Greetings and welcome to the Empire State Realty Trust Second Quarter 2014 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Mr. Thomas Keltner, General Counsel at Empire State Realty Trust. Thank you, sir. You may now begin.

Good morning. Thank you for joining us today for Empire State Realty Trust's second quarter 2014 earnings conference call. In addition to the press release distributed last evening, a quarterly supplemental package with further detail on our results has been posted in the Investor Relations section of the company's website at www.empirestaterealtytrust.com. On today's call management's prepared remarks and answers to your questions may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include those related to revenue, operating income and financial guidance as well as non-GAAP financial measures such as FFO, core FFO, same store results and EBITDA. As a reminder forward-looking statements represent management's current estimates. They’re subject to risks and uncertainties which may cause actual results to differ from those discussed today. Empire State Realty Trust assumes no obligation to update any forward-looking statement in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in the company's filings with the SEC. We also caution that prior period results which are referenced in any comment today may not necessarily be reflective of the results or Empire State Realty Trust if there had truly been a standalone entity during the periods presented. Finally, during today's conference call we will discuss certain non-GAAP financial measures which we believe are meaningful in evaluating the company's performance. The definitions and reconciliations of these measures to the most directly comparable GAAP measures are included in the earnings release and supplemental package, each available on the company's website. This morning's call is hosted by Empire State Realty Trust's Chairman, President and CEO, Anthony Malkin; Chief of Property Operations and Leasing, Tom Durels; and Chief Financial Officer, David Karp. They will make introductory comments, after which we will open the call to your questions. Now, I will turn the call over to Anthony Malkin.

I am delighted to welcome you to our second quarter 2014 earnings conference call. On today's call; I will begin with a brief review of our company with some highlights from the second quarter; Tom Durels, our Executive Vice President and Chief of Property Operations and Leasing, will then provide an update on our portfolio; and David Karp, our Chief Financial Officer, will review financial results in more detail and discuss our balance sheet. Empire State Realty Trust is a pure play, Manhattan and New York City metro area office and retail real estate portfolio. We believe our portfolio offers a unique opportunity to capture upside through the continued renovation and repositioning our properties, bringing their occupancies to market and leasing them at market rates. Our ability to execute this strategy should drive meaningful growth in cash flow and create long-term value for our shareholders. In the second quarter of 2014, we continued to make excellent progress on leasing and implementing our redevelopment and repositioning programs. And our results were fully consistent with our expectations. The Empire State Building Observatory is meeting our expectations for its performance. And I am pleased that we had a record number of visitors for the month of June. On July 15th, we acquired our option properties, the long-term ground lease holds of two Manhattan office properties at 112, West 34th Street and 1400 Broadway on which we had previously announced we had exercised our options. As we have explained previously, through our predecessor, we had operated these properties. We have nearly completed their capital improvement programs and we are well underway with their redevelopment and leasing programs. With approximately 700,000 square feet remaining of space to vacate, redevelop and re-lease at what we believe will be very positive spreads from current fully escalated rents…

Thank you, Tony good morning everyone. On this morning's call, I will review our overall leasing activity in the second quarter, including our continued progress at the Empire State Building and discuss leasing opportunities at our recently acquired properties 1400 Broadway and 112, West 34th Street. Our second quarter leasing results included 69 new and renewal leases signed totaling 211,000 square feet of office and retail space, approximately 210,000 square feet of this leasing activity took place within our office portfolio with approximately 171,000 square feet in our Manhattan office properties. At June 30, 2014 our portfolio was 88.6% occupied, an increase of 140 basis points from the end of the first quarter. Including signed leases that have not yet commenced our portfolio is 89.6% leased an increase of 80 basis points from the end of first quarter. On a year-over-year basis our portfolio occupancy is up 530 basis points and our signed leases not commenced percentage is up 320 basis points. We signed several significant leases during the second quarter at the Empire State Building, a new four floor lease with Bulova Corporation for over 33,000 square feet. And at One Grand Central Place, we executed a nearly 13,000 square foot lease with Robertson Foundation, a private grant foundation established by Tiger Management Company founder Julian Robertson. Along with sustained leasing demand for our office properties, we’ve continued to see strong rental growth spreads. And during the second quarter resonates our new and renewal leases across our entire portfolio were 19.2% higher on a cash basis compared to prior escalator rents. Our Manhattan office portfolio rental rates were 25.8% higher for the quarter. Our average cost for tenant improvements and leasing commissions during the second quarter on all new and renewal leases within the portfolio was $60.85 per square…

