SL Green (SLG) Q1 2026 Earnings Call Transcript

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DATE

Thursday, April 16, 2026 at 2 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Marc Holliday
• President and Chief Investment Officer — Harrison Sitomer
• Executive Vice President, Director of Leasing and Real Property — Steven M. Durels
• Chief Financial Officer — Matthew J. DiLiberto

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TAKEAWAYS

• Leasing Volume -- 51 leases totaling 930,000 square feet were signed, the largest first-quarter leasing in company history.
• Leasing Spreads -- Mark-to-market rates achieved were 16% above prior fully escalated rents for the same spaces.
• Trophy Building Vacancy -- The vacancy rate declined to 3.4%, indicating extremely limited supply in this segment.
• Leased Occupancy -- 94.4% leased, with a revised year-end target of 95% (up from 94.8%).
• Economic Occupancy -- Rose sequentially to 85.9%, with guidance to reach 89% by year-end.
• Leasing Pipeline -- Approximately 900,000 square feet remains, with 30% of leases out and expected to close in the near term.
• Net Effective Rent Growth -- Net effective rents achieved record levels in buildings such as Graybar and 1185 Sixth, with rents in the mid-$80s to mid-$90s per square foot.
• Tenant Activity Drivers -- Financial services, professional services, and technology sectors continued to drive market demand.
• Concession Trends -- Tenant improvements have plateaued, with free rent periods and other concessions declining, especially on renewals where “we are having a great deal of success in controlling our concessions.”
• Office Leasing Market Conditions -- No new major office supply is expected in Midtown Manhattan before 2029, while major new deliveries (e.g, 343 Madison) are not anticipated before 2029 or 2030.
• Development Progress -- 346 Madison schematic design completes May 1 with ULURP filing planned by year-end; 7 Times Square proceeding on schedule, with budgets on or below target and early interior demolition underway.
• Dispositions -- Half of the company’s targeted $2.5 billion disposition plan is expected to be completed with the six deals closed or under contract by mid-year.
• Debt Fund Deployment -- $226 million was deployed since the prior call, bringing the total committed to $567 million out of a $1.3 billion fund.
• Third-Party Fee Income -- Growth is expected in fee income from special servicing and transaction fees, which are lumpier and less ratable throughout the year.
• Same-Store Cash NOI Growth -- 2.6% growth achieved in the quarter; target is 10% same-store cash NOI growth for 2027.
• SUMMIT Performance -- SUMMIT held its position as the city’s top attraction in Q1, with hours extended for coming months to meet higher demand; international expansion begins with Paris opening planned for summer 2027.
• Dividend Level -- The dividend is set at $2.47, deemed consistent with taxable income projections, allowing retention of nearly $50 million of incremental capital.
• Capital Plan Execution -- Approximately $3 billion in financings remain in the $7 billion annual plan, with three deals pending in 2026, including a major financing at 245 Park Avenue.
• Share Repurchase Priority -- Holliday indicated share repurchases will receive “the first and hardest look” for any incremental liquidity beyond business plan requirements.

SUMMARY

SL Green Realty Corp. (NYSE:SLG) delivered record first-quarter leasing volume and captured 16% mark-to-market rent increases, while raising its full-year occupancy target to 95% and maintaining robust leasing activity across key Manhattan assets. Management emphasized the absence of new office supply in Midtown before 2029 and cited strong transactional progress toward the $2.5 billion disposition goal. Economic occupancy and same-store cash NOI are both tracking ahead of guidance, with fee income and SUMMIT venue momentum expected to accelerate results in upcoming quarters. The company’s $226 million in new debt fund investments and proactive capital management—including substantial planned financings and a focus on share buybacks—underscore management’s data-based confidence in both operational and financial execution. Significant new development at 346 Madison and 7 Times Square is on schedule, positioning SLG to benefit from favorable supply-demand dynamics for prime office in New York City.

• Harrison Sitomer described investor demand for office credit as robust, noting that the One Madison financing achieved participation from 44 investors and some tranches that were “seven times oversubscribed.”
• Third-party fee businesses are projected to deliver substantial non-ratable revenue, with DPO transactions included in full-year projections but not yet realized in Q1.
• SUMMIT’s international rollout commences in Paris during summer 2027 and features enhanced experiential offerings; U.S. performance in Q1 was resilient even as tourism was down and premium upsell products recovered quickly post-weather disruptions.
• SLG leadership reiterated that, by 2028, funds available for distribution (FAD) are expected to align with the dividend level established after the board’s most recent review.
• Rising average rents are substantially outpacing annual expense growth, which remains around 2% a year, contributing to the company’s confidence in margin improvement as leasing capital spend returns to normalized levels.

