Thank you, everybody, for joining us, and welcome to S.L. Green Realty's Corp. Second Quarter 2026 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 measure 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 at www.slgreen.com by selecting the press release guarding the company's second quarter 2026 earnings and in our supplemental information, including in our current report on Form 8K relating to our second quarter 2026 earnings. Before turning the call over to Mark 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 Mark Holliday. Please go ahead, Mark.

Thank you very much. Good afternoon, and thank you all for joining us. It may be the deadest summer, but our team is, of course, hard at work. This is truly when we shine the brightest, completely dialed in on our business plan, and outworking the market. That hustle really showed up this quarter. Much of what we predicted at our investor conference in December is now playing out in ways that directly drive earnings and improves cash flow. We forecasted that the leasing progress we've made over the past two and a half extraordinary years would become apparent in our economic occupancy, and it certainly did this quarter up a remarkable 300 basis points as concessions continue to burn off and overall vacancy dwindles. At the same time, we're putting the significant leasing costs associated with the lease-up behind us, and leverage and coverage ratios are improving, which we also saw in this second quarter. On the leasing front, the story remains the same. A growing scarcity of premier space in desirable Midtown districts has turned the tables in our favor. We now know that we'll exceed our leasing goals again this year. It's just a question of whether it will be by a wide margin or a really wide margin. We don't have that visibility yet, so it's too soon to re-forecast, but the trend continues to move in the right direction. We are also seeing very positive momentum at Summit, both here at One Vanderbilt and on our projects around the world. Even with reduced overall tourism in the city this year, we enjoyed the highest attendance amongst all of our competitors and introduced a number of new ticketed experiences that we expect will continue to drive revenue. We are on track to open Paris next summer in 2027 and in Tokyo in 2030 as we continue to see enormous growth potential for this business. Most importantly, the backdrop to our performance this quarter and moving forward is the extraordinary and prolonged surge in business activity in New York City. Our economy is in a league of its own compared to any other CBD in the country, or indeed even the world, driven by financial services sector performing as well as I've ever seen it. Wall Street profits hit $21 billion in the first quarter alone, the second highest first quarter that has ever been recorded in approximately 40 plus years of tracking this metric. The big five money center banks just reported, and second quarter profits are up a whopping 50% year over year, and that's coming off a very strong year. Offers using jobs are up by 12,000 year to date, according to the city's OMB, and a strong showing for only six months of the year, with further growth projected for the balance of the year. We've also seen tech growth driven by AI, and we're obviously getting more than our fair share of those leases, including the lease we announced last night for 100,000 square feet at 11 Madison. It's not just the financial services and tech. It's truly a broad-based growth and demand momentum that we see here in the city. As just one example, the healthcare sector continues to grow and added 20,000 jobs year to date, many of which do land in office space like MSK at 885 Third and the Hospital for Special Surgery at 1521st. And NYU Medical has a significant footprint at One Park. New York City-based companies raised $10.8 billion in venture capital funding. in Q2 alone, and that brings it to $21.1 billion year to date. Both of those metrics are double the same respective amounts in the measurement periods in 2025. The city is, I think, experiencing one of the largest resurgences I've seen. The tax receipts are very good. The city just passed its budget in June. It's another balanced budget with rainy day reserves. And I feel like we're in, you know, very good standing. And this is what all adds up to about 50 million square feet of office space leased in the past four quarters. That has to be a record. It was a very strong quarter. I'm incredibly proud of our team. And I remain very optimistic about the direction of the city and the economic activity that supports our performance. Finally, before we open it up for questions, I want to address our big guidance revision for this quarter. The revision is great news and certainly represents the culmination of efforts, not just over the past three months, but over the many years leading up to this, we've executed a deliberate strategy to invest what was needed to move our occupancy back toward 95 percent, and we're now reaching a positive inflection point. This should not be a big surprise since we forecasted this positive momentum back in December. Maybe the magnitude is even more than we expected, but it's obviously a pleasant result. Matt, if you would please elaborate on the underpinnings of this significant guidance provision.

Thanks, Mark. It is clear we We have had a fantastic first six months of 2026, exceeding our expectations on several fronts, including our second quarter reported results. And we are excited to be able to translate these successes into a significant upward FFO guidance revision of $1.20 a share, more than 26%, the vast majority of which is recurring. In the Manhattan office portfolio, revenues benefit from strong leasing, particularly early renewals, and the leaseable freewheel space, both of which have immediate earnings benefit, along with a conscious effort to accelerate gap revenue recognition by delivering space to tenants more rapidly, which is coupled with phenomenal expense containment, as always, by our operations team to drive 20 cents a share of incremental FFO in 2026 from the real estate portfolio, 10% of which we recognized in the second. 10 cents of which we recognized in the second quarter. While visibility into the execution of the remainder of our 2026 business plan over the next six months also provides us the opportunity to generate additional fee and other income, which we expect to contribute an additional 20 cents a share of FFO. Now, if we had simply increased FFO guidance by 40 cents a share for these operational successes, we would have been thrilled. That equates to about a 9% increase at the midpoint. But because we built one of the most successful and more importantly, profitable buildings in the country here at One Vanderbilt, we're able to add another 80 cents of recurring, not one time, FFO to our guidance revision. This property has generated so much cash flow that we repatriated all of our invested equity long ago. That cash flow in excess of our share of gap net income at the property caused the carrying value of our investment to go negative. GAAP allows you to carry a negative basis, but only up to the value of any known or potential tenant obligation. At the end of the first quarter, our negative basis reached the maximum allowed under GAAP. So starting in the second quarter, one Vanderbilt's incremental FFO contribution is calculated based on the sum of two things. First, amortization of the negative carrying value over the term of the related tenant obligations. This amortization component alone is approximately $21 million a year through the early part of 2031, plus the difference between cash distributions we receive from One Vanderbilt and our share of gap net income. Going forward, every dollar of cash distribution out of One Vanderbilt that's in excess of gap net income is incremental FFO to us. The total of these two components contributes an additional 80 cents a share of FFO in 26, 35 cents of which we recorded in the second quarter, and based on current projections, is expected to contribute as much or more to FFO next year. The way I look at it, this is essentially flowing deferred cash profits from the project through earnings and further evidence of the incredible success of One Vanderbilt. More importantly, a testament to the hard work of the best employees in New York real estate that work here. With that, operator, we can open it up for questions.

Certainly. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. And our first question will be coming from the line of Nicholas Ulico of Scotiabank. Your line is open, Nicholas.

