SL Green Realty Q4 2025 Earnings Report

SL Green Realty EPS Results

• Actual EPS: $1.13
• Consensus EPS: $1.10
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $1.81

SL Green Realty Revenue Results

• Actual Revenue: $159.82 million
• Expected Revenue: $162.73 million
• Beat/Miss: Missed by -$2.91 million
• YoY Revenue Growth: +14.50%

SL Green Realty Announcement Details

• Quarter: Q4 2025
• Date: 1/28/2026
• Time: After Market Closes
• Conference Call Date: Thursday, January 29, 2026
• Conference Call Time: 2:00PM ET

SL Green Realty (NYSE:SLG) Corp. (NYSE: SLG) is a publicly traded real estate investment trust (REIT) focused primarily on the acquisition, management and development of commercial office properties in Manhattan. As one of New York City’s largest office landlords, the company’s portfolio includes Class A office buildings and mixed-use projects located in prime Midtown and Downtown submarkets. SL Green generates revenue through leasing office space to a diverse mix of tenants spanning financial services, technology, media and professional services firms.

Founded in 1980 by real estate investor Stephen L. Green, the company converted to a REIT in 1997 to take advantage of tax benefits and enhance its capital-raising capabilities. Over the decades, SL Green has grown its footprint through strategic property acquisitions, ground-up developments and joint ventures with institutional partners. The firm has demonstrated an ability to navigate market cycles in Manhattan, repositioning assets and capitalizing on redevelopment opportunities to drive occupancy gains and rental growth.

In addition to property ownership and leasing, SL Green provides comprehensive asset management and property management services, including tenant relations, building operations and capital improvements. The company has been active in sustainable building initiatives, pursuing green certifications and energy efficiency upgrades in an effort to reduce operating costs and meet tenant demand for environmentally responsible workspaces. Its development pipeline has included high-profile projects such as the redevelopment of 1515 Broadway and the expansion of One Madison Avenue.

SL Green is led by Chief Executive Officer Marc Holliday, who has overseen the company’s strategic evolution and growth since 1995. Under his leadership, the firm has focused on strengthening its balance sheet, optimizing its portfolio mix and pursuing value-enhancing transactions. Headquartered in New York City, SL Green continues to be guided by a board of directors with extensive experience in real estate investment, finance and development, positioning the company to benefit from evolving market dynamics in Manhattan’s office sector.

SL Green Realty Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: SL Green reported strong leasing momentum, finishing 2025 at 93% same‑store occupancy with a >1 million sq ft pipeline (about 800k sq ft in active leases), 142k sq ft signed in January, and a target of 94.8% occupancy by year‑end 2026.
• Positive Sentiment: The company beat Q4 FFO by $0.02/share driven by higher NOI, lower expenses and improved hospitality contributions, and exceeded full‑year FAD guidance by $65 million (roughly $20 million of that in Q4).
• Positive Sentiment: Management is progressing on a $7 billion refinancing plan (≈$5B tied to One Madison, 245 Park and the corporate facility), is seeing tightening senior borrowing spreads (Park Avenue Tower priced tightly), and plans to launch a new senior credit fund to deploy capital.
• Neutral Sentiment: SL Green maintains a $2.5 billion disposition plan largely expected in the back half of 2026 across a diverse mix of assets, with four deals in term sheet or contract but timing and NOI impacts still uncertain.
• Negative Sentiment: The dividend remains undecided ahead of the March board meeting; management says FAD is not the sole dividend driver and the board will take a holistic view (taxable income, sales, cash flow), leaving short‑term dividend coverage uncertainty for investors.

Presentation

[Operator]

Thank you, everybody, for joining us, and welcome to the SL Green Realty Corp.'s fourth quarter 2025 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.

[Operator]

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 measures can be found on both the company's website at www.slgreen.com, by selecting the press release regarding the company's fourth quarter 2025 earnings, and in our supplemental information included in our current report on Form 8-K, relating to our fourth quarter 2025 earnings. Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Okay, thank you for joining us this afternoon as we kick off the year. It's been just weeks since our investor conference, but we've already hit the ground running on our business plan for 2026. We are about a month into the Mamdani administration and know there's a lot of pressure and focus on the mayor coming out of the gate. But it's going to take some time for the Mayor Mamdani to put an imprint on how he'll govern. He's still putting his team together, and they're at the very early stages of getting their arms around the city. We did see an early test this week with a major snowstorm here in New York, about a foot of snow in Manhattan on Sunday, and the administration did a great job getting the city back to normal quickly, with the mayor being very visible and communicating effectively.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

At the same time, there's a lot of political maneuvering going on as we enter budget season in Albany. This is the time of year when the city makes its case to get the biggest chunk of the state budget as possible for the coming fiscal year, reflecting the city's enormous contribution to the state economy. This is especially true with the new administration eager to invest in the initiatives and promises made on the campaign trail. I know there's been a lot of talk recently about potential city budget deficits, $2 billion this coming fiscal year and up to $10 billion the following. My own view is that the city starts off every budgetary period with a gap that needs to be plugged, and this year is no different. It's not just about expenditures.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

On the revenue side, there's a lot of good news, with tax collections up 8.5% in 2025, a big portion of which came from growth in personal income. One thing that's certain is that the business economy in New York City had an incredible year in 2025, and I believe that when the new revenue forecasts come out in the next few weeks, we'll see that the city will be projecting significant additional revenue increases that will help defray the current deficit. Remember, the city's budget is required by law to be balanced at the beginning of every fiscal year, and we continue to remain confident in the city's fiscal stability and strength.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Let's not forget that New York City's credit rating is double-A and was reaffirmed by S&P as recently as October, which noted that the city has the budgetary reserves needed to navigate any near-term risks. At our investor conference in December, I made the case for what I believe was shaping up to be a stellar 2026. As we sit here on January 29, I feel the same. In short, I think 2026 is setting up to be quite an amazing year for the commercial office sector in terms of occupancy gains, rental achievement, and business growth. Given the lens I look through today, the fundamentals are strong. Businesses are still leasing space and expanding, growing their businesses, and making lots of money.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

The Big Five banks just reported increases to earnings year-over-year, with profits in the fourth quarter up 6.7% and investment banking revenues up 12.6%. We're expecting when Wall Street member firms finally report fourth quarter profits, they will come close to meeting or exceeding the current all-time high of $61 billion, as the numbers stood at $48 billion through the first nine months. Between Wall Street, the Big Five banks reporting and what we see going on in our own portfolio, it all reaffirms our view at Investor Conference that New York City is differentiating itself from other U.S. cities in significant ways and will continue to be the central focus of investors looking to deploy capital in debt and equity this year and beyond.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Case in point, I led a contingency from SL Green that just finished a 10-day swing through Asia, where we collectively held two dozen meetings with debt and equity capital sources, investors, buyers, sellers, asset managers, and sovereigns. I can tell you that the appetite to invest in New York was as strong as I have ever seen. As we continue our travels around the world, we expect to see a similar theme play out. I expect that transaction volume for 2026 will be even higher than last year, which was $23 billion, an amount that was roughly equivalent to that of 2019, and it'll only facilitate the company's execution on our $7 billion refinance plan and our $2.5 billion disposition plan.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