Thanks Tom and good morning everyone. I will begin with a review of our second quarter results, followed by an update on our balance sheet and after that we will be happy to take your questions. Last night, we reported core FFO of $55 million or $0.22 per diluted share for the second quarter 2014. Our results in the second quarter were the results of the continued execution of our stated operating and capital strategy. For the six months ended June 30, 2014 core FFO was $96.3 million or $0.39 per fully diluted share. Core FFO excludes certain expenses and gains that we expect to be non-recurring. In the second quarter of 2014, these items included approximately $735,000 of acquisition costs, approximately $950,000 of issuance expenses related to our private perpetual preferred exchange offering, and approximately $540,000 of gains net of income taxes received by us upon the settlement of a lawsuit related to the Observatory. Combined, these non-recurring expenses and income net of expenses totaled approximately $1.15 million which was excluded from FFO in the second quarter 2014 to determine core FFO. Turning to our Observatory operations. The Observatory hosted approximately 1.2 million visitors in the second quarter 2014, representing a 3.8% increase from the same period in 2013. A portion of this gain was due to the shift of the Easter Holiday week from first quarter 2013 to second quarter 2014. June in particular was the strongest it has ever been with nearly 418,000 visitors. We are pleased to report that Observatory revenue for the second quarter grew 11.4% to $30.4 million compared to the second quarter of 2013 due to higher admission pricing and a more profitable mix of ticket sales based on our implementation of the revised pricing metrics that we put in place during 2013.…

Thank you. At this time we will be conduction a question-and-answer session. (Operator Instructions).

While the operator is polling for questions please let me clarify one item, the lease hold at 112, West 34th Street is 49 years and at 1400 Broadway, 63 years.

So thank you David Tony Malkin here, that will correct the statement on the recording of 39 years. So it’s 49 David do you want to repeat that again please.

49 years at 112, West 34th Street and 63 years at 1400 Broadway.

Thank you.

Thank you. Our first question today is coming Brad Burke of Goldman Sachs. Please proceed with your question.

Hey everyone, nice quarter. I wanted to touch on the option properties it sounds like the mark to market on the leases is a pretty significant opportunity, so I was hoping you give us a sense of where you are seeing the embedded rents compared to what the market levels are and whether that’s before or after you are deploying the capital to redevelop the properties? And then if you can give us some color specifically on what you are thinking about on the mark-to-market on that retail space, on the 34th Street property?

Brad, if you could just repeat it please, it's very hard to hear you, if you could repeat your question from the top and speak much more loudly.

Can you hear me now?

Yes, that's much better. Thank you.

Great, great, okay. That's a tech problem, nevermind. So the mark-to-market and the option properties it seems like that's pretty significant opportunity. So I was hoping if you could just give us a sense of what you are thinking about between the embedded rents on those properties versus the market levels and whether those market levels are before or after you have to deploy any capital for redevelopment? And then also Tom you had mentioned the 89,000 square feet of retail space that's coming in few years and has an embedded rent of $30 a square-foot. If you give us some color on what you are thinking the market rate on that space might be, once you lease it out?

Yes, Brad starting first with the retail space that we are currently marketing of about 89,000 square feet on three levels. As I mentioned in my remarks, the employees fully escalated rents are below $30 per square-foot. The retail space its directly offset to Macy’s, its flagship's core, it's within the 34th Street retail quarter, which is a very dynamic retail location, we're seeing already in advance of lease expiration for the existing tenant which is mid-2016. We're already seeing strong activity, we have proposals in hand. What I can say is that, it was previously reported in the press when we had signed a lease with Swatch for a smaller store of about, just about 1,500 square feet on grade, that deal is waone and on average rent of $1,000 a square-foot. Keep in mind that only about 24,000 square feet of our 89,000 square feet is on grade. So, needless to say I think that we're going to see very significant healthy rent spreads on that particular retail space. Moving on to the office at both properties 112, West 34th Street and 1400 Broadway. We are -- we will be implementing our redevelopment strategy to consolidate smaller order spaces into full floor availabilities. We have targeted over the next throughout the end of 2016 of about 400,000 square feet of space to be redeveloped. So it's executing the same game plan that we have done in our other properties consolidate in smaller spaces. Redeveloping those for larger full floor availabilities and we've got targeted through the end of 2016 about 400,000 square feet. And we've been doing this executing on our redevelopment and consolidation plan for years at all of our other properties. So we feel good about where we're at and our position. And of course we've been doing it 112 and 1400 as supervisor since we took over control of these assets.

