Thank you all for joining us and welcome to SL Green Realty Corp.'s Fourth Quarter 2021 Earnings Results Conference Call. At this time, we want to remind listeners that management may make forward-looking statements during the call. These statements should not be relied upon as predictions of future events because actual results and events may vary. All forward-looking statements are based on management's assumptions and beliefs as of today. Additional information about the risks, uncertainties, and factors that could cause these differences can be found in the Risk Factors and Management's Discussion and Analysis sections of our latest Form 10-K and other reports filed with the Securities and Exchange Commission. We may also discuss non-GAAP financial measures during the call, as defined by Regulation G under the Securities Act. You can find the GAAP financial measures that are directly comparable to each non-GAAP measure discussed, along with reconciliations, on our website at www.slgreen.com by selecting the press release for our fourth quarter 2021 earnings, as well as in our supplemental information filed with our current report on Form 8-K related to our fourth quarter 2021 earnings. Before we proceed, I ask those of you participating in the Q&A portion to please limit your questions to two per person. Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc.

Thank you, and good afternoon, everyone. Before we begin, I want to express our sincere condolences and deep sympathies to the families of officers Rivera and Mora, who gave their lives in the line of duty. At SL Green, we work hand-in-hand with the NYPD, FDNY and other first responders, and we support their efforts in every way we can day after day. There is an outpouring of support at St. Patrick's Cathedral right now, and there will be more in the coming days and weeks as the new administration works with the state to make public safety the number one priority in the city. Everyone has a role to play, and I'm confident we can and will move forward from this. Now, we appreciate the opportunity to discuss with you our company performance and financial results for the fourth quarter and full year 2021. After a solid December in the office market, we had a bit of a reset in January, which is not atypical after the holidays, but most businesses in our portfolio express their intentions to return to the office in February, and by March, we expect to be back at the same levels we saw in December, if not beyond that. The Omicron virus seems to be dissipating as fast as it arrived, and we are hopeful that February we will begin to return to normal. Those questioning the ability of New York City to rebound need to look no further than the resurgence in 2021 of the residential markets, which saw record high-end condo sales and a 1% vacancy in rental apartments as young people return to the city. Our newly completed rental project at 7 Dey Street supports this thesis as we have now signed leases for over 100 units at average rents just shy of $100 per square foot. On the employment front, New York City added another 8,000 office-using jobs in December, bringing the total December-to-December job gain to 61,000 new jobs. We have now regained just over half of all office-using jobs lost during the early days of the pandemic, and there are approximately 50,000 additional jobs forecasted to be created in 2022, which should help to begin to reduce office vacancy rates in Manhattan and in some of the sub-markets we've already started to see those contraction. We remain optimistic about hitting our ambitious leasing goals for 2022 on the heels of signing 250,000 square feet of office leases after our December Investor Conference and notwithstanding having grown our pipeline to almost 1.3 million square feet today from just about 1.50 million square feet in the beginning of December. The positive takeaway is that companies continue to see the office as the central and necessary hub of business activity and are making long-term commitments and expansions within the portfolio that vastly outnumber contractions. It will take some more time to work through the system and get past the disruption of the pandemic, but with the new Mayor, the new Governor and the business community all coming together and playing significant roles in the recovery of the city, we have every expectation of a rapid recovery and another demonstration of New York's extraordinary resiliency. Seven weeks ago, we hosted our December Investor Conference at One Vanderbilt, and we did a deep dive into our goals, objectives, and expectations for '22, which we reaffirm as we sit here today. As usual, we covered a lot of our 2021 accomplishments, which I think were sector-leading in New York in many different respects of leasing, transactions, operational performance and contribution to the city in the form of openings of the SUMMIT, Le Pavillon and other things that turned out to be extraordinary successes, and I think demonstrated the leadership we have and the commitment we have to this market. And accordingly, as is our custom for the January call, we're going to go right into the Q&A and get questions as everything we talked about in December is still relatively fresh, and happy to address anything we covered then or anything new as a result of the release we put out last night. So, with that, we'll turn it over for some Q&A.

And our first question comes from Michael Lewis with Truist Securities. Your line is open.

My first question I wanted to ask about flight to quality, and so, yesterday on Boston Properties call, they used San Francisco as an example with market vacancy well over 20%, but when you look at the top 25% of buildings, it’s more like 5%. Another example, I was in Atlanta recently where the office vacancy is above 20%, but the REITs there are below 10%. So, I wanted to ask about New York and about SL Green, your competitive set, how you think about maybe your investable universe used to be the top half of buildings in New York and now it’s the top quarter, something like that? Do you think differently about any of the assets you own or about how you want to concentrate the portfolio now?