INDUSTRY GLOSSARY

• ULURP: Uniform Land Use Review Procedure—a New York City process governing approval of major land use changes, including new construction or redevelopment projects.
• DPO: Discounted Payoff—debt resolution transaction where a borrower repays less than the full amount owed, often generating fee income for servicing or asset management.
• SUMMIT: SL Green’s flagship experiential observatory and event venue atop One Vanderbilt, referenced both as a current NYC attraction and as a concept for international expansion.
• FAD (Funds Available for Distribution): A REIT metric reflecting cash flow remaining after capital expenditures and leasing costs, representing sustainable capacity to pay dividends.
• SASB: Single-Asset, Single-Borrower—a structure for commercial mortgage-backed securities secured by an individual property and borrower.
• TI: Tenant Improvements—costs incurred by landlords to customize rental space for tenant needs, often used as a leasing incentive.
• CMBS: Commercial Mortgage-Backed Securities—bonds backed by pools of commercial real estate loans, important for office asset financing liquidity.
• NOI: Net Operating Income—total property income minus operating expenses, before financing and capital costs.
• PTET: Pass-Through Entity Tax—a New York State tax on certain pass-through business entities, referenced in discussions of city budget proposals.
• UBT/UBIT: Unincorporated Business Tax/Unincorporated Business Income Tax—local NYC taxes relevant to budget and legislative discussions.

Full Conference Call Transcript

Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I ask that those of you participating in the Q&A portion of the call please limit yourself to two questions per person. Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc.

Marc Holliday: Thank you for joining us today at the conclusion of what was an excellent quarter here at SL Green Realty Corp. We achieved nearly all of our objectives and then some. I know there is some misunderstanding in the analyst community about the cadence of our quarterly earnings, but internally, we were right on our numbers for Q1 and advanced many of our objectives for the year. The headline news starts with our leasing, where we had the single biggest first quarter in the 28-year history of this company. We signed 51 leases totaling 930,000 square feet with a mark-to-market that was 16% higher than the previously fully escalated rents on the same spaces.

The takeaway is pretty clear and consistent with what we have been saying for some time now: there is a massive imbalance in the prime office market. At its core, we lease premium space to sophisticated users, and right now demand far outstrips remaining supply after so many years of lease-up both in our portfolio and the city at large, especially in East Midtown. The vacancy rate for trophy buildings dropped again to 3.4% at the end of the first quarter, which is essentially saying there is no space at all in that segment of the market.

As a result, we are seeing continued escalation of rent levels for these buildings and significant improvement in net effective rents, which greatly benefits our portfolio, which, as you know, is mostly centered in this area, and I do not expect this situation to abate anytime soon. On the one hand, the business climate in New York remains really good. Look at some year-end 2025 stats that came out in the first quarter. City tax revenues reached $80 billion in 2025, 16% higher than pre-pandemic, and that is a record level. Real estate tax collections grew by almost 3% year-over-year.

Personal income taxes were up nearly 12% year-over-year, which shows you the enormity of the bonuses and compensation being paid out in the primary business sectors of New York City. There were $65 billion of record Wall Street securities industry profits in 2025. The prior record was $61 billion back in 2009. There are 160 unicorn startups in New York City—private startups valued over $1 billion—and that is the second largest startup ecosystem behind Silicon Valley. $31 billion was raised in venture capital last year, up 25% from the prior year. And New York City ranked number one as the talent hub for 2025 graduates, where one in nine college graduates came to New York City.

On top of a fundamentally strong local economy, we hope and expect to see macroeconomic improvement in the coming months that will simply add to the momentum in the leasing market. After leasing more than 1 million square feet of space in our portfolio year-to-date, we still have a pipeline of approximately 900,000 square feet of space, most of which we expect to consummate. The demand continues to be there. On the other side of the equation, there is really no end in sight to the supply crunch.

There are zero new space deliveries anticipated for the next three years, with recently completed projects like the Rolex building, 525 Fifth Ave, now in the rearview, and new projects like 343 Madison and 625 Madison not expected to complete until sometime around 2029 or 2030. It is simply physically impossible for any other new construction to be delivered between now and 2029 in Midtown Manhattan. This presents us with one of the most favorable dynamics we have seen in quite some time. Therefore, we are proceeding at a very rapid pace on our very own project at 346 Madison, our next great office tower.

We just closed on the site in the fall, and already we are issuing a 100% schematic design on May 1, just six months from the acquisition, and proceeding immediately into design development. We expect to be filing the project into ULURP, the city's land use approval process, by the end of this year. That is a much faster pace than we achieved with One Vanderbilt. I am also very happy with the way the design programming of the building is progressing. We have already been out talking to select potential tenants and top brokers, presenting the project and getting extremely good feedback confirming we are heading in the right direction with this new development.

I expect on the next call to be able to give you some financial details after we price the project with our construction manager and obtain some major trade feedback in the coming months. Our other big development project at 7 Times Square/53rd Ave is also making great progress. As we said last quarter, we now have an agreement with our final remaining tenant for full vacant possession, which enabled us to start fully mobilizing and commencing execution of contracts for work. We are now in the early stages of procurement, and so far we are tracking on or below budget by successfully navigating tariffs and inflation.

Work is far advanced on interior demolition, and in the coming months we hope to finalize our arrangements for debt and equity capital. We also made progress on our disposition goals this quarter, entering into contract to sell the residential and retail components of our 7 Dey project and closing on the sale of 690 Madison Avenue with our JV partner. More to come in the ensuing months as we progress our way through the $2.5 billion disposition plan. We also took advantage of compelling opportunities in the credit market via our debt fund, which is really performing well thus far.

