Financial Data and Key Metrics Changes - Comparable FFO for Q2 2025 was $0.56 per share, beating analyst consensus of $0.53 per share and remaining flat compared to Q2 2024 [27] - New York office occupancy increased to 86.7% from 84.4% in the previous quarter [28] - Net debt to EBITDA improved by 1.4 turns to 7.2 times from 8.6 times [24] Business Line Data and Key Metrics Changes - In Q2 2025, the company leased 2,700,000 square feet overall, with 2,200,000 square feet in Manhattan office space [12] - Average starting rents for Manhattan office leasing were $101 per square foot, with mark-to-markets of +11.8% GAAP and +8.7% cash [13] - PENN1 occupancy reached 90% after leasing 183,000 square feet at an average starting rent of $101 per square foot [13] Market Data and Key Metrics Changes - The Manhattan office market is described as a landlord's market with tight availability and no new supply expected through the end of the decade [11] - Replacement costs for Class A towers in Manhattan have risen to approximately $2,500 per square foot, with rents in the $200s now commonplace [10] - The overall demand for office space in Manhattan is strong, with significant expansion from clients [10] Company Strategy and Development Direction - The company remains focused on its New York-centric strategy, with plans to enhance the PENN District through various development projects [20] - Future developments include a residential project and modern retail offerings along Seventh Avenue [20][21] - The company aims to capitalize on rising rents and limited supply in the Manhattan market [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong leasing activity and a robust pipeline [28] - The company anticipates significant earnings growth by 2027 as leases at PENN1 and PENN2 come online [28] - Management highlighted the importance of disciplined capital allocation and the potential for significant rental growth in the coming years [82] Other Important Information - The company completed several financing transactions to bolster liquidity, including a $450 million financing with 1535 Broadway [23] - Cash balances increased to $1.36 billion, with total immediate liquidity of $2.9 billion [24] - The company is actively managing its debt maturities and refinancing opportunities [29] Q&A Session Summary Question: How much of the pending leasing activity is geared towards PENN2? - Approximately 50% of the 560,000 square feet in the leasing pipeline is at PENN2 [32] Question: Is the company looking to sell its assets in San Francisco? - The company is open to selling assets like The Mart and 555 California if the right price and timing arise, but there are no immediate plans [35] Question: What is the physical occupancy and rent coming online over the next year? - The company expects occupancy to increase to the low 90s over the next year, with significant income ramping up in 2027 [38] Question: What are the expectations for same-store NOI in the coming years? - Positive same-store NOI is expected as leasing activity increases, but specific percentages cannot be provided at this time [92] Question: What are the plans for the Forever 21 retail space? - The timing for backfilling the Forever 21 space is uncertain, but the company is optimistic about the retail corridor's potential [73]