter at 80.7%, up 350 basis points from the third quarter. We expect further improvement in both occupancies by year-end 2022 based on our deal pipeline and modest 2022 office expiration schedule. Now turning to the leasing markets. The New York office leasing market continues to strengthen and show resilience in this period of change, supported by strong economic and private sector job growth. Quarter-over-quarter sustained leasing momentum led to total volume in 2021 of 25 million sq ft, by far the highest level since the start of the pandemic. Tenant demand continues to surge, especially from technology and financial services users. Importantly, these companies are committing to long-term leases as they map out their futures. Tour activity has returned to pre-pandemic levels with lots of deals in the works. Most industry experts are forecasting market rent occupancy improvement in 2022, with pent-up demand building as more employers get off the sidelines and into the market. The office market's recent performance is completely centered on flight to quality as the highest quality properties are clearly winning. Tenants are strongly attracted to transit-oriented properties with state-of-the-art systems, amenity-rich programming, outdoor space and health and wellness features, along with food and beverage offerings. Importantly, they are happy to pay for quality and value as it's more important than ever to CEOs that they be in appealing and engaging workspaces to attract and retain their employees. JLL reports that in 2021, an all-time high 164 leases comprised of 3.4 million sq ft were signed at $100-plus starting rents. Our leasing team led the market here with 831,000 sq ft or 25% of these deals, including the largest deal in this class for the second year in a row. Our lease with MSG at PENN 2 follows in the footsteps of 2020's largest trophy transaction with Facebook at Farley. We expect this trend to continue, which bodes well for rental growth for our high-quality assets. Overall, we continue to outperform the market, as is evident from our statistics and think it is worth underscoring our leasing accomplishments during the pandemic over the past 24 months. 4.48 million sq ft leased. Starting rent of $85 per sq ft. Mark-to-markets of 8.6% cash and GAAP of 14.1%, an average lease term of nearly 13 years. We executed on a number of large important leases during this timeframe. Facebook, 730,000 sq ft. NYU, 633,000 sq ft. Interpublic, 513,000 sq ft. Madison Square Garden, 428,000 sq ft. Apple, 336,000 sq ft. Clear Secure, 119,000 sq ft. In 2021, our office leasing performance was comprised of 98 transactions for more than 2.2 million sq ft total, with initial starting rents of $83 per sq ft and an average lease term of 11 years. Moreover, cash and GAAP mark-to-markets were strong at 10.8% and 15.9% respectively. 38% of this activity were trophy transactions at triple-digit rents. During the fourth quarter, we completed 23 leases totaling 954,000 sq ft. Our average starting rent during the quarter was $88 per sq ft. Cash mark-to-market was 29%. GAAP mark-to-market was 39%, and average lease term was 14 years. All very, very strong figures. The Madison Square Garden lease is another major milestone for us in the Penn District and validates our program to take rents from the sixty. Richard. Yes, if you could, unmute the backup line. For the year, we executed 36 leases for 229,000 sq ft at positive GAAP and cash mark-to-markets of 37% and 13% respectively. We have an active pipeline with over 170,000 sq ft in the works. Interest in the Penn District in particular is strong, and we expect it to grow with the commencement of leasing in the Long Island Railroad Concourse. Turning now to Chicago and San Francisco. While the Chicago market continues to be challenged by high vacancy, negative absorption, elevated tenant concessions, there are signs which suggest a growing confidence by tenants entering the market as leasing activity continues to increase quarter-over-quarter. We have recently embarked on bringing our New York work-life amenity ecosystem from PENN 1 to the Mart and plan to spend approximately $40 million to create a new tenant program focused on the first and second floors. The program will further differentiate the Mart and include first-class fitness and conferencing facilities, a new outdoor plaza and main entrance fronting our River North neighborhood and new outdoor spaces and landscaping on the south drive along the Chicago River, building on what we first accomplished in 2016 with our grand stair, restaurant and new food hall. We anticipate starting construction in the second half of this year with a completion during 2023. We have begun to introduce the project to the marketplace and are experiencing a real uptick in tour volume proposals. We have a lease out for 80,000 sq ft with a fintech company and are in advanced dialogue with 50,000 sq ft of potential new tenants. In San Francisco, the city's office leasing market is beginning to thaw and recovery seems to be underway. Office leasing volume averaged 2.1 million sq ft over the last two quarters. We renewed 446,000 sq ft in total here during 2020 and 2021, putting the campus in great long-term shape. We have zero lease expirations in 2022 and a