We put out $226 million since our last call, including a transaction closing today, bringing total committed to about $567 million out of a total $1.3 billion fund. All of this positive activity is propelled by a very strong city economy, and we do not expect a summer lull this year as sometimes occurs in years past. In fact, we are expecting a big summer with FIFA World Cup events and the nation's 250th birthday celebrations bringing big crowds and lots of economic activity to the city in June and July. We are forecasting a big boost and shot in the arm, which bodes well for SUMMIT, in particular, for our restaurant venues, and for the city generally.

We feel good about the city and state budget situation as well. The rating agencies did send a message to the new administration about wanting to see some efficiencies in the budget being negotiated now, and the budget that will be in place at the city level by June, and I have every confidence the budget gap will be solved through revenue enhancements, expense control, and support from the state. As has been reported, one piece of that sounds like it will be a new pied-à-terre tax the governor announced yesterday with the support of the mayor and the city council speaker.

Once you get past the notion that we need to find some revenue enhancements as part of this budget process, give credit to the governor for taking a pragmatic and surgical approach to ensure that all New York City residents are paying a fair share. This is a concept that has the support of many New Yorkers because it narrows the focus and impact to the highest earning non-New York City residents who otherwise pay no New York City income tax and benefit from New York City's exceptionally low residential real estate taxes. Last but definitely not least, since we last met, we announced the promotion of Harrison Sitomer to President and CIO.

When Andrew Mathias left the President's seat after twenty-five years of service, we did not rush to find his permanent successor. Instead, we took a measured approach to filling this important position. I wanted someone who truly represents our culture, ethos, and excellence, which is what distinguishes and defines who we are, and Harry is all of those things. As our company turns 30 years of age in 2027, this promotion is a big step towards identifying, growing, and supporting the next generation of leaders here, and I hope to have more announcements in the years to come about the continued ascension of our rising stars.

To wrap things up, I think this was a great quarter and we have made significant early progress on our goals. But when we get together in three months, my instinct is that we will have a lot more to talk about next time on the leasing front, the transaction front, and the company performance front. Thank you. We will now open the call for questions.

Operator: To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from Steve Sakwa with Evercore ISI. Your line is open.

Steve Sakwa: Great, thanks. Maybe Steve or Marc, could you just comment on the pipeline activity that you quoted, Marc? I think you said it was 900,000 feet. How much of that is kind of new or expansion tenants? How much of that is just maybe pull-forward renewals? And maybe just talk a little bit about tenant expectations on expansions and space and how they are thinking about space usage?

Marc Holliday: Well, look, I have the pipeline in front of me. It is predominantly consistent with last quarter, mostly a large number of medium-sized tenants, which is really good and what you would expect because we do not have a lot of big blocks of space left now that One Madison is fully leased. You have to remember, the nature of our pipeline does not necessarily tie into the nature of the pipeline generally for tenants in the market.

What it relates to is what is available in our portfolio, and what is available in our portfolio right now—where I think two-thirds of our buildings are projected to be at 98% or better by the end of this year—we are really just doing new leasing in some of the projects that still have more than that kind of vacancy: 420 Lexington, 1185 Avenue of the Americas. Those are the two most prevalent buildings I see in this pipeline, along with a little bit at 1350 Sixth Avenue, a little bit at 100 Park, and then everything else is a deal here or there—45 Lex, 500 Park, etc.

I would not extrapolate that is the market because there are a lot of big tenants in the market, and Steve can talk about that. There are tenants in that 150,000 to 250,000 to 500,000 square foot range and 1 million square foot users, but you have to have the inventory, which is why we are leasing up the portfolio so rapidly, and why we launched so quickly on Madison, where we will have 850,000 square feet of brand-new state-of-the-art space to deliver right across the street from One Vanderbilt. Anything you want to add to that, Steve?

Steven M. Durels: Of the pipeline, of the 900,000 square feet, 30% of that pipeline is leases out, so we are on a path to wrap those up in short order. As we have seen throughout the year, financial services, professional services, and tech tenants are predominantly driving the market. And I think Marc makes a strong point, which is our pipeline is not dominated by only the best-of-the-best buildings; versus a year or two ago, we are seeing real velocity in the mid price point buildings where we are seeing exceptional rent growth as well.

Graybar, by way of example—and I have been involved with that building for longer than I want to admit—is at the high-water mark in the building's history as far as rents that are being achieved. Lastly, on the concession side, we have clearly seen rents rise, but TIs have flattened and, in some cases, particularly where we have a lot of leverage, they are coming down modestly, but free rent is clearly starting to come down. In particular, on our renewals, we are having a great deal of success in controlling our concessions.

Steve Sakwa: Great, thanks. That is good color. Maybe, Marc, just on the transaction front, I am curious what feedback or data points you are getting from some of the overseas investors. To what extent any of the Middle Eastern investors are either distracted or have other uses of capital that may not want to come to the U.S. at this point? Any thoughts you could share about overseas investors looking at the U.S. market and New York in particular?

