SL Green Realty Q1 2025 Earnings Report

SL Green Realty EPS Results

• Actual EPS: $1.40
• Consensus EPS: $1.27
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: N/A

SL Green Realty Revenue Results

• Actual Revenue: $144.52 million
• Expected Revenue: $158.44 million
• Beat/Miss: Missed by -$13.92 million
• YoY Revenue Growth: N/A

SL Green Realty Announcement Details

• Quarter: Q1 2025
• Date: 4/16/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 17, 2025
• Conference Call Time: 2:00PM ET

3SL Green Realty (NYSE:SLG) Corp., Manhattan's largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of June 30, 2022, SL Green held interests in 64 buildings totaling 34.4 million square feet. This included ownership interests in 26.3 million square feet of Manhattan buildings and 7.2 million square feet securing debt and preferred equity investments.

SL Green Realty Q1 2025 Earnings Call Transcript

Key Takeaways

• SL Green beat Street and internal forecasts in Q1 with stronger-than-expected NOI, leasing results and debt-related profits driving upside to guidance.
• The company’s commercial debt platform closed ~$200 million of DPE investments in nine months with a $1.2 billion pipeline, and management expects debt earnings to rise further, potentially prompting an upward guidance revision.
• On the equity side, SL Green acquired 500 Park, leased it to 100% occupancy and is investing $20 million+ in upgrades to boost rents, while it also bought out its partner at 100 Park to own 100% of a 97%-leased asset.
• Summit One Vanderbilt remains the top attended NYC attraction in Q1, setting a daily ticket presale record of over $500,000 and showing no drop in demand despite lower international tourism.
• Leasing momentum remains strong with 1.1 million sq ft in active pipeline and growing prebuilt (build-to-suit) demand, suggesting tenant expansion and corporate relocations are unaffected by recent market volatility.

Presentation

[Operator]

Thank you everyone for joining us and welcome to SL Green Realty Corp's First Quarter twenty twenty five 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 predictors 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.

[Operator]

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 sections of the company's latest Form 10 ks 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 regarding the company's first quarter twenty twenty five earnings and in our supplemental information included in our current report on Form eight ks relating to our first quarter twenty twenty five 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 and 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.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Thank you. Good afternoon, everyone, and thank you very much for joining us today. Given all that's transpired in the global markets since our last call, I was especially happy with our first quarter's earnings that we announced yesterday. In particular, and as a result of the hard work of the entire SL Green team, the company's earnings for the quarter exceeded the Street's expectations and our own internal projections by a significant margin. Our NOI was on top of our forecasts, our leasing results were well ahead and our profits generated by our debt related businesses were very strong.

[Marc Holliday, Chairman & CEO at SL Green Realty]

This should come as no surprise to anyone given my commentary in December at our investor conference, which focused on an opportunity rich commercial debt market. I highlighted that new originations, secondary market purchases, distressed opportunities, the new debt fund in our special servicing business was going to take center stage in 2025 and Q1 performance in this area is certainly an affirmation of that belief with much, much more to come. We laid out our thesis in this point in the cycle for making equity like returns in credit investments, something that has been our stock in trade for over a quarter of a century. No one has made more subordinate investments on Manhattan office buildings over that period of time than we have. Particularly in the early years of a recovery, our realized returns are typically far higher than the average returns we normally experience.

[Marc Holliday, Chairman & CEO at SL Green Realty]

And we expect 2025 and 2026 to be no different. The recent volatility in the credit markets benefits this business and our new debt fund and substantial liquidity gives us the ability to selectively identify investments with attractive returns and protect the downside. In just the past nine months, we've closed on nearly $200,000,000 worth of DPE investments with the more recent one slated for the fund and we are actively negotiating on a pipeline of over $1,200,000,000 of new debt investments. To categorize our debt related earnings as either non recurring, one off, noisy or confusing is in my opinion to miss the point. Our debt platform is a meaningful component of who we are.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Our expertise and track record in this area is well established. Given the opportunity set in front of us, I do expect that our debt related businesses will account for increasing profits to our shareholders and I expect we are already at the higher end of our guidance range, a range we will reassess next quarter with an upward bias if we are successful in closing all of the business now in front of us. And that's not to say we aren't also concentrating on growing our equity portfolio. In the first quarter, we closed on the acquisition of five hundred Park and weeks later, we signed a lease bringing the building to 100% occupancy. Now we are designing an improvement program with elevated finishes and amenities to materially move the rents up as tenants renew and roll.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Also in the first quarter, we bought out our partner in 100 Park, acquiring a 50% position on attractive terms in a building that is now 97% leased. We've owned 100 Park for approximately twenty five years and it continues to be a solid performer for the company. Finally, Summit 1 Vanderbilt was the number one attended experience of its type in the first quarter according to a recently published report. In just over three years, the Summit has become one of the most sought after experiential attractions in New York City. I know there was a question raised regarding the impact that reduced international tourism might have on Summit's attendance.