I would start off by reminding you that when people talk about the flight to quality, that’s not unique to just new construction or the very, very top 1% of the marketplace. What we’re seeing is throughout our portfolio and given the fact that our portfolio is highly improved throughout all of the buildings. And with the exception of a couple of buildings that we have in redevelopment, we are seeing a migration of tenants coming into the building. Of that 1.3 million square feet that Marc spoke of pipeline, probably 85% to 90% of that are new tenant deals. So, I think, sometimes people get confused that we’ve had such great success at One Vanderbilt, and therefore, that’s the whole show. But in truth, we are already seeing the benefit of our redevelopment plan at The Lipstick Building, where we have two full leases out, and we haven’t even picked up a hammer yet to start the work. But off of a - off of the plan that we’ve got, tenants are coming to the building. We’re seeing increased activity throughout our other very high-end buildings like our 100 Park Avenue, 461 Fifth, 1350 of the Americas. So, you can go down the list of the portfolio and the better quality buildings, particularly Midtown transportation-centric located buildings, are seeing a lot of the activity in the marketplace. And the last point I’ll drive home is to say, we said at our Investor Conference, we had more guests in the tank between then and the end of the year to get to our target of 93% occupancy, and in fact, we signed those leases to hit that bogey.

Yes. And on that point, I think the statistic you mentioned in San Francisco, 20% vacancy 5% from on the top, the same statistic is right in front of us here at SL Green. This market - Manhattan market has a vacancy rate of 16% to 18% depending on what source you use and our portfolio is only 7% vacant and shrinking. So, that same story is there, but that 7% vacancy isn’t just our top buildings, that’s every building combined on average.

Okay great, thanks. And then, my second question I wanted to ask about the risk reward and the DPE book, the rising interest rates have been seemed to start the year, how do you - what do you think about - are you seeing your investment yields start to creep up and maybe there is some opportunity there? And then, on the flip side of that, how do you think about the value of your current holdings, and the value of what you own?

Well, our portfolio is mostly floating rates. So yes, I think the value of the portfolio is very much intact. There is not much diminution as the 10-year rises, if at all. And we are seeing more structured finance opportunities, but that's mostly based on just increased transaction volume in Manhattan, more so than sort of as a result of rates rising.

And our next question coming from the line of Alexander Goldfarb with Piper Sandler. Your line is open.

Marc, I just want to go back to your opening comments on the new Governor, new Mayor, and obviously, Albany. New mayor is awesome. There is definitely seems to be some tension with Albany as far as bail reform. But one of the items that came out late last year was a proposal to do a billionaire's tax and tax billionaire capital gains at normal income, which I'm guessing would lead to other taxes that perhaps Albany would like to pass? So, in your discussions in the business community in New York crime and street safety is one element, but there's also the regulatory and tax element as well. What's your sense of what Albany may do, and are they listening to the business community and what really drives the city as far as the companies that take residents versus migrating to Florida or elsewhere?

Yes, I mean, I do think so that this year, uniquely among years, the state is flushed with cash. I mean, that’s the good news. It came out with a budget in excess of $200 billion, so the highest budget it's ever proposed, and we'll see as it gets negotiated and finalized. But it's - it was able to be proposed in a way with very little in the way of any new revenue enhancements, because the combination of surging business profits in New York State. And also personal income taxes in New York State as a result of rising compensation bonuses is leaving state and city coffers relatively flush going into 2022, and I think that will carry into 2023 and that’s something I talked about in December about the stimulus and ongoing so, there was the stimulus plan that Chuck Schumer was able to bring $100 billion stimulus, and now, the infrastructure on top of that, which I think will be multiples. So again, that - all of that, which we sort of review in December, I think, the tax - the business activity, the tax collections, the stimulus dollars is all pointing to a moment where there is not a lot of discussion on the table or need, more importantly, for any kind of regressive revenue enhancements. And so, I don't think we'll see that. I think, the state of the state that Governor Hochul gave two weeks ago hit on many of the right issues in terms of wanting to work with the city and this new administration on the topics that we talk so much about, making investment in infrastructure. I think, there’s a lot of common ground there no matter where you stand, on what side of any political or social leanings. Affordable housing, a mandate to come up with new and creative ways to modify 421a in a way that will create more and better affordable housing, while also creating an economic framework that developers can help - the private sector can help deliver them. And public safety, I think, again I put it right there as priority one working with the Mayor in a very concerted way to put higher presence of boots on the street, in the subways, in mass transit to. Just to reinforce and get right back to where New York was not long ago and where we will be again very soon because we know how to get it done, and now, I think there is a will to get it done. So, I’m pretty optimistic, Alex that it - the soundings coming out of both City Hall and Albany are in line with the kinds of things we want to see in here.