That's correct.

Okay, and I guess staying on the similar theme the mark-to-markets on the leases this quarter were obviously impressive second quarter in a row. So I am just trying to think about how much of that is market improvement versus you getting a return on your investment to redevelop that space. And I am also wondering whether you could give me an idea of whether the mark-to-markets you're realizing now ending Q1 are above or whether they're in line with what you are thinking about when you were originally underwriting that redevelopment.

Well, it's in line with our expectations for this quarter. I would say that mark-to-market is based upon both factors, the success and the appeal of our redevelopment program which is attracting a broad base of tenants from various industries as well as the improvement in the market and the improvement in our submarkets and we think the market is coming to us. So, keep in mind that going forward the mark-to-market all depends on the in place escalated rents. So you’re going to see variability from quarter-to-quarter and on space-to-space. But given the performance today, we feel very good about where we’re at.

Okay. And maybe just a bigger picture question, I mean I know last year obviously the IPO was a big focus and I assume that the offering properties were obviously a big focus on management’s attention this year. So, now that the IPOs in the rear view mirror and you have the option properties finally on the balance sheet, is there something new that becomes the next area of focus?

Tony Malkin here. Thanks for the question. I think it’s safe to say that we are continuing with the same focus that we stated all along. We are very focused on our redevelopment and the releasing of aggregated and assembled full floors and achieving the spreads that we have been achieving, of course we’d always like to do more we’ll see what happens. Beyond that I’ve stated that I have conversations and will have conversations with other families. We react to opportunity as and when we see it at the moment, the best opportunity we see is within our own portfolio and we have something new to say we’ll say it.

Okay. I appreciate. Thank you.

Thank you. Our next question is coming from Craig Mailman of KeyBanc Capital Markets. Please proceed with your question.

Good morning guys. Jordan Sadler is on the line with me as well. Just want to start on the space to be taken back and redevelop over time the 2.3 million square feet. I appreciate the comments on what you guys are planning to do at two option properties. But just kind of wondering if you guys could be able to see schedule of how you see it over the next year or two of kind of that space coming back average spend on the retail of that space. And is it good kind of place to think about 10% return on that investment, just maybe some color on that?

Sure. First on the timing of redevelopment out of the 2.3 million square feet, I already commented on the two option properties what we have our sight set on through the end of 2016. And just like the two option properties throughout the entire portfolio, we have been managing our lease expiration dates to line-up smaller tenants so that we can and actually vacate space and execute on that consolidation or redevelopment of both office and retail space again throughout the whole portfolio. So if you look at our lease expiration days, you'll see that there is a good amount of role in 2015 and '16 that was lined up intentionally. Through that period of end of 2016, we're looking at somewhere in the range of probably 900,000 square feet that we got targeted for redevelopment that will change plus or minus overtime as we continue to manage our rent role. And then on spend, it's really market, as we redeveloped with the [smaller] space we updated we put in base building HVAC and electric and then its market TI contributions. So it's really consistent with the market and keep in mind that that initial based there spent for demolition abatement HVAC and electric is really a one-time spend that we will not incur again.

And Craig with respect to the question on the return on investment, the 10% to 12% return estimate that we had provided prior to the IPO or at the time of the IPO it’s still a number we feel comfortable with. I will point out that we have added additional information within the supplemental which will help you understand that better, clearly we believe that we are getting better returns from our existing properties and what we are currently seeing generally in the marketplace. But with respect to understanding driving returns going forward, again I would refer you to the information in the supplemental and if you find it you need more information than that please let us know and we will happy to consider that for you.

