Thank you, everybody, for joining us and welcome to the SL Green Realty Corp's Fourth 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 assumptions and beliefs as of today. Additional information regarding the risks, uncertainties and other factors that could cause such differences to appear 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 a 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 and in our current report on Form 8-K, relating to our fourth quarter 2024 earnings. Before trying to 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 for joining us today. It's wonderful to connect with everyone as we embark on another promising year, 2025. Traditionally, my opening statements in January are concise, following our in-depth presentation for institutional investors at the December Investor Conference, which took place just seven weeks ago. December was a significant milestone for the company and our team, marking a successful conclusion to a year where we achieved remarkable results. After experiencing some challenging years, it was rewarding to see our strategy yield substantial benefits for our shareholders, resulting in leading market returns. This affirmed the commitment we maintained to our strategy. Looking ahead, I believe we are entering a period that could be among the best we've experienced, driven by the current market dynamics. We concluded the year with 188 leasing deals totaling 3.6 million square feet, our third-best leasing year ever. We also successfully closed our Opportunistic Debt Fund in December, shortly after its launch earlier in the year, and we're anticipating additional closings that will help us exceed $1 billion in the first half of the year. The good news is we foresee ample opportunities for deployment through our historically successful debt and equity platform in this discretionary fund format. It's a significant achievement for our team to have closed this fund so swiftly, especially for a first-time closed-end fund issuer, and we look forward to introducing many more strategies in the future. Crucially, we ended the year with an occupancy rate of 92.5% and expect to surpass 93% leased occupancy in the upcoming year. Our core business centers on filling office buildings with tenants. When we approach the 95% occupancy range, which we are nearing, we can effectively increase rents, limit concessions, and see greater appreciation in building values. In December, we reported a pipeline of 900,000 square feet, and in just seven weeks, we've already leased 250,000 square feet, with the pipeline remaining at approximately 900,000 square feet. This demonstrates our productivity and our commitment to refilling and expanding our pipeline, even in January, which is usually a slow time in the market. Our recent earnings release shared positive news, including strong profits. We have continued to be active in New York City, executing close to 1.8 million square feet of leasing in the fourth quarter. Since then, we have announced two significant expansions already this year. Notably, we signed IBM for a 93,000 square foot expansion at 1 Madison, marking a 33% increase from their previous commitment made within the last 18 to 24 months. This expansion reflects IBM's rapid growth, especially in the AI sector, and their ongoing push to bring employees back to the office full-time, which enhances collaboration. Furthermore, Ares has expanded by 38,000 square feet, roughly a 10% increase at 245 Park, which is undergoing a substantial repositioning and has been successful. We are also thrilled to announce the acquisition of 500 Park Avenue, a prominent post-war landmark designed by SOM. This location allows us to enhance our brand with hospitality, high-end amenities, and capital improvements, which we expect will significantly elevate rental rates. Our recent financing from Wells Fargo for this property was competitive, reflecting the building's qualities and potential. The market on Park Avenue is tighter than ever, with a vacancy rate of about 7% or lower. Trophy buildings, which total 46 million square feet, have an availability rate of just 6.7%, down nearly 200 basis points since the third quarter of 2025. This demonstrates how quickly the market can tighten due to decreasing supply and increasing demand. As I look ahead to this year, my optimism is reinforced by the positive activity I've described, alongside the fundamental economic strength of New York City, particularly in job creation. The city's Office of Management and Budget is forecasting about 38,000 new office-using jobs in 2025, mainly in the finance, business services, and information technology sectors, which correlates to significant demand for office space. With more employees returning to the office four to five days a week, we anticipate a strong demand for office space throughout 2025, and we will keep you updated in our quarterly calls. Shifting focus to the city's financial outlook, personal income tax receipts are on the rise, primarily due to exceptional profits in the finance sector. Notably, Wall Street member firm profits reached $36 billion through September, with expectations of $48 billion by the end of 2024, which would be the third-highest year on record. This increased profit translates into higher corporate and personal income tax collections. Additionally, the city has been investing $3 billion to $4 billion annually to address the migrant crisis, which is now trending toward shelter closures. This development should yield significant cost savings for the city as the situation becomes more manageable. All of this occurs amid a scarcity of well-located amenitized space in Manhattan. As I stated in December, there are currently no new ground-up office projects underway in core Midtown. With lengthy timelines for major developments, inventory will only become scarcer in the coming years. The trend of converting office space to residential is progressing rapidly, with around 15 million square feet of residential development in the pipeline from office conversions. This figure could exceed 25 million square feet over the next five to seven years, suggesting a significant change in the market due to rising demand and limited supply. This scenario positions us for a positive outlook in achieving our 2025 goals and beyond. This conversion initiative represents a triple win: it removes outdated office space from the market, addresses the housing crisis, and revitalizes Midtown, which thrives on year-round activity. We are actively engaged in this trend and have initiated the conversion of 750 3rd Avenue, which we unveiled in December, aiming to introduce approximately 650 new housing units. This will create lifestyle amenities in the area and may encourage further developments on Third and Second Avenues. On the hospitality and entertainment front, we've made great strides, particularly with SUMMIT One Vanderbilt, which welcomed over 6 million visitors since opening. We are also expanding to Paris, with a new SUMMIT location set to open in the Triangle Tower, offering stunning views of the Eiffel Tower. We are collaborating with artist Kenzo Digital to create a unique concept for the Paris venue that will connect with our branding at SUMMIT One Vanderbilt, elevating the experience even further. Furthermore, we recently opened La Tête d'Or at 1 Madison, our first steakhouse in partnership with Daniel Boulud, which has received outstanding praise and, alongside our Michelin-starred restaurants, has solidified our presence in the high-end culinary scene. Thank you for your support throughout 2024. We eagerly anticipate continuing this journey with you into 2025, and now I welcome your questions.