Marc Holliday: Our counterparties, for the most part—whether it be partners, co-lenders, groups that are giving us special servicing assignments, groups we have some management for—the predominant countries of origin tend to be Asia, Europe, Canada, and domestic. We do not have a lot of partnerships or counterparties in the Middle East, so I cannot really give you any direct feedback there, only anecdotal feedback, which is as you would expect: sovereigns from Saudi Arabia, Qatar, and the UAE are definitely, I think, pulling in their horns at the moment while they assess that which they are committed for versus how they look at deployment of new capital. But that is really just there.

We are not seeing that in the other markets. If anything, we are still seeing what we talked about three months ago, where I think Harry gave you good color on the feedback we were getting, particularly on the heels of the last trip we did to Asia—in Japan, Korea, and elsewhere. There is still, to this day, strong appetite in both credit and equity, but equity for well-located assets of the highest quality, and generally relationships we have, factoring in our sponsorship. We feel very good about executing the joint ventures and financings that we have scheduled for this year with counterparties from those parts of the region, and we have not seen any material shift in those folks.

Albeit, if you are dependent on Middle East capital, I am sure it is a different story. Harry?

Harrison Sitomer: The only thing I would add is that in moments of macroeconomic uncertainty, proven hard assets in proven locations continue to demonstrate resiliency. We saw that with the One Madison Avenue financing that we got done. I think we met with some of you down at Citi as we were pricing that deal in the early days of the Middle East conflict. That deal ended up having 44 investors across all of the classes. Certain classes in that deal were seven times oversubscribed.

One piece that our business specifically is going to benefit from is that over the past few years we have not been heavily reliant on private credit, so we have not seen big valuations boosted up by big private credit loans. As a result, we are far more resilient to what is going on right now than most, if not all, other industries.

Steve Sakwa: Great. Thanks for the color.

Operator: Thank you. Our next question comes from John P. Kim with BMO Capital Markets. Your line is open.

John P. Kim: Thanks. You are at 94.4% leased occupancy. Your target for the year is 94.8%, and you have a 900,000 square foot pipeline. Is there upside to that target for the year? And same question on leasing spreads, given you had 16% for the quarter and your target figure is around 10%?

Matthew J. DiLiberto: We increased, in our press release last night, our year-end same-store occupancy target from 94.8% to 95%. So we have gotten the upside there. On mark-to-market, we had a healthy objective. It was clearly a very healthy number in the first quarter. We still have nine months to go, but we are well on track for our objective. We typically do not revisit leasing objectives after just three months—we want to get at least six months in before we do that—but obviously the momentum we have coming out of the first quarter puts us on a great track to meet or even exceed the objectives we laid out back in December.

John P. Kim: And then on your economic occupancy, it went up sequentially to 85.9%, which is positive, but it is still below your guidance or target for the year, which is around 89%. Can you talk about how the cadence of economic occupancy goes for the remainder of the year and the impact that will have on same-store NOI?

Matthew J. DiLiberto: The flippant answer—but it is the truth—is it is obviously going up sequentially over the next three quarters to get to that 89% objective that we set out for the end of the year, and we are on the path for that, which then sets us up for our 10% same-store cash NOI growth objective for 2027. All in all, the first quarter on every metric we look at was on or ahead of our expectations. The leasing metrics speak for themselves—a record quarter not just on volume, but on starting rents. The trajectory from earnings to spend was as good or better than what we expected. So great cadence into the back three quarters of the year.

Operator: Thank you. Our next question comes from Alexander David Goldfarb with Piper Sandler. Your line is open.

Alexander David Goldfarb: Harrison, first, congrats. A question following up on your comments to Steve on private credit. As you talk to lenders and capital providers, do you feel comfortable that private credit is not going to infect real estate? Private credit has its own issues in, say, software, but this is not like the second coming of the GFC. Do you feel, in talking to people, that there is some concern it could broaden?

Harrison Sitomer: The simple answer is we are just not seeing it. If anything, the inverse: some private credit investors have felt their pain through the software cycle right now, and they are looking for hard assets. One of the first places they will look is, as I said earlier, proven locations and proven assets. Right now, I see no sign of any direct impact to our industry or our capital markets environment. We are the beneficiary of having not seen that run-up and big private credit demand into our space, so now there is not a lag hangover effect of those groups pulling out of certain markets.

We did not feel one ripple effect of any private credit lender in the market when we priced One Madison in what was probably the toughest week you could imagine—between a conflict in the Middle East and all the redemptions you saw in the news. We had 44 distinct investors and certain classes seven times oversubscribed.

Alexander David Goldfarb: And the second question is for Steve. You mentioned the strength of the more value proposition. Do you see an opportunity for you to acquire B buildings, especially around your core Park Avenue/Grand Central, to create more density in your target submarkets?