Okay, that’s helpful. Tom at this point market TI [tag] is would you call it 90 bucks with the base building work in TI, is that a fair….?

It varies. TI contribution for the larger space is really going to vary, it could be anywhere from $55 to $65 a square foot. I think most of it ends up in that $60 to $65 per square foot range it all depends on the economics of the deal certainly, the rent and the free rents were as part of that overall equation and the pre-builds are turnkey, pre-builds on base building work where we are doing a TI contribution for the work I mentioned, HVAC demo abatement, electric and alike. It’s going to be a range, it really depends on the specific space and the building, because we got a variety of conditions. And keep in mind it’s a onetime spend, but to give you some visibility on that, it’s a range, it’s anywhere from $30 to $55 a square foot depending on the space.

Okay. And then just one last one on this topic of the 900, how much of that is the Empire State Building?

We have about 700,000 square feet of redevelopment to execute at Empire State Building. That's remaining to be done. Through the end of 2016, a bit over 300,000 square-feet is what we kind of have our sight set on. So, that by the end of 2016, and looking at remaining balance of only about 400,000 plus or minus square feet to be redeveloped at Empire.

Okay, that's helpful. And then on the demand side, just curious the make-up of the tenants you are seeing, is it mostly TAMI or financial services come back. And just curious, Google's announcement that they may take back 500,000 square feet at 111 Eight. Are you guys hearing from any of those tenants that maybe displaced?

The good news is we are seeing demand from a very broad based set of tenants, I mean in a variety of industries. I think that’s a testament to the central convenient location of properties with great access to mass transit and a success of our redevelopment program. But we are seeing everything from the TAMI tenants, insurance, finance, consumer products, professional services and legal. So, and we're seeing strong -- I'd say strong demand from a broad based set of tenants. With respect to any tenants come from Midtown or Midtown South, we're seeing movement from both those areas to our properties.

Okay. Then one just quick follow-up, what's the commencement date on (inaudible) lease?

It has already commenced. We were able to effect possession and commencement of that lease immediately upon signing. Now there is free rent of about roughly 10 months but commencement occurred upon signing.

Great. Thank you.

Thank you. Our next question is from Jamie Feldman of Bank of America Merrill Lynch. Please proceed with your question.

Hey, thank you. Good morning. So I guess just sticking with the Times Square South submarket, can you talk a little bit about net effective rents today and where they’ve been trending? It sounds like you've seen an improvement in the market. How should we be thinking about where they stand today versus a year ago?

Yes. We’ve seen a steady positive trend, specifically you are asking about the Times Square South market in that Broadway quarter. So we’ve seen a positive steady trend really over the last two quarters. The most of the leasing that we've done in that Broadway quarter has been in our pre-built suites and we’ve steadily increased our asking and taking rents since the start of the year. To give you some kind of visibility on that it’s from the start of the year depending on the space, it’s been an increase in taking of anywhere from 8% to as much 12%.

Okay. And then what's your expectation going forward and what do you guys able to get in terms of annual bumps?

We generally will get annual bump depending on the term of lease but even in our smaller suites, if it's on the short-term side of five years, we’ll still get a mid-term bump; generally of over our 10 year deal you get a 10% bump mid-term, on a five year deal, get may be a 5% bump mid-turn. Going forward I'll say is that we’ve had good success to-date. I think we're very well positioned and we're seeing good activity in our properties based upon the number of showings, the number of leases in negotiation and active proposals being traded. So, we've had a good positive trend today and really won’t speak going forward.

And in terms of your leasing spreads this quarter, they are very positive for the new leases, slightly negative for the renewals. Do you guys have a sense of what those were on a GAAP basis? I guess I’m thinking specifically about the renewals, I imagine with bumps to probably positive.

Yes. We calculate our leasing spreads on a cash basis comparing to starting cash rent to the for fully escalated cash rents. So we haven’t done a calculation for a GAAP leasing spread. We can certainly take a look at that.