Great. Thanks. Hi, everyone. Maybe we can start on the leasing side. The mark-to-market, again, this quarter was strong, above guidance. Can you just talk about what the specific buildings driving that activity, sub-markets, or if it's actually just sort of a broad-based improvement?

Well, let's start with it's a broad-based improvement, but then And within that, within the portfolio, there's some particularly notable transactions and buildings that are really seeing rent depreciation. Anything on Park Avenue, we've raised rents dramatically. Sixth Avenue, for instance, 1185-6, rents are up dramatically. And then across the portfolio, we've been consistently raising, asking rents throughout the year. So 245 Park Avenue, where we've done a lot of leasing this year, we've got some deals pending to replace some tenants that at OVA, rents are going to be up dramatically. So I think what we saw this quarter, we're going to see it again next quarter.

Okay, thanks. And then second question is just going back to one Vanderbilt, you know 100% leased and as we think about it I know you've said before there's a significant mark to market embedded in that asset is there any opportunity to perhaps move an existing tenant to you know 346 Madison your new development project and and unlock you know some of that mark mark to market in one van to build through that process well let's show it you know moving It's a little early to talk about 346 Madison since it's five years away, but there are opportunities that we're pursuing for tenants that have either outgrown their space and we're recapturing some of those spaces and then accommodating tenants that need expansion space in the building.

So we've got, you know, several pending transactions, and you'll see, you know, those leases I expect to sign this quarter, and the rents will be up in a, you know, to really, I think, illuminate the fact that the building's in-place rents are well below current market.

Okay, thanks, guys.

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

Hey, good afternoon. down there uh two questions um mark or steve the pace of this office recovery is just it's incredible i mean it's like what the dot-com was maybe even better is it solely just the lack of supply or what do you think is causing companies to clamor for so much space so quickly uh and even be willing like it's just as i say it's we haven't seen this in in decades and just trying to understand if it's lack of supply or something else?

You know, four things. One, the economy in New York City is doing extremely well. And, you know, profits drive growth, growth drives demand for space. It's broad based, as I mentioned earlier. And there's no sign of abatement right now, because things are really just, you know, firing on all cylinders across almost all sectors. And, you know, that is kind of like the tip of the spear, if you will. You know, second, we just are in a situation where there's almost no addition to space to speak of in a 400 million square foot market. And that's really looking out over the next five years or so. And that's because a lot of projects during 2020 and 2024 either got delayed or shelved or changed or whatever. And as a result, you just can't flip a switch and produce that space. It takes a lot of time and effort and money and foresight to be able to open up the inventory. This isn't like one of those, you know, borderless markets that are out in other CBDs around the country where, you know, you have constant new product replacing old. Here, it's it's much more delicate, especially in a fully built out midtown. So scarcity, I'd say, is the second major issue. Thirdly, you know, you had companies that were just sitting on the sidelines, uncertain as to what direction they were headed. And we had some very lean years back in 2020 through 2023. And then now we've been the beneficiary, especially in 25 and 26, of, you know, just companies that, you know, have plans for the future that are so ambitious and so affirmative that, you know, the issue we face right now is not just delivering space. It's giving tenants confidence that once they leave space, we'll have more growth options for them, either within those buildings or surrounding buildings, to satisfy their future growth needs. And, you know, it kind of feeds on each other and it's, you know, turned into smart businesses wanting to put away their long-term space plans for 10, 15, 20 years now and not have to deal with the unknown, you know, down the road. And I would say, you know, fourth major point is convergence. You heard me on this back in 24. This was something I identified as what I thought was going to be one of the most significant trends in favor of diminishing office supply and, you know, sort of a winnowing of secondary and tertiary office space being converted into primary and very attractive residential space and much needed rental apartments. And as a result, you have an inventory that's actually dropping and is bringing up the middle and bottom of the market into rates that become economic for the business. So that's why, as Steve said earlier, we're experiencing rental growth across all facets of the business. So, you know, I think that taken together really should not be a surprise because we've been on these themes for months and months, maybe years and years. And I think what you're just seeing is, you know, that playing itself out in a very predictable way. And as long as the economy stays, you know, robust as it is, we don't see this abating anytime soon.

And then, so, Mark, just on that point on the office-to-resi conversions, do you see most of that pipeline continuing on, or is your view that we'll suddenly get a bunch of buildings that were planned to be converted come back to office and maybe that's competition?

You know, that's an interesting question that we'll have to see play out. You know, I'd say right now for the projects that have been what I'll call lit and or have been permitted or about to be permitted, I think you're going to see them all go through as conversions because before I would say the economics were in favor of residential. I'd say office, you know, at that segment of the market is closing the gap. And, you know, maybe it's getting closer to a push. But you have to remember, aside from just the pure economics of rental value and cost to convert, you still get a pretty strong financing edge with residential where spreads are tighter than office. and a stronger cap rate environment to sell into or JV into, as you saw on seven day, where I think the cap rate was about a five or 5.1 percent. You know, and that's I think some projects will command better than that, depending on location. So I think the gap is narrowing, but still tilts in favor of of conversion for a number of these buildings. but that could change in a year or two and you may hit an equilibrium.

Thank you.

For our next call, this question will be coming from the line of Steve Sakwa of Evercore ISI. Steve, your line is open.

Yeah, thanks. I know you guys had an ambitious debt refinancing and, you know, capital markets transaction program for 26. Could you maybe just kind of give us an update kind of where you are on refinancing and asset sales for the year?