We set lofty goals for ourselves in December, as we always do, and know you all will be monitoring our progress every step of the way, as you should. We like that pressure, and we've never been more motivated to meet or exceed those goals than this year. What emboldens me is that the private markets completely get it. One point I highlighted at Investor Conference, Paramount trading at under $4 a share, and then selling for nearly $7 was not lost on anyone. The private markets see economic growth in real terms, the coalescing of young and highly educated talent, and strong business demand right here in New York City.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

So we're going back to work on what we can control and keep putting numbers on the board until we see it reflected in the stock price, which I know we will, because the disconnect now is simply too big to ignore between the value of our premier assets in this company and our share price. And to be clear, one of those premier assets is our human capital, the people of SL Green, who will generate more than $100 million in fee revenue from institutional investors who look to us to develop, manage, and monetize investments on their behalf.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I hope everyone out there appreciates our efforts and the enormity of the plan we have for 2026, and thank you for continuing to support our company. Now, I'd like to turn it over to our Chief Investment Officer, Harrison Sitomer, who will add some color on how we're progressing on our business plan.

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

Thank you, Marc. On the capital markets front, 2026 is off to a busy start. First, in the credit markets, we have seen a continued tightening of senior loans, as demonstrated by our recent financing of Park Avenue Tower, which priced a spread of 1.58% at our full proceeds ask. Most notably, we saw AAAs, representing over 50% of the transaction, sell as tight as 112 basis points over the Treasury rate. While this rate is a compelling borrowing rate, I will remind everyone that in 2018 and 2019, we saw similar classes trading in the 60 basis point range over Treasuries. So there is still a substantial amount of room for further rate tightening across the capital stack, and of course, in the index.

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

We will continue to benefit from this momentum as we execute on our $7 billion financing strategy this year, highlighted by the refinancings of One Madison Avenue, 245 Park Avenue, and our corporate credit facility, which total approximately $5 billion of the $7 billion plan. We are in various stages of executing on each of these financings, and you should expect to see us roll out a series of announcements through the balance of the year as we enjoy a tightening senior borrowing market for quality assets and sponsors. In the equity markets, we are seeing a wide array of new entrants rejoin this market as a result of improving sentiment and investors realizing the relative value of New York City commercial office properties versus alternative investment opportunities in economic climate where hard assets are otherwise trading at premiums.

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

We had a busy New Year's Eve closing out our partnership with Rockpoint at 100 Park Avenue, where we quickly realized on a substantial premium from the acquisition 11 months prior. With the building now 100% leased, us and Rockpoint together will fund the necessary costs to complete the capitalization of the project. We welcome Rockpoint to our blue-chip roster of reliable partners. They are a great firm, and we expect to do more together. This was Rockpoint's first major office deal in 6 years, a testament to the recovery in New York City. We are in negotiations on contracts and term sheets on 4 additional transactions in our $2.5 billion plan, and look forward to sharing updates as we further our JV and counterparty roster.

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

On that note, and to reiterate Marc's earlier color, I will add what a difference a few years makes in the private markets. After our investor conference, my phone and inbox was flooded with inbounds looking to explore participating in our capital markets plan for the year. Marc talked about Asia, but the interest is really across the globe. I'm seeing it domestically in Canada, Europe, and the Middle East as well. I haven't seen this widespread of demand since pre-2020, and New York is clearly defining itself as far and away the city to invest capital in today. On the fund side, while we have seen stability in the senior lending markets where we are borrowers, we still are seeing inefficiencies and imbalance in the subordinate credit space where our fund is focused.

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

We are tracking for $150 million-$175 million of deployment per quarter, and the team is hard at work deploying that capital for our customers. We are also pleased to announce that we will be launching fundraising for our next fund, focused on senior credit lending as we continue to bulk up our fund business. More on this to come over the next few months. Finally, last but not least, a shout-out to Green Loan Services, which is now the largest active special servicer of SASB loans in the country, now servicing five of the top 10 largest specialty serviced loans. With that exciting news, I will pass it over to Matt.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Thanks, Harry. Clearly out of the gate strong here in January, no matter how many snow days people in the market seem to want to take recently. As excited as we are for what's ahead, I want to take a minute to highlight the results we posted for the fourth quarter, where many of our operating metrics exceeded the expectations we just laid out in early December at our investor conference.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

From an earnings perspective, we printed an FFO beat of $0.02 a share, driven by higher NOI due to lower expenses, net of reimbursements, which came through both in the earnings beat and in same-store cash NOI that was better than we expected for the quarter. There was also an improved contribution from our hospitality business, which saw a solid fourth quarter of activity and lower G&A, which, as I highlighted back in December, is already low based on our AUM and relative to the comparable peer set. These positives were partially offset by lower operating profit from Summit, which is affected by the later than expected opening of the Ascent premium experience in mid-November, and some additional maintenance costs we incurred related to it.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

And finally, for those who like to refer to FAD, hopefully, you took note that we actually beat the initial guidance we gave back in December 2024 by $65 million, almost $20 million of which happened in the fourth quarter alone. On the leasing front, we closed out another banner year. Congrats to Steve and his team with almost 800,000 sq ft of Manhattan office leasing in the quarter, bringing the annual total to 2.6 million sq ft and our 3-year total to almost 8 million sq ft. And the strong leasing in December specifically allowed us to ultimately exceed our mark-to-market expectations for both the fourth quarter and the full year. Our same-store lease occupancy objective was also met, albeit a couple of weeks later than we expected.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

We ended the year at 93%, which is sector leading and reflects an increase of almost 400 basis points since the lows at the end of the first quarter of 2024. Yes, we did say we would end the year at 93.2. However, some tenants in our pipeline that we expected to sign in December decided they wanted to enjoy the holidays with friends and family versus answering Steve's phone calls and signing leases, so they waited until January. Including the same-store leases that were signed after January first in our December occupancy, we would have been at 93.2. So it was simply a matter of timing, nothing more.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

More importantly, with 142,000 sq ft signed so far in January and a pipeline of more than 1 million sq ft behind that, we are well on our way to achieving our 2026 leasing goals, including our same store occupancy objective, 94.8% by the end of the year. All in all, a very solid fourth quarter. Puts us on great footing to achieve the objectives we laid out for 2026 and for earnings growth in the years beyond. With that, turn it back over to the operator for questions.

[Operator]

Thank you. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the candidate roster. One moment for our first question. Our first question will come from the line of Alexander Goldfarb from Piper Sandler. Your line is open.