Thank you. At this time, we will conduct a question-and-answer session. Our first question comes from the line of Nick Yulico of Scotiabank. Your line is now open.

Great. Thanks. I guess first question is maybe, Matt, you can just walk through a bit how Q4 and the year played out because I think there was a little bit of confusion about the FFO number given the gains and whatnot, but it does seem like you actually beat on the year even versus the December forecast that you just gave, even if you exclude all the gains. So, can you just maybe walk through some of the items there? And if there was a beat, what drove that? Thanks.

Yes, certainly. One point that Marc didn't mention amidst all the positive updates he shared was that the fourth quarter significantly exceeded our earnings expectations. Going back to December, we had projected a normalized FFO midpoint of $4.86, excluding certain DPO gains and mark-to-market adjustments on derivatives. However, when we look at the actual results and remove those same factors, we recorded $4.95, which is $0.09 higher than our estimate for the quarter. This improvement was driven by stronger property performance, resulting in greater NOI and additional fee income. SUMMIT outperformed our forecasts in the fourth quarter, and we also engaged in incremental debt and preferred equity investments. We noted our intention to seek new investments, primarily in debt, which was partially funded by the equity raise in November. We made some of those investments and recognized additional income from them in late December. Overall, we exceeded our expectations by $0.09 in the fourth quarter when excluding the gains and mark-to-market adjustments on derivatives.

All right. Thanks. And then, Marc, you talked about the leasing pipeline essentially being up because you removed some leased activity versus December. Can you just talk a little bit about kind of what's the incremental pipeline, where it's focused? Any other sort of commentary either you or Steve can provide on that? Thanks.

Yes, I can discuss where it's coming from. Overall, it's broad-based. I mentioned earlier how tight the market is on Park Avenue, both in terms of occupancy and trophy buildings throughout the city. Some of the largest deals we completed last year were in excellent buildings, which may or may not fit the trophy definition exactly. For example, we had a significant leasing and expansion deal with Bloomberg at 919 Third, and another at 100 Park with Alvarez & Marsal. One is in information and media, while the other is in financial business services and consulting. Alvarez & Marsal took around 220,000 square feet at 100 Park, and Bloomberg expanded and renewed for 900,000 square feet. We also worked with Travelers Insurance at 45 Lexington, which is right across from 245 Park. We've owned that building since around 2003, and it's a great property where Travelers has been for quite some time and has just renewed their lease. There are more anecdotes to consider, but regarding our current pipeline of 900,000 or 875,000 square feet, how would you describe it?