Yeah, sure. So just talking about the capital markets more broadly, I would say the shifting macro landscape since the start of the year and the resulting benchmark rate widening, they've tried to interfere with the natural trajectory of the market. But these are moments where New York City shines. Mark always says New York City is the AAA investment of our sector. So despite not having the wind at our back, we continue to see what I would call unending domestic and international demand for quality Midtown Manhattan product. Just this morning, we saw a report that was issued and published in Cranes about how Manhattan's investment sales market jumped 50% annually in the first half of the year, which marked the strongest first half of the year since 2022, when interest rates were just starting to rise. So when we look at transactions over this past quarter, in the development sector, we completed our partnership with Mori Building at 346 Madison. This is our third transaction with Mori Building. Mori is a remarkable partner. They're incredible developers and visionaries, and we're proud to be able to launch this project with them. We shook hands on our partnership within only a few months of us closing on our acquisition. I think that really speaks volumes to the quality of what we will be building and the trust between our two organizations. In the core office sector, we entered into contract to sell 10 East 53rd Street. That cap rate was approximately 5.7% for a side street building. That sale will complete a successful transaction for SL Green, and notably, it's about a three and a half times multiple on the acquisition of our partner's interest in 2024. And another example is our good friend's purchase of Park Avenue Plaza, which was a highly competitive process, and that's on the heels of their purchase of 623.5. And then in portfolio deals, I assume everyone's seen the rumors in the press regarding a potential transaction for the Hudson Square portfolio. So I would say most interestingly, much of this quarter's demand was driven by domestic and long-term investors in our sector. Most of those groups were on the sidelines for quite some time. So between availability of debt capital, the strong fundamental performance that you've been hearing on this call, and the diversity of investor base that we saw this past quarter, I would say this is one of the better investment sales backdrops we've seen in quite some time. With respect to our program more specifically, we've completed or in contract on four of the 11 deals in the plan. I expect we will be announcing two additional deals soon, and then we're going to get started on the remaining five deals that are in the plan. As most of you know, our disposition plan this year was weighted to the second half as we strategically launch sales throughout the year, and the team is gearing up to launch on those remaining transactions. We can talk more about the debt capital markets, but I would say specifically to our plan, the next one up in the queue is 245 Park. That one is in advanced stages right now, and I expect that we'll have more to announce and discuss in the coming months.

Great. Thanks. Thanks. Mark, I don't know if you could maybe just comment on 1515 Broadway. I know, you know, you are disappointed, you know, with the casino outcome, but have you guys kind of given more thought to sort of the long term, you know, plans for that building? And if so, you know, when do you think, you know, that kind of takes more shape?

Yeah, you know, look, we shook off the disappointment back, I guess it was last September, I want to say. Amazing how, you know, time goes so quickly. It's a shame because I think we would have been close to open when we all would be walking into the casino. But since then, we've had the opportunity to assess a lot of plans. And what I've come to appreciate even more is that we're in a we're in a very good spot, I think, with 1515, you know, one paramount after being acquired by Skydance and now, you know, having an agreement to merge in with or acquire Warner Brothers to create. I think, you know, one of the most powerful and largest media companies, you know, in the world. Hold it. We good. OK. One of the most powerful media companies in the world. You know, puts 1515 kind of squarely back in the mix for, you know, longer term use by that combined entity. I'll call Skydance for the moment. I don't know, you know, that they have their plans all sorted out yet. My guess is not from, you know, from what, from the conversations we had and also given that that merger is not yet closed. But, you know, certainly the combined entity is going to employ, I think, more than 4,000 people. I think a lot of those jobs can and will stay hopefully in New York City. And we would expect to be a net beneficiary of that. Now, with all that said, you have to remember that the debt is on rapid amortization over there. So at the expiration of the Paramount Least, we have very low debt outstanding on that particular mortgage, which again, gives us flexibility to consider other types of conversion options to maximize entertainment uses, which I think is really highest and best for Times Square and for that asset, signage opportunities far and away above what currently exists, and really make it kind of a mixed-use destination, entertainment, theater, live theater, live music, media, office, capital of Times Square. So I think there's going to be a lot more to say on that. Time-wise, Steve, I think is next year, you know, because I think, like I said, until things are clearer with our, you know, primary tenant over in that building or sole tenant in that building. You know, there won't be a lot to do, but I think as soon as that transaction's culminated, we could be very active over there. And I'm very positive on that particular property right now. Great. Thank you.

And our next question will be coming from the line of Tom Catherwood of BTIG. Your line is open, Tom.

Thank you. Good afternoon, everybody. Mark, I want to go back to something you said in your prepared remarks when you were talking about the step function in economic occupancy in 2Q. Maybe view it from a different angle. We think of vacancy leasing and how it eventually drives economic occupancy. But there's a good portion of your portfolio that are leases that were signed 2020 to 2023 when tenants were focused on shorter term renewals. Do you have a sense of kind of, you know, for that portion of COVID vintage loans or leases. What's the embedded mark to market on that that maybe it's not reflected in economic occupancy right now, but in the next year, two years, three years really starts to roll into the numbers?

Yeah. I mean, look, I don't have that number and I'm looking at Steve and Matt and they're not giving me the high sign here that they have it. So I'm going to give you a little bit more gut and instinct. I would say I'm going to give you a broad range between 10 and 20%. I think just given, based off of our increases in our asking and taking rents that Steve referred to earlier, I have a better sense, building by building, how we've moved rents up, you know, sort of incrementally over the past, you know, two, two and a half years. And I think, you know, typically, the range of increase is minimally 10%, probably as much as 15 or 20%. I mean, I don't know, building like one vendor, but more than that. But that's, you know, that's that's, you know, we're fully leased here. So I would say a safe bet is 15 percent ish, you know, on, you know, when those what you call COVID or leases come up for renewal. But I'm giving you that more touch and feel than like I don't have the numbers in front of me. But I don't think it's less than that. Steve, do you have any?

Well, I think there's a couple of thoughts with regards to it. You know, a lot of the deals that we did during COVID were even shorter term. I mean, we're five, six years past COVID at this point. So a lot of those deals we were doing at that point in time were, you know, three, four, five years. Secondly is, if you'll recall, the net effectives may have dropped more than the face rents. face rents were probably down about 10% from where they were at the end of the beginning of 2020. And since that time, face rents have dramatically increased throughout the portfolio. And certainly as our portfolio, the complexion of our portfolio has changed over the years, you're seeing much bigger rent appreciation on parts of the portfolio, particularly Park and Sixth Avenue buildings. And with the stabilization of concessions over the past year and a half, you know, the net effectives, not only are the face rents going up, but the net effectives are going up as well. So I think we're probably past the moment in time where those kick the can deals, you know, those leases have probably already come back and we've attended to them as part of our leasing over the last couple of years. Particularly if you look at our rollover schedule over the next couple of years, we don't have any big, you know, chunky expirations. Certainly nothing of consequence this year that's not already being attended to. And our largest lease next year is like 150,000 square feet, and that's one lease.