[Marc Holliday, Chairman & CEO at SL Green Realty]

And I would simply note that last week, we set a ticket presale record with over a half a million dollars of advanced ticket revenues sold in one day. In closing, I'd just like to say in uncertain times, SL Green shines. Thank you.

[Operator]

And our first question comes from Alexander Goldfarb of Piper Sandler.

[Alexander Goldfarb, Managing Director at Piper Sandler Companies]

Hey, good afternoon down there. So two questions. First, Steve, can you just talk a little bit more about prebuilts? It's a topic that we're hearing from further from you guys from other landlords. Just curious how that has gone in winning tenants, what the economic rent potential is versus raw space and how that's been going versus the market in general.

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

Sure. I mean, it's pre builds or also known as build to suits where we do a custom build for a new tenant coming into the portfolio have been around for a considerable amount of time. And I would say broadly speaking, in order to be competitive in the market, if you're transacting with a tenant that's, call it, certainly 10,000 square feet or less, it's almost mandatory that the space be built or that the landlord is willing to build the space for a variety of reasons. Tenants want to take out the mystery of cost. They want to accelerate the decision or the timeline from decision to move in.

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

And for us, having the expertise in house with design and construction, and we're very well practiced at doing these prebuilts, I think it's a big competitive advantage to do the prebuilts in a way that we execute in a very high design manner and do it throughout the portfolio on all price points of product.

[Alexander Goldfarb, Managing Director at Piper Sandler Companies]

And then the second question is, obviously everyone's focused on tariffs and the impact on leasing. Everyone's trying to figure out their crystal balls. As you look back in time when the market has gone through sell offs like we are, is there some sort of lag and you're like after three months of a market sell off, you see the impact on leasing activity slowing down after two months. How do you how can we get comfort? Obviously, you've done well year to date, but how do we get comfort of how long the market remains disrupted in the stock market before there's a potential to start seeing discussions in your pipeline slow?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

Well, that's an impossible answer as to how long it would take to have absolute clarity. In prior disruptions, it's really what is the cause of the disruption as to is a function of how fast we see the impact in the marketplace. But I think what's most telling, and give me a second to sort of tell the story, if you go back in our pipeline three weeks ago, so pre announcement of tariffs, we had 62 tenants in the pipeline versus today we have 64 tenants in the pipeline. Of those 64 tenants, 44% of them have an expansion requirement as part of the deal that they're negotiating. Of the tenants that we replaced over the past three weeks, eighteen tenants were replaced by 20 new tenants.

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

And of those 18 that were replaced, 14 were replaced because leases were signed. So I only lost four tenants and those were done really because the tenant chose a different building or we elected a different tenant to replace that tenant for a space we're negotiating. So point being, we haven't seen a slowdown yet. We haven't seen any commentary from the marketplace and we haven't seen any pullback from any decisions in portfolio yet. And that I think over those three weeks gives a very good indicator of where, why we feel, you know, cautiously optimistic, but time will tell. Thank you.

[Operator]

Thank you. Our next question comes from Nick Yulico of Scotiabank. Your line is open.

[Nicholas Yulico, Managing Director at Scotiabank]

Hi, thanks. First question is, I was hoping you could just talk a little bit more about the trends you're seeing in the overall debt financing markets and if you have a sense for I know the CMBS market was very strong heading into the tariff announcements, and I think now it's mostly on hold. Any update on just sort of roadmap of how that could be functioning start functioning better again? Thanks.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

Yeah, I think with the credit markets in general, we certainly can expect to see some turbulence as a result of the macro environment across the country, but I expect New York City to mostly be immune from that. There is a flight to quality in moments like this, and New York City has demonstrated an ability to stand out from every other market. At the end of the day, needs to be put to work by investors, and our market is experiencing positive momentum as a result of a weaker U. S. Dollar demand for tangible assets, the reopened CMBS market we've seen since the beginning of this year and prospect of rate relief.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

