Financial Data and Key Metrics Changes - Comparable FFO for 2025 was $2.32 per share, slightly higher than 2024 and better than anticipated [28] - Fourth quarter comparable FFO was $0.55 per share, down from $0.61 per share in Q4 2024, primarily due to higher net interest expense [28] - Overall same-store GAAP NOI increased by 5% for the quarter, while same-store cash NOI decreased by 8.3% [29] Business Line Data and Key Metrics Changes - In 2025, the company leased 4.6 million sq ft of office space, with 3.7 million sq ft in Manhattan, marking the highest Manhattan leasing volume in over a decade [8] - Average starting rents in Manhattan were $98 per sq ft, with mark-to-markets of +10.4% GAAP and +7.8% cash [9] - Office occupancy rose from 88.8% to 91.2% [13] Market Data and Key Metrics Changes - The New York office market is experiencing a significant recovery, with demand from finance, tech, and other industries robust [5] - The financing markets for Class A assets are strong, with CMBS spreads at their tightest since 2021 [31] - The company has a liquidity of $2.39 billion, including cash balances of $978 million and undrawn credit lines of $1.41 billion [24] Company Strategy and Development Direction - The company is focused on the Manhattan office market, believing it to be the best in the country, and anticipates a tightening landlord's market [5] - Development projects include 350 Park Avenue and 623 Fifth Avenue, with construction expected to commence soon [16][18] - The company is also considering several options for a new development site at 3 East 54th Street [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery of the New York office market and expects significant earnings growth in 2027 [30] - The company plans to maintain a highly liquid balance sheet while exploring stock buybacks due to perceived undervaluation [26][27] - Management noted that the difference between leased occupancy and GAAP occupancy represents a significant revenue opportunity, expected to materialize over the next few years [14][54] Other Important Information - The company has extended maturities on nearly $3.5 billion of debt through 2031 [25] - S&P has changed the company's credit outlook from negative to stable, affirming its credit rating [34] - The company is actively engaged in stock buybacks, having repurchased 2.35 million shares for $80 million recently [26] Q&A Session Summary Question: Changes in the structure of 350 Park Avenue - Management confirmed that there were amendments to the agreement, allowing for flexibility in equity percentage, but no significant changes in economics [36] Question: Yield expectations for 350 Park Avenue - Management indicated that Citadel's rent will be based on a formula related to financing costs, with an appetite for more space than initially planned [38][39] Question: Overall leasing pipeline and tenant conversations - The leasing pipeline remains strong, with significant activity from new tenants and expansions, particularly in financial services and tech [42] Question: Cash vs. GAAP same-store NOI - Management expects to see cash NOI turn positive in the second half of 2026 as free rent periods expire [48] Question: Retail market conditions on Upper Fifth Avenue - The retail market is improving but still struggling to reach peak rents from previous years [51] Question: Difference between GAAP and leased occupancy - The $200 million difference is not annualized and will be recognized as tenants build out their spaces [54] Question: Dividend restoration timeline - Management indicated that a return to a normal dividend is not expected this year but will be pursued as income stabilizes [82] Question: Sources and uses of funds for upcoming projects - Management outlined a capital plan that includes financing, asset sales, and careful management of buybacks [89]

Financial Data and Key Metrics Changes - The second quarter comparable FFO was $0.56 per share, beating analyst consensus of $0.53 per share and remaining flat compared to the previous year's second quarter [26] - New York office occupancy increased to 86.7% from 84.4% in the previous quarter, primarily due to a full building master lease at 770 Broadway [27] - The net debt to EBITDA metric improved by 1.4 turns to 7.2 times from 8.6 times, indicating a stronger balance sheet [23] Business Line Data and Key Metrics Changes - In the first half of 2025, the company leased 2,700,000 square feet overall, with 2,200,000 square feet in Manhattan office space [10] - The average starting rents for Manhattan office leasing were $97 per square foot, with mark-to-markets of plus 10.7% GAAP and plus 7.7% cash [10] - The company executed 27 deals totaling 1,500,000 square feet in Manhattan during the second quarter, with average starting rents of $101 per square foot [11] Market Data and Key Metrics Changes - The company operates primarily in Manhattan, which is considered the strongest real estate market in the country, with a focus on a smaller Class A better building market of 180,000,000 square feet [7][8] - Replacement costs for a Class A tower in Manhattan have risen to approximately $2,500 per square foot, with rents in the $200s now commonplace [8] - The leasing pipeline includes 560,000 square feet of leases signed or in negotiations, with over 1,000,000 square feet in various stages [21] Company Strategy and Development Direction - The company aims to focus on increasing its stock price and is considering selling non-core assets in Chicago and San Francisco for the right price [32] - The Penn District is viewed as a growth engine for the company, with plans for future development projects and rising rents [19] - The company is actively redeveloping 350 Park Avenue with Citadel as the anchor tenant, indicating