Yeah, but with that said, we're going to be mining opportunities that are non-contractual. I think you're going to see the growth come from is really three things, four things. One, nominal face rent increases. Steve and I just spoke about that. Two, stabilized lease concessions for new deals, maybe even slightly contracting. Three, a much higher prevalence of renewal to new. Early renewal. Well, renewal to new, I was going to go forth, which we're saving considerably. That's where your net effective rents are going to be far higher than 15% to 20% because you're getting that kick on face rent, and then you're getting a compounded effect on reduced TI and free rent. And then lastly, we're mining the portfolio for every expiration between now and 2032. I mean, we are out there like five, six years forward, hitting every tenant right now, trying to do blend and extend deals, early renewals, trying to get, you know, blend in rental uptick and defer out, you know, some capital costs. And I think you're going to see in the second half of the year, we're going to get some good traction there. And so all of that is what we are busy at work on. I mean, you know, when the, you know, you got to hit the market when the market's there and we recognize that. And we're not just focused on the next year or two, we're focused on the next five or six. And with an intense eye on saving capital dollars and trying to max out face rents.

Got it. Got to appreciate that color. And then the last one for me, maybe Harry, just want to touch on the debt fund. You've had success deploying capital there. How do you see that opportunity set potentially evolving as New York market continues to improve and traditional lenders start to get more comfortable with office? Do you have to focus on a different part of the cap stack or kind of shift strategy in any way?

Yeah, look, so we've done approximately $600 million of deployment through call yesterday. We have a handful of opportunities in the pipeline today that, you know, we're working through. And I think, you know, these are moments where our team shines. I mean, we had obviously a lot of opportunity in front of us last year into the beginning of this year as the capital stacks start to tighten. And for us, this is now about financial engineering and working with senior lenders, trying to get the tightest senior financing, much like the execution you saw us do on our balance sheet years ago at 550 Madison. And this is where we go out, work with our relationships. There's a deal we just closed in the debt fund. We're not disclosing transactions in the debt fund, but there's a deal we just did where we went out, originated the entire stack, syndicated out of senior, syndicated out of subordinate Mez. and we're able to get to our yield requirements. So, you know, for us, this is where our team focuses on our relationships and builds capital stacks to get to our yields.

Got it. Appreciate the thoughts. Thanks, everyone.

And our next question will be coming from the line of John Kim of BMO Capital Markets. Your line is open.

Thank you. I wanted to follow up on what drove the 20 cents of operational uplift this year and what surprised you. You didn't raise same-store occupancy guidance. I'm assuming a lot of this is timing and the economic occupancy is moving up, but is it purely just a better renewal rate in terms of retention of your tenants and more leasing of pre-built space? I'm just trying to understand why such a big uplift relative to expectations.

Sure. Yeah, I thought I'd hit that in the opening comments, but you read the biggest ones, and Steve and Mark highlighted that as a catalyst to what we're seeing, renewals and early renewals. If you're looking at NOI, everybody's very focused on gap revenue recognition and economic occupancy, renewals and early renewals are instant gratification when it comes to gap revenue recognition. And we're doing more of those. We've also made a conscious effort because we talk about turning on gap revenue recognition is triggered by the turnover of space to tenants. We are working with our tenants that our own team is hustling to try and turn over space even faster so we can turn that earnings spigot on. And then just from an expense perspective, we budget very conservatively. We're ahead on expenses. And the combination of those things at $0.10 of the $0.20, we already recognized in the second quarter. That was $0.10 ahead of our expectations just in Q2. So we have $0.10 left for the balance of the year, which is a combination of those handful of items.

Okay. And then I also want to follow up on the refinancing plan for the year, and in particular, 245 Park. The leasing has been very strong. The redevelopment is underway. But now with the 10-year moving up above the assets mortgage rate, how does that impact either the timing of some of the refinancing or sales and the valuation of the assets?

Sure. So just, I spoke earlier about equity capital markets and a bit on 245, but let me just talk about the credit markets more generally. You know, we continue to be encouraged by the strength of what we're seeing in the credit markets. We've seen approximately $11 billion of CMBS originations year to date. That figure, same period last year, was about $8.5 billion. The two biggest deals that got done this past quarter was the $1.9 billion financing of two Manhattan West. I see here the $1.8 billion financing of nine West 57th Street. And I think what's one of the best data points that we've seen out there is really this tightening of the AAA spreads. We're now seeing AAAs tighten sub 100. And overall spreads on the deals that are getting done are in the mid to high 100s, depending on last dollar LTV. And I would say, interestingly, when you compare it across all asset classes, spreads on single borrower CMBS AAAs for trophy office are now trading in line and in some cases inside of what we're seeing for spreads on industrial, multifamily, and self-storage. So I think the bond market is starting to appreciate what we're seeing in the trophy office asset class. We're going to be big beneficiaries of that on 245 Park financing. That's in process now, and I think you'll see a lot more illumination on that as we launch the rating agencies and data becomes public. But I would say from a spread perspective, we're very confident in the execution that we're seeing. Of course, the benchmark, as you noted, is not cooperating with us. That's obviously outside of our control. But Matt can speak to some of the hedging that we're putting in place to ensure that we have the proper protections at the right times in the market.

Yeah. As has been customary for the last few years in this rate environment, we are maintaining a very cautious stance when it comes to rates. We're hedging out well ahead of time financings like 245 to protect against rising rates. The bulk of our debt remains hedged as well. We were at one point 70-30 fixed to flow, we remain more like 90-10. So hedging existing and hedging forward for the foreseeable future.

Thank you.

And our next question will be coming from the line of Blaine Heck of Wells Fargo. Your line is open.

Great, thanks. Sorry if I missed this, but just on the leasing pipeline, I think it stood at 900,000 square feet last quarter.

Can you give us an update there uh the mix between new and renewal and how much of the renewal activity is pulled forward renewals um well there's a 900 000 square foot pipeline it's it's roughly 50 new 50 renewal um and of that 900 000 square feet 400 000 square feet of it are leases that are in active negotiation and essentially very far advanced negotiation, I'll say. And the balance are term sheets, which we expect to convert over to leases. As far as the renewals, most of the renewals are, I don't have a perfect answer to it, but they're near-term renewals.

They're not early you know renewals um for the majority of that square footage great thanks steve um and then second question just to follow up for harrison or mark uh can you just walk us through the the thought process you all went through kind of on 346 madison was there any consideration of either selling a smaller stake or waiting for some leasing activity to potentially push the valuation a little higher? Did you just see this as, you know, something you wanted to do for timing or relationship reasons?