And all of that's paired with fundamental and sentiment recovery that we've seen that's really at a five year high. Looking at the CMBS data, 2025 year to date, we've seen $6,900,000,000 of New York City office CMBS completed. That's versus zero in 2023 and $300,000,000 in 2024 during the same exact period. So, and in addition to that, we've also already eclipsed the full 2024 levels. So, on the sheet side, I'd say we saw recently the five Manhattan West deal get done at $1,250,000,000 and we're going to be watching closely the transactions at 300 Park, 5 90 Matt, and 1345 Sixth in the coming weeks and use that to gauge how the markets are reacting from some of the macro news.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Yeah, I would just add that and distinguish. I think you're going to see in New York and the deals that Harry just mentioned is going to be more pricing related. I mean, clearly pricing is gapped out, but that's not the same as what we experienced in 'twenty two and 'twenty three, where there was just an absence of deals. There were no buyers. There's a lot of buyers.

[Marc Holliday, Chairman & CEO at SL Green Realty]

There's a lot of capital out there. And there's lot of capital that wants to put their money into CMBS. You know, the risk premium they may demand now is going to be higher. You'll see that, I think, you know, in higher rates, the deal just got done this week at, you know, rates that probably are higher than what would have been a month ago. But there's a dramatic difference in market stability when you talk about buyers who want more premium versus lack of buyers.

[Marc Holliday, Chairman & CEO at SL Green Realty]

And I think, as Harry said, in New York, you're going to see deals get done and there'll be some price discovery and hopefully that price discovery will compress. As per Steve's comments, the market evidences itself that there's still great demand out there for office product. But there's no I wouldn't relate this to what we saw previously in prior years where there just was no activity.

[Nicholas Yulico, Managing Director at Scotiabank]

All right. That's helpful. Thanks. And then second question is just, I think, Mark, you said something about upward bias to guidance. And I wasn't sure if that was just predicated on getting more sort of investments done on the debt side.

[Nicholas Yulico, Managing Director at Scotiabank]

I want to be clear on that. And then maybe on the other side of that, in terms of your FFO guidance range, right now for the year, Matt, if there's any downside protection we should think about? If we're heading into a weaker economy or anything else, do still feel good about the guidance range there? Thanks.

[Matthew Diliberto, CFO at SL Green Realty]

Yeah, going in reverse order, certainly comfortable with where we are right now. As we highlighted in December, the balance sheet is very insulated. We termed out all of our debt last year. We're hedged on all but 3% or 4% of our floating rate debt, so rates can move around and the markets can fluctuate and we're insulated there. So certainly comfortable from the downside.

[Matthew Diliberto, CFO at SL Green Realty]

The upside bias is, you know, Mark talked about investment opportunities. We have some other stuff we're working on that could result in upward revisions, but, you know, we typically don't revisit that in the first quarter. We get at least six months of activity behind us, and reevaluate. But, you know, the prospects are good as we sit here now.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Yeah. And not just debt related. I think that was part of your first part of your question. Is that all related to debt? No.

[Marc Holliday, Chairman & CEO at SL Green Realty]

We've got like, you know, a lot in front of us right now. Equity, debt, fee oriented, you know, leasing deals working on this. There's a lot of contributors. And my point was simply, if we get it all done and that's our goal is to get it all done, then we'll need to sit and revisit. But that'll be a topic for three months from now.

[Nicholas Yulico, Managing Director at Scotiabank]

All right, thanks everyone.

[Operator]

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

[Steve Sakwa, Senior Managing Director at Evercore ISI]

Thanks. Good afternoon. Mark, I know at the Investor Day and on other calls, you've talked about wanting to try and secure a new high quality development site in Midtown. I'm just curious, given kind of what's going on in the macro and the uncertainty over tariffs and costs, how challenging is that to try and pencil out today? And is that something you'd still be looking at, say, this year? Or maybe that's something more for next year?

[Marc Holliday, Chairman & CEO at SL Green Realty]

I think it's completely delinked, Steve. These development projects are five to seven year journeys. And when we take a pen and pencil or computer to underwriting, are, this is not a question of two months ago, we were excited about development and two months later, we're not. And next month we are. And next month we're not based on the stock market or tariffs.