[Alexander Goldfarb, Mnaging Director at Piper Sandler]

Great. Hey, good afternoon. Thank you. Steve, maybe just hitting AI upfront. You know, we've now had AI, AI out there for quite a while, and, you know, the market seems to be shaking out, you know, but you see like law firms, for example, they're bidding aggressively for associates. You see the demand that you guys and others are showing for office, and at the same time, you know, other industries are talking about, you know, downsizing from AI.

[Alexander Goldfarb, Mnaging Director at Piper Sandler]

Can you just give an update how your tenants and the tenants who are driving the market, how they are incorporating AI, and are they truly downsizing any people, or this is just all, like, part of the mix, and therefore, AI is part of their business, but it's not affecting their hiring plans or how much space they need to take?

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

Well, that's a lot of ask to get to that insightful into exactly where our tenants are using AI. But I, I'll give you what we're seeing from a leasing perspective, which is, I've not heard of a single instance of the deals that we've done where tenants have downsized as a result of AI, just the opposite. You know, many of the deals that we're working on, I would say, quite frankly, the vast majority of the deals we're working on have some element of growth, whether that's growth because AI is making them more efficient and more profitable and delivering more opportunities to develop their business, one can only speculate. But, you know, maybe pivoting a little bit more onto the AI demand side of the equation. You know, this AI tenants leased 1 million sq ft last year.

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

There's currently 80 tech tenants in the market right now, with active searches for over 8 million sq ft. Of that, there are 13 known AI requirements for over 1.2 million sq ft. So to the extent that there's any space savings on other businesses, it's clearly being offset by an exploding growth of AI demand in the marketplace.

[Alexander Goldfarb, Mnaging Director at Piper Sandler]

Okay. And then, Marc, on your Asian adventure, you know, it sounds like some productive meetings over there. Are there any areas of interest where the overseas investors want that surprised you? Or how are they talking to you about the money in terms of, are you giving them the ideas of, hey, we can invest here and there, or they're saying, "Hey, here are the areas that we want to focus on, and this is where we'll give you more, more money?" I'm trying to figure out, you know, which way the horse race is being driven and if it's conjuring up some new opportunities or maybe just reaffirming your existing game plan.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Well, I think the way I would characterize it is the way, you know, I've seen it in the past, but really only, you know, several years out of three decades, where the money inflows into these institutions seems to be so great, and real estate has to, you know, sort of maintain a certain percentage of total AUM for these different investors. And many of these, you know, country investors have kind of maxed out their investments in their local economies and they really can't invest more, so they are, you know, almost, forced, if you will, to look outside their borders. And when they do that, it was quite evident to me that there's really only a couple of areas that they feel comfortable investing in worldwide and certainly in the US.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

The constant theme of New York City, Midtown Manhattan, you know, real estate being sort of the real estate equivalent of US Treasuries, I think really resonated in terms of, you know, risk-adjusted downside safety and a path towards real returns, where you can still earn double-digit returns on good, core real estate assets. Because interest rates in the US are still relatively high, and cap rates are still relatively high, and that translates well for a lot of these investors. So, there was a lot of our counterparties, you know, telling us that they are looking to us to help them deploy capital in various different ways, debt and equity, development and core assets. You know, some are more opportunistic.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

In some cases, people have interest in the Summit platform and sponsoring growth in the Summit platform in various markets, et cetera. So it was, you know, it was just great meetings. Our franchise in those markets is very well known and highly regarded. You know, there seems to be a lot of capital deployed in 2026, and notwithstanding some of the geopolitical events with, you know, particularly with tariffs, you know, both ways, you know, U.S. tariffs of foreign goods and foreign tariffs of American goods, it seems that there's still a desire to, you know, convert money to dollars and put it to work in New York City, and in many cases, with us. So, it was a very good trip all around.

[Alexander Goldfarb, Mnaging Director at Piper Sandler]

Thank you.

[Operator]

One moment for our next question. Our next question will come from the line of John Kim from BMO Capital Markets. Your line is open.

[John P. Kim, Mnaging Director at BMO Capital Markets]

Thank you. On the new disclosure that's provided on page 31, Matt, so difference between the physical and economic occupancy, I guess this would suggest that there's another $78 million of rental revenue coming to SL Green from leases that have already commenced. So I'm wondering, as far as timing, when you will recognize that on both a GAAP and cash basis?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That's about the most specific question I've gotten in a while. Look, you know, we gave economic occupancy as a new stat we would be referring to back in December. So, you know, and we, and we guided to where it was gonna end 2026, property by property. Obviously, you need a starting point for that, so we threw it into December. How the growth from the December number, December 2025 to December 2026 number, plays out, we don't give quarterly guidance, so I'm not gonna layer it in, you know, first quarter, second, third, and fourth. But we gave you, you know, full year NOI guidance. It translates into significant same-store NOI growth, 3.5%-4.5%, over the course of the year. So as I say, it's coming in over the course of the year.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

How it bleeds in, somewhat out of our control, because the tenants control when they finish their space and can move in, and that's what triggers revenue recognition. So, for that, among other reasons, you know, we give it on an annual basis and can't give you how it bleeds in over the course of the year.

[John P. Kim, Mnaging Director at BMO Capital Markets]

Can you give us, like, a rough estimate? Like, would half of it come this year and half in the following years?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

I cannot.

[John P. Kim, Mnaging Director at BMO Capital Markets]

Okay. My second question for you is, the FAD outperformance that you mentioned, $20 million this quarter, what drove that? Is any of this, timing related? And how does that impact your views, on the dividend?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

How does it impact the view? What was I- You f-

[John P. Kim, Mnaging Director at BMO Capital Markets]

On maintaining the dividend.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

So FAD and dividend are unrelated topics, so I'll start with that. As it relates to FAD outperformance, I think part of that is, you know, our being very vigilant about capital spend, and also gives evidence to the, you know, the unpredictability of FAD, which is why office companies like us don't guide to it. Because it's, it's largely out of our control when it comes to the tenant's capital spend. If they elect to build out space and call it capital, that, you know, we, we have to fund that. If they defer or just spend slower, we can't control that.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

So I think the combination of those things, plus just FFO outperformance, you know, pure earnings outperformance, all drove the overall FAD beat. As it relates to, to dividend, you know, FAD is not the governor of dividend. FAD is a stat just like FFO is. And so the dividend is, an accumulation of, you know, taxable income items, and, and that's what will drive our dividend on a go-forward basis.

[John P. Kim, Mnaging Director at BMO Capital Markets]

Great. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question will come from the line of Nicholas Yulico from Scotiabank. Your line is open.