Marc Holliday: Alex, it depends on how you define B assets. We are buying assets to convert or to develop. We are not buying B assets to hold and operate if B is defined as real commodity space, even though there is probably, on a relative basis, a lot of upside in those assets. You are not wrong—there will be a tail effect here and you will see B asset rents go up—but we are trying very hard and intentionally to deal not just in a sector where we think rents are going up, but where we think net effective rents can be maximized.

For that, you are really looking mostly for the highest nominal head rents—whether they be $100, $150, $200 a foot or more for new development. Even at $90–$100, if you are dealing with assets where rent points might be in the $50s–$70s, even though you may experience pretty good nominal rent growth, you still have concessions for those leases that are relatively the same—free rent and TI per foot construction costs—as for the much higher nominal rents. We think there is a lot more margin in dealing in the $90-and-up, $100-and-up rents, and that drives us—for hold assets or redevelopment candidates—into that sector.

Unless we feel we can ultimately execute a program and drive rents into those upper categories, you will not see us participate, even though rents and prices are moving in the B assets. It is not a bad play; it is just not our focus.

Operator: Thank you. Our next question comes from Nicholas Yulico with Scotiabank. Your line is open.

Nicholas Yulico: Thanks. First question, going back to the idea that there is really not much new supply coming to market in the city for four years or so. Can you talk more about how that plays out relative to your portfolio and submarkets? It sounds like it should be a benefit. In some cases, new supply is being looked at by tenants with lease expirations four years out, so there is no real benefit today to buildings from that. Can you unpack that dynamic a bit more?

Steven M. Durels: Two takeaways. One, tenants are getting smart to the market and seeing rents rising, and that is driving those paying attention to do early renewals. In some cases, we are in front of tenants with expirations three to four years out in time, which is great. It is a smart landlord play to do early renewals and take downtime or vacancy risk off the table. Two, there is a spillover effect where tenants need to go farther afield or one avenue over from where they wanted to be, and that is giving lift to some other buildings. Within our portfolio, the best example is 1185 Sixth.

We are seeing some pretty heavy rents by comparison to historical rents in that building, with a tremendous amount of leasing velocity. It had a lot of tenants vacate over the last several years, and we are on a path to that building being fully stabilized this year with rents in the mid-$80s to mid-$90s per square foot.

Nicholas Yulico: Thanks, Steve. Second question for Matt on quarterly FFO. I know you do not plan to give guidance and there are moving parts in a quarter that create volatility, but if we think about the first quarter number and then getting back to the full-year guidance range, can you talk at a high level about some components that will accelerate FFO throughout the year?

Matthew J. DiLiberto: Our quarterly results can be choppy and people tend to read too much into a quarterly result. The reality of our first quarter numbers is that we were not even a penny off from our internal expectations—property NOI was better than we expected, offset by SUMMIT, which had a tough weather quarter and underperformed our expectations. Net-net, we landed right on top of what we expected. As we look out over the balance of the year, we are headed right to the midpoint of our guidance range as well. FFO results quarter to quarter might be choppy, driven less by NOI and more by fee income.

Our third-party fee businesses are growing, and a lot of those fees come in big chunks rather than ratably—success fees out of special servicing, fees from transactions. We did not close big transactions in the quarter, to say nothing of DPOs that we still have in our projections for the balance of the year. We feel comfortable about where we are in the guidance range, with a bias to the higher end.

Marc Holliday: I would add to that on SUMMIT. SUMMIT is an enormous success. Every year we are pushing ahead the envelope on the earnings capacity of SUMMIT. For 2026 over 2025, we had another big increase baked into our expected performance. It was off a bit in Q1, but it was far and away the leading attraction in the first quarter among all the attractions in the city. Where other decks might have been down a percent or more, SUMMIT held its own.

I am completely confident, based on what I have seen in April alone as the weather has improved and heading into what is going to be an extraordinarily good summer for the reasons I mentioned, that we will end up the year at SUMMIT ahead of our ambitious targets. We are extending our hours more than budgeted in response to excess demand we are seeing for May and June, because we are pre-selling those tickets. In terms of future ramp in FFO for the company, SUMMIT will be a contributor.

Operator: Thank you. Our next question comes from Anthony Paolone with JPMorgan. Your line is open.

Anthony Paolone: Thanks, and good afternoon. First, on your 95% targeted leased rate for year-end versus where your economic occupancy is—the gap is pretty wide and assumed to be narrowing. Can you give us a sense of where a normal spread between those two should be over time for the portfolio?

Matthew J. DiLiberto: We only started reporting economic occupancy last quarter, so we do not have perfect history. Clearly it is at the wides right now. It will narrow substantially over the course of the year to probably half as wide as it was at the end of last year by the end of 2026. On a stabilized, normalized basis, it is always going to lag leased. If you are in a fully leased portfolio—95% plus—with limited roll, which is the period we are headed into, I could see that being roughly 200 basis points of difference on a recurring basis as space rolls and you re-tenant space. That seems like a comfortable place to be—maybe tighter—but 200 feels about right.

Anthony Paolone: Thanks. Second, on capital markets: can you characterize liquidity broadly in the market right now—are a lot of buyers back, a lot of product for sale, cap rates for the best versus more commodity product? Just a broad sense of liquidity and capital markets at the moment.