From your lips to Albany's ears, Andrew, regarding the mezzanine book on the DPE, you had a $0.04 write-down. Were these prior positions or something else? What was the composition of these write-downs? Generally, the DPE book has been very successful over time, and during Investor Day, you mentioned the first mortgage interest that was allowing a lot of positions to cash out, so workouts or write-downs weren’t necessary. Can you provide more insights into what is causing these write-downs, and whether they are new write-downs or from positions previously written down?

I mean, there aren’t previous positions. The book had an enormously profitable year, and we take a conservative approach when we think there is any type of potential for a future write-down. We like to make sure that it’s covered and reflected and the income is - that you’re looking at for the year is sort of net of any potential offset. But the book had a very good year. We had some very large payoffs. We had a large payoff after the Investor Conference on a development position we had on 72nd Street. And as I said on the call previously, we're seeing very good new opportunities and we'd expect to be able to hit our target we laid out to you in December or exceed it for originations for the year.

And our next question coming from the line of Caitlin Burrows with Goldman Sachs. Your line is now open.

Maybe just a question first on the return to office. I know you mentioned how companies that were planning to return in February, where March could be back to December levels or possibly higher? I guess, what's your outlook for further improvement of physical utilization and sort of recent conversations with tenants who maybe weren't yet back in December been like? And then, more importantly, how important do you think that kind of near to medium term return is to SL Green's business long-term?

It's challenging to gauge pre-pandemic levels because people often think of a 100% benchmark, which is quite misleading regarding space utilization. From my discussions with our tenants, over 900 of them, it appears that factors like PTO, holidays, sick days, and travel have a significant impact. Remote work was already a part of the equation before the pandemic, and it's not surprising that typical occupancy might hover around 70%. While I lack concrete statistics, it seems most companies fall within the 70% to 75% range at most. Some firms require more space, while others need less, but I believe this is a fair average. When we mention approaching 50% physical occupancy soon, it indicates we have some way to go. Transitioning from that 50% to 75% occupancy is contingent on addressing disruptions within the system, and many companies will incorporate some degree of flexible remote work for now. Nevertheless, most are indicating that the majority of workdays will still be spent in the office. Whether a firm opts for a three-day, four-day, or five-day office week, the trend seems to show that everyone has a designated workspace. Interestingly, those companies discussing a hybrid model are concurrently signing long-term leases, often expanding their footprint. Our expansions significantly surpass our contractions, around 521 in square footage and about 421 in terms of deals, across over 200 transactions that included office leases in 2021. This year, I anticipate an even greater degree of confidence and we are witnessing rising occupancy rates. While the overall impact on our portfolio is still uncertain, the changes companies are making seem positive. This evolution reflects our commitment to providing more than just basic office space. We emphasize creating environments that encourage employees to work from the office, focusing on efficiency, health, wellness, and amenities like food services, lounges, and recreational areas. The feedback from tenants has been overwhelmingly positive; when the environment is engaging, employees are more motivated. I believe that over time, we will return close to pre-pandemic occupancy levels despite any shifts toward greater remote flexibility. The office remains essential for collaboration, community, mentorship, and business development, and I don't foresee that diminishing. Time will reveal the outcomes, but early indicators from our leasing activities, including the 1.9 million square feet we signed last year and the anticipated 2 million square feet this year, speak volumes.

Got it. And maybe then a follow-up question on different topic, other income. It looks like that came in materially higher than expected in 4Q. So just wondering what that might have been driven by? And as you look out into 2022, it seems like you're expecting that to be significantly less than '21 and 2020. So just wondering why you think that may change?

It's Matt. So, the other income line, I think was roughly $7 million better than we expected in the fourth quarter, meaning most of the other $19 million was expected significant contribution from the fees and income we got from the JV at One Madison, and the increment was some incremental leasing commissions and fees we received and also better performance at the Summit than we had expected, which flows through in large part, other income.

And so, when you think about 2022, is it that part of that? I guess, I was just one time and it could be lower, perhaps there's upside opportunity?

No, comfortable with the guidance we put out for '22 in other income.

Our next question coming from the line of Manny Korchman with Citi. Your line is open.