[Nicholas Yulico, Mnaging Director at Scotiabank]

Thanks. I guess just going to the asset sales guidance that you'd given, the $2.5 billion, and, you know, you gave some NOI impact this year that was expected. Is it right to think that that's, you know, the timing of the asset sales is more of a back half of the year impact? And can you just give us any, you know, sort of range on how to think about cap rates for the different asset classes that you're selling?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

So you're right to say that it's mostly back half. You know, we do have some asset sales. Harrison commented that there are term sheets, contracts, and, you know, advanced discussions, so maybe we can get some of those wrapped up, you know, in the first half of the year. But by and large, a lot of it is second half. And, you know, we're selling probably the most diverse group of assets we ever have. We have some stabilized office, we have development sites, we have residential, we have retail, a little bit of everything. I wouldn't hazard to, you know, put a blanket cap rate on all of that. And when you talk about a development site, there is no cap rate. I don't know, Harrison, you wanna add anything to that?

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

No, I think that's right. You know, for also for competitive purposes, I wouldn't wanna put a cap rate out there that you want us negotiating the best price. But, you know, I would add that we put out that business plan only a couple of weeks ago. We have a very high degree of confidence in executing on that plan. That's why we put it in front of everybody, and, we are hard at work at getting that plan done. And as I mentioned, four of those deals are already in term sheet or contract negotiations. So hopefully some more news to come, over the coming months.

[Nicholas Yulico, Mnaging Director at Scotiabank]

Okay, thanks. And then I just wanted to follow up on the dividend question. I know what you mentioned on, you know, Fed and how it doesn't impact necessarily the thinking on the dividend, but I just wanted to see if you could give us a little bit more of the thought process of the board. Because, you know, ahead of the March decision on the dividend, you know, how the board's thinking about it, because, you know, we're all seeing that FFO and likely FAD is going down this year, and so it kind of raises questions about the dividend. Any additional commentary there would be helpful? Thanks.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Yeah, I would, you know, it's premature to have a dividend conversation right now. We'll take it up with the board. I can tell you the board doesn't just look at the next quarter, two or three. The board takes a holistic look, and we're gonna look at things in the coming years. I think 2027 is gonna be a really strong year. So you know, we don't peg the policy quarter to quarter. It's intended to be underpinning of a long-term plan of investment and harvesting, repatriation, creating free cash flow. And one of the biggest parts of that plan now, which is different than it used to be, is the creation of, you know, pure net fee income, unlocking the value in the platform over and above just our asset value.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

That, you know, money, if you will, is kind of in place of what used to be DPE income. And I think you get a much higher multiple, it's much stickier, and it's, you know, core to who we are to build up this asset management business further. You heard Harry talk about the launching of a new fund, which we will do in 2026, and that's not even in, you know, those numbers. So I feel very good about the earnings trajectory of the company. As, you know, all this development we did and all these leases start, you know, activating and coming into recurring FFO in 2026, maybe back half and certainly beyond, 2027 and beyond.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

You know, those are the kinds of things we'll look at in addition to taxable income and in addition to cash flow, when setting a dividend policy. So, you know, I think what you're hearing is we're generally optimistic as it relates to the business plan. Where we peg the dividend, you know, at a moment in time, is something the board will take up in, I guess March or April. Yeah, March, March. And, you know, there's not a lot more I can add, you know, to that. But, I, You know, you mentioned something about, you know, declining or falling earnings this year. This portfolio is, without question, the best portfolio of assets with the highest earning capacity this company has ever had.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

At the end of our $7 billion refinancing plan, our $2.5 billion disposition plan, you know, the balance sheet's gonna be exactly set to where we want it to be at the end of this year. And we're, you know, poised for opportunity and growth, you know, earnings growth and value growth. So, you know, the dividend will have to suss out in March. But, you know, this is not a company that feels like it's in a moment of decline. I think we're in a moment of expansion on all levels.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

And, you know, I think the private market gets that, and I hope the public market, you know, comes to realize the great successes we're having in this market and follow suit with support. But until then, you know, you know, we're happy, it's a necessity that we have extraordinary support from global investors.

[Nicholas Yulico, Mnaging Director at Scotiabank]

All right, that's helpful. Thanks, Marc.

[Operator]

Our next question comes from the line of Anthony Paolone from J.P. Morgan. Your line is open.

[Anthony Paolone, Executive Director at JPMorgan]

Great. Thanks. And Matt, maybe just to, to clarify, just to make sure we got this right. So this new occupancy or economic occupancy, you gave us the 86.7% for year-end 2025 for the same store. So the, the number in your guidance for 2026, is that the apples to apples with that for year-end 2026, or is that at the average across the year? Just to make sure we got this right.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

The economic occupancy we published at the investor conference, is your question, Tony? Was that end of year or average?

[Anthony Paolone, Executive Director at JPMorgan]

Yeah, what's in the-

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That was, that was average.

[Anthony Paolone, Executive Director at JPMorgan]

Yeah, what's the year end?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That was average. Year-end is higher.

[Anthony Paolone, Executive Director at JPMorgan]

Okay, but that is apples to apples then with this 86.7 that you now gave us?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Yeah, well, the published number is as of the end of December. What we guided to in at the investor conference for 2026 was an average. The year-end 2026 number would be higher, but in order to kind of get people to a, to an average, since it's annual guidance, to give a year-end number is not really giving a, a picture as to how the, the earnings growth might look over the course of the year. We did an average, by building.

[Anthony Paolone, Executive Director at JPMorgan]

Okay, got it. That, that's helpful. Thanks. And then just second one for me, just curious, you know, Worldwide Plaza has been in the news a bit. Can you remind us, like, what that FFO impact is? Like, is that thing running at an FFO loss, or is interest and, like, penalty interest, like, how does that work for your earnings right now?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

It generates $7 million of FFO.

[Anthony Paolone, Executive Director at JPMorgan]

Okay. Got it. Thank you then.

[Operator]

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

[Blaine M. Heck, Executive Director and Senior Research Analyst at Wells Fargo]

Great, thanks. Marc, just wanted to follow up on your trip to Asia and dig into the drivers of the increased appetite since foreign investment has been lower over the past few years. Weakness in the US dollar has been a big headline over the past few days and weeks, so I hear you on rebalancing domestic versus international exposure for those clients and, and them searching for higher yields. But how much of a part of their increased appetite do you think a weaker dollar is playing, if at all? And if that continues, are you expecting that to provide you access to additional partners for fund investments or acquisitions? Or does that, does that just mean more competition for for assets and just higher values across the market?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

The second part of that question, you said that with respect to the valuation push, what exactly did you ask?