modest 203,000 sq ft expiring in 2023 and 2024. Where we finalized a renewal with one tenant for 50,000 sq ft just last week at a significant positive mark-to-market, and are in discussions with the remaining tenants to also renew. You will see that our occupancy in the campus declined from 98% to 94% this quarter, which is solely a function of bringing back the 78,000 sq ft cube, which is vacant, back into service. The balance of the campus is full. Lastly, turning to the capital markets. The investment sales market is continuing to pick up with the return of large office deals at strong pricing, such as 441 Ninth for $1 billion, 452 Fifth Avenue for $855 million, and One Manhattan West for $2.85 billion. Investor interest in New York is clearly rebounding as they see that the city has bottomed and find the relative value compelling. On the debt side, despite the move up in rates, spreads remain tight and all-in coupons attractive. We refinanced over $4 billion of debt in 2021, taking advantage of the very favorable financing markets to lock in low rates, including our early refinancing in November of the $950 million loan on 1290 Avenue of the Americas. We have modest debt maturities in 2022, the largest of which we are currently in the process of refinancing, and essentially no maturities in 2023. Finally, our current liquidity is a strong $4.105 billion, including $1.93 billion of cash and restricted cash, and $2.175 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, you may need to 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 a question and a follow-up question before we move on to the next caller. We're standing by for questions. Our first question online comes from Mr. Manny Korchman from Citi. Please go ahead. Your line's open. Hey, good morning. It's Michael Bilerman here with Manny. Steve, I wanna go to your comments around the tracker and putting it on pause. Maybe you can just walk us through your and the board's decision to put that on pause. Obviously, you made the announcement last April when we were in the throes of COVID. It had been multiple multiple years that you'd been thinking along those lines. Why put it on pause now when there is a lot of vibrancy coming in the city, a lot of excitement? Obviously, the office stocks have rebounded. It would seem. Actually, it would be a good time to put something out. Maybe just walk us through the decision of putting it on pause and whether you would look at other transaction alternatives to a tracker, or is it still, you know, 100%, you know, on that path? Good morning, Michael. How are you? Fantastic. I'm calling you from the office. Uh, so I. How about that? I hear you had a little dust-up yesterday. Yes, I did hear. Look, I mean, I think that my remarks speak for themselves. We think COVID is not resolved yet. Our tenants, customers, and the CEOs that we talk with that are in our portfolio and in the city know that they have not resolved yet the coming back to work, getting their employees back into the office or the schedules, et cetera. We're still in an uncertain period. Our thinking is that we want to have put our best foot forward. There is still uncertainty. We are still at the foothills of a recovery. We don't, we just don't think the timing is right. That's our judgment and I stand for it. With respect to your, I still have conviction about the concept of having our investors be able to invest in either the Penn District or our pretty terrific other assets, and whether there's other transactions. There's no other transactions that are being contemplated at the moment, although we do have a responsibility to you know to cover all the bases. I'm just really trying to understand what really changed in your thinking because this wasn't a financial driven transaction, right? You didn't have a counterparty, which you talked about. You know, this was really just. Michael, I couldn't. Yeah. Michael, I couldn't be clearer, okay? This, we're still not done with COVID. Buildings are still, you know, 30% occupied. This is not the right time to launch something like we contemplated for success, okay? I couldn't be clearer. No, no, I know you're clear, but this is not something. You announced this during COVID, right? You've been progressing along this path for a number of years. That's it. It's just surprising to now put it on pause when we've had all this information, and you've been doing this during COVID. That's the thing. I'm happy that you're surprised. I have nothing further to say. Okay. Thank you. Thank you. Our next question online comes from Mr. Steve Sakwa from Evercore ISI. Yeah, thanks. Good morning. Michael, you unfortunately, the line cut out for maybe a minute or two. I think we lost a little bit of information, or at least I did. I don't know if you had talked a little bit about the pipeline, but maybe you could just talk a little bit about the leasing pipeline and perhaps how the MSG lease, you know, directly impacted the leasing stats in the fourth quarter. I realize there was a very big mark-to-market on that lease, and so it probably helped to get you up towards that 29% figure. I was just wondering if you could unpack maybe MSG from everything else in the quarter, and then talk about the pipeline in general. Steve, I did make