Thank you everybody for joining us. And welcome to SL Green Realty Corp.’s Second Quarter 2024 Earnings Results Conference Call. This conference call is being recorded. At this time, the company would like to remind listeners that during the call management may make forward-looking statements. You should not rely on forward-looking statements as predictions of future events as actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their expectations and beliefs as of today. Additional information regarding the risks, uncertainties, and other factors that could cause such differences to occur are set forth in the risk factors and MD&A sections of the company's latest form 10-K and other subsequent reports filed by the company with the Securities and Exchange Commission. Also, during today's conference call, the company may discuss non-GAAP financial measures as defined by Regulation G under the Securities Act. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on both the company's website by selecting the press release regarding the company's second quarter 2024 earnings and our supplemental information included in our current report on Form 8-K relating to our second quarter 2024 earnings. Before turning the call over to 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 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. Good afternoon, and I appreciate everybody joining in today. I think this was by all measures a great quarter for SL Green, even by our own lofty standards. I want to lead off by expressing my sincere appreciation for the SL Green team, who have massively contributed to our company's impressive results for this quarter and throughout the most challenging times of recent. The extremely talented men and women of SL Green work seven days a week, believe in New York City, care deeply about what we are doing, and are simply the best in the business. We could not have achieved these results against the tide of negativity and defeatism without the dedication and loyalty of the 300 plus SL Green corporate employees and another thousand plus who work in the buildings day, night, weekends and holidays. We are extremely lucky to have such a diverse and talented team of professionals, and it's the biggest reason for our outperformance in the office sector over the past one, three, and five years. This year-to-date achievement illustrates something far greater than simply a market in recovery, because we are vastly outperforming a still unsettled commercial real estate market. It is the result of a deliberate plan we laid out years ago to improve the quality of our portfolio by physically improving and amenitizing our properties, focusing our efforts along the Park Avenue Spine and East Midtown, selling assets that didn't fit that profile, and then monetizing our best assets to fund our new development activity. What you are now seeing is the positive consequence of the execution of that plan, and I believe we are now on a path to seeing sequential quarterly improvement in our operating and financial metrics into the foreseeable future. When others gave up on New York, we believed. People said that the financial sector was picking up and moving to Florida. But what we've seen is significant sector growth right here in our hometown, fueled in part by the $12 billion of Wall Street profits in just the first quarter of 2024, and that's as compared to $26 billion for all of last year. Growth in South Florida and elsewhere doesn't mean contraction here in New York. In fact, it's been the opposite. Companies like Blackstone, Citadel, Wells Fargo, and Bloomberg are all expanding their footprint here. And it appears that JP Morgan is buying the neighboring building at 250 Park Avenue as they continue to report extremely strong profits. But the demand for space goes far beyond Park Avenue, and I think the best illustration of that is looking at our current pipeline of office leasing, which is 1.2 million square feet. This is after all the activity we announced yesterday, totaling 1.4 million square feet of leases signed to date. There's another 1.2 million square feet of identifiable leases pending, term sheets out for signature that we have in our sights after that activity. And interestingly, more than 80% of that activity is not on Park Avenue but rather it's spreading outward through East Midtown, everywhere from 6th Avenue over to 3rd Avenue, fairly evenly dispersed, with lots of mid-market deals and strength in the middle, not just the big deals. And I think it’s one of the more exciting elements of what we have to look forward to for the balance of this year. Everyone wrote off retail in New York City, but you saw our release yesterday, and it very clearly is back. Retail is back. Yesterday we announced that One Madison retail is now 100% leased, curated in a way that brings real value to our tenants at the building and to the residents of the Flatiron neighborhood. And naysayers wrote off New York as a global destination, but tourism is beating expectations again, with well over 60 million tourists expected this year in New York. Hotel average daily rates are up 3% year-over-year, with occupancy approaching 90% in Manhattan. The result of this is due to limits on Airbnbs and conversion of some hotel properties to supportive housing. If this trend continues, Midtown is likely going to be under hotel again soon. There is no better evidence of this surge of tourism than right upstairs from us at Summit where attendance numbers are up again this year over the outperformance attendance we had last year. This is proving again and again that this has become one of New York City's most compelling destination experiences and has contributed to our quarterly results, with more to come on that. But I want to end on an even higher note. Today, I'm excited to announce that we have secured our first new Summit Global location, and we are expanding to Paris. More details to come on that in the fall. But today, I can say to everyone listening in, in Paris, a bientôt, and see you soon, and thank you all for listening. And we'll take questions.