Marc Holliday: I will break it into equity and debt. On equity, we always have our head down focused on our business plan. The plan is on track and we feel good about executing it this year. As a data point, we have 11 transactions in the business plan for this year. On the last earnings call I said we had four dispositions we were working on. When I went to Citi, I said we had five. Now, where we sit today, that number is six. Two of those six were the already announced deals at 690 Madison and 7 Dey, and the other four transactions are progressing very well.

I would expect all four of those to close or be in contract in the second quarter. Those were the six identified for the first half of the year, and they are on plan, on target, and expected to get done in the first half. With respect to the credit markets, the market is very strong right now, especially because of the CMBS market and the SASB market that we just experienced at One Madison.

Harrison Sitomer: Two data points there: One Madison was the largest office deal done in the U.S. since January 2025, and the bottom of that deal—priced in a very complicated and difficult week—was the tightest new-issuance office spreads at the bottom since when we did One Vanderbilt in 2021. We continue to see new capital coming into the credit markets. We are not feeling any of the lag effects of private credit pullback, and liquidity continues to get stronger in the credit markets as we are seeing.

Operator: Thank you. Our next question comes from Seth Berge with Citi. Your line is open.

Seth Berge: Thanks for taking my question. First, going back to some of the SUMMIT commentary and the demand you are seeing there—are you seeing, with the strong demand, opportunity for premium experience upsells? How is the pricing side coming along?

Marc Holliday: Q1 is not a good representation of what the next eight and a half months will look like. Tourism in the city was off a bit, which may translate into a slightly different mix of domestic versus foreign visitation. Domestic accounts for about 30%, which is quite high. It is a very popular local attraction as much as a tourist attraction—we worked hard to transcend both markets from an observatory, cultural, and nightlife perspective. Looking at the advanced sales we are booking now, tourism is picking up, and we expect to recoup whatever slight diminution there was in Q1 over the next nine months.

We expect a typical profile to last year, with the summer months seeing a lot of international travel. There is expected to be over 1 million people coming in for FIFA World Cup games at MetLife Stadium and 8–10 million people coming in for the Semiquincentennial around Independence Day. We are strategically situated to sell out those months. On upsells, the only one is the Ascent elevator rides. When the weather is very cold and winds are high, we do not run that as often; those ticket sales were down a bit in Q1 but have completely bounced back and more. SUMMIT is hitting on all fours, and we are opening SUMMIT next summer in Paris.

It is going to be an extraordinary day for SUMMIT and for the company when we have our first global location accepting visitors, with an additional announcement pending in the coming months.

Seth Berge: Thanks. As a follow-up to Harrison's capital markets comments, specifically with equity markets and dispositions, can you talk about the profiles of who the buyers are for office and residential? Is there a core bid for office, or is it value-add/opportunistic? And any impact on willingness to buy/sell office from thinking about long-term AI impact on employment?

Harrison Sitomer: The composition of investor groups has not changed from what Marc outlined earlier. We spent a lot of time early in the year on our first show in Asia and are in the process of closing out a handful of transactions I mentioned earlier. Those buyers are looking at a range—our disposition plan includes everything from ground-up office buildings to core office to value-add office, and that market continues to be there for all of those product types. On residential, you can look at our latest comp: the sale we did at 7 Dey to a buyer that is a core residential buyer continuing to accumulate more product through a public listing they have.

On AI, the investors we speak to are looking at the same stats we listed at the beginning of the call. It was the best first quarter for New York City office leasing since 2014. Some of that leasing is driven by AI tenants, some of which we have announced, and investors are optimistic about what they are seeing.

Operator: Thank you. Our next question comes from Ronald Kamdem with Morgan Stanley. Your line is open.

Ronald Kamdem: Two quick ones. First, on the postmortem on the dividend cut. Can you talk more about what went into cutting it to that level—taxes or cash flow—and why not cut more, given high interest costs and limited flow-through? Why not cut the dividend even more to offset that?

Matthew J. DiLiberto: We spent a lot of time discussing the dividend. Ultimately, taxable income is what, above all else, drives the dividend, and our business plan for this year was consistent with the dividend level we established. We can maneuver within taxable income to some extent, but if we are going to execute on the business plan—and we are on a path to do that—then you have to pay the dividend at a certain level, and that dividend is where we established it at $2.47. At the same time, it allows us to retain almost $50 million of incremental capital that we can put to other accretive uses—DPOs, maybe buybacks.

Capital spend will go down such that, in the back half of 2027 into 2028, there is a big shift in cash flow to the positive. We will reevaluate the dividend every year based on taxable income.

Ronald Kamdem: Thanks. Second, I know FAD is not cash flow and it was a bit down in the quarter. As you think about the ramp on NOI as you get commenced occupancy, any sense of the magnitude of dollars that are going to flow to FAD?

Matthew J. DiLiberto: As I said last quarter, the spend in 2026, like in 2025, is the funding of a lot of leasing—9 million square feet of leasing we did over a three-year period. That assuages in 2027 into 2028 and will drive same-store cash NOI growth north of 10% next year and enhance earnings and FAD. We will talk magnitudes as time progresses.