a comment on the MSG. If you take MSG out on the mark-to-markets, I guess that's where I cut out. MSG was a tremendous deal. That being said, the balance of the quarter was similarly outstanding. Now, if you take out the MSG lease, the mark-to-markets for the quarter were 9.2% cash and 12.9% GAAP. Outstanding starting rents and mark-to-markets really across the board, which I think is reflective of our portfolio. Steve, let me give you a little color the way I look at it. There were three components in the leasing this quarter, okay? One was the MSG lease. The second was a 136,000 sq ft lease in a building we own in Long Island City. Obviously, the market there is in the mid-30s of rents, so that was lumped into the averaging. Then there's the balance of the portfolio. The number that I think is the most relevant is the starting rents, because I think that speaks to the quality of the assets. The rent in Long Island City, the Long Island City component of the quarter's leasing. By the way, Glen and his team did a bang-up job in the quarter this year and last year, and they always do. We couldn't be prouder of our Glen and his teams. The Long Island City lease was 136,000 sq ft in the 30s. The Madison Square Garden lease we know about, okay? By subtraction, the remainder of our portfolio, that is ex-Long Island City and ex-Madison Square Garden, the starting rents were $94 a foot, okay? Not $65, not $70, $94 a foot. I think that if you focus on that is a measure. Now, of course, this is idiosyncratic. It depends quarter by quarter by the mix of tenants. What I'm saying is the fact that the balance of our portfolio, ex-Long Island City and ex-Madison Square Garden, commanded $94 starting rents, to me, is extremely telling to the quality of our assets and the reception that our assets get into the marketplace. I'll talk about pipeline. Hey, Steve, it's Glen. On the pipeline and Michael's remarks, we said two things. One, we have leases out final negotiations of more than 400,000 sq ft. Notably, about 80% of those deals are with new and expanding tenants. Furthermore, we're in a very good negotiation on another, call it more than a million sq ft, which is a real balance of new expansion and renewals across the portfolio in all the buildings with tenants from most of the industry sectors. Very strong activity throughout the portfolio, you know, as we sit here today. Steve, out of that 440, again, maybe I cut out here, 160,000 of that sq ft is at PENN 1 at over $90 per sq ft starting rents. Just to continue down the line on this question, and it's an important question and the statistics are important, Steve, so thanks for the question. Basically, what's happening in the Penn District, and when we basically announced our plans in the Penn District, we said that we were going to take the two existing buildings, which are the better part of 5 million sq ft combined. These are big assets, they're important assets. We were going to spend X, and we were gonna take the rents from $55 a sq ft average up to, into the 90s and into the triple digits. We believe that our performance, as announced this quarter, validates that program. The MSG lease is not a one-timer. It's not an anomaly. We have lots of leasing to do in the Penn District, not in the existing buildings, you know, not even getting into the new buildings that we will be doing. We will be announcing, I don't know, the better part of 100,000 sq ft a quarter or whatever the number's gonna be at $90 rents, maybe triple-digit rents, you know, almost as far as the eye can see. The numbers are going to be foretelling what the future will be and what the growth will be and what the earnings accretion will be coming from the Penn District. The number that I'm the happiest about is that the balance of our portfolio commanded $94 this quarter. I think that's an extraordinary number, and we're very proud and happy about that number. That also is the result of years and years of improving those assets, redeveloping those assets, and nurturing those assets so that they perform at the level that we were able to daylight this quarter. I'll give a shout-out to David Greenbaum and Glen because they did most of the work of repositioning those assets over the last years. Great. Thanks for that commentary. I guess, Steve, just as a maybe follow-up, you know, with new government officials in, both the governor and mayor specifically, I'm just curious. That's not a follow-up. That's a whole new topic. Go ahead. Well, just briefly, can you maybe just talk about, you know, the mayor and some of the priorities and how they fit into kinda Penn Station, and whether it's a homelessness issue in New York and the crime, just, you know, how are you sort of thinking about that and, you know, what do you think are the key focal points here for the next six to twelve months? Well, you know, obviously, the densely populated urban northern cities which go across the northern belt of the country, that goes from Washington, D.C. and New York across to Chicago, and then across to San Francisco, are all pretty much similar. Similar to similar politics, similar demographics. Crime has increased there and all of those cities have the same rate. Homelessness is one hobby. It's a situation which is distressing. It's disturbing. We believe that the political climate in New York is getting better. If you read the headlines about what the mayor in Chicago has said, what the mayor in San Francisco has said, what the mayor in New York has said, they are all sort of similar, and that is that the situation has to improve, and their job is to improve it. We are extremely optimistic about the political climate in New York at the governor level and at the mayor level. We're very supportive, and we're very optimistic. Thank you. Our next question on the line comes from Mr. John Kim from BMO Capital Markets. Thank you. I had a couple questions on guidance. You mentioned increasing your 2022 retail guidance to $175. Can you talk about some of the puts and takes on that? 