Our first question comes from John Kim of BMO Capital Markets.

You threw a curve ball with the Paris announcement, so I’ll have to ask about that. Can you talk anything more about the location of Summit in Paris, the timing of it, and anything else you could describe on it?

No, we're going to leave that, stay tuned. More formal rollout in the coming months, lots to talk about, very exciting. But just wanted everyone to know we're coming.

Maybe if I could focus then on Summit, New York. You had a 16% growth in revenue this quarter year-over-year. How much of that was visitor count versus average ticket price? And can you also remind us on the mechanics of how the rent is paid to the JV, and how much of the OpEx is that rent figure?

I got the first part of the question. It's mostly attendance. I think the attendance, which we had up for the year was up another $100,000 for the first half of the year above our budgeted numbers. The ticket prices are fixed. My goal is to keep Summit as affordable as possible, so people can come and enjoy it both within the city and around the world. We have programs for New York residents where they get discounts. We have discounted programs that I think are best in class for active duty personnel and veterans. The prices are fixed; we don't surge price. We set those prices at the beginning of the year. We hold them fixed and evaluate them at the end of every year. So almost all of what you see is attendance. What was that second part that you asked, if I can ask you, John, again?

Can you clarify how much of the intercompany rent you paid at the joint venture is included in the operating expense? Additionally, when do you plan to start opening on Mondays or extending your hours in relation to revenue and visitor counts?

Well, why don't you answer the rent part?

Yes, the rent schedule’s in the supplemental, John, the base rent. We don't get into how much percentage rent the Summit pays to the building. And then hours…

Hours of operation?

Yes, hours of operation. I think right now, we're typically opening from around 9 in the morning, last ticket sale at 10:30 at night; facility closes at midnight. We could go longer. The night experience at Summit is every bit as good as daytime and sunset; something better because of the city lights and the air-at-night feature we have that we've curated in the evening. It's possible that in the second half of the year, maybe after the summer, we'll go later on the closing hours. We're open seven days a week now. Portions of the first half of the year, we were closed on Tuesdays, I believe, down days. But right now, the facility is in excellent condition. The demand is strong. We're going to see strong days and I imagine we'll be going seven days almost right up until the end of the season, right up until the end of the year.

Our next question comes from the line of Connor Mitchell of Piper Sandler.

Marc, you touched on it in your opening remarks, but just as Park Avenue leases up at higher rents with the recent quarter in activity, as an example. Could you just expand on how you guys are seeing the dynamic of the neighboring submarkets changing in terms of pricing, concessions, touring activity, any other color you might be able to give?

Yes, I don't have the average starting rent for the pipeline. But just to give you a sense of the leases done in the second quarter, the average rent, which was about $93 in the first quarter, was up over 10% to over $100 in the second quarter. So a lot of that is influenced by Park, but not all of it. It's really as much Park Avenue as it is the tops of buildings, because I think Steve will sort of run you through the dynamic in the dearth, if you will, of big-block availability, particularly in the tops of buildings, whether it's old or new and regardless if it's on Park or off of Park, and it's definitely driving rents. And as it relates to concessions, Steve, your thoughts?

Well, I have a few points to make. Marc accurately highlights the shift towards higher quality spaces. It's important to note that this doesn't solely refer to new constructions or extensively renovated properties. We're actually witnessing significant activity in our portfolio even in mid-range buildings, with much of that activity concentrated on the upper floors, particularly in the towers. If we look at the broader market outside our portfolio, a statistic indicates that 57% of the available space is located on the base floors of buildings. We're observing price increases on Park Avenue and in well-renovated buildings across different locations, along with strong leasing activity on the tower floors of both high-quality and mid-range buildings. As we've mentioned previously, concessions have remained relatively unchanged, regardless of the building type. Meanwhile, prices are rising on the more desirable segments of buildings. Earlier this year, when we were asked a similar question, we indicated that this was precisely how we anticipated the market to evolve as conditions improved.