[Marc Holliday, Chairman & CEO at SL Green Realty]

There is a enormous scarcity of high quality office development sites that can be delivered over the next four or five years. And any a city like New York that is, you know, the pivotal CBD in this country and is growing and, is reaching all sorts of records on employment, on Wall Street profits, on bank earnings. There's a confidence we have in the long term viability of this market that we would absolutely welcome the prospect of developing a significant new site in core Midtown Manhattan in our market, in SL Green territory. That's for sure. And that hasn't changed in my opinion or mine in the past three months.

[Marc Holliday, Chairman & CEO at SL Green Realty]

My pricing it goes back to what I said earlier. On the bond question, my pricing change one way or the other? Maybe. Do I think rents have changed for that product? Absolutely not.

[Marc Holliday, Chairman & CEO at SL Green Realty]

In this building alone at 1 Vanderbilt, we have a constant flow of inquiries for expansion, because we have great tenants here and elsewhere through the portfolio. And notwithstanding, you know, what you're seeing in market, there's still companies that are growing and taking advantage of this market and need more space. This isn't anecdotal. These tenants who are ringing our doorbells and saying, we need to grow. And this isn't like modest growth.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Some of these requirements are significant. And the issue I have right now is not tariffs. The issue I have right now is delivering 1,500,000 to 2,000,000 square feet of brand new Class A, one Vanderbilt like style office space to the most sophisticated base of tenants in the country that want to grow. And I'm as committed to that today as I was in December.

[Steve Sakwa, Senior Managing Director at Evercore ISI]

Great, thanks. I guess secondly, and I don't know how much you can comment on this, but just where are we kind of in the whole downstate casino license plan? And is that something that you still expect, I guess, the state to, kind of get concluded by the end of this year or might that process get delayed?

[Brett Herschenfeld, Executive Vice President of Retail & Opportunistic at SL Green Realty]

This is Brett. How are doing? The process has been, full speed ahead, since call it December of last year, when the state for the first time in four years reached out to all the bidders and said, we'd like you to start the environmental review process. That was new. We took it very seriously, great sign.

[Brett Herschenfeld, Executive Vice President of Retail & Opportunistic at SL Green Realty]

And we commenced immediately. We're an as of right project. There's two or three other as of right projects that are out there also starting their environmental process. We expect that given the amount of expenditure, the requests of the state to engage professionals for that review that June 27 will be the on track day to submit the license for the state's review. We're looking at from there, a September local approval process, and hopefully a year end awarded that license.

[Brett Herschenfeld, Executive Vice President of Retail & Opportunistic at SL Green Realty]

The state has acted much differently this year than it has in all four prior years. And we're very ready for it. We're excited. We're eager. We've been ready for, you know, the past two or three years, and can't wait to launch out there publicly and get going.

[Operator]

Thank you. Our next question comes from Jaina Gallen of Bank of America Securities. Your line is open.

[Jana Galan, Director at Bank of America]

Hi, good afternoon. Thanks for taking my question. Going back to the active leasing pipeline, your press release noted 1,100,000 square feet. Would you say they're kind of following the typical leasing deal timeline? Or is there evidence that corporate decision making is pausing?

[Jana Galan, Director at Bank of America]

Or is it just kind of the tightness in the market, there's more urgency and corporates are tuning out the macro uncertainty?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

It's really a function of the types of tenants that we're negotiating with at a point in time. And I think there's certainly no sense of tenants feeling pressured to to make an accelerated decision and maybe there's, you know, they slow down a little bit because we're working on a bunch of big deals. But I don't think this is a a material change in people's sentiment or their how they're conducting themselves or how their third party consultants are conducting themselves. So I don't think there's really a lot of color commentary as as to, you know, what we're seeing right now versus how it's been over the past several months.

[Jana Galan, Director at Bank of America]

Okay. And then on the fee rents and TIs came down in 1Q. Can you talk a little bit more about how you see that through the course of the year and what

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

that's just really a function of the basket of individual transactions for the quarter. I think broadly speaking, concessions have been stable for really all through last year coming into this year. We haven't seen a material change. If anything, I would say, you know, there's a good chance that in certain submarkets like on Park Avenue and Sixth Avenue where you see real pockets of strength in the Midtown market that you'll see some tightening of of concessions. I don't know it's enough to really move the needle, but as certainly the face rents are going up.

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

And I think, you know, we've seen the rents go up on Park Avenue and I think the entire, community is is expecting Sixth Avenue rents to go up because it's been a tremendous amount of leasing and there's number of large deals pending on sixth Avenue. And that's gonna drive face rents as we as we look into the rest of the year. So the natural extension after that is, you know, after rents go up, then they'll start to get pressure on trying to push concessions down. But I think it'll be, you know, sub market by sub market, not broadly across all of the Manhattan market.