Good afternoon and thanks. Marc, if we want to spend a couple more minutes on this utilization or census question, a couple of questions there. One, have you seen a difference in utilization, actually people coming in from the companies that have signed new leases more recently, are they signing new leases and then trying to bring people in, especially on the ones that have expansions? Are you still in those lower building census numbers there? And then secondly, as you signed new leases, and this might be one for Durels, are they thinking about the same 70% on average? Are they trying to boost that number and so you might have the same number of people and you might have the same square foot a lot of the people that you're actually taking less space because you try to get utilization up? Thanks.

Well, I try to answer the first part of that question. I would just say that the space plans that we've been presented with it and what's being built new is very - it's well amenity space, it's highly efficient space and it's space that I think they intend will be fully utilized. I mean I don’t think these companies are building with the intent that they’re building with the expectation that all of that space and all of those tests will be utilized. In fact, just I want to caution that everything is an average. We have many tenants in front of us right now. Part of that 1.3 million square feet of pipeline who are at their limits, in terms of whether who is back in the office company like us, we are 100% back. There are others that are predominantly back and there are some that have such enormous expansion needs that even when they are underutilized, they’re still in the market. We've got deals over at, I'll just say, in the Green Central Park Avenue area, Steve, where we were talking the other day two tenants, both expanding competing for the same space. Both of those 38% - I was going to say, those were, I thought there were about 50, but interim note, 30% to 50% expansions per tenant and we can only accommodate one of those two, just given the nature of the building where that's coming from. And it's not One Vanderbilt. So there, I do go back to what I said, which is when these tenants are very sophisticated with sophisticated real estate groups, they do a lot of planning and when they sign these 10, 15, 20-year commitments and they lay out there are full floor plans with desk they expect to be occupied and they come and they say they've got these significant expansion goals. Yes, I think they have every intention of bringing people back and populating those work areas, because they would not be acting that way otherwise. And in terms of who we see doing it, we absolutely saw that. The vibe in the city in December was great. Like I said, we had a reset in January, a confluence of events, but we'll get past that quick, I believe in Feb, March, April. We will be there. So, on the next call, give you the same question again.

Marc, it's Michael Bilerman here with Manny. I just wanted to ask a question just about the sort of transaction market and investors. Last year, when we talked about the subject, you talked about maybe a limit of maybe $500 million cheque from an individual investor to go into office transactions, we certainly see in the upper end of the market, just like on the leasing front that the investors are more looking at higher quality buildings, newer buildings, environmentally friendly buildings and those deals are getting done, where do you think we are in terms of investors may be enlarging the scope of office assets that they're looking at? And maybe even looking at portfolio type transactions and just comparing it to some of the other property sectors like whether it's single family or multifamily or industrial and data centers or an infrastructure where we're seeing multi-billion dollar commitments almost on a weekly basis? It just doesn't feel like the office market is strong to that same sort of scope. And so I want to sort of get a little bit of the color that you're seeing from the institutional world?

Okay. So I mean let’s switch to a discussion about what we are seeing on the things we’ve recently transacted on the money raising efforts that we’re undertaking right now both for pipeline activity and just general future activity. Andrew sort of will cover as much for Michael.

All right. I think we have an active market for non-trophy properties, as well as evidenced by 110 East 42nd Street, which we closed in December and 10 Amsterdam, and many of the other sales that we closed last year, you saw the Columbia Property Trust portfolio, which many of those buildings are certainly not there masonry type buildings and auto glass and steel buildings. And I think there is a thriving market right now for large assets and small assets, and across the property types, we have here in New York City, obviously, it doesn’t speak to data centers and single-family homes. There is a lot of liquidity out there for transaction is large and small. You saw 8 Spruce, a large multifamily asset the Blackstone, we see One Manhattan West, which is going to get recapitalized, there is a 452 Fifth Avenue, the HSBC headquarters. So, there is a tremendous amount of the capital markets activity out there. On development deals, on cash flowing deals, on partially vacant deals, so we see a very active investment sales in terms of the multi-multi-billion dollar portfolio deals, I guess Columbia Property Trust with the closing, we’ve had to that. I don’t know. There just hasn’t been that type of offering out.

Right. I mean, that’s, I mean you’d want to point more than one, another sort of the framing of my question of whether that’s starting to open up and whether you’re starting to have more serious discussions on finding that investors want to get more appetite. So I’ll turn it over to the other questions you down in Florida.

Our next question coming from the line of Steve Sakwa with Evercore ISI. Your line is now open.

Thanks. A lot of questions on leasing had been asked and answered, but, Marc, maybe just on the Summit. I didn’t know exactly what you were planning to do from a disclosure standpoint going forward, and I don’t know what you can share with us about the activity levels in the fourth quarter, and what is your expectation, if any, or what’s embedded in guidance for '22 for the contribution from the Summit?