And then maybe just a quick question on the JV debt fund as well. Just wondering if there's any update on if the focus is still primarily on Manhattan or maybe any opportunities outside of the company's primary focus submarkets may surprise you, and you're kind of taking a look at any opportunities for the debt fund outside of Manhattan?

The emphasis remains on Manhattan. Additionally, you will observe our continued growth in the special servicing and asset management sectors, which do not involve principal investments. We will also take on assignments beyond Manhattan, but those will strictly be fee-based opportunities for us.

Our next question comes from the line of Michael Lewis of Tourist Securities.

My first question is about the leasing in Manhattan so far year-to-date. Your full year guidance, as you know, for Manhattan and office time lease is 2 million square feet for the year. I don't know if you expected that to be first half weighted or not. So I guess the question is, is your volume year-to-date, are you running ahead of what you expected in your guidance? And if you are, is there a reason or is it just broad strength that you're seeing in the market?

We're definitely performing better than expected. The first half of the year was quite strong for us, and occupancy is moving in a positive direction. We're not just increasing volume for the sake of it; we have solid leases that meet our satisfaction criteria. This is reflected in our guidance and other aspects as well. We anticipate exceeding our annual goal, and it will be interesting to see by how much. I hope our team can achieve outstanding results. However, there is still significant work to be done on the $1.2 million pipeline. Steve, could you provide some insights into what is driving that pipeline and highlighting its strengths?

So as we mentioned earlier, the pipeline currently stands at about 1,200,000 square feet. In that number, we have leases out in negotiation as opposed to just term sheets being negotiated, covering over 760,000 square feet of that overall pipeline of 1.2 million. Sixty-two percent of the square footage that's in the pipeline is for deals or pending deals for current vacancy in the building. So you're seeing a lot of new tenants come into the portfolio, filling current vacancy. We're seeing the financial services sector, which makes up 50% of our pipeline, continue to add bodies and add square footage and see dramatic expansions. Some of the bigger deals that you've seen us announce recently this year with both PJT at 280 Park Avenue and areas of 245 Park Avenue, those are very large transactions and each of them were for tenants that were doubling in size. So I think those are some big drivers of our success to date, and we're seeing that in our pipeline. So no expectation that's slowing down for the rest of the year.

We'll look for that green thumbs up on that slide in the deck in December. My second question is about fee income and I talked to Matt a little bit about this. The other revenue line item was $33 million this quarter. It was $13 million in the first quarter. If I look at the guidance, it appears to me it's somewhere in the mid-teens quarterly run rate the next couple of quarters. Can you maybe talk about the recurring fees? And I don't want to call the rest of the nonrecurring because I realize they're just lumpy and more transaction driven. But it might help kind of frame not only modeling but what multiples to put on revenue streams to talk about the servicing fees versus some of the lumpier transaction fees in that line item?

So I think this quarter finally illuminates the people, the fee generating machines this platform can be, which we've telegraphed to people over the last few years, and it's really showing its strength now. These fees come in, in various forms, and they can be lumpy. So last quarter was a fairly muted quarter in ancillary fee income. This was big, and those fees can come in many forms. We talked about the special servicing business; that business is basic modest fees on a monthly basis until you resolve the situation, then you get a resolution success fee. Those are unpredictable but they're sizable when they come in. We often get fees from partners, buyers of assets, or restructuring debt. Those can be lumpy, and those can be time function of the timing of the closing of those deals. That's part of what flowed through in the quarter. So when you say what's recurring? Well, all of those as categories are recurring. The timing of those things is what is most challenging. By the way, it’s even for us, it's the blessing of not putting out quarterly guidance; I don't have to guess when these fees come in every three months, we can do it over the course of 12 months. But even that can move from quarter to quarter. But as categories, you will see special servicing fees, ancillary fees, asset management fees continue to be a bigger and bigger part of our recurring income and that's a very high margin business, much higher margin than the real estate, and therefore, requires a much higher multiple.

Well, I have to continue to do quarter-to-quarter, so I'll do my best.

Our next question comes from the line of Nick Yulico of Scotia Bank.

First question is for the Ares renewal and expansion, I think that was done in July. Is it possible to get a feel for the mark-to-market on that?

It's a sizable number. I don't want to get into specific mark-to-market on leases, but the leases in 245 Park as a general statement are being marked up significantly from prior vintage.