[Jana Galan, Director at Bank of America]

Thank you.

[Operator]

Thank you. And our next question comes from John Kim of BMO Capital Markets. Your line is open.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Thank you. I wanted to ask about a couple of your objectives for the year, which includes 2,000,000 square feet of leasing and 93.2% year end leased occupancy. So in the first quarter, you're ahead of the pace, but occupancy did go down. And I'm wondering, given all the uncertainty in the markets today, if you still feel comfortable with those targets?

[Marc Holliday, Chairman & CEO at SL Green Realty]

We're comfortable. Our our living budget at the moment is in excess of 2,000,000 feet. And that's as of like an hour ago. So that'll go up and down. I feel pretty good about 2,000,000.

[Marc Holliday, Chairman & CEO at SL Green Realty]

We had a good start first quarter. We're already, I think over 100,000 feet leased year to date. Well, April to date, quarter to date. And, you know, Steve's already talked about the pipeline. So, you know, look, we're going to monitor closely as we always do, you know, the pipeline to, you know, evaluate trends and sentiment and whatever.

[Marc Holliday, Chairman & CEO at SL Green Realty]

But on the one hand, you've got geopolitical. On the other hand, you have tenants with real need for space, you know, and that's not abating that we see yet. You know, we did so much in the first quarter, you know, we would hope to be at around a million feet for the second quarter. And we think by year end, we could eclipse that 2,000,000 feet. And, you know, a lot of that's just driven by return to office.

[Marc Holliday, Chairman & CEO at SL Green Realty]

You know, you had, you know, years of people, you know, on a hybrid work model. And, you know, now, this is a competitive environment. People are back, people are focused, people need space. And it's like, you know, we're just seeing that all over the market. And, you know, if ever there's a moment we don't, you know, we'll be the first to tell, you you guys and our shareholders.

[Marc Holliday, Chairman & CEO at SL Green Realty]

But at the moment we're, you know, we're feeling good about both the occupancy level and the and the volume.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Okay. Switching gears to 500 Park, I realized it wasn't a huge lease, but you got it to 100% occupancy. And I'm wondering what that implies for the mark to market of that asset. And if there's any update on this 6.8% cap rate that you acquired it at?

[Marc Holliday, Chairman & CEO at SL Green Realty]

Well, so on mark to market, I think we have to look at it in two ways. The lease we signed relative to both the in place and the current market. But more interesting to me is where those rents will be after we finish a $20,000,000 plus improvement program that we have commenced. We've selected our architect. We're going to be doing work in the plaza.

[Marc Holliday, Chairman & CEO at SL Green Realty]

We're in the amenity lobby, some other improvements, bringing sort of elevated hospitality to the building. And in that regard, we're projecting rents up off of today rents by at least $15 a foot on average for what I'll call the repositioning program. But if the question is specifically where was that lease relative to market?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

So that one I don't think had a mark to market calculation because it was it was filling vacant space at the time of acquisition. But, I can tell you that the rent that we signed on that lease was $10 a foot higher than the prior sponsor was asking for the space the day before we acquired the building.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

And where does the yield go to compared to the six eight that you bought it at?

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

We we we sit today at about a 7.2%. That six eight you referenced from our investor conference is, now 72.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Got it. Thank you.

[Operator]

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

[Ronald Kamdem, Managing Director & Head of US REITs and CRE Research at Morgan Stanley]

Yes, two quick ones for me. Just starting on the disposition targets of $1,000,000,000 just how are you thinking about sort of that? What are you seeing in the markets? Thanks.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

Yes, look, the plan is on track.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

We feel confident based on the meetings and negotiations we're having. I think it's important for everyone here to realize that our team has navigated through the past five years of COVID, negative office bias, and high interest rates. And through that period, we completed approximately $9,000,000,000 of gross sales at share at a blended cap rate of four point three percent and $1,400 a foot. Just demonstrating that our portfolio is liquid and investable in even the toughest of markets that you can imagine. So, yes, sure, are challenges in front of us as a result of some macro conditions, but it's far less than what we've experienced the past five years, and so we're on track for the plan this year.