Yes. So, I think Marc hit one of the key features, which is that it's broad-based, not dominated by any one particularly large transaction. As a matter of fact, it's composed of 59 separate tenant transactions. In the 900,000 is roughly 600,000 square feet of leases that are out, another 300,000 square feet of advanced term sheets. Coincidentally, it's the same number of about 600,000 square feet of new tenant leases as opposed to renewals. And it's spread everything from 810 7th Avenue to the Grabar building to a little bit of leasing on Park Avenue, which we don't have a lot of space left on Park Avenue. So, it's a wide variety of different kinds of businesses, different size, geographic locations, financial services, law firms, entertainment, some media type, and general business uses. So, I take a lot of comfort from that because we had this conversation a year or two ago, it would have been heavily dominated by the top end of the market and only financial services. And now we're seeing a much broader type of tenant demand and broader geographic and different price points.

All right. Thanks guys.

Thank you. Our next question comes from the line of Alexander Goldfarb of Piper Sandler. Your line now open.

Hey, good afternoon. Two questions. Steve, maybe I'll just continue on that, the leasing discussion. From the Investor Day until now, it seems like there's been an uptick in activity. And as Marc noted in his commentary, the holiday times, January is not exactly a hot leasing activity market. You had two big expansions. So, could you just give a little bit more color as to what was going on? Were these just sort of deals in the pipeline that were stalled because of the election? Or what was driving this sort of holiday January surge, if you will?

Well, I think recall that when we talk about our pipeline of deals that are pending for that component of the pipeline, that's where term sheets have just advanced to a stage where we have a high degree of probability that it will convert over to a lease. So, some of that is now those conversations maturing so that they may have started two or three months' prior to us now adding them to the pipeline. Some are just new requirements that have come out of the woods. But what's most notable of that is that it's two-thirds of it is our new tenants as opposed to just renewal transactions. So, yes, I mean, listen, we did 0.25 million square feet of leasing since investor conference, kept the pipeline basically at the same level. And I think it's a combination of factors. I don't think there was an unnatural pause of deals other than the fact that people took a powder for two, two and a half weeks over vacation, and now they're sort of restarting the engine. So, I think what will be most notable is what we see over the next two or three months now that everybody is back in the office and there's a lot of enthusiasm in the tenant market for where the economy is headed and particularly for New York City commitments.

Okay. The second question is about the debt paydowns or payoffs. If my calculations are correct, you have now paid off mortgages on four deals, either below par or repaid mezzanine below par. I believe 690 Madison is a fully leased asset. Can you provide more insight into how you are managing to get lenders to accept cents on the dollar, especially considering the current market is showing signs of improvement? Are there still many more deals like this possible, or are we nearing the end of these payoffs?

Yes, sure. This is Harry. Look, we have great relationships with all of our lenders. We work closely with them. We don't get into their motivations. Everyone in every cycle has their motivations as to why they want to either keep paper or move paper. And our job is to work closely with them to find the best outcome for everybody.

And as to the last part of your question, Alex, we layered into our guidance another $20 million of gains in 2025. I think we stretched that goal to $50 million like we did last year. Do we have opportunities? Potentially, but we'll have to work them.

Thank you.

Thank you. Our next question comes from the line of John Kim of BMO Capital Markets. Your line is now open.

Thank you. So, this quarter, leased occupancy went up, but your financial occupancy went down sequentially. And this is not just one or two assets, it's across several assets. I was wondering why that happened this quarter? And also if you can give us maybe some guidance or an idea of how financial occupancy trends this year?

Yes, John, it's Matt. I mentioned some of this in December. There were move-outs in the fourth quarter, late third, early fourth. This impacts the same-store NOI guidance we provided in December because leased occupancy is on a clear upward path towards our goal in 2024. We anticipate the same trend in 2025, but we need to account for the move-outs, prepare the space for new leases, and then bring them in. This process somewhat dampens the same-store cash NOI growth we expect in 2025, but in that same year, we will also be making our capital investments, which will contribute to NOI growth and economic returns in 2026 and onward.

I believe that financial metrics will always lag behind leased metrics because leasing involves renewing existing leases or filling vacancies. Therefore, I don't really expect financial performance to lead leasing. As leased occupancy increases, financial occupancy should subsequently rise after experiencing a downturn.