Marc Holliday: I only see one way to look at it: we are leasing the hell out of this portfolio. With that comes leasing capital that we will muscle through in 2025, 2026, and 2027, but we are going to try and get this portfolio to 96–98% leased. That would be unprecedented for 31 million square feet. Getting beyond what I would call the frictional vacancy point of 97%—we are vastly outcompeting and getting more than our fair share. We will pay for that tenancy because there was a lot of out-migration for unnatural reasons in 2020–2024. By this time next year, to the levels I think we are going to get, we will already be working on 2027, 2028, 2029.

We want to get this portfolio to full occupancy. There will be a cost to that, but when you attain it and then you are living in a world mostly of renewals, there will be an enormous rightsizing of the capital, like we experienced in the past and will experience in the future. That is our business plan. We are not just on track; we are ahead of track. Our average rents are going up significantly faster than expenses, which are up about 2% a year. Steve is starting to rein in capital, first on renewals and then on new tenants.

This is what shareholders want us to be doing: redeveloping our buildings, having a premium Class A portfolio, leasing it to its fullest, and investing in a portfolio with unparalleled residual value in 2027–2028. From my vantage point of 36 years in the business, I have never seen a market as good as this one.

Operator: Thank you. Our next question comes from Blaine Matthew Heck with Wells Fargo. Your line is open.

Blaine Matthew Heck: Great, thanks. Following up on dispositions: Harrison, you mentioned you would have closed or be under contract on six of the 11 targeted sales by midyear. In rough terms, would those proceeds put you at about half, or a little more than half, of the targeted $2.5 billion of sales this year, or are those six skewed smaller or larger than the remaining five?

Marc Holliday: Approximately half.

Blaine Matthew Heck: Great. And, Marc, we are several months into the new mayor’s time in office. Beyond the budget, can you talk about anything that has been a positive or negative surprise relative to your initial expectations, and whether you see any risks or opportunities for your business arising from policy changes?

Marc Holliday: It is still very early—it is too early to assess any mayoralty in the first hundred days. This is measured over years, not months. I look to the opinions of stakeholders: condo buyers—Q1 was a record for $10 million-and-up condo sales, up about 47%; Wall Street profits; expansion by tenants. I am seeing tenants who are, on a scale of five or six to one, expanding rather than contracting. Tech is back. The key issue is affordability. Different mayors will tackle it in different ways, but we agree it is best for the city to make the city more affordable.

The current administration’s focus seems to be on getting more production in housing to help stabilize or even bring down rents. You see cutting through red tape on “City of Yes,” SEQRA/land use revisions, support for conversions under 467-m, and a program to try and reduce insurance premiums for affordable/rent-controlled housing. Having that focus is productive as long as there is appreciation that tax collections make all this work, and our industry drives tax collections. Our industry is firing on all cylinders. If left unimpeded, and if we can exceed tax receipts this year on top of record receipts last year, there will be money to take care of administration priorities—mass transportation, affordability, cost of goods.

Objectives align, and I see a city poised for a very good year.

Operator: Thank you. Our next question comes from Peter Dylan Abramowitz with Deutsche Bank. Your line is open.

Peter Dylan Abramowitz: Hi, thank you for taking the question. Matt, you mentioned being biased towards the high end of your guidance range. You talked about fee income impacting the ramp throughout the year. In terms of potentially getting to the high end, can you talk about the specific items that could get you there? Is it NOI? Other items? And any commentary on underlying guidance assumptions and whether those have changed?

Matthew J. DiLiberto: In Q1, NOI was running ahead of our projections, and that flowed through to earnings and same-store cash NOI. The 2.6% positive same-store cash NOI was 300 basis points higher than what we expected for the first quarter, so NOI will be a contributor. Marc discussed SUMMIT and the momentum we are seeing already in April and expect over the balance of the year to make up any small shortfall in Q1. Fee income—our third-party fee business is growing. If we can exceed our initial projections, that is very high-margin, high-multiple business. We have a DPO in our guidance; if we can source more, that is upside. Momentum from Q1 biases us to the midpoint or higher.

Peter Dylan Abramowitz: Thanks. And maybe a question for Marc on the new administration. You mentioned the pied-à-terre tax that was reported yesterday. I believe the estimate for incremental revenue is around $500 million, which still leaves a budget shortfall. From the first hundred days or so, there have been talks of taxes on higher-earning households and higher property taxes that have not gotten a lot of support. With a gap to fill, what else is possible from a legislative perspective to fill that, and how could that impact your business?

Marc Holliday: The City Council and the new City Council Speaker, Julie Menin, came out thoughtfully with their own budget. The mayor has a budget; the council has a budget. Their emphasis will be on cost-cutting. Last year’s budget was about $115 billion; this year is projected at $127 billion. You are not going to get all $12 billion of increase—that is the initial stab. There will be efficiencies and reductions achievable.