The asset was owned by HNA for some time and likely did not receive the necessary capital investment to meet the demands of its prime location on Park Avenue, which should be a leading property. We are currently addressing this with a substantial capital program that has already begun, with the goal of completing it by the end of 2025 or the first quarter of 2026. We are marketing the building based on our commitment to a comprehensive repositioning, including upgrades to the plaza, lobby, amenities, and the rooftop. It will be an outstanding building once finished. Comparing the current market value to past figures is not entirely fair, as this building will be vastly different from its previous state. The rental rates are reflective of this, with all rents ranging from the lower to the upper floors in the triple digits, peaking around $150 per square foot. We anticipate raising rents moving forward due to the decreasing availability of similar properties. Initially, we expected a longer leasing period, but the strong demand for renewal space, expansion space, and new leases signed in recent quarters suggests we will achieve even higher market values as we work towards fully leasing the building.

I guess, Marc, just a follow-up then; I know you've gotten a lot of leasing done in the building, as you mentioned, and it sounds like rents have gone higher. Can you then just give us a feel for how you're thinking about then what the asset valuation could be like versus the interest sale that was done last year? I realize you're still, I think, focused on that. Just any feel for whether it's an NOI number or something else, how that may have changed based on the underwriting a year ago versus what you're trying to achieve now?

Well, I don't have those numbers in front of me. But I mean, just looking at intuitively we’re like over a year forward. I think in terms of time elapsed, we've leased up a lot of space. We've done it on budget. So time value alone would warrant some type of premium. On the one hand, you could say, well, that's great progress. On the other hand, we budgeted this progress. That's the progress our partner brought into when they did the deal. When was it 13 months ago. One of the things our partners rely on is we put numbers on a piece of paper, they're not shy; they're not unobtainable, obviously, but they're not shy. We test ourselves just like we do with you guys every December with our scorecard; we do the same with our partners and put down what we think we can achieve, both timing and rents and concession packages; we've been achieving that. The good news is we're executing the plan. The costs for the development are coming in right on the nose of where we expected them to come in. In fact, we increased the scope a bit to include a more dramatic improved rooftop like we did at One Madison. By the way, the rooftop at One Madison is spectacular, and I think it's going to be one of the real icons down in that area for venue space going forward. On the one hand, you pick up the time value. On the other hand, we're dead on our numbers. So that's the good news. I would expect there'll be some premium to where we transacted.

Our next question comes from the line of Steve Sakwa of Evercore ISI.

You guys have had a lot of success leasing up 280 Park, 245 Park, obviously, One Vanderbilt is filled, One Madison on the office side maybe hasn't made as much traction, Marc. I know you kind of leased up all the retail there. But maybe you or Steve, just kind of speak to the demand within that 1.2 million square foot pipeline that you're seeing for One Madison, and maybe what's been holding the leasing back at that asset?

Steve, I understand your point. First of all, let's keep things in perspective. We are currently 65% leased and over 70% economically leased, right in line with our original pre-COVID budget numbers, and the building doesn't officially open until November. So the idea that the building is behind schedule or not leasing well is simply not accurate. We've successfully leased the retail space completely, and the tower is fully leased as well. We have about 3/8ths of the podium leased. Everything is on track based on our projections. While we can discuss leasing status, there are no issues or underperformance with this asset. Now, Steve Durels has calmed down a bit, so he can continue.

Well, I think Marc, you have all the highlights. The building is 65% leased. The tower portion of the building is fully leased. We just signed the top floor with an expansion to FanDuel. So they now have two floors in the building at rents that exceeded our underwrite for that last floor. What we have remaining in the building are five floors in the podium of the building. Those are 92,000 square foot floor plates. Without a doubt, it is the best building in the Midtown South submarket, and everybody we tour through there loves the project. The challenge is what we have available right now are those five large floor plates. As you may have read some of the market reports in the brokerage houses, there's been a dearth of large tenants in the Midtown South market as opposed to large tenants actively transacting in Midtown where we've done more than our fair share of very large deals in the Midtown market. It's just a matter of time before the large tenants sort of come back into the Midtown South market. And when they do, the building is well positioned and we'll have great success.

And then is there any update on the potential stake in One Vanderbilt? I know that was something that was actively marketed and part of your plan for 2024. I'm just curious if there's any updates you can share?