Okay. And my second question is on the New York City congestion tax, which certainly seems like it's had an impact on traffic patterns. But I'm wondering if you could comment on any impact you've seen on the office side, whether it's tenant preferences for certain neighborhoods or office utilization or anything that maybe has impacted demand in a negative way?

No, I think it's too early to comment. It's only been a couple of weeks, so we will have some data on that after a quarter or two. It's challenging because everyone's commuting patterns change a bit after the holidays in January. According to the stats the MTA is sharing, traffic is lighter than usual in the congestion zone. It's unclear how much of that is due to the new tax or whether it's simply how January typically is in New York City when it's very cold. We need more time to gather the data, assess it, and speak to our tenants, which we haven’t had the opportunity to do yet, to see if they're changing their preferences and choices based on this situation. I haven't noticed any changes, but I'm not sure if you have.

We haven't heard any commentary to it, but common sense would tell you that if more people are going to take public transit, then proximity to Grand Central Terminal and major transportation hubs will be a driver. And of course, that's where our portfolio is most centrally located.

Thank you.

Thank you. Our next question comes from the line of Steve Sakwa of Evercore ISI. Your line is now open.

Yes, thanks. Good afternoon. Marc, you've noted the tightness in the market and I'm just wondering how is that translating into the brokerage community? And are you getting a sense from the brokers and maybe tenants that there's a little bit more angst on their side to start thinking about even 2026 and 2027 expirations? And are they coming to you earlier to talk about renewals?

I don't really see it as angst. I think tenants are becoming more aware that their opportunity is narrowing. While the market hasn’t reached a critical tightness, we are actively securing deals, and some prime buildings are indeed tight, particularly on Park Avenue. However, there is still availability in secondary and tertiary buildings in certain outlying areas. Tenants may have become complacent, thinking they could postpone decisions and maintain flexibility. Given the rising demand and dwindling inventory in the secondary and tertiary markets, that window of opportunity will close rapidly. Whether it happens immediately or in the coming quarters, tenants will soon realize that the opportunity to secure space is slipping away, leading to increased competition. This will present us with the chance to reevaluate rents and concessions. We are already witnessing this in some buildings, and I hope to see it more broadly soon. As I noted earlier, I view this as a pivotal moment for us. While many focus on quarterly results, we are looking towards the next two to five years. We appreciate the market landscape and aim to acquire and develop more properties while deploying as much capital as possible from our new discretionary funds to seize current opportunities, especially since not everyone is experiencing the same level of success. There are deals available that are struggling, and while some sponsors are navigating through, others are not.

Okay. I guess that leads to my second question. You had talked at the Investor Day about trying to find another Midtown development site. You just mentioned here, you'd like to do more development. Just can you kind of update us on that process? And to the extent that you are underwriting a new development, what sort of hurdle would you want to see on a new deal today to the extent that you could put one under contract and bring it to market in, say, three to four years?

Well, Steve, you're going to have to reserve that one for the next quarter because a group of us are saddling up and heading out to do about a 12-day roadshow in Asia. We've got a lot of partners and capital and equity partners out there. We try and be out there several times a year because they have a significant appetite for the best of the best product in the best of the best markets. And we've got really great relationships that now are broad and diverse throughout several different markets in Asia. And we'll have it really dialed in on those yield expectations for prime development. I don't think it's changed much over time. I think secondary product, risk product, those spreads gap out, they contract. I think good core Class AAA properties, trophy properties in Midtown Manhattan, you don't see those prices change a whole lot, and we've demonstrated that over the years on deals that we've done where people take a very long-term view, not three to five or seven to 10, I'm talking 15 years and beyond for good core product that's kind of irreplaceable and top of the market. And those returns on a levered basis could be in the low teens. I don't think it would be much more than that, but I think that's consistent with where it's been.

Great. Thank you.

Thank you. Our next question comes from the line of Jeffrey Spector of Bank of America Securities. Your line is now open.

Thank you. Marc, I have a follow-up regarding international or foreign capital interest in working with you or New York City. Could you share any insights or observations you've received since the election over the past couple of weeks, considering the apparent interest in the U.S.?