Well, I mean, we did it first and foremost for business reasons. You know, I love fully capitalized deals, development deals. You never want to take for granted, you know, a moment in the market. And, you know, we do have very special relationships with many of our JV partners, Maury Building on 346 Madison, certainly among them. And, you know, we've gotten to a point with many of our co-investors where it's a symbiotic relationship where we count on their partnership and they count on our delivery of opportunities in this city, which are the good ones are few and far between. We were able to get, you know, our standard package, if you will, of JV enhancements for being the ones to, you know, source and execute the deal. But, you know, in the case of Mori building there, they're also a really good co-developer. I mean, these are, these are folks that have built as much as anybody in Tokyo, as of Badae Hills, Teroniman Hills, Roppongi Hills. These are fabulous investments. I think there'll be opportunities for us, you know, each ways, you know, both, you know, opportunities for us and for them. We had their commitment early on. There's a lot of planning that needs to happen and happen early and having a good partner like Maury, you know, together with us at the early stage makes the entire development go much easier. We reserved enough that we plan in the future to probably syndicate equity further down the line, maybe when we sign our first leases or maybe when the project's completed or maybe when it's recapitalized. That'll be for a later date. But, you know, the combination of de-risking through capitalization day one, getting the kind of economic deal we set out for, you know, and then some, you know, point two and the solidification of relationship point three. And on we go to the next one. I mean, this is we are a volume shop. And while developments are bespoke and long term and they get a lot of our senior level attention, there's lots more deals for this company to do in this market, both long term and opportunistic. And we want to be flush with capital to take advantage of this market. And, you know, I think we've proven our ability to do so. over our decades in the business, but certainly over, I would say, the past three to five years. And we're happy with how it turned out.

Yep, that all makes sense. Thanks, Mark.

And our next question will be coming from the line of Peter Abramowitz of Deutsche Bank. Your line is open, Peter.

Hi, thank you for taking the questions. First one is just in relation to the guidance raise and this kind of expected ramp and NOI and fee income may be faster than you were expecting at the beginning of the year. Just wanted to ask, how does that sort of impact when you think you'll start to see an inflection in FAD? I think previously you've kind of messaged that the expectation would be end of 27 or early 2028. But just curious for any updated thoughts on that in relation to the guidance raise.

Yeah, I would say the trajectory that we're on is slightly ahead. But, you know, 27 into 28, you know, with the break-even point in 28 is still the path that we are on at this point.

Okay, thanks, Matt. And then a second one, just on Summit. I think, Mark, you had some commentary around tourism maybe being a little bit weaker in the city this year. Just on Summit, I'm kind of curious, was there any noticeable impact from World Cup travelers in the second quarter and into the third? Sort of how are you thinking about that impact as it relates to the full year results?

Yeah, well, look, you know, I mean, the FIFA games, there were eight of them, including, you know, the much watched finals. And there was definitely a bump that I think all hospitality got from from those events. It's hard for me to parse how much of that was FIFA driven versus, you know, we're in the we're in the heat of the summer right now. And, you know, Summit typically does very well, June, July, August. And certainly, you know, I look at the numbers daily and the past, I would say, four weeks in particular have been, you know, very strong. You know, ticket sales, daily ticket sales exceeding 400 and some odd thousand a day is fairly typical. So that's those are like end of year holiday numbers. So I'm happy with that. um people love summit you know it's uh all ages all walks of life domestic tourism you know tri-state residents foreign tourism uh people love going they they they repeat they go back um you know i think our year over year attendance numbers are down a few uh points but really modest because most of that was in the more challenging beginning of this year when we're up against weather and other issues. But I would say since May, numbers have been sort of right back to where we had them. And I'm hoping and expecting that through the ability to manage variable operating expense and also have a big second half a year that we'll finish up right on our numbers, which are market leading. You know, they're well ahead of the other observatory attractions, both in terms of average ticket price and attendance, because it is a very special experience that I'm now excited to be bringing to major cities like Paris and Tokyo and more to come. You know, we've got a lot in the queue and maybe, you know, more on that in December, because I always like to hold something back for December. But we're hard at work trying to bring Summit to everyone around the world for people who can't get here. And I think it's going to be just the momentum will build and the experience will get even better. And the team is very excited about the future.

All right. Appreciate the color. Thank you for the time.

And our next question will come from the line of Anthony Pallone of J.P. Morgan. Your line is open, Anthony.

Thanks. Good afternoon. Can you maybe give us a sense of cap rates and what to expect on your dispositions over the balance of the year, maybe even bucket them, depending on whether it's things like maybe a 245 Park Steak or Resi or something like that?

You know, look, for competitive purposes, obviously, we wouldn't want cap rates on any specific transactions out there. I think the best data points to look at right now are what we completed. We just announced 10 East 53rd Street. That's a core office building on a side street. And that got done at a 5.7% cap rate. We announced a seven day. That's a core residential asset that got done at a residential and retail, forgive me, that got done at a 5.0. And I think you'll continue to see assets trade in those types of ranges, but I don't think we'll go long any specific number or tied to any specific asset at this point.

Okay. And then just my other question. On 753rd and 346th Madison, you obviously had the incident with the other conversion close by on 753rd. And then there's some press on 346th Madison that maybe a neighboring property is delaying you or something. Can you comment on just the progress on those two deals and whether anything gets interrupted on either of those in terms of timeline or plans? Okay.

Let me just make sure.

The question is 750 and 346 litigation.

That's two questions. Okay. 346. What? Oh, okay. So 750. I want to make sure I got the question. I've got with me Bob, there was a question about what are we doing over at our building to ensure integrity of the executioner?

It was, did we see any interruption on our project at 750?

No. There's no interruption on the project, debt or equity capital from what took place at a property on 42nd Street, which I assume many of you are aware of what happened there. It was basically, as far as we know, and it's not yet official, human error. And, you know, something that has zero extrapolation to our project and therefore, you know, our debt and equity is not impacted by that in any way. We expect to have that transaction closed in the third quarter, both debt and equity. We're on a path. I feel great about the project. I think it will be the top rental project in, you know, that, let's call it, you know, Midtown, I don't know which one, you know, in that particular Third Avenue Midtown Submarket, as expanded all the way over, you know, to second and to first. uh it is it is the design is extraordinary the amenity package we have for that building is like none other we're having a lot of fun with it and we're able to do it in a way with domestically sourced products to keep it you know within our original budget which i think was around total cost 800 million dollars plus or minus i've got my head of construction here making his debut after 122 conference calls that we've done since 1997. Robert DeWitt, the man behind the curtain who shepherds under Ed Picknick's watchful eyes our developments at one Vanderbilt, one Madison, now 346, certainly the conversion on 750. Bob, a little bit, you know, just a minute on what controls we have in place at 750 to ensure structural integrity, you know, which on a project like 750 is actually, I'm going to say, a fairly easy lift for us relative to the kinds of things we've done at One Madison and elsewhere, but I think it could be illuminating if you would share that.