[Ronald Kamdem, Managing Director & Head of US REITs and CRE Research at Morgan Stanley]

Great. And then my second question, just going back to that one point million square feet of pipeline, just a little color on how much of that is nonfinancial, right? And then the second piece of it, how much of that is outside of Park Avenue and Grand Central, which have been pretty strong?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

Well, let's see. The easy one is the first part of your question. There's a quarter million square feet of Tammy tenants in that pipeline, which I think is pretty notable because that's probably as much square footage as we've seen from that industry over the past couple of years within our portfolio. And certainly Tammy, broadly speaking in the market, has doubled the number of active tenant searches, year over year. And then as far as Grand Central, you know, the majority of our portfolio sits within the Central area.

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

So it's it's safe to say that the majority of the pipeline is within the Grand Central market, which has proven to be one of the one or two most active submarkets over the past year.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Thanks so much.

[Operator]

Thank you. Our next question comes from Blaine Heck of Wells Fargo. Your line is open.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Great, thanks. Just a follow-up on the last question. Can you give a little bit more color on the profile of the kind of most active CAMI tenants and whether that activity is driven by relocations from other markets or kind of organic growth from tech and media companies that already have a presence in the New York market?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

All of them are relocations. And as best I recall, all of them are driven by growth. In that growth, some of those tenants are AI related businesses. And I don't know what other color I can give you on it, but you know, yeah. I mean it's growth, it's relocation, they're household names, and we're seeing an AI name attached to a lot of these tenants.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Got it, that's helpful. And then maybe a different angle on tariffs and uncertainty. I guess can you talk about the profile of potential capital partners that are showing interest in JD deals or even the debt fund at this point? And in particular, whether there's been any notable change in demand from foreign investors given the recent macro uncertainty and trade disagreements?

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

We haven't seen it yet. Would note countering what you just mentioned is the weaker US dollar. 1 thing that we experienced in 'twenty three and 'twenty four was the US dollar moving against us for those two years. With the dollar getting weaker, it makes it much easier to have some of the conversations we're having. On the fundraising side for the fund, our group of investors are institutional, both domestic and international, representing almost every region across the world.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Guess the main point to make there, think, if I understand your question is, we have not seen a drop off in foreign investor demand for the debt fund or for product. Now, you know, with respect to the dispositions, the proof will be when we close them. And, you know, we just started the year. So we're, you know, in the process of doing that and hope to knock those off, you know, in the second half of the year contract, first half, close second half, which is our usual rhythm to that. But, you know, as we sit here, we look at the shortlist for the many different sales and JVs we're working on.

[Marc Holliday, Chairman & CEO at SL Green Realty]

I would still say a lot of the usual, I don't want say suspects, usual relationships are still steadfastly on that list. So, you know, we'll more more to come on that on the next call, but we've not seen any any drop off of interest there.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Very helpful.

[Operator]

Thank you. Our next question comes from Amateo Okusanya of Deutsche Bank. Your line is open.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Yes, good afternoon everyone. On the Investor Day there was a lot of emphasis around Office to Resi conversion and the opportunities in a more improved conversion. Talk a little bit this.

[Matthew Diliberto, CFO at SL Green Realty]

Yeah. Tayo. Tayo, we're not we're not hearing you, Tayo.

[Marc Holliday, Chairman & CEO at SL Green Realty]

You gotta ask it again because you're breaking up.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Oh, can can you hear me?

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

Now, yes. Now we can.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Oh, okay. Sorry about that. So I was saying on the Investor Day, there was quite a lot of emphasis on the on the office to resi opportunity in New York and how Indian regulation was changing. Could you just give us an update in regards to that and how you are thinking about opportunities in your portfolio to do some of the potential more resi to office to resi conversions?

[Marc Holliday, Chairman & CEO at SL Green Realty]

Yeah. So I would say that as we sit here three and a half, four months from our investor conference, I would say the volume of announced or planned deals is anywhere between consistent or ahead of where we were and what we showed back in December. There's a lot of conversion candidates, particularly downtown where the prices of the bricks and mortar and land enable conversion on an economic basis. We're seeing it on Third Avenue, our own project 750 Third as well as the old Pfizer headquarters as well as

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

675 Third and 767 Third which are both recent trades for office to register.

[Marc Holliday, Chairman & CEO at SL Green Realty]

So I mean there's four deals in that Third Avenue market and you can imagine how quickly a market for office can tighten when you take four very viable office buildings and take it off the market, which all four of those are essentially off the market now for office tenancy. And that has a very firming effect, if you will. There's going to be a lot in Midtown South as well, due to the zoning changes that were accomplished there as part of City of Yes. And I think a significant and one of those understated or not well understood trends that we'll look back on in two or three years when this market really firms up and you see occupancy levels drop to well, vacancy levels drop to single digits. A big part of that, half of that's going to be net absorption and growing demand, half it's going to be resi conversion.