I haven't really been looking into that recently. For the past four to five weeks, we haven't been focused on it, but now we are starting to explore new opportunities. We're planning new deals, including various debt and equity options. When we move forward, we'll consider a wide range of potential opportunities. I believe we'll be able to assess the situation well, but I don't have any insights to share based on discussions with others.

Yes, I think it's worth noting a few of the transactions we've completed were post-election, whether it be One Vanderbilt, the financing at 500 Park. So, we haven't seen anything getting in the way. And if anything, we're seeing continued momentum coming off the election.

Thank you. It would be interesting to hear some feedback after your trip. Marc, you mentioned one of the policy initiatives regarding potential immigration changes in New York City. Do you have any other high-level insights to share about executive orders or policy shifts that you believe would be beneficial for SL Green or that you are considering? Thank you.

I really appreciate the five-day workweek requirement. It's time to return to the office. Corporate America is largely back to normal, and many people associate the federal government with Virginia and D.C. We have numerous federal buildings in the city, both leased and owned, so it's crucial to have everyone return. This is essential for our business activity, profitability, and overall energy. We simply want to see people back in the office. Seeing it as one of the early executive orders reinforces a positive direction towards productivity and collaboration. This is significant not just for our market directly, but also indirectly.

Thank you.

Thank you. Our next question comes from the line of Anthony Paolone of JPMorgan. Your line is now open.

Great. Thank you. First question is on just the capital markets and building sales side. So, maybe putting aside something like One Vanderbilt that's pretty unique. But in the past few months, it seems like buildings are starting to transact again. And yet in the last month, you've had this big move in treasury yields. Like is there a point where there's a pause again? Or do you think that's a limiting factor or just there's enough momentum to keep this going?

Not after today's mandate from President Trump, interest rates are down immediately. Do you understand? I’m not going to bet against this.

Not whatsoever. I mean we're seeing very strong momentum from investors right now. Look, they're focused on the fundamentals. All the things that you're hearing Steve talk about all the results we're posting, that takes up almost the entirety of our discussions with investors today. And so I continue to see more momentum of investors wanting to participate in recaps, outright sales. And as Marc said, we're going to be out in Asia very shortly, and we'll be digging in on those conversations as part of execution of our 2025 business plan.

Thank you. I would like to ask for a bit more detail. You have provided numbers regarding special servicing, including what is currently active and your designations. I am curious if you are designated based on events becoming highly probable, which would then increase the likelihood of the $8.2 billion, for example, moving to active status. I am trying to understand whether this represents a pipeline or how to conceptualize it.

Yes. Those events are particularly beyond our control. Therefore, I wouldn't feel comfortable commenting on the potential outcomes of those assets and assignments. Some may go into servicing, while others may not. Our priority is to work with controlling class bondholders to ensure that the capital stacks are properly aligned with them. I don't believe there's a way to predict how many of those will enter special servicing or not.

Okay. Thank you.

Thank you. Our next question comes from the line of Michael Griffin of Citi. Your line is now open.

Thanks. Maybe just going back to the leasing pipeline and the tenant interest you're seeing out there. Durels, I know you mentioned a number of different industries, but I didn't hear tech as being a bigger part of that. I know that tech doesn't make up a big part of your portfolio, but just curious if you're seeing more demand from those kind of companies given what we've seen in the press about more stringent return to office requirements.

Overall, there are currently about 300 active tenant searches encompassing over 25 million square feet in the market. Among these, more than 7 million square feet involve tech tenant searches, compared to 3.7 million square feet in January 2024, indicating a doubling in demand over the past year. Although tech is not a major component of our portfolio, we are in discussions with a few tech tenants who are interested in 1 Madison Avenue.

Great, that's helpful. And then maybe just a little more color on the financing, the new mortgage at 500 Park. Should we take this as lenders are more willing to dip their toes into the office financing market? I mean I imagine there's an aspect that's driven with relationships that you have with lenders, but curious if that market is opening up more? And then just on the term, is there 10-year debt out there for mortgages yet on office buildings or is five really kind of pushing it for what's out there?