[Blaine M. Heck, Executive Director and Senior Research Analyst at Wells Fargo]

Yeah, just, you know, does that increase appetite for investment in Manhattan? Just do you think of that as providing you access to additional partners for fund investments or acquisitions, or does that just mean more competition for assets and higher values across the market?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Got it. Okay. So, you know, it's interesting. When the dollar was strengthening and other currencies were weakening, you could have made an argument that maybe U.S. assets would become less attractive, but we didn't experience that. Because at that moment in time, people wanted to get their foreign currency into U.S. currency because they felt that, you know, U.S. had great real growth prospects. And once that money is here, I think the intention with a lot of these investors is it stays here and gets reinvested. You know, they're not just rifle shotting certain asset investments opportunistically, but they're looking to set up, you know, investment platforms in, you know, domestic markets here in the U.S. And, you know, there's a.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

At that moment in time, there was kind of a intentional directive to diversify some money into, you know, what was then a strengthening dollar. I didn't see that hurt our ability to raise money really at all. Plus, a lot of these sophisticated investors have hedging strategies that, you know, I think mitigate some of that risk. Now, with the dollar depreciating, it obviously makes the assets, you know, somewhat, you know, less expensive, but also remember, that means rates are rising in their home countries. So that, that relative advantage we had, the U.S. rate versus, you know, home country rate, is probably, you know, narrowing a bit, but still decidedly in favor of U.S.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

You know, yes, I think the appetite picks up more with the depreciating dollar, which, you know, creates more demand, will certainly, you know, push pricing, but nothing pushes pricing as much as interest rates. You know, if you're looking for a push on pricing, you know, maintaining or falling rates, I think, would have, you know, an explosive effect on values in the city. You know, right now, maintenance of rates, I think it's a fair market and we outcompete in that market. And I think, you know, it makes it more attractive for investors to invest. And, you know, there was very little talk about the exchange ratio being a barrier in any, you know, way, and, you know, in some cases it was certainly a benefit.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

So, you know, I think it's a good trend, but I don't want to, you know, give it the implication that if that reversed itself and the dollar started strengthening again, that I would expect a dramatic, tapering off, because I still think there's a diversification play, a global diversification play into, you know, markets where they're underrepresented in investments. I think that's the number one reason we're seeing these money flows, you know, in our direction. Harry, you have any thoughts on that?

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

Yeah. The only other thing I would add is what you heard me talk about in December and in my intro, which is just the relative value of commercial office properties in New York. A lot of what we're hearing from investors, to Mark's point about weighting, is they're heavyweight in data centers and other asset classes that have seen big appreciation in pricing over the past 3-4 years. They haven't seen, we haven't seen that type of appreciation for the past few years in commercial office assets, and that's what's enticing them into this market, is the relative value versus other opportunities and other asset classes.

[Blaine M. Heck, Executive Director and Senior Research Analyst at Wells Fargo]

Okay, very helpful commentary. Second question: You have a significant disposition target for 2026 and a solid occupancy trajectory forecast for the year. Can you give us any idea of how much of the occupancy gain is related to selling off underleased buildings, and how much of the gain is related to organic leasing of vacancy throughout the portfolio?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

It's Matt. I would say the occupancy objective is very nominally, if at all, affected by asset sales. You know, there are some asset sales that we have in there that are lower occupancy that we could not consummate and still meet our objective based on the leasing trajectory we're seeing. So, you know, will it have an effect? Potentially. Was it factored into our objective 94.8%, achieving it or not? Yes. So we could do without the disposition plan and likely achieve our target.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

You know, Blaine, I would point you in the direction of a slide we used in the investor conference. I thought it was a pretty impactful slide, which listed, I think, you know, a subset of mostly older buildings or more material buildings, if you will, in terms of current occupancy and where we expect it to be at the end of the year. And those are same store, obviously, between 2025 and 2026. And, you know, it showed not only in almost every case, maybe not every case, but the vast majority of cases, occupancy gains being projected, which underlie the march forward from 93%-94%+ in 2026. But, you know, shows you two stories.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

One, we're operating at the highest levels, I think, in the market at getting to 95% and above on a major segment of our portfolio. But still, we want to see those properties 100% leased. You know, and people say, "Well, it's impossible, frictional, whatever." We've got properties that are 99% and 100% leased, and in a tight market, you know, I think 97%+ is not unachievable. We've achieved it in the past. And every 100 basis points for this company has a dramatic impact on the bottom line. So, you know, I just think, you know, referring back to that slide will give you a good visualization of where we see the occupancy gains coming from.

[Blaine M. Heck, Executive Director and Senior Research Analyst at Wells Fargo]

Great. Thank you, guys.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Brendan Lynch from Barclays. Your line is open.

[Brendan Lynch, Director at Barclays]

Great, thanks for taking my questions. Maybe one for Harry. Appreciate the color on the spreads tightening over the past couple of years. What do you think could get us back to the tight spreads of the pre-COVID era? Is that more macro-related or more office sentiment related, and kind of what's the house view on the trajectory and timeline of spreads tightening going forward?

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

Yeah, I think it's more macro and relative yield focused. I will say, you know, just even through the Park Avenue Tower financing, that was tightening, like, up to the last hour of bidding out those bonds. And you know, I think we're going to continue to see a trajectory over the next 6-12 months, that the spreads, like you saw us go from One Madison into Park Avenue Tower, you'll next see One Madison Avenue, and then you'll see 245 Park Avenue. You'll continue, so long as we stay on the current trajectory, to see those spreads tighten, as we go throughout the year.

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

And a lot of that is new entrants coming into the bond market that are recircling. I met with someone this morning, a North American-based investor, coming back into the bond market that wasn't there for quite some time. So, you know, we're going to continue to see that momentum, and that will continue to tighten the spreads.

[Brendan Lynch, Director at Barclays]

Great. Thanks. That's helpful. And maybe another question on the trends within concessions. It looked like the TI packages and free rent ticked up a bit in the second half of the year, despite the really strong demand that you guys are seeing. How should we think about those packages going forward?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

You know, broadly speaking, I'd say much of what we saw last year continues today, which is concessions have been very stable. There's been opportunities to tighten them up in certain instances where whether it's on certain parts of the market, where there's a lot of landlord leverage, particularly on renewals and the sort of, call it the small to medium-sized tenants. We're seeing some improvement on the concessions there. But I think, you know, what you'll see this year is free rent will start to come down a little bit, and I think TI, you know, will be the last thing to change.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Although, again, on the small to mid, mid-size, and particularly on the retail size, we've got the leverage to be able to improve and reduce the amount of TI that we're giving on those transactions. And I think what you saw this particular quarter is simply a reflection of the complexion of deals. You know, if there were a lot of bigger deals, new transactions, then those naturally carry the bigger TI packages.

[Brendan Lynch, Director at Barclays]

Great. Thank you for the color.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Manush Abek from Evercore ISI. Your line is open.