'Cause I know you sold some assets since the original guidance was put out. How does this impact your 2023 guidance, which initially was at that $175 level? You know, we don't give guidance. We did give guidance on retail because of the precipitous change in market dynamics. We did do that to help you all in terms of your modeling and in terms of your valuing our retail assets. I don't think that it would be productive for me to start getting into 2023. Although we are optimistic about it, we think 2023 will be better than 2021. We're on a progression of recovery. I think Michael or Tom, do you want to pursue that any more? Yeah, I would just say, John, look, first of all, I think if you think about, you know, where we were, you know, a year or two years ago and we first laid this out, I know you've been on this. There was some skepticism, whatnot. I think we've continued to say, we own the best retail assets in the city. You know, there was a period where, obviously at the outset of COVID, with no tourism, no workers in the city, right, leasing went on hiatus. You know, it's now picked up. You know, we still need to see consistent return there. You know, the tourism started to come back pretty significantly in the fall. Retailers are now active again. I think what you're seeing in 2021, you know, was the fact that we got, You won the pools. We got the benefit, you know, of our assets. Again, when you own the Fuller, you know, a lot of great assets that we own, you know, Union Square, et cetera, we saw leasing there. We're seeing continuation of that, and I think a lot of what's gonna come through in terms of raising the guidance in 2022 is the fact that we did sign leases at quite a few of our assets, and that's gonna come online. You know, we feel good about the number we put out there. As Steve said, hopefully continues to go up from there you know, the bottom that you know, we had called earlier in 2021, I think you're seeing come through, and we just need to see a consistent return of you know, tourism and workers and so forth for rents to start building back significantly. Just from a technical point of view, we did guide and predict what 2021 would be. We exceeded that by, was it $25 million? The number is now known. We thought it the responsible act for us to now update what we expect for 2022, and we did that in my remarks. You know, we're trying to tell you what we think as we think it. I just wanna clarify. The Moynihan retail, is that being pulled forward to 2022, or is that still expected to be a 2023 delivery? The latter. Okay. My final question is on. The 2022 number does not include the Moynihan retail. You can just, you know, look back and just think the Moynihan retail is pretty substantial, how that will improve the 2023 number and our growth profile going forward. Okay. My follow-up question is on variable income. Your indication, it's not really quite guidance, but your indication is that it will be fully returned in 2023. However, if I look at your fourth quarter gain on the variable income of $12.5 million versus the loss that you had in the prior year, fourth quarter 2020, which was $24 million dollar loss, less the Hotel Penn. Hotel Penn was about $14 million. It looks like you've already gained back all that variable income that you lost in the fourth quarter 2020. I'm just wondering if components of this variable income have changed. No. Look, do you fellows wanna handle that detail on this call, or do you wanna handle it supplementally off the call? Either way. I mean, it's gonna be primarily garages and trade shows that are gonna come back. You know, BMS and the signage is pretty much back to where they were pre-pandemic. Well, I would say the signage is like we had an outstanding fourth quarter on the signage side. Having the dominant signs, as I mentioned in my comments, you know, has paid significant dividends, and that's with having taken a couple signs offline, right? Yeah. You know, while we're back up to pre-pandemic levels on the signage, that's not same-store. When we bring those signs back, we think that number goes up further. The BMS business and our signage business are growing businesses, by the way. In normal times, what we're doing now is recovering from the hit of COVID. In normal times, and going forward, we'd expect those businesses to be, to grow. How else can we help you, John? Next question, please. Thank you. Our next question on line comes from Jamie Feldman from Bank of America. Please go ahead. Great. Thank you, and good