Sure. Thanks, Mark. Thanks for the intro. So we have numerous layers of oversight, review, inspection, and approvals before any structural demolition or overbuild is authorized to proceed. We've got a world-class design team, independent and major New York City construction manager, third-party special inspectors, as well as our own dedicated staff overseeing the day-to-day execution of the project. We have extensive procedures in place to track the execution of the structural reinforcement of columns and beams at all levels of the project. Ultimately, each location is tracked with detailed photographs and logged electronically in our online tracking software by our construction manager and design team. Once reinforcement is confirmed, complete by the subcontractor and the construction managers, an independent third-party special inspector performs their inspection and confirms the work is complete per the plans and specifications before any further work can continue. And finally, no structural additions, demolition, or overbuild activities are permitted to commence until all required structural reinforcement has been completed. All inspections have been approved, all tracking documentation is in place and verified, and all structural stability requirements have been satisfied and confirmed in a pre-transfer and pre-overbuild conference that includes all members of the design team and development This process is not only standard for our 750 project, but any project we complete across the portfolio can involve structural overbuilder structural work.

Thank you, sir. So that is where we stand on 750. As to, I think the question was on 346, the litigation you're referring to is for some access across the adjoining building. that's fairly, I hate to say routine in New York City development. You know, there should be a lot of neighborly love and access, but you often have to, you know, make a visit downtown to lay out the parameters of exactly what level of access, monitoring, building protection, etc. You know, we did it on OVA, we've done it on other buildings, we did it here. When people build next to us, we're on the other side of that. And I think that will all be sorted out next month in August. Ahead of our demolition, we anticipate no adverse outcome and no adverse impact on timeline.

Okay, great. Thanks, Rolikawa.

And our next question will come from the line of Seth Berge, a city. Your line is open, Seth.

Hi, thanks for taking my question. I guess just a first one, you did $14 million of buyback activity in the corner, and I know the dispositions are kind of back half-weighted. I guess just thinking about the use of those proceeds, how do additional buybacks compare to your goals of debt pay down on a relative basis?

Yeah. Our goal is to make the most with what we have, and that takes different forms at different times. development, opportunistic investment, buybacks, debt paydown. We had said, I think, for a while now, when we felt we were in a position either with deals done, deals in contract, or deals within our sites, that we have incremental liquidity, that we would use that incremental liquidity for buybacks. And we were in that position towards the end of the second quarter. We did dip into the market at a point in time that we felt the price was not nearly reflective of the underlying value of this platform. I think with, you know, the intense focus of the analysts and shareholder community on earnings, and I understand that because we focus on that too. There's also an intense lift on valuation. I mean, our assets, which are already premier assets, are becoming more valuable with each passing day, with every bit we lease up and with every bit we improve and winnow some of the low growth assets and redeploy into high growth assets. So we feel not just really good about leasing. We feel not just good about where our earnings and cash flow is headed, but we feel good about underlying valuation. And so we consider it to be a structural disconnect in the second quarter. We put some money to deploy in what I often consider to be the best and most obvious way to invest in yourselves, because we believe in ourselves. And I think we'll be rewarded over the long term for those investments, which we may or may not do more of as time goes forward. You know, we'll just see what the landscape is at that time. The great thing is we've got so many different, you know, levers to push at any moment in time to try and optimize return for shareholders that even though our focus is in one market, it's a pretty damn big market. And there's lots of opportunity and lots of ways for us to deploy capital and make money.

Thanks, Tom, Paul. And then with just the $0.80 of FFO kind of related to some of the basis accounting and then having some component of kind of maybe fair value adjustments on derivatives, have you put any thought into disclosing either a core or a real estate FFO metric to kind of give the investor community a better sense of the underlying earnings performance of the business? no uh i don't believe in violating what nareed says is ffo and creating your own so we do it as reported as everybody should and that's the best way to compare across companies and our next

question will come from the line of vikram vikram mahaltra of mizuho your line is open uh afternoon um uh thanks for taking the call and you know congrats on a strong print um just two clarifications. I guess you referenced FAD and breakeven. I was just wondering if you can clarify what do you mean by breakeven? And Matt, could you, at least for 26, give us a sense of how the CapEx should trend in the back half relative to the first half?

Sure. CapEx tends to be a little back-ended just because we get budgets approved and then you got to get to spending. That's our spend and reimbursement to tenants. So historically, capital spend is higher in the back half than the first, but since that's largely out of our control, we can't say for certain how that plays out. And the commentary on 28 is the same thing we said back on our first quarter call with FAD steadily improving 26 into 27, but 28, you are break even as against coverage of your dividend.

Dividend, okay, that makes sense. And then I guess just now given what you talked about in terms of more interest, the capital markets even opening even wider, is there a way you can share with us like as of today you sold E53rd, I think it was a 5.7, but how should we think about the range of cap rates for, say, like, newer built core asset versus maybe an older, you know, needs CapEx or just a lease-up opportunity?

Like, how should we think about Manhattan and the range of cap rates, older versus new So, Vikram, you know, cap rates, I subscribe, are really driven by two things, you know, embedded growth, expected growth within the asset, and a view on, you know, rates. You can get a low cap rate with an old building, a high cap rate with a newer building. It's not really new versus old. It's, you know, when cap rates compress is when the market believes you're going to have above average earnings momentum and growth. And, you know, if that growth in NOI projection over three, five, seven, 10 years, you know, outstrips your view of, you know, where rates are headed, then you're going to have a compressed cap rate, and it could often be below your financing costs. You know, it's not uncommon to have, you know, cap rates drift lower than your financing costs when you have embedded growth. And right now, you know, when we see nominal rents and net effective rents increasing at these kind of rates, you know, as long as interest rates are roughly stable, And that's, you know, that's a caveat. Then I think you'll see cap rates compress, notwithstanding it's a higher than historical interest rate environment because people are investing for growth. You know, they want to borrow in $2,026 and repay in $2,036 and have a lot of, you know, nominal growth along the way. And when you have that circumstance, you can have premier growth assets, sub five. I think the bulk of what we own is between five and six. And there's really not much in our portfolio that trades north of six, in my opinion. That's not, I'm not giving you market cap rates. I'm giving you cap rates for our portfolio. The way I look at our assets, you know, I don't think we have much of an appetite to trade in the six and a half to seven range, even if that were the market, which I don't think it is for our assets. So I think it's decidedly between five and six. Certain assets are sub five. Very few might be a touch over six. that's kind of a broad range of of how we view and the more the tighter I think occupancy in the city in our portfolio gets and the more net effective net effective rates improve I think the more you may see those cap rates dip and then if you get a little interest rate relief you know then it's all bets off and we've seen that you know we've seen how fast it can you know go in your direction or, you know, five years ago, go against your direction. But I think right now we're in the, you know, we're in the place we want to be. And I think that's why, you know, you saw us dip into the buyback market again, which we haven't done in many years. And, you know, I think that's a fair assessment of Keprits.