Sure. Well, what I can share on the Summit is it’s unbelievable. It’s fantastic. We opened it on October 21. It exceeded every lofty expectation that communicated to you in the prior years, not just in terms of the financial performance. This is as successful as it will be financially. It’s an important addition to New York and the destination entertainment sector. Because of its uniqueness, it’s very out of the box. It was a little bit risky. But now obviously we look back and we think we hit it exactly right in terms of the customer experience and the journey and the uniqueness of what we’ve created and everybody experiences it a different way and that’s kind of the beauty of it, some people come individuals. They come in groups. There is people lying on the floor and they’ll video themselves and everything going on for hours, the dwell time for some people might exceed 2 hours, depending on how they want to experience split, which is everything about the view outside, but being brought inside and the way that is all curated and amplified with the artistic input and creation of Kenzo with the various mirrored transcend rooms and the air at night light show and the soundtrack curation, it really is wonderful and it’s something people are coming back to again and again, which is very atypical for this market to have people coming back 2, 3, 4 times in a very limited period. We only opened this October 21. Our average capacity sell-out was about 95% on average from October 21 through the end of December. Most of December was even higher. It was probably like 97%-98% and this industry typically has a very significant drop-off in the first quarter after the holidays and yet, we are still experiencing great numbers for January. We sit here today already beyond our January projections, which were already increased when we sat with you guys for the December Investor Conference. So that’s just a little bit about split and more to come. But you should also note that that capacity I mentioned is kind of self-limited because we are only open right now about 5 days a week and we’ve curtailed the hours on a couple of days. We have demand, we could, we can and will extend hours and add a day probably at the end of the first quarter. I would expect sometime in April for us to do that. I think it’s the right time for that, and we want to lean into this very gradually. This is not - the Summit is going to be here for a long, long time and it’s going to get better and better over time and we want to make sure that experiences because it can be. In terms of numbers, Matt, I don’t know what you want to. I mean the '22 guidance, most of the numbers are embedded in the lease payment. That’s the way this deal restructured. The operating company mix has some contribution to FFO, but probably just a few cents a share on the opco and the lease itself in the projections we’ve shown you guys previously and over the years, Summit bottom line FFO contribution was always about in the range of 20%, maybe 24% of the bottom line for OVA. And so, it should meet, we over, we exceeded on our rental assumptions and we’re exceeding on our Summit assumptions and hence that 20% to 22%, 23%, 24% contribution to bottom line should be holding up at metals.

Yes, that’s the spot on in our 22 number. We had expected around $100 million of GAAP NOI of One Vanderbilt, our share, and 20%, 25% comes from Summit. And the operator has a modest contribution of $0.02, $0.03 in our '22 guidance.

And that will be increased in '23 and beyond as we add hours, add days and dial the semi comfort.

Great, thanks. My follow up I guess is just on the transaction market and I don’t think in the press release you detailed a lot of deals that had previously been announced that either closed or we're going to close. Just curious sort of what you’re looking at in terms of bringing to the market or thoughts are in the first half of the year and just what should we be looking for on the transaction side and mirror debt up obviously with the buyback?

Well, we have active discussions on quite a few assets, we're putting 609 Fifth on the market, that will be as an alternative to lease, but we've received some unsolicited inquiries to purchase that asset and we're re-marketing 110 Greene Street as well. So those two are sort of active in the market right now and we're entertaining discussions on other assets that are not in the market. So I’d look for a very active transaction sort of book for ourselves in the first half of '22.

I would also just add to that that the activity and expressions of interest we are receiving on assets mentioned that and assets that we're working on that, that weren't mentioned in almost every case exceed our own internal NAV, and accordingly really give us confidence as we execute our business plan throughout this year to continue to acquire our own stock with proceeds of some of these capital transactions as well as investment in new development debt repayment in order to capitalize on what we see still as an attractive and wide arbitrage.

Our next question coming from the line of Jamie Feldman with Bank of America. Your line is open.

Marc, in an answer to a prior question, you talked a lot about the types of amenities and I would just what your tenants are going to want in their space is to bring people back to the office and make it a great experience? How should we think about the capex for the company? I mean, do you think there is going to be a good number of major capex projects across the portfolio going forward or is this more capital that's going to look a lot more like traditional TI capital over the next several years?