morning. I wanted to get your thoughts on exposure to floating rate debt. As you look at the balance sheet, you know, you do have a decent amount. Clearly, we're in a rising rate environment. Maybe if you could just kinda step back and tell us your philosophy and, you know, what we should expect going forward in terms of either, earnings risk from floating rate debt or just, you know, how you expect to run the balance sheet in terms of percentage floating versus fixed. Jamie, good morning. You know, a few comments. The answer is, you know, we do run our balance sheet with a mix. I don't think anybody can predict exactly where rates are going in any environment. The reality is, if you'd borrowed fixed for the last several years, you know, you would've been generally wrong in terms of where rates are going. Even floating, you know, when we have looked at swapping those, obviously, we're gonna pay more for several years. You know, I would say from a baseline standpoint, you know, our balance sheet is 50/50 fixed floating, okay? Now, when you net out, let's just say $1.5 billion of cash, which is sort of natural hedge against floating rate debt. As rates go up, we're gonna earn more on that income. We're probably about 2/3 fixed, one-third floating, which is, you know, not that radically different from, you know, most others. There's probably one company that's entirely fixed. Why do we borrow floating to that proportion? Because we have a number of assets that the business plan warrants that, right? We're gonna be executing redevelopments. Maybe there's a recapitalization opportunity. For whatever reason, having that debt be fixed. Sale. For sale, right? Having that debt be fixed, we think is costly, right? I would think almost 100% of the time, if you're selling an asset, recapitalizing an asset, if you borrow fixed, the buyer doesn't want what you've put on it, right? You've guessed leverage levels wrong, high or low, and it ends up costing you more than it would've cost along the way. That's some general philosophy. On a floating rate basis, even if they go up, they're still cheaper, in our view, than where we would've borrowed fixed for several years and maybe entirely. Look, rates may go up now, Jamie, right? The Fed's gonna clearly push short-term rates up here to tamp down inflation, hopefully not push us in recession. You know, that's a risk. We think ultimately, you know, rates stabilize at levels that are, you know, still fairly low. That's you know, general commentary. I'll let Steve, you know, tack on if he's got anything. You know, I think important also to understand that natural hedge that sits in our cash portion. Macro philosophy, the thinking on the part of analysts and what have you, that fixed rate debt is safe and floating rate debt is not safe, is totally incorrect and debunked, in my opinion. If you were a fixed rate borrower over the last 15 years, you were wrong and dead wrong, to the tune of huge amounts of money. The first thing is that if you look at it from a risk point of view, if you are a fixed rate borrower, you have locked in a cost for, you know, seven, 10 years, whatever it is. If you wanna refinance that loan or sell the asset or redevelop or whatever it might be, then you have to pay a defeasance, which historically has been very, very high. There is risk in fixed rate debt that you know, many folks don't really recognize, okay? Now, you have been wrong historically. Generally speaking, there is a premium to floating rate to fixed rate. Generally speaking, it's, you know, anywhere from 2%-3%, 200-300 basis points. If you borrow fixed, you are giving up 200-300 basis points, maybe more, with certainty in the beginning. Now, rates fluctuate, and it appears as if we are in a period now where the Fed is in a tightening cycle, as Michael said, to tamp down inflation. Whatever. You know, for example, we did a floating rate loan, a big floating rate loan on 555 California last year. We basically, the loan was unbelievably attractive, and we swapped it for, I guess it was for three years at an unbelievably attractive low fixed rate for that. We hedged our bets with that. We did a big floating rate loan recently on 1290 Avenue of the Americas, and we did not yet swap it. Our feeling was that the difference between the current bid on floating rate debt versus the fixed rate debt was so high that the risk that our tolerance for increases in floating rate debt outweighed the cost of fixing the debt. I mean, that's basically a philosophical answer. Philosophically, looking backwards, fixed rate debt has been very wrong. Going forward, of course, now our balance sheet is pretty simple. We stay very liquid with a couple of billion dollars of cash on our balance sheet most times. As Michael said, that is a hedge. We do swaps. When we do use floating rate debt, we do it with care, caution, and we think a great deal of thought. All right. Thank you. I appreciate the detailed and thoughtful response. You know, you guys gave good color on, you know, kind of where the thought process is for, office tenants right now in terms of getting back to the office and the kind of space they use. How would you characterize the thought process of retail tenants right now in terms of where they wanna be, the types of