[Manush Abek, Analyst at Evercore ISI]

Thanks for taking the question. Just wanted to see if we can provide some color on the pipeline, specifically for leasing demand outside of Park Avenue.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

The pipeline, despite all of that big leasing in the fourth quarter, we've kept the pipeline full, over 1 million sq ft of pipeline. I think what is most notable, and I think this is important for people to hear, of the over 1 million sq ft of pipeline, 800,000 sq ft of that pipeline are leases that are out. So these are not just, you know, hoped-for transactions that will convert. 800,000 of the 1 million sq ft are leases that are in negotiation, and many of them are in close to execution form. Also within that pipeline, there's 900,000 sq ft of new tenants as opposed to renewals. And then the, you know, as far as the types of tenants, heavily weighted towards finance. Half the, half the pipeline is financial service businesses, the balance being tech and legal tenants.

[Manush Abek, Analyst at Evercore ISI]

Gotcha, and maybe a quick follow-up, just like, how would you classify, like, Sixth Avenue or Third Avenue right now, like, just in that mix?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Sixth Avenue is the new Park Avenue. You know, Park Avenue is the tightest market submarket in the country. Sixth Avenue posted some really big deals. You're seeing rents rise dramatically on the avenue, given the tightening of supply. What we've experienced in particular, I think, is a really good case study of what the strengthening market on Sixth Avenue is. Many of you have inquired about the vacancy or the rollover that we had at 1185 Sixth Avenue. Over the past couple of years, we had four big tenants that rolled out of the building, or in one case, one more tenant still to go. Over almost 700,000 sq ft of that, covering 25 floors of space. Since that period, we've leased 434,000 sq ft.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

We have leases out on 135,000 sq ft, deals pending on 131,000 sq ft, which leaves us only 24,000 sq ft to deal with of that almost 700,000 sq ft of roll. Which I think is an amazing case study to the strengthening of the submarket, to say nothing of the strength of the leasing team, of course.

[Manush Abek, Analyst at Evercore ISI]

Got you. Perfect. Thank you. I appreciate it.

[Operator]

One moment for our next question. Our next question comes from the line of Ronald Kamdem from Morgan Stanley. Your line is open.

[Ronald Kamdem, Mnaging Director at Morgan Stanley]

Hey, great. Just two quick ones. On the same-store NOI guide of 4%, you know, I think last year there was some headwinds from sort of Summit operator. Was just curious if we could sort of decompartmentalize that guide in terms of the benefit from Summit versus occupancy versus other factors, just to get a sense of that 4%. Thanks.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

I would say, you know, Summit has an impact on it, but it's not gonna be the main driver of it. Clearly, the driver is, you know, occupancy increases. As I said in my earlier commentary, you know, we've driven same-store occupancy from, you know, up 400 basis points in a period of, you know, seven quarters. That starts to flow through, that's why we show economic occupancy as a new metric, ticking forward with still growth thereafter.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That translates into, obviously, same-store NOI growth of, you know, the 3.5%-4.5% this year and, you know, 10%+ in 2027. You know, the Summit effect, it had an effect, so it'll be, you know, helpful in 2026, clearly, to have Ascent back up and running and Summit back on a great footing, but it's not the driver.

[Ronald Kamdem, Mnaging Director at Morgan Stanley]

Helpful. My second one is just going back to the dividend payout ratio. I appreciate FAD is not the right sort of way to look at it, but I guess my question is, you know, when you think about sort of the cash flow statement that you guys published and that is out, there's always sort of a big delta between the operating cash flow and the dividend payment because you have a lot of JVs. I guess the question is, like, how do we think about the recurring cash flow payments of the JVs? And is that something that when the board is thinking about the dividend payment, is that the right way to sort of think about the consideration versus FAD? Thanks.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Well, I can. I look at cash flow, and cash flow is comprised, for this company, of operating cash flow and the gains we take on sales. Because we are an active seller of real estate. We are just not a buy-and-hold company. And if you evaluate us and our dividend only from the, you know, lens of buy and hold, which I don't, you know, a non-active way of managing the real estate, then, you know, we'd have to look at different metrics as a board. But as a board, we look at, you know, buying things that are, it's like unformed clay in some cases. You know, breathing new life into older buildings, developing new buildings, entering into transactions to create, you know, high IRR, and, you know, we often will monetize.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I think we've sold much more real estate than we currently own, and we own 30 million sq ft. So that's saying something. And to only look at one metric for purposes of total return and dividend, et cetera, coverage, I just would— You know, my opinion, and I think the board's opinion, would be, don't look at it that way. Look at it in its totality, for all the revenue we generate. Because all of that revenue, which, you know, often is taxable, is what goes, which I think is what Matt's saying is, that's our metric and that's our barometer for setting of the dividend. We don't just occasionally harvest gains. You know, this year it's a $2.5 billion plan.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Last year was, you know, a couple of $2 billion, but year before that, I think it was a $5 billion plan. I mean, this is what we do and who we are. You guys know that. You absolutely know Green buys, improves, develops, stabilizes, harvests, move on, does it again. I've been doing it here at this company for 27 years, and it has not changed much over the 27 years. The assets have just gotten better, the numbers bigger, but, you know, the culture and the ethos, the same. So, you know, it's not a debate per se, it's just this is how we look at it at the board level and, you know, we've been able to, you know, keep as good a dividend policy.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I think, over those years as we possibly could, given the ups and downs of the markets. And, you know, we're just going to stay on that theme and keep, you know, evaluating it through that, you know, through that telescope of the different types of businesses we do and the contributory cash flows to that business, the taxes that result thereon, and the setting of the dividend, we think, at the proper level.

[Ronald Kamdem, Mnaging Director at Morgan Stanley]

Thanks so much.

[Operator]

One moment for our next question. Our next question will come from the line of Peter Abramowitz from Deutsche Bank. Your line is open.

[Peter Abramowitz, Director and Equity Research Analyst at Deutsche Bank]

Yes, thanks for the time, and thanks for taking the question. Just wanted to go back. Matt, you had some comments on maintenance costs at Summit in the quarter. Just want to confirm, are those sort of one-time just related to Ascent? And is there any change in sort of the 2026 outlook you gave in December for Summit?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

No change in the 2026 outlook unique to the fourth quarter.

[Peter Abramowitz, Director and Equity Research Analyst at Deutsche Bank]

Okay, got it. And then, I guess either for Harry or for Marc, you talked about some of the deployment you're starting to look at out of the debt fund. Could you just give us a sense of sort of where you're underwriting returns on some of those initial investments?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Yeah, sure. I mean, we've given out a slide at the investor conference that fund targets gross returns of mid-teens.

[Peter Abramowitz, Director and Equity Research Analyst at Deutsche Bank]

Okay. And so largely, what you've seen so far is fairly consistent with what you talked about at the Investor Day?

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

Yeah, absolutely. I mean, no change in the past few weeks. Mostly focused on subordinate credit, for all the reasons I gave in my introduction. And we're still seeing opportunities there to get the capital out, and very interesting opportunities.

[Peter Abramowitz, Director and Equity Research Analyst at Deutsche Bank]

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

[Operator]

Thank you. One moment for our next question. Our next question will come from the line of Seth Bergey from Citi. Your line is open.