No. Lenders are back. We're already in mid-January and have seen some significant transactions completed. I mentioned The Spiral at the end of last year's investor conference, and it has just been finalized at $2.85 billion. Notably, the AAA spreads on that transaction were just over 1%, and I believe it is now trading even better than that according to the latest market data. There is strong momentum from lenders right now, engaging in both balance sheet and CMBS transactions. The credit markets are expected to be very active in 2025. Look out for deals involving 299 Park, 200 Park, 3 Bryant, and 5 Manhattan West, all of which are currently out for pricing and expected to close in the first and second quarters of this year.

Great. That’s it from me. Thanks for the time.

Thanks.

Thank you. Our next question comes from the line of Ronald Kamdem of Morgan Stanley. Your line is now open.

Hey. Just two quick ones for me. So, going back to the leasing, I think the commentary on Park Avenue was pretty clear. But wondering if there's moving to sort of the Westside assets and that part of the portfolio? Any sort of color on the interest, tenants on that piece of it?

Yes. We did a substantial amount of leasing at 1185 6 and 8, and 7 last year, and that momentum has continued into this year with several leases currently being negotiated at those buildings. For the Westside portion of our portfolio, those properties are among the two largest assets we have in that area.

Great, that's helpful. And then my second one is just on the FAD funds available for distribution. I know this year, the guidance has some CapEx and speculative CapEx. Just any comments or as you're sort of leasing up this portfolio really quickly, how we should think about that recurring CapEx line and maybe getting better in 2026 and 2027? Just high-level thoughts would be helpful.

Yes, I mentioned this briefly in December during our guidance discussion. We leased 3.6 million square feet, marking our third highest year ever, and increased our occupancy by over 300 basis points. The funds we allocate for this new leasing are indeed investment dollars, although they fall under FAD due to industry categorization. As we approach stabilized occupancy—93% this year, and moving up to 94% and 95% thereafter—the leasing capital expenditures will naturally decrease as occupancy levels increase. On another note, regarding maintenance CapEx or other types of capital, while we are investing significantly in leasing, our base building expenditures, which don't directly generate revenue, are quite minimal. Our operations and construction team does an excellent job with a portfolio that is mostly redeveloped. They spend a small amount each year to maintain high standards. Overall, for a portfolio exceeding 30 million square feet, our spending on non-revenue-enhancing CapEx ranges from about $20 million to $30 million annually, which is relatively small. We believe these investment dollars are highly valuable, and we look forward to utilizing them as they contribute to higher occupancy and net operating income.

Thanks so much.

Thank you. Our next question comes from the line of Michael Lewis of Truist Securities. Your line is now open.

Thank you. So, that CapEx question was my first question, too. And so obviously, when you have a lot of leasing activity and success like you had, you also have CapEx, right? So, you guided to $88 million specs this year, $99 million committed and then you've got base building and the other stuff, which is smaller, like you said. I was wondering is there committed capital that you think fills into 2026? And do you expect the CapEx to remain high until you get close to that 95% occupancy? Or does it kind of normalize first? And I guess to maybe put a point on it, just on guidance, I mean, do you think the dividend is covered in 2026 or is the CapEx still really heavy for another year?

Let me share my perspective from the TI side regarding capital. First, in the fourth quarter, we experienced higher TIs mainly in transactions tied to long-term leases, typically over 15 years or at higher price points. Looking ahead, I expect that in the high end of the market, TIs will begin to decrease due to a supply shortage, which will give landlords more power to lower those numbers. Additionally, I anticipate a reduction in TIs for renewal transactions, as tenants will have fewer options available, increasing their chances of renewing without needing to spend as much on TIs to keep existing tenants. Both of these trends are positive indicators for a decrease in capital costs over the next year and beyond.

Okay. Is there any capital, aside from the $100 million committed this year that needs to be spent, that is committed beyond 2025 and sizable like that?

When we commit capital to tenants, we have to rely on our best estimate for when that capital will be needed and utilized, unless we are managing the work ourselves. Due to this, some expenses may carry over into 2025 and 2026. We have also moved some capital originally planned for 2025 back into 2024. Consequently, there is some fluctuation from year to year because we do not have control over every dollar of that capital.

Okay. And too early or not appropriate to comment on whether the dividend will be covered?

The dividend is covered this year and we look at the dividend every year from a perspective of not just taxable income, which is what governs it, but coverage. And FAD is not the metric. I'll say it for the 100th time, FAD is not the right metric to look at coverage of dividend because FAD is not cash flow.