One Vanderbilt continues to set the standard for the market and continues to receive the recognition nationally and globally. No matter what meeting we are in throughout the world, the first thing investors want to talk about is One Vanderbilt. It's fully leased. The debt is locked in through 2031, sub-3%. Summit continues to outperform as a globally recognized tourist destination. We just added our second Michelin Star restaurant. Architecturally, Jamie von Klemperer and the KPF team just received, I think, it was like last month, the prestigious AIA National Architecture Award for their work at the building. By my estimation, we have in excess of $30 a foot of average embedded rent growth, really, which I look at as demonstrating the scarcity and really no comparable supply on the horizon due to a bunch of factors: sourcing the right location, long lead time, lack of affordable construction financing, and some of the big anchors needed for any comparable project to this recently signed up commitments. I think you have Blackstone, Bloomberg, and Citadel. All of these factors really create a moat for One Vanderbilt. And for all these reasons, of course, we have very strong investor appetite and multiple offers from investors. I know everyone on this call wants speed, but I think most important is the right investor on the right terms; I'm not really looking at it quarter-by-quarter. That said, we are working on transaction documents and I do expect news to share later this quarter.

Our next question comes from the line of Camil Bonel of Bank of America.

It seems like the financing and transaction market is starting to open up this year. So more broadly, can you talk to how investors are underwriting lease-up timelines and returns for office in New York City?

Could you please repeat the question?

Just wondering if you could provide more color on the underwriting that investors are looking for when looking at office buildings.

Look, I think the fundamental side for the right assets, I think, as we've always said, you can't generalize the market. But for the types of deals we own and the types of deals we're investing in, whether it be through the fund or through our balance sheet, the fundamentals of the real estate investors are very easily wrapping their head around today. There isn't a lot of question about rents, downtime, or even concessions at this point. Investors, again, whether through the fund or on specific deals, they have a lot of confidence in our ability to underwrite assets. We talked about 245 Park. As Marc said, we're dead on the underwrite that we presented to our partner a year ago, and that is over 500,000 square feet of leasing just in 13 months. So there's a lot of ability for investors to wrap their head around those fundamentals. With respect to the overall transaction market, the reason we're not seeing a significant number of investor transactions is really just the lack of debt liquidity today. A lot of that is driving us to want to launch the fund, and the efforts we’re putting in there is to be that source of liquidity. But right now, the reason we're not seeing significant investor activity is really because investors are still trying to wrap their head around where the liquidity will come from in the debt capital markets.

And for the benefit for those who have only started to follow your company more recently, curious to understand the kind of involvement your teams engage in when you have active assignments on the special servicing side, how much capacity do they have to take on more?

Special servicing and asset management presents a rapidly expanding opportunity for us. Our subsidiary, Green Loan Services, led by Andrew Falk, is seeing continued interest from capital providers for our real estate services, whether in special servicing or asset management. Currently, we are managing over $3 billion in active special servicing and asset management, along with an additional $6 billion where we are designated as special servicer, which I view as future growth potential for our special servicing business. I anticipate substantial growth in this area over the next few quarters. We currently have a pipeline exceeding $2 billion in additional opportunities, which are not limited to New York, and I expect to secure most, if not all, of those soon. These numbers will continue to increase. As Matt mentioned earlier, much of this will contribute directly to our bottom line, which is a key focus for us. Regarding staffing, Andrew and his team are well-equipped to handle new opportunities by utilizing existing resources, but we are always assessing the need for additional personnel. Overall, I foresee that nearly all revenues generated will go straight to the bottom line.

And so to clarify, is the timing of that $6 billion that you're designated as factored into the updated guidance you provided last night?

The $6 billion is not all factored into the guidance we got last night.

Our next question comes from the line of Blaine Heck of Wells Fargo.

Rent spreads on signed leases increased really nicely for you guys this quarter. Can you just try to characterize kind of how much of that you think might have been more of a mix issue and lower rents on expirations this quarter versus how much of that is kind of a reflection of market rent growth that you guys have seen recently, really just trying to get at whether the mid-teens level seen this quarter is kind of a blip or a level that could be more sustainable?