[Seth Bergey, Senior Analyst at Citi]

Hi, thanks for taking my question. You know, it might be a little early, but just in the context of you know, one of your peers who owns a site across the street, and now it's in pre-leasing. I guess, could you talk a little bit about kind of any early indications of demand for the 346 Madison Avenue development site?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Well, advanced demand for 346.

[Seth Bergey, Senior Analyst at Citi]

For this version.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Well, we just debuted it last week. I hope everyone liked the design and, you know, it's. We closed, I think, in September or October. Somebody can correct me. You know, within those few months, we conducted a fulsome design competition, went through a range of different designs to get to something that, you know, we settled on as being something that we think is really going to be, you know, world-class to, you know, to try and stay within the spirit of doing, you know, efficient buildings, but really attractive buildings and well-amenitized, et cetera. We're excited for this project. We think it's the right project at the right time. I think we just formally unveiled it last week, and I know, Steve, your phone's been ringing, and you've had some pre-conversation, so, you know, where are we at?

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

Yeah, I Listen, my only wish is that we had the building built and ready to go today, because there'd be more than enough demand to fill it. Just to give you a sense of the kind of large tenant demand that's out there, there are 250 tenants that are being tracked in the market right now, covering 26 million sq ft of tenant demand. Of that, there are 32 tenants with requirements over 250,000 sq ft, and another 37 tenants with requirements between 100,000 and 250,000 sq ft. There is a dearth of supply for high quality, particularly large block spaces.

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

If you, if you look at the high end of the market, you know, the best of the best part of the market, there's a 3.7% availability rate, and there are no 100,000 sq ft blocks in what's considered the best of the best part of the market. So consequently, you know, let's get the building built because we'll fill it like, you know, pronto.

[Seth Bergey, Senior Analyst at Citi]

Great. Thanks for taking my question.

[Operator]

One moment for our next question. Our next question will come from the line of Vikram Malhotra from Mizuho. Your line is open.

[Vikram Malhotra, Mnaging Director at Mizuho]

Afternoon. Thanks for taking the questions. I guess just first, you know, you've talked a lot about the leasing pipeline trajectory, getting to that occupancy number. You know, one of your peers yesterday said, New York, on new leasing, you know, you're doing double-digit roll-ups. We can see that in your reported numbers. You're seeing roll-ups. I'm just trying to understand as it stands today with the pipeline, like, where would you peg your, you know, portfolio mark-to-market today?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Did we give mark-to-market guidance, or?

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

Well, yeah, we gave, we gave guidance or our, our objective for the year back at the investor conference. We don't mark to market the portfolio, you know, as in its entirety, because you can't mark it all to market, you know, in one shot. But I would say our, our pipeline reflects the exact range that we, we gave in December.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

What was the range in December? Do you recall?

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

It'll be high, high single digits.

[Vikram Malhotra, Mnaging Director at Mizuho]

Okay. Just, I know you know, I'm not going into like, what is FAD? Does it cover your dividend or not? Does it matter? But just one component, given the leasing you've done last year, that's, you know, commencing and then the tenant spending money and all the leasing you're doing this year, how should we just think about actual dollars in terms of TIs that are hitting that FAD calculation this year versus last year?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Thank you for leading in by saying you're not going to compare the FAD to the dividend. I appreciate that. As it relates to trajectory, you know, we are still funding, as we did in 25, you know, leasing that we've done for the last couple of years. That though, as volumes slow as we get the portfolio full, once we get to, you know, we're going to get to close to 95% by the end of the year. So, you know, volumes will drift lower, and then we, you know, Steve is seeing concessions kind of moderate, then that spend goes down. It's kind of the natural progression, and that follows with the NOI growth that we're seeing next year, and thereafter.

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

Yep, you know, it's worth noting that over the next four years, we have the lowest rollover that I recall in the company's history. Less than 900,000 – typically 900,000 sq ft of leases expiring each year over the next four years, whereas typically we were 1.2 million-1.5 million or more in certain years.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I think another way to look at it is, I think over the past two years, we did 6 million sq ft of leasing.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

$8 million in three years.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

What's that?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Eight million,

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

$8 million in three years, $6 million in two years. I think our projection for the year is like $1.6 million or $1.5 million.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Mm-hmm.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I mean, in that range, $1.5 million-$1.6 million. We don't have a projection for next year, but we, that we've been public with. We certainly have our own internal projections, and suffice it to say, as we continue to fill these buildings and get towards occupancy, the volume of leasing necessary to generate high occupancy becomes somewhat less. The capital associated with that becomes less, and the scarcity value allows you to trim in renewal TIs and free rent back to, you know, levels that are seen. So there's multiple reasons why we would see a big improvement in that FAD number in 2027, which is what I was trying to allude to two or three questions ago on FAD.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

And, you know, this is, this is just, you know, the reality of 6 million sq ft of leasing in 2 years. You have to pay the capital, too. But now we've got 1.5 million square feet that we're going to lease this year, unless we over exceed that. And the projection for the year after, and the year after, as Steve just said, are going to be relatively modest, because of the less roll and the tightening of the packages. So, you know, that's where it is, but it's, it's, it's a good news problem, guys. It's a good news reality that, you know, we're paying to install a lot of 10-, 15-, in some cases, 20-year tenancy, often at triple-digit rents. What was our average rent for the quarter, Matt?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Low 90s.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Low 90s. You know, we're in the 90s to 100s, you know, now for average rents in this portfolio, and you can. You know, that's where you start to make some real margin to cover the concessions and, you know, contribute to the cash flow of the company. But it took a lot of work over the past few years to get here, and now we're here, and we're kind of enjoying that. So I think we're six or 12 months ahead of, I think the narrative here, you know, looking out to 2027 and beyond, and, you know, we see a lot of a lot of great recovery there in both FAD and earnings, which, you know, will be the subject of discussions in the second half of this year.

[Vikram Malhotra, Mnaging Director at Mizuho]

No, I just. I appreciate that. I guess, you know, we're just trying to understand you through the 10% same store number for next year, which is a great acceleration, but just trying to understand whether it's like, delayed TI spend or de- or debt refi or asset sale impacts, which will, you know, may or may not be dilutive. But just as we go, that how much of that 10% then gets offset so that maybe the FAD growth gets pushed out again one year? That's kind of, I guess, I'm just trying to make one big piece of it that's been a headwind the last three years, and you're saying it's going to be a tailwind. But the, the ultimately, I guess we're just trying to understand how much of that 10% next year gets eaten up.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

I think, I think Marc gave you all the commentary you need. We have 10% NOI growth coming out of it, and, and capital should be moderating.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Yeah.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That's it. That's the end game.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Michael Lewis from Truist Securities. Your line is open.

