Financial Data and Key Metrics Changes - The company reported an FFO beat of $0.02 per share, driven by higher NOI due to lower expenses and improved contributions from the hospitality business [21][22] - Same-store cash NOI exceeded expectations for the quarter, with a year-end occupancy rate of 93%, reflecting an increase of almost 400 basis points since the lows at the end of Q1 2024 [23][24] - The company achieved a FAD outperformance of $65 million, with nearly $20 million occurring in Q4 alone [22][41] Business Line Data and Key Metrics Changes - The hospitality business saw a solid fourth quarter of activity, contributing positively to overall performance [21] - Leasing activity was strong, with almost 800,000 sq ft of Manhattan office leasing in Q4, bringing the annual total to 2.6 million sq ft [22][24] - The company is on track to achieve its 2026 leasing goals, including a same-store occupancy objective of 94.8% by year-end [24] Market Data and Key Metrics Changes - Tax collections in New York City increased by 8.5% in 2025, primarily driven by growth in personal income [7] - The Big Five banks reported a year-over-year earnings increase of 6.7%, with investment banking revenues up 12.6% [9] - The company anticipates a significant increase in transaction volume for 2026, projecting it to exceed the $23 billion recorded in 2025 [10] Company Strategy and Development Direction - The company is focused on executing a $7 billion refinancing strategy and a $2.5 billion disposition plan, with various stages of financing already in progress [16][17] - There is a strong appetite for investment in New York City, with the company actively engaging with global investors to deploy capital [10][18] - The management emphasizes the importance of human capital, expecting to generate over $100 million in fee revenue from institutional investors [12] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the fiscal stability of New York City, despite potential budget deficits, citing a strong business economy [7][8] - The company views 2026 as a promising year for the commercial office sector, with expectations of occupancy gains and business growth [9][11] - Management highlighted the disconnect between the value of the company's assets and its share price, indicating optimism for future stock performance [12][51] Other Important Information - The company is launching fundraising for a new fund focused on senior credit lending, aiming to expand its fund business [19] - The management noted that the credit rating of New York City remains strong, reaffirmed by S&P, which is crucial for navigating near-term risks [8] Q&A Session Summary Question: How are tenants incorporating AI into their business plans? - Management noted that there have been no instances of tenants downsizing due to AI; rather, many are experiencing growth and increased demand for office space [27][28] Question: What areas of interest did overseas investors express during recent meetings? - Investors are looking to diversify their portfolios, with a strong interest in New York City real estate as a safe investment [31][32] Question: Can you provide details on the timing of rental revenue recognition from leases that have commenced? - Management indicated that the timing of revenue recognition is dependent on when tenants finish their space and move in, making it difficult to provide specific quarterly guidance [36][38] Question: What is the impact of asset sales on occupancy gains? - Management clarified that the occupancy objective is primarily driven by organic leasing rather than asset sales, although some lower-occupancy sales could have a nominal effect [70] Question: How does the board approach dividend decisions? - The board takes a holistic view of the company's long-term plans and does not base dividend decisions solely on short-term earnings fluctuations [48][50]