I mean, the mark-to-market when we put out our guidance and then reported first quarter, people questioned how to correlate down in the first quarter to a positive 2.5% to 5% for the full year. The mix and the quarterly activity is going to bounce all over the place. So to date, yes, we had a good quarter. We expected the second and third quarter to be relatively strong just based on the mix of leases that we expected to do in those periods. I think we're still on a trajectory on a full year basis to hit our targets; that will be a function of the mix that happens for the back half of the year. But I wouldn't read too much market movement or anything like that into what we've achieved thus far. Volume, yes, you can do that, but mark-to-market, no.

And then just second question. Any update on the casino bid that you can provide?

No, I don't think there's anything new regarding casino timing. Everything is publicly available. The governor currently has to decide whether to expedite the process by calling for submissions and forming the Community Advisory Committee to progress beyond the initial hyper-local stage. We strongly support expediting this process for several reasons, primarily the jobs that will be generated by the three casino licenses. These jobs will have a significant positive impact on the construction industry, leading to tens of billions of dollars in construction projects. Furthermore, once the casinos are operational, they will create a substantial number of well-paying jobs in New York City, potentially from two licenses. There are also tax benefits involved, including upfront fees for the state and ongoing taxes from gaming operations. Thus, we have plenty of reasons to advocate for a quicker process. We're prepared, as our building is already constructed with no displacement or interruption issues. Our bid will enhance Times Square and benefit the entire city, especially through our collaboration with Caesars Rewards to gather a multitude of coalition supporters, all of whom will gain from the outward-facing design of the Times Square Caesars Palace Casino, which will include retail, restaurants, hotels, and entertainment. It’s a compelling community and economic development project for New York City. We are optimistic about winning and hope to see the process commence soon. However, a decision is still pending in Albany regarding when exactly the bids will be called, and once they are, we will be ready.

Our next question comes from the line of Anthony Paolone of JPMorgan.

I'd like to go back to the transaction market and understand the lack of debt out there. But as you mentioned, you are the balance sheet partners and have been able to get that. So I mean, what would levered and unlevered IRRs have to be for you all to put capital out there to do something on assets that you find attractive?

We are focused on maintaining attractive unlevered returns for our business. As we expand our pipeline, which is mainly intended for our fund, those returns generally range from the low teens to high teens, depending on various factors like asset type, location, and credit. Each deal is unique, making it challenging to predict outcomes due to their distinct nuances. For subordinate lending, I believe the expected returns fall within that low to high teens range. Additionally, all our fee-based activities, as mentioned by Harry, are quite capital-light, yielding strong returns. We plan to allocate resources to enhance our platform and, in some instances, take on capital positions, as this segment operates on high margins. The Summit expansion also represents a lucrative venture that benefits from years of brand development, offering higher returns. Currently, we are primarily focused on property development, recognizing it as a market strength. Our residential conversion initiative—specifically converting offices to residential spaces—will kick off with our first project, which is well underway in design development. We aim to commence physical construction in early 2025, setting a benchmark for such conversions in Midtown. The levered returns for this project are projected to be in the mid to high teens, which is enticing given the current popularity of residential developments. By pursuing affordable housing solutions, we aim to deliver over 100 units in this project while still generating returns that will attract further debt and equity investment. We anticipate providing more clarity on our capitalization and returns during our investor meeting in December, which should reflect typical outcomes.

And then just my second question, maybe just a detailed one for Matt. Matt, if my notes are right, I think at Investor Day, the guidance for other income for the year was, I think, $84.5 million, and I think it included $17.5 million for Summit, if I got this right. Just wondering what that new number might be because it sounds like part of the guidance bump was change there?

No, a little part of the guidance bump was other income. We increased guidance by $0.10, I'd say half of that is fee income. The rest is Summit and NOI. So that's $0.05 is roughly $3.5 million or so; that's the incremental fee income. So we're not running that far ahead of our anticipated other income levels overall. But there's the potential to do better than that depending on how special servicing assignments play out over the balance of the year. But I think we're trending exactly where we expected to be, maybe slightly ahead, and we'll expect to see similar levels as we head into next year.

So just to make sure I got that right, about a nickel from the other income running a little ahead, $0.02, $0.03 from Summit, and the rest from the core.

Our next question comes from the line of Michael Griffin of Citi.