spaces they're looking for? Any, you know, read-through we should be thinking about at this point in the cycle? Haim, are you on the call? I am, Steve. Yes. The first sign of resiliency in New York City were the neighborhoods and the basic needs retail, the Union Squares, the 770 Broadway Wegmans. Those have come back robustly. The high streets and our major high streets are Fifth Avenue and Times Square. Those are gonna take a little longer. We need our international tourists back. We need our workers back in the office to fill the streets. That's just a little behind the curve, and I predict those will be back robustly as well. You know, it's interesting. There was, and probably still is, a very negative feeling about brick-and-mortar retail in the ether. There has been a startling recovery in brick-and-mortar retail around the country. The open-air shopping centers are doing well. The freestanding brick-and-mortar retailers are doing well. I mean, look, for example, at Target stock. It's just shocking how well they are performing. They are basically a combination of brick-and-mortar and e-commerce. There's others like them. The luxury brands are booming, and that's mainly almost entirely brick-and-mortar. Around the country, retail is recovering surprisingly well and aggressively, and that includes open-air shopping centers and the malls, what have you. The cities, the big cities in America are lagging, and New York is a lagger. There's lots of reasons why, you know, we understand those reasons. We believe over time, and not a long period of time, by the way, that New York will catch up with the rest of the country, and high street retail in New York will begin to recover aggressively. The marketplace in New York, as Haim, I think, said, is the retailers that are doing well, that are well-capitalized, that are well-managed, that are aggressive, are starting to nibble and take new locations. I mean, we have done, you know, multiple deals with those kinds of folks. We expect that over time, the street retail will recover. We do not expect it will recover to the unbelievable highs of the top tier in rents three, four or five years ago. It will recover from today's levels very aggressively. Is there anything you're seeing in the market that changes your appetite for certain types of assets or how you wanna be positioned within retail? Well, let's see, how do I answer that question? We have offloaded several assets. We're not very high on Madison Avenue for lots of different reasons that I went into extensively on the last call. We unloaded some small, less important assets downtown. The rest of our assets we're pretty happy with or very happy with. I mean, you think about it, we own the two, you know, the two best mega blocks on Times Square. They're irreplaceable assets. The assets that we have on Fifth Avenue. By the way, Fifth Avenue is struggling. The traffic on Fifth Avenue is not what it was, but it will recover. You know, we reanalyze the hand that we have, you know, periodically, frequently. As of right now, we're not unhappy with what our portfolio. Thank you. Our next question online comes from Alexander Goldfarb from Piper Sandler. Please go ahead. Hey, good morning. Morning, Steve. Hopefully, your bankers and lawyers have paused the billables on the tracking stock as well. A question for you. You know, when you look at the TIs that are in the quarter, for, you know, presumably that's a lot of Madison Square, but also other tenants as well. Then speaking to brokers, hearing about how tenants are cutting lease terms, you know, 10 is the new 15, what have you. How have the economics changed as far as when you're leasing to tenants, how has the TI package and the length of the lease changed as you're engaging in the rents? Is it purely a function that the way to get the higher rents, you have to, you know, escalating TIs given inflation? Do you think that, you know, some of this may subside? Just trying to get the economics, because if you look in San Francisco, 555 California, you know, it's the TIs as a percent of the lease are much, much lower than they are in New York. All right. Go on, Alex. I will tell you, TIs have certainly neutralized. They, of course, did escalate post-COVID, but we've seen a stabilization in those numbers. Rents are even strengthening in many of our buildings. You know, this quarter was certainly weighted to the MSG deal, which was a market TI. So, you know, the numbers, you know, speak for themselves. I would tell you know, San Francisco, a lot of the deal-making that we've done the last two years have been renewals, and the terms have been, call it, five, six years. I think the bigger answer to your question is, tenants are committing to long-term leases. If you listen to our, you know, remarks in terms of term, you know 13, 14 year average terms, I think is a huge signal that CEOs are committing to space in a big way, you know, all over our portfolio and throughout the city, alone. I think that's a big thing in terms of the signals of everyone starting to think about the future, bringing their employees back, and making huge commitments to space. I think the term is the biggest, you know, answer to focus on in terms of, you know, what you're, you know, asking. Alex, let me give you