[Marc Holliday, Chairman & CEO at SL Green Realty]

So I think it's taken root. There's projects underway like ours. There's going to be thousands and thousands of units delivered and I think ultimately in excess of 25,000,000 square feet of office is going resi.

[Marc Holliday, Chairman & CEO at SL Green Realty]

It'll take time to complete and deliver, but it's fairly instantaneous in terms of its exit out of the inventory of available space to lease.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Thank you.

[Operator]

Thank you. Our next question comes from Seth Berge of Citi. Your line is open.

[Seth Bergey, Senior Research Associate at Citi]

Hi, guys. Thanks for taking my question. Are you guys seeing any larger requirements for the remainder And you touched a little bit on the supply picture, but can you talk about the demand for Midtown South?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

Yeah. You know, we've seen a market change in tour activity and some early proposals that are on the table right now. I was sharing with Mark kind of a week or two ago that the number of qualified large prospects that have either toured or are in a diligence process focused on 1 Madison just over the past thirty days is probably more than we saw all of last year. So, you know, I don't wanna get too far out over our skis, but it it certainly feels very promising at this moment compared to any time over the past eighteen months.

[Seth Bergey, Senior Research Associate at Citi]

Thanks. And then just on the summit, kind of what percent of visits are international visitors? And then kind of can you talk a little bit about what the booking window looks like for that?

[Marc Holliday, Chairman & CEO at SL Green Realty]

Question is what percent is international? You know, look, I don't want to mislead. I don't have those stats at my hand right now. I think traditionally it's about two thirds tourism and one third domestic. That's a very high domestic attendance level for when I say domestic, I'm talking tri state area, like local.

[Marc Holliday, Chairman & CEO at SL Green Realty]

It's like a third local, it's like two third tourism. Within that tourism break, I mean, the preponderance is domestic. But you know, when I go up there, you know, it feels to me like almost 35, 40 percent is foreign tourists. So I don't have good stats on it. Does anyone else have here?

[Steven Durels, Executive VP & Director of Leasing & Real Property at SL Green Realty]

A lot of repeats.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Yeah, lot of repeats for sure. You know, it's an unusual in so much as people go back and back. It's only been open three and a half years. We've had people come back five, six, seven times. Because it's not an object.

[Marc Holliday, Chairman & CEO at SL Green Realty]

It's an experience. It's an attraction. You know, it's a destination and it's thrilling. So for those that know it, you know what I'm talking about. For those that don't, you should get there right away.

[Marc Holliday, Chairman & CEO at SL Green Realty]

You know, in 2024, it was about closer to 50% foreign visitor. I'm just getting that stat sent to me right now. So a little higher than I said, but a good balance and we see no drop off in any demand or change in composition through the first quarter.

[Seth Bergey, Senior Research Associate at Citi]

Thanks.

[Operator]

Thank you. Our next question comes from Vikram Malhotra of Mizuho. Your line is open.

[Vikram Malhotra, Managing Director at Mizuho Financial Group, Inc.]

Thanks for taking the questions. Maybe just building up on the summit question in New York, I guess, just can you talk a little bit about the opportunity in Paris, where you are, potential timeline for execution?

[Marc Holliday, Chairman & CEO at SL Green Realty]

A lot more to come on Paris between now and end of year, hopefully with some imagery that we'll be able to share with you as well, which I think everyone will find extremely exciting. But Rob Schiffer and I just came back from Paris about two weeks ago where we spent a lot of time with developers there and the site and the construction. And our team, we have a big team that's already been assembled in Paris of engineers, designers, expediters, etcetera, working on taking things from conceptual to design development. We expect to have possession of the floors for Summit Paris sometime in Q1 of twenty six. And we expect to be open to public sometime at the end of Q1 twenty seven.

[Marc Holliday, Chairman & CEO at SL Green Realty]

So to me that's right around the corner because there's so much to do. We're going to be putting a team and a staff together out there that'll be managed and run by this amazing team we put together here in New York with obviously local senior people on the ground in Summit. We've started some of that hiring already. I can only tease you with the fact that the early artistry coming out of Kenzo's shop is staggeringly beautiful. And it's gonna be in the spirit of what we have upstairs, but very different, very unique.