No. I mean for this year, I think we highlighted in December. I don't exactly remember. But we talked about 85 Third, 750 Third, well and so three buildings on third where we think the investment is not, don't think of it is redevelopment capital. The way we've redeveloped every building in this portfolio, which get down to systems and windows and big heavy infrastructure mechanicals. This is usually very targeted surgical programmatic upgrades, usually of space that’s underutilized, so a lot of times it’s sub-grade space or some grade space that wasn’t fully built out. All the capital for those projects are in our 2022 capital plan. They’re not disabling in any way and the return on those dollars in terms of the lease velocity and rental uptick, we think more than pays for itself. I think we spent about $3.5 million at 100 Park for a 10,000 square foot, the name of the facility is Park Look and tenants love it. I mean it’s a lot of bang for the buck now. We’re doing a larger project at 885, but we’re leasing by 600,000 square feet space. So this to me is not - I wouldn't look at it, for me it's not like TI capital. This is real permanent building improvement and permanent value where this is taking a building from one level up, TI's commission, that's a cost of leasing for us, because the improvement is 210 spaces, not the building space. But this is improvement to fundamental building. Everything we spend here at One Vanderbilt, I mean, is part of this $5 billion appraised valuation and everything we're doing at One Vanderbilt will be part of what we hope will be One Madison. One Madison will be a part of a significant valuation and the same for 885 and 750. So I look at them differently. They more manageable. We've planned it throughout the portfolio. We are internally financing it with sale proceeds of assets and we're getting leasing velocity and rental uptick as the reward for that delivery of excellence.

Okay, that's helpful. I guess just a follow-up just thinking longer term. I mean it sounds like the opportunity to do this is when you have vacancy. As you just think about your expiration schedule or just the portfolio overall, I mean, how long do you think this goes on in terms of years that you’ll be putting kind of excess capital into building or is there a way to quantify how much you got to go build?

Look, for us, it's a very granular process, you got to go building-by-building. I mean, gray bar is done. We have our conference center there that actually was the former SL Green conference center that we put like a million bucks into and have now turned it into, I think one of the - I mean a dominant within that world of building, small tenant building, it’s probably the best amenity of any building, and we just opened, it wasn’t dramatic cost and that’s done and One Vanderbilt is done and 1515 is fully tenanted and so, in some of these smaller buildings, either they don’t require the same investment or we’ve sold some of that, we just saw 110 East 42nd Street. So, no, it’s not just sort of endless pipeline of improvement, it’s very targeted and very manageable. So I mean I hear what you’re saying, but it doesn’t feel like that to us, by the way, this is also a little silver lining in a deal like 810 Seventh. We just as part of I guess last year or 2 years ago, I’m not even sure of as part of the pandemic we took back, a fully improved conference center that was a third-party conference center with full back of house and kitchen and furniture, I mean with a little bit of investment, ready to go, and we’re aligning up operators into our leases for that facility, which will serve as an amazing amenity for 810 Seventh. So it’s underway and the portfolio occupancy level I think reflects the great state of our product.

Our next question coming from the line of John Kim with BMO Capital Markets. Your line is open.

I just wanted to follow up on your commentary on the Summit. It sounds like you're expecting $20 million, $25 million of NOI this year to be contributed and comparing that versus the $2.1 million of intercompany rents that you provided, so I was just wondering what that mismatch was? And then, Marc, you mentioned 95% capacity, what does that mean as far as visitors, as I think you last provided guidance of 2 million visitors per year?

John, I’ll take the first one, I don’t know, it’s a 2.1 million of intercompany rent is, but yes, I mean we have leases between SL Green and One Vanderbilt that separate aside from Summit. So I think that’s what you might be looking at. And then there is also remember cash payments base rent on our leasing schedule that is separate and aside from the percentage rent, right the bulk of the lease here with Summit between Summit and One Vanderbilt is percentage of sales, that’s obviously not in the leasing schedule - the ground lease schedule if you’re looking at, I think so. The 20% to 25% of NOI is based on a projection of attendance and sales and a lease that has rents based on that.

Was your second question about attendance, we had previously talked about stabilized - underwritten stabilized projections of about $2 million or $3.1 million. I think for this year 2022, we’re expecting to be about 70% to 75% of that number. I say our underwritten numbers probably have about 70% of that total capacity. So that’s our expectation for the year. Obviously, we hope to exceed it. But remember, it’s kind of hard to go by that, that’s where we’re only open 5 days a week and two of those days fairly limited like half days.

Okay. So I mean, is it fair to say that rapid shortens that’s going to be more like 23 stabilization? Yes. I think that’s reasonably fair to say, maybe like I say, I would rather go to number like between 70%, 75%, but whatever it is, it’s so vastly in excess of ’22 projection, we’re in good shape.

