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 [19][27] - Overall GAAP same store NOI increased by 3.5% [19] - The company expects 2025 comparable FFO to be essentially flat compared to last year, with significant earnings growth anticipated by 2027 [27][28] 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 [19][30] - A major lease of 337,000 square feet was completed with Universal Music Group at PENN2, contributing to the overall leasing activity [19][30] - 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 the low 90s over the next year [28][62] Market Data and Key Metrics Changes - The New York office leasing market maintained strong momentum, with the strongest quarterly volume since Q4 2019 [28] - Availability in the best ISA market continues to shrink, with only 500,000 square feet of new construction set to deliver in the coming years [29] - The company anticipates strong rental rate growth due to a tightening market and a significant shortage of quality office space [29] Company Strategy and Development Direction - The Penn District is viewed as a growth engine for the company, with expectations of significant incremental NOI from leasing activities [22] - The company plans to develop a grand 1,800,000 square foot headquarters tower at 350 Park Avenue, indicating a focus on high-quality developments [23][80] - The company is also exploring opportunities in apartment developments within the Penn District, although it remains primarily an office company [84] 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 [28][29] - The company is optimistic about the future, with expectations of rising rents and decreasing concessions as the market tightens [98][102] - Management highlighted the importance of maintaining financial strength to capitalize on future opportunities [80] Other Important Information - The company has reduced its debt by $915 million and increased cash balances to $1.4 billion, providing significant liquidity [18] - The company completed a master lease with NYU for 1,100,000 square feet, which will be treated as a sale for GAAP purposes, resulting in an estimated gain of approximately $800 million [15][16] Q&A Session Summary Question: Breakdown of the 2,000,000 square foot negotiation between PENN1, PENN2, and the balance of the portfolio - Approximately 50% of the pipeline is from PENN1 and PENN2, with strong activity expected at PENN2 [39] Question: Confidence level around reaching 80% occupancy at PENN2 by year-end - Management remains confident in reaching the target, with significant rent increases expected [41] Question: Plans for cash on the balance sheet - Cash will be used for new investments, debt repayment, and maintaining a buffer for volatility [48][49] Question: Owner-occupier trends in the market - There is a growing trend of retailers and companies wanting to own their real estate in prime locations, which is beneficial for the market [91][92] Question: Real estate valuations and potential sales - The company is not willing to sell high-quality assets at distressed prices and expects values to recover to pre-COVID levels [59][60] Question: Changes in tenant behavior regarding concessions and renewals - There is a reduction in free rent packages, and tenants are coming to the company earlier for renewals due to rising rents [97]

Financial Data and Key Metrics Changes - First quarter comparable FFO was $0.63 per share, an increase of $0.08 compared to last year's first quarter, primarily due to the positive ground rent reset at PENN1 and higher signage NOI [26][18] - Overall GAAP same store NOI increased by 3.5% [18] - Cash balances increased to $1,400 million, with total liquidity of $3,000 million including undrawn credit lines [17] Business Line Data and Key Metrics Changes - Leased 1,039,000 square feet overall, with 709,000 square feet in New York office at starting rents of $95 per square foot [18] - Significant leasing activity included a 337,000 square foot lease with Universal Music Group at PENN2 and 163,000 square feet at PENN1 [29][18] - Completed leases totaling 222,000 square feet at 555 California Road Office Tower in San Francisco at starting rents of $120 per square foot [19] Market Data and Key Metrics Changes - New York office occupancy decreased to 84.4% from 88.8% due to PENN2 being placed fully into service, but is expected to rise to the low 90s over the next year [27] - The New York office leasing market maintained strong momentum with the strongest quarterly volume since Q4 2019 [27] - 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 [28] 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 [27][21] - Plans to develop a grand 1,800,000 square foot headquarters tower at 350 Park Avenue, with a focus on high-quality assets [22][78] - The company aims to maintain a robust development program while managing debt and cash reserves effectively [47][46] 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 [28][27] - The company anticipates that as occupancy rises, earnings will significantly increase [63] - Management highlighted the importance of maintaining cash reserves for potential new investments and debt management [46][47] Other Important Information - The company has reduced its debt by $915 million and increased cash by $500 million through recent transactions [17] - The PENN1 ground lease rent reset arbitration resulted in a favorable ruling, reversing previously over-accrued rent expense [12][13] - The company has achieved 100% certification across its entire portfolio of in-service buildings for sustainability [23] Q&A Session Summary Question: Breakdown of 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 from PENN1 and PENN2, with strong activity expected [38] Question: Confidence level around reaching 80% leased at PENN2 by year-end - Management remains confident in reaching leasing targets, with significant rent increases expected [40] Question: Plans for cash on the balance sheet - Cash will be used for debt management, maintaining liquidity, and funding new development opportunities [46][47] Question: Insights on owner-occupiers in the market - There is a trend of retailers and companies wanting to own their spaces in prime locations, driven by long-term strategic interests [90][91] Question: Changes in tenant behavior regarding concessions and renewals - There is a reduction in free rent packages, and tenants are approaching early renewals due to rising rents [96]

Financial Data and Key Metrics Changes - Comparable FFO for the first quarter was $0.63 per share, an increase of $0.08 compared to last year's first quarter, 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, with significant earnings growth anticipated by 2027 [25][24] 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 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][16] - At 555 California Street, 222,000 square feet were leased at starting rents of $120 per square foot, demonstrating strong performance in a historically soft market [18][16] Market Data and Key Metrics Changes - New York office occupancy decreased to 84.4% from 88.8% due to PENN2 being placed fully into service, but is expected to rise to the low 90s over the next year [25][16] - The New York office leasing market maintained strong momentum, with the strongest quarterly volume since Q4 2019 [25][27] - Availability in the best ISA market continues to shrink, with only 500,000 square feet of new construction set to deliver in the coming years [26] Company Strategy and Development Direction - The company is focused on the Penn District as a growth engine, with expectations of significant rental rate increases as supply tightens [20][19] - Plans include a robust development program at 350 Park Avenue and the Penn District, with a small apartment project also in the works [45][105] - The company aims to maintain a strong financial position, leveraging cash reserves for new investments and debt management [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][25] - The company anticipates that as occupancy rises, earnings will significantly increase, with a target of reaching around 94% occupancy in the next couple of years [60][61] - Management highlighted the importance of high-quality buildings in driving demand and rental growth [98][97] 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][16] - A favorable ruling on the PENN1 ground lease rent reset will increase GAAP earnings by approximately $36 million [11][15] - The company has achieved 100% sustainability certification across its portfolio, reflecting its commitment to environmental responsibility [22] 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 from PENN1 and PENN2, with strong activity at PENN2 and continued leasing at PENN1 [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, emphasizing that timing is less critical than achieving the desired rental rates [39][40] Question: What are the plans for the cash on the balance sheet? - The cash will be used for debt management, maintaining liquidity, and funding new development opportunities [44][45] Question: Can you comment on the trend of owner-occupiers in the market? - There is a notable trend of retailers and companies wanting to own their spaces in prime locations, driven by the desire for long-term control and stability [90][89] Question: How do you view the current real estate valuations? - The company believes that great assets will command great prices, and they are not willing to sell high-quality assets at distressed prices [55][53]