Okay. Thank you. And then that was helpful. Just one last one, Matt. You have a fair amount of get coming due next year, and I guess concurrently also a bunch of swaps expiring. You talked about asset sales, but just maybe can you give us an update specifically the plan for 2027?

Yes, I plan to do that in December. Thanks for your third question.

Any early preview? No. Thanks so much.

And our next question will be coming from the line of Ronald Camden of Morgan Stanley. Your line is open.

Hey, great. Just two quick ones. My first one, I know we talked about sort of the least occupancy target of 95 and potentially exceeding that, but any sort of color where the commenced occupancy ends the year. And the reason I ask is that the investor day, I think you guys caught a lot of attention on the same-store NOI for 27 over 10% potentially, and just would love to understand where the commence occupancy ends and if that's still sort of a good target or realistic.

Yeah, it's a good question. We are trending ahead of our same-store NOI projections for 2026, which is great, but then it calls into question, well, that's increasing your benchmark, so what does it mean for 2027? But the trajectory into 27 is such that we still expect to be in excess of 10% same-store NOI, cash NOI growth in 27 as well, even though 26 is outperforming. As to occupancy, you're talking about commenced occupancy. I think the more relevant is probably economic occupancy. That's what flows through. Earnings commenced is more of a legal term. Economic occupancy, we expected to close the gap to least occupancy by at least half of what it was at the end of 2025, by the end of 2026. And we are on that trajectory.

Great. And then my follow-up is on the alternative strategy portfolio, just any updates on Q Herald Square? I mean, I see 655th or Y Plaza, just any traction there, any movement on those assets? Thanks.

You know, Ron, Harry had to leave for three. We hung in there as long as we could. And but he had a hard stop at three. He really is the one to hit those questions. I will have him call you on those. But like, you know, in terms of what I can say, you know, sort of broadly is that, you know, they're good assets that for different reasons need to be recapitalized. I mean, I think that's obvious. You know, Worldwide Plaza, it was the move out of the main town of Kravath. In the case of Two Herald, you know, there was the Amazon slash WeWork, you know, lease expiration, I guess, you know, it will be. And 650, you know, that one, I think, you know, that's still yet to be played out. I mean, needs to be recapped, but, you know, it will be recapped, but, you know, that's a good piece of real estate on Fifth Ave, lease to a great tenant. So I look at all of those as assets that have some challenges, not fundamental real estate challenges, but, you know, capitalization challenges. I think we've proven time and time again in that ASP portfolio and otherwise an ability to get in and work with the various stakeholders to try to get to a solution for everybody that's the optimal solution on the table. and, you know, we're committed to trying to make it work on each of those assets, but each one needs, you know, to be restructured and either we'll be successful or we won't. But, you know, just to reiterate, those are assets that contribute little in the way of earnings and really nothing in the way of NAV as we perceive it. We have no recourse to speak of on those assets. And And I look at them as just three opportunities that we are giving attention to. We're not committing a lot of capital to and probably won't. But, you know, we might under the right set of circumstances commit some and, you know, yet to be played out. But we're hanging in there. And, you know, I think the stakeholders recognize we've done, you know, all we could do in those circumstances. And I think we're kind of in the, you know, in the batter's box, if you will, to be the ones to help put those assets back on safe footing. And if we do, we may get a surprise to the upside.

Helpful. Thank you.

And our next question will come from the line of Brendan Lynch of Barclays. And as a friendly reminder, please limit yourself to two questions.

Sure. I'll limit myself to one question. On the concession environment, one of your peers has argued it's hard to get free rent down below a month per year of lease term, which you guys were able to do this year, or excuse me, this quarter. And the argument being that you need the time to build out the space. The clients kind of resist having double cash rent during the build-out period, and they'd rather have higher face rents. So the question is, how low do you anticipate you can get free rent going forward?

Well, you've got to differentiate between new tenants coming into the portfolio versus renewal leases. And I think Mark made the point earlier that, you know, the net effectives and the concessions, net effectives rise and the concessions tighten when we're doing renewal deals. So, assuming that it's a typical five-year renewal, you know, when the market is at its peak, generally, its free rent is, you know, maybe two or three months. Today, we're kind of in the three to four months, three probably being the average on a typical kind of five-year renewal for most of the deals that, you know, these small to mid-sized deals. um new transactions if it's a 10-year lease um you know i think that's generally when you know you i would not be surprised to see free rent ultimately get down to kind of the 10-month uh free rent for a 10-year transaction okay very good thank you and our next question will come from the line of caitlin barrows of goldman sachs your line is open

Hi, everyone. Sorry it's so late. Just a quick one on the one Vanderbilt 80 cents of additional income. I guess it seems like something that you guys would have had some visibility into. So I guess why wait until now to talk about the boost to FFO? And then more importantly, what will cause fluctuations over each quarter going forward? So like if the 2Q contribution was 35 cents, why isn't 2Q to 4Q total like over a dollar?

So the first, the first answer is we, if we have visibility into it and we get affirmation of the treatment, we would include it. So we didn't have that until we included it this quarter and vetted it all the way through all the rules, auditors, NAIRIT, and everybody else involved. So when that was vetted through and we had eclipsed the threshold only after the end of the first quarter, so it wouldn't apply until the second quarter. That's when we employed it, and we'll use it going forward. What impacts it going forward is, most importantly, distributions. As I went through the math earlier, there's a fixed, what I'll call a fixed component of the calc and a variable component of the calc. The variable component is cash distributions as compared to what would conventionally be gap equity pickup. And as cash distributions increase or decrease, so does the FFO contribution. It's almost equivalent to a cash basis of accounting. So as we look forward, we look carefully at distributions. If we need cash for something, we'll hold it back. If we don't, we'll distribute more, and those distributions will impact quarter-to-quarter FFO recognition.

