Greetings. Welcome to Empire State Realty Trust First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.At this time, I'll turn the conference over to Thomas Keltner, Executive Vice President and General Counsel. Mr. Keltner, you may now begin.

Good afternoon. Thank you for joining us today for Empire State Realty Trust first quarter 2020 earnings conference call. In addition to the press release distributed yesterday, a quarterly supplemental package with further detail on our results and our latest investor presentation are posted in the Investors section of the company's website at empirestaterealtytrust.com.On today's call management's prepared remarks and answers to your questions may contain forward-looking statements as defined in applicable securities laws, including those related to market conditions, property operations, capital expenditures, income and expense. As a reminder, forward-looking statements represent management's current estimates. They are subject to risks and uncertainties, including ongoing developments regarding the COVID-19 pandemic, 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 in the company's filings with the SEC.Certain of our disclosures today are added specifically in response to the SEC's direction on special additional disclosure due to the changes in our business prompted by the COVID-19 pandemic and are unique to this instruction. We do not expect to maintain the same level of disclosure when we resume normal business operations.Finally, during today's call we will discuss certain non-GAAP financial measures such as FFO, modified and core FFO, NOI, cash NOI and EBITDA, 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.Now, I will turn the call over to Tony Malkin, Chairman and Chief Executive Officer.

Thanks, Tom and good afternoon to everyone. Our thoughts are with all those affected by the 19 particularly our colleagues and their families who have experienced illness and loss.Our thanks go out to the frontline responders in New York City, the United States and the world and we honor them with the Empire State Building's nicely beating heart. The heart of New York City beats for all of us. We recognize that the situation remains fluid and continues to evolve. We will share the facts that we have at this time to the best extent possible as we navigate this environment.In the week of February 24, we began the implementation of our crisis management plan. From beginning, we looked at this as a marathon and not a sprint. All our actions have been driven by our theme, keep calm and carry on.Our perspectives and team preparedness derived from our experience with many cycles indicated our plans and governed our actions. Our observatory remained open until we were instructed to close by the authorities. Happily none of our observatory personnel contracted the 19 during this period.Our CapEx teams remained at work to fulfill our obligations under our assigned leases not commenced and our long-term capital plans until they too were instructed to cease work by authorities.Even today essential work continues in our New York City portfolio as governed and limited by authorities. We have -- had no interruption of construction in our Connecticut portfolio. Our buildings remained open, clean and safe for our tenants use, while we follow the guidelines from authorities.Our business continues as witnessed by the leasing activity and financing we completed towards the end of the quarter. Our leasing team has done an excellent job to advance the leases we still have underway and the new leases that…

Good afternoon and thank you, Tony. In the first quarter, we had a healthy January and February across the business prior to the early disruption from the emerging pandemic. We saw steady leasing activity and a strong pipeline. And the observatory showed significant revenue growth post completion of our redevelopment, at the end of last year.In the remainder of today's call, Tom Durels will speak about the first quarter leasing results and how we have responded to the COVID-19 impact on our business. Greg Faje will then review our financial performance and balance sheet. And Tony will then provide some additional details, on our outlook for the Observatory.As always we are joined by Drew Prentice, our Chief Accounting Officer, Treasurer and acting CFO; and John Hogg, our Head of Financial Planning and Analysis who can also assist with questions.In March we completed our planned actions to bolster our already strong and flexible balance sheet. We are grateful for the excellent work by our team and our wonderful financing partners. In two financings, we raised $300 million in net incremental cash proceeds at attractive all-in blended costs of approximately 3.6% inclusive of the effect of swap agreements and with a weighted average maturity over eight years.In the first transaction, we raised $175 million in a private placement of 12 and 15-year unsecured notes to Prudential, MetLife and AIG. In the second transaction, we proactively refinanced our existing $265 million unsecured term loan, which was due in 2022 with two new unsecured term loans, totaling $390 million which mature in 2025 and 2026 respectively. This term loan financing, generated net incremental proceeds of $125 million.To ensure adequate liquidity not just for a very extended runway of operations but also to take advantage of new opportunities, we have drawn down $550 million under our $1.1 billion unsecured revolving credit facility.As of quarter end we held over $1 billion in cash on our balance sheet and continue to have ample undrawn capacity under our credit facility. We will now assess potential longer-term options for financing to restore the full credit facility drawdown capacity.Finally, I would like to add my welcome to our new CFO and to say he's got a great experience to lead our transition team as we have executed at a high level and not missed a beat during our nearly one year without a permanent CFO.I'll now turn the call over to Tom Durels. Tom?