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Great, thank you. I apologize if I'm just blanking on this, but why is Landmark Square now 733,000 sq ft, versus 863,000 sq ft the quarter before? Did a 130,000 come out of service or something?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Yeah, that's a campus made up of multiple buildings. One of the buildings is under development, so it got popped out of the operating property square footage, and it's over in the development square footage.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Nice catch.

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Okay, great. That'll do it.

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

That would have been my first guess.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

That was a good pass. Did I pass?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Yeah, we have some exciting things we're working on, on one of the buildings. You want to Yeah, we got approval last year to convert Three Landmark Square to residential. We just received the approval from the town and now working on capitalizing that deal.

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Okay, thank you. And then, my second question, you know, there were questions about rent and mark to market and cash rent spreads. You know, this is one of the things with office, I think that gets confusing. I, I just tried to do a quick back of the envelope. I looked at the last five quarters that you're leasing for rent, term, free rent, TIs, and then I did the same thing for the trailing five quarters in 2019. It's not clear to me, right, like, so TIs and free rent periods are up, like, 60%-70% since then. Rent's only up, like, 20%-25%. It's not clear to me that the, the total lease economics are better. I, I just wonder, you know, how do you think about that? You know, first of all, as a, as a signal of strength in the market or what's happening in the market, and also in negotiating, right?

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Because these concessions can get sticky, people get used to them. I don't know, any thoughts on that, about, about the change in, like, the total lease value instead of cash rent?

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

You've got to amortize the TI over the term of the lease to get to I mean, yes, the, it's, that's a phenomenal one-time number, the upfront TI, but on a, you know, 15-year lease, just make sure, you know I'm not, I'm not questioning your math. I'm just saying, make sure that when you're comparing a 20% annual rent increase, make sure you're looking at the annual TI increase. It's not 60%, you know, annually. It's, you know, you got to spread it over the term of the lease. I mean, that's the only thing I would say to that. But, to the, to the more fundamental question-

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

Well, it's also more leasing being done in new deals, right? New tenants-

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Yeah.

[Steve M. Durels, EVP and Director of Leasing and Real Property at SL Green Realty Corp]

coming in as opposed to renewals, and that is-

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

I think you look at, you know, the where it all comes home to roost is in price per square foot for premium assets. So, you know, when you put everything through the rents, the TI, and the free rent and, you know, downtime, you know, asset values today for, I'll call it, you know, the top, you know, 20% of the market, 25% of the market, you know, is I think solidly between $1,000 and $2,000 a sq ft. You know, below $1,500 a sq ft for older, but well-located renovated product and, probably, you know, $1,800-$2,500 a sq ft, maybe even $3,000 a sq ft, for, you know, for the best new product.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

And so in order to achieve those kind of price per foot, they have to be supported with, you know, the net effective increase of rents minus concessions. And certainly, if you look back to 18 or whatever period of time you were looking at, you know, asset values were not there. So, you know, look, the there is a part of the market that's still recovering, and I think the story is yet to be told on, you know, assets where the average rents are below $100 a foot.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

And yet, you're right, the TI and free rent is relatively high relative to those leases. But for buildings that are enjoying average rents, you know, well, north of $100 a foot, I think the improvement is both nominal and net effective. And so I wouldn't paint the whole market with one brush. There's different categories of buildings, you know, that we're referring to, and what we're referring to mostly is that upper echelon of building in East Midtown.

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Yeah, thanks. You know, the economic occupancy addition I thought was great and really helpful. It made me kind of, you know, dream of a metric where maybe we could put the whole value of the lease together, right?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

You got to dream. Gotta have dreams.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Matt's pulling himself up off the floor.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Gotta have dreams.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

He's pulling himself up off the floor.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

There to dream.

[Mike Lewis, Cyber Security Group Manager at Truist Securities]

Thank you, guys.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

All right, thank you.

[Operator]

Thank you. One moment for our next question. Our next question will come from the line of Caitlin Burrows from Goldman Sachs. Your line is open.

[Caitlin Burrows, VP at Goldman Sachs]

Hi, hopefully two short ones. Just first, on the income statement, it showed that Q4 other income was almost $40 million, which was up meaningfully year-over-year. Just wondering what led to that other increase in Q4 and what was included in there?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

You know, the fee income, which flows through other income, is lumpy, as we said. You know, that's that causes some quarters to, you know, look high, and other quarters, that's when we see the, "Oh, well, you know, we missed." It's often a function of when transactions close. So we had a couple of transactions, like 100 Park and 800 Third, and those things closed in the fourth quarter, as well as some, you know, other special servicing fees that came through in the fourth quarter that drove that number higher, just for the quarter.

[Caitlin Burrows, VP at Goldman Sachs]

Got it. Okay, and then back to those Summit one-time expenses. Sorry to bring them up again. I was just wondering, were they shown in the Summit operator expenses line or SL Green's operating expenses? Because it looked like operating expenses were up again in 4Q, but I know last quarter we talked about AC costs being highest in 3Q. So, yeah, wondering where those showed up, and if it wasn't in the operating expenses, then what drove that?

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

So the Summit expenses were in Summit Operator. Operating expenses, along with other consolidated lines, went up in large part because 800 Third Avenue became a consolidated asset during the quarter when we bought out our partners.

[Caitlin Burrows, VP at Goldman Sachs]

Got it. Thank you.

[Operator]

Thank you.

[Matt J. DiLiberto, CFO at SL Green Realty Corp]

Operator, is that it?

[Operator]

Yes, this concludes our question and answer session. I would like to turn it back over to Marc Holliday for closing remarks.

[Marc Holliday, Chairman and CEO at SL Green Realty Corp]

Okay. No, no closing remarks, operator. I think, you know, we've been on for quite some time, so thank you to all who stayed with us throughout. Thank you for the questions, and we'll speak to you all again in three months.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Participants

Executives

• Harrison Sitomer, Chief Investment Officer
• Marc Holliday, Chairman and CEO
• Matt J. DiLiberto, CFO
• Steve M. Durels, EVP and Director of Leasing and Real Property

Analysts

• Alexander Goldfarb, Mnaging Director at Piper Sandler
• Anthony Paolone, Executive Director at JPMorgan
• Blaine M. Heck, Executive Director and Senior Research Analyst at Wells Fargo
• Brendan Lynch, Director at Barclays
• Caitlin Burrows, VP at Goldman Sachs
• John P. Kim, Mnaging Director at BMO Capital Markets
• Manush Abek, Analyst at Evercore ISI
• Mike Lewis, Cyber Security Group Manager at Truist Securities
• Nicholas Yulico, Mnaging Director at Scotiabank
• Peter Abramowitz, Director and Equity Research Analyst at Deutsche Bank
• Ronald Kamdem, Mnaging Director at Morgan Stanley
• Seth Bergey, Senior Analyst at Citi
• Vikram Malhotra, Mnaging Director at Mizuho