[Marc Holliday, Chairman & CEO at SL Green Realty]

I think a nod towards Parisian abstraction. And, you know, I am really excited to, be able to cut that ribbon in 2027.

[Vikram Malhotra, Managing Director at Mizuho Financial Group, Inc.]

Great. And then just on the FAD FAD guidance at the Investor Day kind of relative to 1Q. Can you just remind us sort of as we go through the year, I'm assuming there is more leasing you did that's converting to cash later in the year. Is there like a ramp up as we go through the year or anything kind of one time that we should model in for the rest of the year?

[Matthew Diliberto, CFO at SL Green Realty]

Yeah, two components of FAD. You know, over the course of the year, as we highlighted in a recent presentation, you know, physical occupancy or commenced occupancy, whatever you want to call it, economic occupancy, is increasing every quarter throughout the course of the year, such that we end up, you know, going from around 88%, eighty nine % at the end of last year to over 92% at the end of this year, so that'll help the revenue side. On the cost side, obviously, as the space is built, the build out costs go down. That said, typically our capital spend accelerates into the end of the year. It's lightest in the first quarter and heaviest in the fourth as the projects get completed towards the end of the year.

[Matthew Diliberto, CFO at SL Green Realty]

So, you know, the FAD number for the first quarter, was a solid one, better than our expectations, but for the full year, we're still seeing, roughly in line with what we guided to in December.

[Operator]

Thank you. Our next question comes from Peter Abramowitz of Jefferies. Your line is open. Peter, your line is open.

[Peter Abramowitz, Equity Research Senior Associate at Jefferies]

Thank you. Yes. Just wanted to ask quickly about 11 Madison. You have expiration in September. Just wondering if there are any kind of comparable deals you could point to, to give us an idea of maybe you would expect in the refi market?

[Peter Abramowitz, Equity Research Senior Associate at Jefferies]

And any comments on if you're considering doing something in CMBS market rather than a bank deal.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

Sure. I would sort of say this is an active negotiation and deal that we're working on now. So I'd prefer not to comment on it with more to come later this year. Obviously, we got our $5,000,000,000 plan done last year. We have a lot of reps now as to how to work with existing lenders and the market as to obtaining efficient financing for these assets.

[Harrison Sitomer, Chief Investment Officer at SL Green Realty]

And I would say just stand by and we'll update you into the next call.

[Peter Abramowitz, Equity Research Senior Associate at Jefferies]

All right. That's all for me. Thanks.

[Operator]

Thank you. This concludes our question and answer session. I'd like turn it back to Mark Hollenay for closing remarks.

[Marc Holliday, Chairman & CEO at SL Green Realty]

Okay, great. Well, appreciate all the questions. And like I said, I want to just leave you with the notion that we're working very hard on all these different opportunities in front of us, but also very cognizant of the state of the markets right now. And we're going to stay very nimble and be very reactive to both opportunities, you know, making sure we keep the buildings as least as possible and get the occupancies up. And, you know, Matt will continue to steward the balance sheet.

[Marc Holliday, Chairman & CEO at SL Green Realty]

So I think we're in great shape at this moment in time, really as good as I could have asked. And we look forward to speaking to you again in three months.

[Operator]

This concludes today's conference call. Thank you for participating and you may now disconnect.

Participants

Executives

• Marc Holliday, Chairman & CEO
• Steven Durels, Executive VP & Director of Leasing & Real Property
• Harrison Sitomer, Chief Investment Officer
• Matthew Diliberto, CFO
• Brett Herschenfeld, Executive Vice President of Retail & Opportunistic

Analysts

• Alexander Goldfarb, Managing Director at Piper Sandler Companies
• Nicholas Yulico, Managing Director at Scotiabank
• Steve Sakwa, Senior Managing Director at Evercore ISI
• Jana Galan, Director at Bank of America
• John Kim, Managing Director - US Real Estate at BMO Capital Markets
• Ronald Kamdem, Managing Director & Head of US REITs and CRE Research at Morgan Stanley
• Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities
• Omotayo Okusanya, Managing Director at Deutsche Bank
• Seth Bergey, Senior Research Associate at Citi
• Vikram Malhotra, Managing Director at Mizuho Financial Group, Inc.
• Peter Abramowitz, Equity Research Senior Associate at Jefferies