Okay. And then, are your same-store occupancy, it looks like it dipped to 92.1%, which is versus the 93.8% that you provided in December first the update, so it’s come down a little bit and I was wondering how that impacts your guidance, I know you don’t change it, but you had occupancy guidance of 94.3%. It’s just a further ramp up to get there?

Yes, I'll start with it, you're picking up the wrong number. We ended at 93% as against 92.8% that we guided to in December. So we actually beat our year-end same-store occupancy projection, which includes leases signed. So it's a signed occupancy numbers, so exceeded the expectation and feel it puts us on a great ramp too. Our number for 90, I'm sorry, of 94.3% for '22, so beat our expectation.

The 94.3% is occupancy including sign leases?

That's the only way we quoted. And the only way we have ever quoted it and the only way we will continue to quote it.

Our next question coming from the line of Anthony Powell with Barclays. Your line is open.

Just a question on I guess exploration the renewals. It seemed like a lot of leasing is with the new tenants, which is positive at good rates. But let me that there's a lot of churn. So I just was leave in the portfolio, why are they leaving, are they - are they working in office or relocating to either new cities and new buildings, what's kind of driving some of that churn on that side of the business?

We did a lot of early renewals. If you recall during the depths of the pandemic, we were extremely proactive about going and making outreach to tenants in order to quite frankly to lock down our rent roll. So that pays off pay dividends to us because it helps us stabilize the occupancy level, and so, it's not so much that we're losing a lot of tenants. I would say there is very few tenants, who are departing, who we haven't - who we didn't already identify as likely to leave Probably 12 to 18 months ago, and the majority of those are typically because they want to rebuild their space. They've outgrown their space and they want to make an investment to create a different work environment for themselves. And the reality is, it's tough to do around yourself unless we can provide swing space and when we're so well about. We don't have a lot of excess space in order to make that happen. We accommodated where we can, but I would say if I was going to broad stroke it, the majority of the tenants that if they're losing them now is because they've outgrown their space and they want to create an entirely different work environment, which over the way I think is a good thing throughout the broader marketplace because a lot of those tenants that are coming into our portfolio are doing the exact same thing.

Right. So you're not seeing tenants leave because you know that they're going to downsize and space is more of a rethink reconfigurations or you're not really seeing a broader just retreat from office space is more just re-configuring and switching out one?

Yes, I think it’s - I think it’s - they’re using their space differently, they’re not necessarily downsizing and if I answered it in a different way, by selling some of the tenants that we see coming into our portfolio. There is a good - this is a good percentage of the square footages are being driven by new tenants coming in that are doing consolidations, which is a pretty interesting phenomenon where we’re seeing these companies that want to consolidate, where they used to split their operations and go to a campus type environment. Now, they want to put everybody into one roof and it’s all driven by what Marc was saying earlier, which is a desire by the tenants to really create a work environment that gives their employees a reason to want to be in the office and as a recruitment tool because it’s become - and has remained for quite some time, highly competitive in order to recruit new talent.

It’s Matt. I just want to add one thing again because we keep here in the contraction, contraction. We said it earlier, and I think it’s worth saying again, in the 1.9 million square feet of leasing we did in '21, expansions were 5 times larger than the contractions, almost 400,000 feet leases were expansion is less than 70,000 feet were contractions.

Yes, understood. Yes, I mean better day, I think you mentioned that you hired or were starting to hospitality, I guess, warm hospitality, I guess, segment, maybe go into more detail about that. What do you expect to kind of drive there? And then what's the opportunity for you there?

Yes. Well, we introduced in December the team, the hospitality team, headed up by a Lower for LI, Gerald for R and Mariana SOG and now Juliana has also been promoted within that group. So I’d say it’s a growing and very solid group that is taking responsibility operational, and marketing responsibility for all of these locations, not just that One Vanderbilt, but One Vanderbilt seem to be One Madison, 100 Park that Steve mentioned earlier, the gray bar Conference center, the one over at 810 and this is proving to be really not only a great source of satisfaction with tenants, but there is an ability for us to drive some revenues that are not - not un-meaningful in terms of after our rentals and events that tenants like to throw. Because we’re doing this F&B at a very high level and generally with Dynex, Daniel Boulud’s company that is delivering extraordinary culinary experiences into these spaces and we have an arrangement with Dynex, there is a lot of symmetry there. There is a lot of compatibility, it's a win-win situation where the tenants are getting access to great spaces and great service and great food and beverage. Dynex is about as good as it comes in the city of providing that. And for us, it's a great way to get a return on all this amenity space that's really amenity during business hours and then doubles down is a function space after business hours in our weekends. So we're going to keep growing that business and growing the team and you know it's, eventually, it should become a line item on the - budget. I mean in terms of its relevance, I could see it growing substantially. Le Pavillon alone just that - one restaurant is going to be meaningfully is expected to be meaningfully profitable in 2022, which in less than a year of open is quite a statement.