Thank you. And our next question comes from the line of Blaine Heck of Wells Fargo. Your line is now open.

Great. Thanks. Just following up on the investment side. It sounds like your focus might be on debt transactions at the moment, but we're hearing that there are higher quality properties that have come to the market and more potentially coming to the market. So, if you were to make more direct property acquisitions, are they most likely to be done in a JV structure or would you consider full ownership? And if it required a big check, what are your thoughts around issuing equity at these levels for the right transaction?

We've been following an asset-light strategy for several years, but we still own a number of properties at times. For instance, we own Marcellus 500 Park, where we intend to carry out our plans and lease it out. In the future, we may consider bringing in a joint venture partner to recapitalize it, but that's a later stage decision after we create value. This is a project we can handle within our balance sheet. There may be larger deals, like the new development concept we discussed, that would be better suited for partnership because the equity investments could exceed $1 billion, which doesn't align with our asset-light approach. It really depends on the situation. We focus on identifying and executing strong opportunities first and then determine the best way to finance them afterward. We are fortunate to have significant liquidity, which allows us the flexibility to make decisions quickly, unlike many of our competitors who must have their capital sources secured to be competitive. Our corporate liquidity allows us to be tactical and adaptable in our choices. However, the priority is always finding the best deal; optimizing the capital structure is a secondary consideration.

Okay, great. And any thoughts on issuing equity for the right transaction?

We conducted an equity issuance about a month and a half ago, but I wouldn't say it was specifically for new opportunities. It was more of a general raise with various purposes. Before that, we hadn’t raised equity in quite some time—around 10 years, actually. It's just one of the options we have. We're quite careful with our equity. Over the last six or seven years, we've significantly reduced our share count from approximately 105 million shares to around 75 million shares now. So, while it's always an option, it’s usually not the primary option. However, we won't rule it out if we identify a moment where there are opportunities, whether that involves new investments, debt reduction, or other needs. If the right moment arises, we will consider it, but based on our 10-year history, raising capital through equity is not our main approach.

Great. And then second question, you invested in a relatively small amount of CMBS this quarter. But can you talk about the profile of those investments, whether they're collateralized by office properties in New York or whether there's any exposure to other sectors and potentially other markets? And I guess, what sort of attributes from a return and profile perspective you're looking for in additional CMBS investments?

Yes. The only color at this point would be New York City commercial properties.

All right. Fair enough. Thanks.

Thank you, and I apologize. We need to wrap up shortly as we have commitments outside of the office following this call. We might have time for one or two more questions, but we need to move on. I'm sorry for the longer discussion than expected, but hopefully, we can keep it to just one or two additional questions. Thank you. Our next question comes from the line of Caitlin Burrows of Goldman Sachs. Your line is now open.

Hi, thanks for taking the question, Maybe I'll just go on the other income side. I know this was a volatile line item in 2024. So, wondering if you can go through what drove it to be so high in 4Q? And then beyond the full year guidance you've given, maybe your expectation for 2025 main drivers and cadence?

Yes. So, 2025, I'd just refer you back to the investor conference deck where we gave guidance and broke out all the categories. Q4 was nominally ahead of what we expected, maybe $1 million or $2 million just through incremental fee income that we generate in a bunch of different ways. The large number in Q4 was all expected. We generated fee income off of our JV interest sale in One Vanderbilt that was included in guidance going all the way back to December of 2023 and was again included in the numbers that I presented for 2024 back in early December. So, nothing really unusual or unexpected in the Q4 numbers, maybe $1 million or $2 million more than we expected. 2025 million, you can look at the investor deck.

Got it. Okay. And then just back to a question earlier on the lease versus economic occupancy. I was wondering if you could talk about your expectation for economic occupancy this year? And do you think it goes down before up or like how quickly will it rise?

No, it's going to lag behind the leased occupancy by a bit because we need to complete the space, have the tenants' leases start, and then move into financial or physical occupancy. However, it is expected to trend upward throughout 2025 and beyond and will eventually align with the leased occupancy, but it does typically lag behind.

Thanks.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Marc Holliday for closing remarks.

Okay. Thank you, everyone, who are still listening in. I appreciate your participation on the call and look forward to getting back together in a few months' time.

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