Keep in mind Jamie, on renewals, as I commented earlier relative to the execution of our redevelopment plan, there will be times that we do short-term renewals to preserve some cash flow in order to line up leases expiration dates, so we then can execute on our plan to consolidate an entire, a large block of full floor.

[Exceeding] most of the renewals we saw this quarter were those types of leases?

Well, I would say that the majority of leasing we did, over three quarters leasing we did this year were for new deals. So, and some of those renewals were done for cash flow purposes just for -- on short-term basis to execute our consolidation and redevelopment plan.

Okay. And then as you guys are thinking about in your conversations with other families and potential acquisitions, how interested are you in drifting outside of this Times Square South where you’ve clearly built a pretty good concentration?

Let’s be clear. We have a presence in Times Square South really from Empire State Building up to 1400 Broadway which is the route of our legacy predecessor business model. And as we go forward, I think I made the comment before, within the limitations of our focus, we’re going to be omnivorous opportunities. That being said, we’re not going to make any predictive statement. We have a tremendous amount of work to do in our internal portfolio which we believe is going to drive growth, not organic growth, but really material improvement beyond just the market. I've said this before. If the market improves, I believe we will improve more than the market; if the market stays the same, we believe we will improve better than the market and if the market goes down, we believe we will do better than the market. So as far as looking where else we might go, it's really hard to tell. We're very, very return oriented, we're very focused on capital allocation and we're very focused that we have a lot of opportunity in front of us for a long time. Over 2 million square feet left to redevelop and re-lease and we believe that's good work for us to focus on particularly in this very capital risk environment.

Okay, thank you. And then just finally, it looks like things have got a little bit better in the suburbs. Can you talk about what you guys are seeing out there and then do you think it’s a long-term hope for you that suburban office assets or all of them?

I would say that our properties there, we believe we got the best properties in our particular sub markets; three of them have direct access immediate adjacency to mass transit with the Stamford Transportation and White Plains Metro North station. Our properties show very well, they’re all fully amenitized, fully improved. We're at about 92% leased given credit to lease assigned but not yet commenced; we got very little role in the next two years. So, I'm pleased to what the activity that we've got and I think that we could be very well within those submarkets given that we have the best properties out there.

And as far as whether or not these are holds or not, again we're going to keep track of everything going forward. These are definitely part of the formation of the company, number one and number two a very small component of value for the company and number three, we will review all things at all times as have said we will do on the past and we are really focused on where we have capital, where we are putting capital to work and where we think we can put capital to work.

Okay. But I see did you actually see a meaningful pickup in the second quarter or is more to specifically things look pretty good?

I think that there has been some improvement, particularly in our direct competitive set in Downtown Stamford that’s where we saw some pickup and then in North Malibu so there is some modest improvement again in our direct competitive set, I think the overall market stats can be skewed year certainly large blocks that are not necessary directly competitive with CBD Class A multi tenant office building. So again like some modest improvement as reflected in the results that we had and again keeping in mind we are 92% leased with given credit to leases signed that not yet commenced and we got little rollover over the next two year so feel pretty good about where we are at.

Okay, great. Thank you very much.

Thank you. Our next question is coming from John Guinee with Stifel Nicolaus. Please proceed with your question.

Great, a number of questions. First obviously the New York market in all product types is doing extraordinarily well. Can you help us think about how to value the lease hold position versus fee position and essentially when you are at the ground let’s see here it’s essentially a dead position where the ground less or has a pretty option at the or the asset at the ground lease termination. How should we value the, or what do you think it would cost you to get a hold of the feet position on these two assets?

John, I guess, well I guess, let me address the first part of your question is how do you think about valuation of a leasehold? I guess I would point you to and remind you of the process that we went through in determining the purchase price for the options as you recall

David, I perfectly understand the how you got, how you paid, how you arrived at the value for the positions. I'm just thinking about if you were to buy the fee or buy the ground, is that a $100 per bill to book further $1000 per bill to book foot to buy the underlying ground position.

Yes, I don't know that we would express a view on what we would pay for the underlying ground. And whether or not we have an opportunity to do so, it will be something that we'll present itself maybe or not in the future.

Okay. And then second G&A took a spike was there some onetime items in the G&A that I just missed?