a commitment to high-quality developments [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong demand and a landlord's market in Manhattan due to tight availability and no new supply expected through the end of the decade [9] - The company anticipates significant earnings growth by 2027 as leases at PENN1 and PENN2 come online [27] - Management noted that the financing markets are liquid, and they are actively refinancing their 2025 maturities, indicating confidence in future cash flows [28] Other Important Information - The company has generated $1,500,000,000 of net proceeds from sales, financings, and the NYU deal since the beginning of the year [23] - The company has completed several refinancing transactions, including a $675,000,000 refinancing of Independence Plaza and a $450,000,000 refinancing of PEN11 [22] Q&A Session Summary Question: How much of the pending leasing activity is geared towards PENN2 versus the rest of the portfolio? - Approximately 50% of the 1,400,000 square feet in the pipeline is at PENN2 [31] Question: Can you elaborate on the potential sale of The MART and 555 California? - The company views these assets as valuable and will sell them for the right price, but they are not actively marketing them [33] Question: What is the current physical occupancy and rent coming online in the next twelve months? - The company expects occupancy to increase to the low 90s over the next year, with significant income growth anticipated in 2027 [38] Question: How do you see the potential for NOI growth in the Penn District? - The company believes that as market rents increase, the existing inventory could generate significant NOI growth, potentially reaching $400,000,000 in five years [42] Question: What are the thoughts on dividend reinstatement? - The company expects to at least match last year's dividend of 74¢ per share and is considering a more regular dividend as the business environment improves [88]

Financial Data and Key Metrics Changes - Comparable FFO for the first quarter was $0.63 per share, an increase of $0.08 compared to $0.55 per share in the same quarter last year, primarily due to the positive ground rent reset at PENN1 and higher NOI from rent commencements [24][16] - Overall GAAP same store NOI increased by 3.5% [16] - The company expects 2025 comparable FFO to be essentially flat compared to last year, down from an earlier estimate of a slight decrease [25] Business Line Data and Key Metrics Changes - The company leased a total of 1,039,000 square feet, with 709,000 square feet in New York office space at starting rents of $95 per square foot and a positive mark-to-market of 6.5% [16][27] - A major lease of 337,000 square feet was completed with Universal Music Group at PENN2, contributing to the overall leasing activity [28] - The occupancy rate in New York decreased to 84.4% from 88.8% due to PENN2 being placed fully into service, but is expected to rise to 87.4% with the completion of the master lease at 770 Broadway [25][26] Market Data and Key Metrics Changes - The New York office leasing market maintained strong momentum, with the strongest quarterly volume since Q4 2019 [25] - Availability in the best ISA market continues to shrink, with only 500,000 square feet of new construction set to deliver in the next several years [26] - The company anticipates strong rental rate growth due to a tightening market and a significant shortage of quality office space [26] Company Strategy and Development Direction - The company is focused on the Penn District as a growth engine, with expectations of significant earnings growth by 2027 from the lease-up of PENN1 and PENN2 [20][25] - The company plans to sprinkle in a not insignificant amount of apartments in the Penn District while primarily remaining an office company [100] - The company is actively looking for new investment opportunities while maintaining a strong cash position for potential acquisitions and debt repayments [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market despite current volatility, noting that demand for quality office space remains strong [27][30] - The company believes that the current market dynamics will lead to increased rents and reduced concessions, indicating a shift towards a landlord's market [95] - Management highlighted the importance of maintaining financial strength to capitalize on future opportunities [78] Other Important Information - The company has reduced its debt by $915 million and increased cash balances to $1.4 billion, providing immediate liquidity of $3 billion [15] - The company completed a significant transaction with NYU, which included a prepaid rent payment of $935 million [12][13] Q&A Session Summary Question: Can you break down the 2,000,000 square foot negotiation between PENN1, PENN2, and the balance of the portfolio? - Approximately 50% of the 2,000,000 square foot pipeline is related to PENN1 and PENN2, with strong activity expected at PENN2 [37][38] Question: What is the confidence level around reaching 80% occupancy at PENN2 by the end of the year? - Management remains confident in reaching the target occupancy, with significant activity and rising rents expected [39][40] Question: What are the plans for the cash on the balance sheet? - The cash will be used for debt repayment, maintaining liquidity, and funding new development opportunities [44][45] Question: How do you view the trend of owner-occupiers in the market? - There is a growing trend of retailers and companies wanting to own their spaces in prime locations, which is beneficial for the market [90] Question: What is the outlook for real estate valuations? - The company expects that great assets will command great prices, with a recovery in valuations anticipated [55][56]