Our next question coming from the line of Derek Johnston with Deutsche Bank. Your line is open.

Derek, we're going to try and pick up the pace here because it's after 3 and I think we still have one or two more questions. Operator?

Operator, go to the next and Derek, you can jump back in the queue.

Our next question coming from the line of Ronald Kamdem with Morgan Stanley. Your line is now open.

Two quick ones from me, just update on One Madison and sort of the leasing activity, trying to get an anchor there and any update that would be great?

Well, as we said, it's our Investor Conference. We've had a lot of very, very strong interest from prospective tenants. We're in advanced dialogue with a couple and we'll see how it unfolds. But we are - I would say I think Marc would agree that the pace of our discussions with tenants at this point in time of that development far exceeds. The level of activity that, we were experiencing at One Vanderbilt at a similar moment in time. So we are emboldened by that and optimistic and there's nothing really specific that we are ready to report yet, but I hope to have more to talk about later this year.

Great. And then sort of the second question is just really in the co-working space, just given the experience we've had over the past two years and talking to clients, talking to tenants, has the Company's views changed on that business, business model and is it something that you would consider?

We have a division called EMERGE 212, that's been operating for about 20 years in the co-working environment. So we introduced the Ulta suites at One Vanderbilt, that's been a huge success. That's fully furnished shorter term occupancy suites upstairs. We've leased two - we lease out on the third and there'll be one remaining shortly. So all this has been a huge success. I think we're fans of co-working where we build it, we operate it, we manage it, which we do a lot of and third party co-working was never a big priority for us and I would say that sentiment exists and continues.

Our next question coming from the line of Nick Yulico with Scotiabank. Your line is open.

Thanks. So I was just hoping to get some more info on page 29 of the stuff, where you give the occupancy versus the leased occupancy. Is it possible to get the leased occupancy number for the consolidated same-store portfolio where it is showing up here that you have more vacancies in the rest of the portfolio?

It probably is, but I haven’t done that math so no.

Okay. I mean, I guess I'm just trying to figure out here. I mean if the bulk of your vacancy is in the consolidated portfolio and certain assets that look under-occupied versus history. I mean 810 Seventh Graybar Avenue of the Americas, right, where your overall vacancy showing up here is very similar to the overall market. Just kind of how you're thinking about those buildings competing and how much occupancy uplift for those lower occupancy buildings is built into your guidance for the year?

I’ll say with specificity to those buildings, I can’t tell you, but there are obviously part of the 100 plus basis points occupancy pickup these 130 basis point occupancy pickup we’re expecting for 2022. Those are traditionally buildings that operate at a much higher occupancy level and they are headed that direction. So, we don’t...

It's difficult to generalize as each building has its own dynamics. For example, we moved out of Graybar, which is a high occupancy building. We were a large tenant in a space primarily occupied by small tenants, so our departure left a significant vacancy. We exited in March 2021, and while Graybar has potential, it's not accurate to assume that every building operates the same. The situation can vary widely; some joint venture properties might have high vacancies while others may not. For instance, One Vanderbilt was a joint venture property that had low occupancy, and similarly, One Madison has experienced fluctuations. We also had a conference center that was underutilized during the pandemic, leading us to take it back for upgrades and to make it profitable. Overall, the properties we own are valuable, and we are working on improvements to enhance their appeal. We aim to increase our overall occupancy to 94.3%, which is significantly better than the market, where vacancy rates are considerably higher. This is our commitment to our investors, and we're confident we can achieve this. However, I wouldn't make broad assumptions based on temporary vacancy rates of any specific asset.

I mean I guess my point was just that if you had activity in those buildings will be helpful to know kind of what the lease number is in those buildings. Because if you look at this page, you just see a lot of occupancy loss in those buildings in the last year.

Let us - I didn’t hear what you’re saying, If it’s the lag time between lease and commencement, let us look at it, but when we give that lease number know that they will all commenced. So we are 93% leases we sit here today period. Your point is, well, I don’t know which buildings those leases are in, I guess, they have a commenced. And then, so let us - let's digest that or hear that. Okay all right. Okay. Any more questions, operator. Terrific, we will get right back to work and look forward to speaking to everybody in three months. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.