Yes, I think the two things in the G&A that in this quarter is, one and probably the largest driver is the shift in the income tax accrual related to the operation of TRS. In Q1, we actually because of the way the seasonality of the income and the way lease works between the TRS and REIT, we generated a taxable loss which resulted in a negative income tax expense of about $2 million. In the second quarter, with the season we adjusted higher profitability of the observatory we ended up with a $2 million tax liability. So that's a $4 million swing right there. The second driving piece of it was in 2Q we had approximately $950,000 of expenses in connection with the private perpetual preferred tender exchange. So between the $1 million of cost on the exchange and the big swing in pre-tax liability on the taxable subsidiary that accounted for almost all of that spread between Q1 and Q2.

Okay. And you expect the taxable issues to be run through G&A indefinitely?

Yeah as always we're going to have seasonality in the performance of the Observatory there will be those quarters where in one quarter we'll generate much lower level of taxable income and we'll win another and as a consequence of the some volatility in the calculation of quarterly flows for income tax.

Got you. And then lastly when I am looking at your numbers, your operating expenses for the six months the Manhattan portfolio runs about $31 a square foot and the Greater New York office portfolio runs that $18 a square feet, are those all fixed cost which they should stay the same as your portfolio leases up or there is some variability to those costs.

Particularly the properties that are in heavy redevelopments and specifically Empire State Building I think we're seeing higher I’ll call it, transitional cost as we're executing in our re-development program particularly in the R&M line item. I think that we could see some improvement overtime, but also as we've commented previously the on Empire State Building operating expenses, there are some unique expenses that really encourage occurs really because of the diverse business natures of that building including the Observatory.

Great. Thank you.

Thank you. Our next question is coming from Brandon (inaudible) of Wells Fargo Securities. Please proceed with your question.

Thanks, good morning. Tom, out of the either 900,000 square feet over the next 2.5 years that you’ve planned to redevelop or the 2.3 kind of the longer-term to be redeveloped, how much of that space is currently occupied versus the space that that we see today?

Give me one second. I’d say that probably about -- we probably got about 200,000 or 300,000 square feet that is currently vacant that we are executing on our redevelopment plan or we’ve got the space on hold waiting to line up for on adjacent lease expiration date so that we can execute on our redevelopment plan. But I think maybe more clearly to think of this is that over the next 2.5 years for this year we’re already executing on some of that redevelopment in the form of rebuilds and demolition and white box of full floors. We’ve gotten about another 150,000 square feet to execute this year, probably about a 0.25 million square feet in 2015 and if you look at our lease expiration dates, we’ve got a pretty healthy role in 2015 and that means that that will be redevelopment occurs in 2016. So we would look at 2015 or '16 being very, very busy years.

Okay. No, that's helpful I guess what I'm trying to piece together is you've got call it this 900,000 square feet to be redeveloped over the next few years, it sounds like out of that there is call it couple of hundred thousand, 200,000 to 300,000 square feet that's vacant today. And then you've also got between the Manhattan portfolio including the option property somewhere around 900,000 square feet to a million square feet of vacancy today, if I'm just looking at high-80s occupancy. So how should we sort of think about the occupancy progression. Is the space that’s unoccupied today that's available outside of the 200,000 to 300,000 square feet to be redeveloped. Is that space that's easily leasable and we should see an occupancy pickup on that portion of the portfolio?

I don't think, you should think of our occupancy as moving trending as a straight line up. As we execute this redevelopment program, we will create vacant space. Particularly at the option properties with roughly 400,000 square feet to be redeveloped between now and 2016, we're going to be vacating floors to execute on that redevelopment with the intend of leasing to better tenants at higher market rents. So again, so I think that we will create vacancies overtime as we execute that redevelopment program.

So if I'm hearing you correctly, it sounds like me to create the long-term value that's fair, maybe occupancy actually goes down even you guys have done a great job moving occupancy up over the past 12 months 500 basis points, maybe goes down near-term before it kind of gets to stabilized levels and low to mid 90s?

So let’s be clear, of course our objective is to lease to 100% we will see how we do, but as we said in prior calls and as we said in meetings with analysts and investors in order for us to do the work we need to, do we must vacate space and we will produce vacant space in order to lease. We will produce a trend line which is a flattening out of the ups and downs overtime which moves towards our objective of full occupancy, but we will generate vacancy as we take our portfolio to a stabilized position.