my take on this. The inducement packages, TIs are elevated. We are not happy with that, by the way. It's the market, and we have to meet the market. The market in New York is basically a sort of a. There's a rule of thumb, a formulaic rule of thumb, that based upon the term of the lease, that's how large the TI package is and the free rent package is. Okay. It's fairly formulaic, and you know, the market has gone to a. It's not a jump forward. Every lease is a new negotiation. There's kind of a formula. It's kinda like one month free for every ten-year term, you know, that's the way it sort of works. There are some wise guys in the market, and we are certainly not one of them, who will elevate the TI package and buy up the rent. Okay. That's not the game that we play. Okay. No, that's helpful, Steve. Then, just going back to, you know, your comments about uncertainty in the market, and certainly, you know, I saw yesterday there's a headline that, I guess, Eric Adams isn't gonna pursue bail reform with Albany. It sounds like that may have died yesterday, which is unfortunate, because certainly we need that. You mentioned uncertain. Alex, making political predictions like that, you're over your head, son, okay? You know, just because a newspaper says something and because whatever it is, don't, you know, don't take that to the bank. Okay, I won't go to the ATM. My question is, you made a comment about uncertainty around COVID, and it seems like a lot of companies, especially the Wall Street banks and everyone, are sort of moving on and accepting that COVID is here. We gotta get back to the office. Even Kathy Hochul has said that. When you make the comments about the uncertainty in the market, is there a concern that until maybe labor pressure subsides, that the companies may feel like they have to still be sort of gingerly with the employees? Or is there a true concern from the leasing managers that if there's another COVID wave, they may go back to the return at home? It just seems like everyone's sort of done with COVID and wants to get back to normal lives. I was just curious about your comment about it still being a risk out there? I didn't think I said it was a risk. I said it was not resolved yet. The point of it is this: every CEO that Glen talks to or Michael talks to or I talk to, they want their people back in the office, okay? The business is run from the office, not from the kitchen table. They all feel it's a universal feeling that the office is the place where creativity is, gatherings are, and that's the place where businesses are run and where businesses grow. I mean, I think that's a universal feeling. Now, obviously, there's different health issues and other issues which have affected that feeling. Obviously, it's getting a little silly where, you know, people announce they're going to call back their workers on X date, and then that gets postponed and postponed and postponed again. From my point of view and that of my partners here, speculating on when all this is going to be over and when the, you know, the occupancy rate in the offices will go back, you know, from the 30% that it is now up to the 75% that's normal, you know, I think it's silly. It's going to happen. Whether it happens three months from now or nine months from now, we don't know. T he one thing that we do know is all of our clients, our tenants, and the CEOs, they basically want to be office-centric operations. Okay. Thank you, Steve. Thank you, Alex. Our final question comes from Ronald Kamdem from Morgan Stanley. Please go ahead. Hey, two quick ones for me. Just going back on the variable income, maybe asking it a different way, is there a way to think about how much is left relative to sort of pre-COVID, that's not been recovered, just putting it all together? You know, I don't wanna give you a number off the cuff here, Ronald. We can follow up offline. We gotta go component by component. Let's not do it off the cuff. Sure. My last small one was just, in 2021, sort of did one acquisition and bought a partner out. Just curious, is there sort of more opportunities like that in 2022 and 2023, as you're thinking about the portfolio and some of the joint ventures? Look, that was. What was the question? We bought a partner out in 2021. Are there more opportunities like that in 2022? You know, the answer is we'll see. We'll see. They initiated that, and we responded, and we're happy about the purchase. You know, all our other partners seem fairly content. Got it. Thank you. The answer continues to be we'll see. We have no further questions at this time. Well, thank you very much. We appreciate you all participating. I mean, obviously, as you can tell from the results that we published last evening and our remarks and our dialogue this afternoon, we're very proud of the quarter. We think we had a bang-up quarter. I'm extremely proud of our teams delivering on these results, and we're excited. You know, we think, once again, we reaffirm the quality of our portfolio. We reaffirm that we are bouncing off the bottom aggressively in retail, and we're, you know, doubly and triply excited about the Penn District. We appreciate your participating in the call, and we'll see you at the next call. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.