If you assume the state is going to solve $500 million to $1 billion of it, you are talking about a 3–4% gap to be closed, with revenue projections likely reassessed higher based on the first quarter’s tax receipts, plus the new pied-à-terre tax, plus council proposals on modifying PTET, and a modification of UBT/UBIT. They are going to close that gap. By June there will be a balanced budget through incremental tax, some revenue reforecast, and some expense reductions. The city has gotten there every year since the 1970s. We will get there again.

Operator: Thank you. Our next question comes from Vikram Malhotra with Mizuho. Your line is open.

Vikram Malhotra: Good afternoon. Thanks for taking the question. Marc and Matt, pushing a bit more—you have done a lot of good work getting up occupancy, TIs are coming in, you have less to lease, and you are dealing with 2027 expirations. Can you give guardrails on how this ultimately translates to a measure of cash flow—FAD or cash flow from operations? You said 10% same-store next year, but it would be nice to get some broad guardrails rather than wait nine to twelve months. And can you clarify TI spends in 2026 and 2027—do we wait until 2028 before growth picks up?

Marc Holliday: When you say guardrails, I am not exactly sure what you mean beyond what we have given. We gave it in December, and our projections have not changed. There is plenty in the supplemental and our other disclosures to get a handle on the amount of capital necessary for leasing—it is arithmetic. You see every quarter how much we spend on TIs, commissions, and free rent based on quantum of leasing.

As we approach 96–98% occupancy, there are going to be spend years for the balance of this year and next, but we have said—and I thought we were clear—that by 2028 we expect our FAD to be in line with our dividend that we recently recalibrated to, and then hopefully more. We will get there with that kind of guidance in 2027, but not today.

Vikram Malhotra: Just to clarify: by 2028, you think FAD will be similar to the dividend?

Marc Holliday: If you look at my commentary on the dividend and what Matt said in the release when we came out with the new dividend level after our last board meeting, we said the new dividend level was set where we expected to be able to cover that dividend and more by 2028. I am reiterating that. That is our belief and how we got to that very specific number—it is based on our models and calculations. We try to be very conservative on NAV and growth projections, but we are headed to a great spot both in earnings and cash flow.

Vikram Malhotra: Thanks. Going back to SUMMIT, makes sense the World Cup should drive a nice uptick. Any update on other projects and regions—when could we see the next SUMMIT driving NOI?

Marc Holliday: We expect to open Paris in summer of 2027. I will come out in December with monetary guidance on that. In 2027, it will only be open half a year, but I expect a seismic, popular, well-attended opening. What we have designed is like SUMMIT 2.0 with lots of new features. It is thrilling to work with Kenzo and Rob Schiffer on these projects now coming to life, with more beyond. The next locations would not be 2027—they will be announced this year with future openings thereafter. Paris is first next year.

Operator: Thank you. We have a question from Brendan Lynch with Barclays. Your line is open.

Brendan Lynch: Great, thank you for fitting me in. Matt, you got a nice reduction in your spread to SOFR with the new revolving line of credit, and you have been bringing down your cost of debt for the past year. Macro-dependent, but do you see other opportunities within your control to reduce your weighted average cost of debt further?

Matthew J. DiLiberto: Great execution on the credit facility—appreciate the work of our team and the participating banks. The financing backdrop was strong and the institutional support was extraordinary. We have about $3 billion left of our $7 billion financing plan for the balance of this year, and then not a lot thereafter. We talked in December about increasing some floating-rate exposure because we expect the curve—maybe not at the pace we would like—but eventually to come down. We will let some of our fixed-rate derivatives burn off and take advantage of a lower SOFR curve overall. Harrison can speak to the financings in our pipeline and what we are seeing in the market.

Harrison Sitomer: We have three financings left in the business plan for this year, the largest of which is 245 Park Avenue. We just started that process yesterday, so we will see it play out through the second and third quarters. More to come next call. On pricing, we have no influence over base rates, so we will monitor SOFR and Treasuries. On spreads, we are optimistic about tightening, especially in CMBS. Especially at the bottom of the deals, we are seeing spreads tightening even from where we saw One Vanderbilt price. Each deal will depend on asset quality and execution, but we definitely expect a strong execution at 245 Park.

Brendan Lynch: Great, thanks. The press release alluded to turning more active on share repurchases. Matt mentioned that earlier as well. What conditions would incentivize you to be more active on executing the existing authorization?

Marc Holliday: I have been clear in the past: I think the stock is terribly mispriced. You do not have to look hard to appreciate the magnitude of the discounted valuation relative to a fairly liquid and active market where it is not hard to get price and value discovery on assets we own, especially well-leased assets where the debt and equity cost of capital is well known. I look at buybacks as a significant opportunity that we will take a very hard look at with incremental liquidity to the business plan. Our plan includes investment in new development projects and reduction in indebtedness—both secured and unsecured.

With incremental liquidity above and beyond that plan, share repurchases get the first and hardest look.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Marc Holliday for closing remarks.

Marc Holliday: Thank you, everyone. We ran longer than usual, so thank you for all the questions. We look forward to speaking in three months’ time.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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