I wanted to go back and touch on leasing for a minute. Steve, I think you mentioned earlier in the call that some of the vacancy you're seeing in the market is those bottom level, not the tower floors. But if we're led to believe that particularly Park Avenue is as strong as it's been, wouldn't you expect kind of greater leasing demand to come from those lower floor spaces? And then you mentioned concessions as well. I'm curious if you've seen any change in net effective rents, given it seems like face rents have been increasing, particularly a lot of properties in that submarket?

When I mentioned the vacancy being primarily in the lower levels of the buildings, I was addressing the overall market, not just Park Avenue. Specifically, Park Avenue currently has a vacancy of less than 9%, making it a landlord-friendly submarket. This is why we have increased rents in our Park Avenue properties at 280 Park, 245 Park, and 450 Park. I don't anticipate any decrease in tenant demand for those quality buildings on Park Avenue, regardless of whether the spaces are on the upper or lower floors. Regarding concessions, as I mentioned earlier, I haven't noticed any changes. I believe we are in a position to raise rents instead of tightening concessions. Over time, concessions are likely to be reduced, starting with some of the free rent. The costs to build out tenant spaces remain high, which leads tenants to rely on their landlords for tenant improvement allowances, typically balanced out by higher rent.

And then maybe one, Matt, for you, just on the capital plan. Given I think where the equity is currently trading. Could you look at maybe issuing equity as kind of an arrow in your quiver, or is the plan to kind of maintain the outlook for your capital needs laid out at Investor Day?

I appreciate the comparison to an arrow in the quiver; one of the advantages of being a public company is having access to that option. As we progress through 2024, we do not anticipate needing any equity based on our base case plan because our balance sheet and liquidity are in strong positions. The plan we established in December is unfolding as we expected. However, if we come across additional investment opportunities, we might consider bolstering our liquidity. We are always on the lookout for such prospects. That would be the scenario in which we would evaluate equity as a financial source, given that it remains quite costly.

Our next question comes from the line of Ronald Kamdem of Morgan Stanley.

Just one quick one from me, just on the same store NOI. Just thinking about the guidance at the Investor Day and comparing with where you're trending sort of year-to-date, that suggests there's sort of a big acceleration in the second half of the year. Just am I thinking about that right that the same store sort could be 2, 3 in the second half? And any sort of puts and takes as we're thinking about the second half and going into 2025?

Let's clarify that, and I'm here if he needs to reach me. Our guidance for same-store NOI was down 1% to 2%. The CEO next to me mentioned, somewhat jokingly, that our goals and objectives would indicate we would be up 1% to 2%. We are trending positively in the first half of the year, which is encouraging. I would love to see outstanding results, but as it stands today, we are aligning more closely with our original guidance rather than the objective.

Those are stretch goals. We never achieve all of them, nor should we, although we strive to. The aim is to reach as many as possible. I believe in setting ambitious targets at all levels. Midway through the year, we're performing well on many of those goals, though not all. There is a scenario where we could fall in the 1% to 2% range. That scenario still exists for a strong second half of the year, but it will be challenging. We may or may not meet that specific goal. I'm confident we'll accomplish the majority of our objectives. The key is to excel in all these leases, as we do many, likely over 100 annually. We'll see how the second half of the year unfolds. We'll try to maximize our bottom line and reduce expenses as much as possible in the latter half of the year without compromising quality to meet our goal. However, it’s too early to determine the outcome. We mentioned back in December that this would be a push.

My second question is about the numerous properties where you're considering joint ventures and redevelopment, such as One Vanderbilt and 245 Park. Could you share your insights on the level of interest from local and international buyers, as well as your confidence in successfully completing these deals? Any comments would be appreciated.

Look, the demand from foreign buyers today is very strong. It hits on what I said earlier. The assets we own today, investors believe heavily in the fundamentals of those assets. The good news for us is, in many cases, as you know, we're working through our plan to extend our debt across all the assets, and that makes assets more attractive for investors to invest. There's a lot of belief from the foreign market in the fundamentals of our real estate, and we'll continue to see new joint ventures over the next few years.

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

Okay. Well, for those still on, thank you for participating and listening in. We appreciate it. We like the questions. We love the constructive feedback. We'll take it to heart. Everyone, have a great summer, and we'll speak again in Q3. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.