Yes. So I think Tony I completely understand all of that I guess. And maybe you guys aren’t in position to going to provide the outlook today. I think what would be helpful is trying to get a sense of directionality of that somewhat in the near-term so we can sort of measure your progress against what reasonable expectations are. So it’s perfectly reasonable to think that there is going to be, you have got to create some vacancy to add value to the portfolio. So we are just trying to get a sense of maybe what those near-term and longer term expectations are. If I could just last question for David. You have got some maturities on the debt side that are coming up and it strikes to me that those, the rates on some of those mortgages are high relative to market. And how should we sort of think about the financing plan for the upcoming maturities and maybe what you would replace those with?

As I noted in my opening remarks we did have two near term maturities at 501, 7th Avenue and 1359 Broadway, those known were set to mature on August 1. And we did enter into a short-term extension of those for six months. The predecessors loans were priced at about 6%, we’d extended those on the short-term basis at LIBOR plus 175. We do have, our next maturity comes up in November of this year and then we have two others at the beginning of next year. In terms of how we expect to deal with those? We are currently working on our longer term financing plan; we expect to refinance those with longer term debt. And we should have something to report to you on those shortly.

Any sense of kind of where long term mortgage debt or unsecured debt would price for you guys if you were to do it today?

Well, I mean I think if you're looking at the mortgage market, these are all high quality assets in gateway city. And we're seeing mortgage rates and again on our leverage or advanced rates, we typically do not push the envelope on our loan-to-value. We are seeing pricing on mortgage debt somewhere in the 175 to 200 over the comparable treasury term. And then with respect to unsecured debt or corporate debt, I don't really want to speculate where we are going to be, because we're not at that stage yet providing a public issuance. But I think as you look at some of the other unsecured financings, the market can be anywhere from depending upon the instrument to use, anywhere from the mid 2s to the mid 3s.

Okay, alright. Thanks a lot.

I think it's important to note with regard to traditional lenders, we have been borrowing from major institutions for decades. And during some of those decades, we have a lot of contentious issues out there with partners or processes. We have always gotten most favorable pricing from our institutional lenders. And I see no reason to take that having become a REIT with the unified balance sheet. And a straight forward corporate governance structure if that's going to do anything but stay the same or improve.

Okay. Thanks for the time.

Thank you. Our next question is coming from Craig Mailman with KeyBanc Capital Markets. Please proceed with your follow-up.

Just two quick ones here. On the ground lease, are there any expansion options on either property?

No, there are not.

Okay. And then just the other item on the leases that you signed during the quarter, what was the average term for the new and renewals?

I am sorry. The question again was in which market overall?

Just the average term on the lease you guys signed in the quarter, may be broken onto new and renewals? If not, you guys don't breakout and stop, it may be helpful going forward.

Yes, I don't have it broken out by new renewal. We can get back to you with a breakout between new and renewal.

Do guys have just in aggregate?

We do. For the office leases and including both New York City and the suburbs, the average term was 7.2 years.

But keep in mind, that's not going to be a productive use of your time because you’re going to have to ask for detail which we don't give on short-term renewals of spaces where we are simply looking to warehouse cash flow while we prepare aggregate floors. So I think we'll take a look at that question and come back to you. I think to draw any conclusion from the number that you’ve asked for as a backup which is overall is not going to produce a meaningful piece of information for you.

Okay. I mean the other angle is if it’s harder to break out maybe not as meaningful in the new renewals, maybe just give us what the TI and leasing commissions are on a per year basis rather than just an overall square foot so we can compare quarter-over-quarter. That’s all I have got.

Yes, we will take a look at that and we’ll get back with you.

Great, thanks.

Thank you. At this time, I would like to turn the floor back over to management for any additional or closing comments.

We really would like to thank you very much for joining us today. We look forward to sharing our ongoing progress with you on our next call and through disclosures along the way. And we’re having a great time and we very much enjoyed your interest and the interest of our shareholder population. Thank you very much and we’ll be in touch.

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day.