Okay, thank you. And then just on Summit 1 Vanderbilt, you guys were talking about how well it's doing. I know last year Ascent was offline for part of 2Q, but I believe it was online for all of 2Q26. So I was just wondering if the 2Q26 expectations were in line with your expectations and if there's any changes to the full year 26 expectations.

No, as I said earlier, I think that I started seeing the turn in numbers late May, June. So So, you know, the latter part of 2Q, I think Q3, you're going to see some good numbers. The downs I referenced were really Jan through May or Jan through part of May. It's not really a cent driven. I mean, we had to reintroduce the cent because we had it down for, you know, for maintenance for a while. It's back up. It's running. It's great. Very popular. And, you know, that'll be a part of what you'll see. And Q3 is the, you know, multiple effect of ascent at full throttle plus, you know, plus ticket sales back to many, many days where we're selling out. Weather's been great, et cetera. So I'm very optimistic for Summit in what is a challenging market. I think if you look around at some of the other objects where foreign tourism particularly has been substandard for the year, it's made up a little bit by domestic tourism, but it's still down overall. And I think some of our competitors have had to resort to discounting tickets. tickets. We've been able to keep our rents high. We don't participate in the past program, probably the only object I know that doesn't participate in that program, which generally discounts the tickets, just because we have a great following, and it serves as a great attraction, both for new attendees and repeat attendees. I think we're going to have a very good second half of the year. And whatever we experienced in the first half, we were able to somewhat, you know, mitigate through management of variable expenses. I think the team did a great job there.

Okay, got it. Thanks.

And our next question will come from the line of Michael Lewis of Truist Securities. Your line is open.

Thank you for running along here. So the AI leasing is obviously very strong. And I know some of those tenants are large players, some of the largest companies in the world, but some of them are not. So, you know, kind of similar to when the, you know, the early days of the internet, the internet worked, but not all the companies did. And there's a lot of AI companies. I'm just wondering, you know, from an office landlord's perspective, what are you seeing in terms of, you know, credit quality? And, you know, are there are there ai tenants where you say oh i'm going to pass on that one it worries me a little alternatively are there ones where you say wow the growth could be really explosive there that one you know might be worth a shot i'm just you know wondering what you kind of see um the breadth of the ai demand well let's i think there's a couple things that to point out to you you know the good news is broadly speaking the technology industry is back in a big way uh leasing space in Manhattan.

There's nine and a half million square feet of active tech searches going on right now. Of that, two and a half million square feet are AI tenants. So important to differentiate so that people don't believe that just because it's tech, therefore it must be AI. That's not the case. That's one. Two, during the dot-com days, we were very conscious about not having being overexposed to that industry. And we were very limiting as to the deals and the size of deals that we did. But there's a big difference between what we saw of dot-com tenants during that market period versus the AI tenants that we're seeing today. Most of the tenants of any consequence that have come through our doors are firms that are well-capitalized. They have big revenue versus the dot-com tenants, which many of them had no revenue. A lot of these tenants have big, big revenue in place. But having said that, there will be winners and losers, no doubt about it. And we've consciously limited our exposure to the AI industry to somewhere between one to two percent of the portfolio and you know most of that industry is midtown south as far as where the where the tech and ai tenants like to locate themselves and our buildings in that part of town at this moment in time for the foreseeable future are 100 least great and then my last question somebody earlier you know asked about an alternative ffo metric i don't i i'd prefer not to have another FFO metric to worry about, but I might propose something to all the office companies as far as net effective rent comparison.

So this 18% cash spread is great. And I've done this on your call and I've done this on other office calls, right? I pulled up your 2Q16 sub and your 2Q21 sub and I just, you know, I look at the rent, the free rent divided by the term, the PI divided by the term. Whatever I look over it, it seems like net effective rent goes up like two and a half, 3% a year. I don't even, I don't know if it keeps up with OpEx, but I guess my question is, right, when you look at that 18% cash rent spread, which tells us a lot, you know, what would it be if you looked at the annual rents on a net effective basis, right? You talked about those are spiking up, but I could never find, I could never see it in the number. Does that make sense?

I guess you're, we're trying to interpret your question, Mike. You're asking what.

Yeah, I guess I'm asking if net-effective rents are really going up that much, because I can't see it.

So the question is, Steve. What is net-effective rent growth? 18% is the face rent. What's net-effective?

What's net-effective rent growth?

Well, let's just go this way. I mean, if concessions have been stable for the past, called, at least year and a half, so if the face rents are up, you know, materially, your net-effectives are up materially.

I think a measure of it would be, you know, but you have to look over two, three year period. If you have FFO growth and AFO growth that exceeds the FFO growth, that differential largely would be, you know, you know, or at least partially driven by, you know, leasing cost savings now on first gen at least. right um you know uh we don't track um you know uh what do you call it uh uh net effective growth because it's very hard i'll give an example just the question becomes do you amortize all the ti uh over the period of the lease to calculate net effective or do you assume some salvage value Some leases yes, some no. And TI is one of the biggest components. And to just assume that all TI is written off over a 10-year lease term, I don't think is accurate. Or it's sort of dependent on the quality of the tenant's installation. So it's just not that simple. Um, and, you know, I mean, really the way we, I'm, I'm, I'm striving for, uh, like as higher renewal probability as possible, 75% plus and keeping the concessions down to three to six months on a renewal and, uh, you know, TIs of paint and carpet, uh, that's the ultimate in which case, you know, you're, even if rents are flat, uh, replacement rents, your net effectives will be up by almost 100%. So, you know, it's in order to drive the rental rates, it's not just leasing concessions, you have to invest in your buildings. And you have to invest in amenities and lobbies and roofs and everything. So that's why, you know, what may seem like, Jesus, I should be looking at 50% net effective growth. Yeah, but we spend a lot of capital on the buildings themselves in order to drive nominal rents. It's not just about direct leasing costs. So, you know, I think that, I mean, we're managing to try and get FFO growth, you know, at a consistent level. And I think three to 5% a year, you know, nominal growth, anything above that is gravy. And, you know, that or more on cashflow growth. And you should see that in our numbers as we're, you know, as 26 compares to 25. And then when we get to 27 and 28. I think you'll see it. But, you know, to give you an exact percentage increase in net effective, we don't have that number.

Thank you.

All right. Thank you for the calls, everyone, and have a great rest of your summers. We will be heading right back into the pit and start to put together, you know, plant the seeds for a great Q3, and we'll speak to you all in October.

And this concludes today's conference call. Thank you for participating. You may now