Thanks, John, and good afternoon. Today I will comment on our first quarter leasing results and then provide insights into our operations during the COVID-19 situation, including April rent collections, rent deferral requests, actions taken to reduce operating expenses and capital improvement costs, and preparations for when shelter and place orders are lifted.First a word about our properties and our staff. As Tony mentioned, all of our buildings have remained open during the current crisis to all our tenants who provide essential services as permitted by the authorities. We thank our dedicated building staff who make this possible. They are well prepared and trained and we are incredibly grateful for their work and commitment to serve our tenants as we continue with day-to-day pivots and course corrections.In the first quarter, we signed 35 new and renewal leases totaling approximately 149,000 square feet. This included approximately 94,000 square feet in our Manhattan office properties, 24,000 square feet in our greater New York metropolitan office properties and 32,000 square feet in our retail portfolio.The most significant new lease signed during the quarter was a 23,000 square foot new retail lease with Starbucks, as reported in the real deal yesterday, who will occupy three levels including the currently the recently vacated Northeast corner store at the Empire State Building.This unique concept will be a tremendous amenity providing an engaging experience and amenity for our office tenants and its Observatory visitors and a destination attraction, allowing time for to relocate our recently extended term with our move of an existing Chipotle store we expect Starbucks to be open in 2021.During the first quarter, rental rates on new and renewal leases across our entire portfolio were 3.4% higher on a cash basis compared to the prior cash escalated rents. And at our Manhattan office properties,…

Thanks, Tom. For the fourth quarter, we reported core FFO of $54 million or $0.18 per diluted share. Same-store property operations if you exclude onetime lease termination fees and the observatory results for the respective periods drove a 4.8% increase in cash NOI.Turning to our Observatory operations, we started the year off on a strong basis following the conclusion of our Observatory redevelopment project in the fourth quarter of 2019. Revenue for the first two months of 2020 was up 13.2% compared to the first two months of 2019, reflecting previously announced pricing actions.Visitation was flat in this two month time period compared to the prior year. This attendance and revenue growth occurred despite the absence of Chinese New Year activity in January and a pullback in demand in March from European countries where COVID-19 was ramping.In the first half of March, the Observatory saw lower visitor density. We followed the mandate of government authorities and close the Observatory on March 16.Page 16 of our supplemental details our Observatory results. Revenue for the first quarter of 2020 declined to $19.5 million or 5% from the prior year period driven primarily by the aforementioned Observatory closure.Observatory net operating income decreased 12.3% to $11.4 million. The Observatory hosted approximately 422,000 visitors in the first quarter of 2020, a decrease of 29.8% compared to the first quarter of 2019, primarily attributable to the 15 days that the Observatory was closed in the quarter due to the COVID-19 pandemic.Now for a word about our strong and flexible balance sheet. We have looked at our near-term cash requirements as part of our stress testing analysis and believe we are in great shape leaving us with significant capital to deploy opportunistically as we see fit.As of March 31, 2020, the company had total debt outstanding of approximately $2.5 billion on a gross basis and $1.5 billion on a net basis. The company's total debt has a weighted average interest rate of 3.6% and a weighted average term to maturity of 7.2 years.Our consolidated net debt to total market capitalization was 35.5% and consolidated net debt-to-EBITDA was 4.4 times. We have no near-term maturities and a well-laddered maturity schedule.Our revolving credit facility expires in August 2021 and has two six-month extension options. Our next maturity is until November 2024. And last, we would highlight that we have no joint ventures, no WeWork or similar new generation shared office tenants and no debt book.I would like to add my own welcome and congratulations to our new CFO. I look forward to working with her. Finally, thanks to John Kessler for his leadership of the transition team.Now, I will turn the call over to Tony to provide some additional thoughts on our Observatory business as we think about it on a go-forward basis. Tony?

Thanks, Greg. Before we go to Q&A a little more information about the observatory expenses and a view of how a reopening may look. On expenses, we have reduced our annualized expense run rate from $35 million in February to $14 million, a 60% reduction.There have been certain wind down costs that have continued in April and we will reach this run rate in May. Approximately two-thirds of the reduction is attributable to lower payroll costs as we furloughed staff and the balance is due to lower operational and other costs.We anticipate we will initially reopen on a reduced hours basis and most of these expenses will come back when we reopen. Our remaining costs related to payroll for our management and sales staff; certain fixed operating costs; skeleton custodial and security crew and other contracted costs.With respect to our outlook for a reopening, our current base case for us admissions wrap-up is outlined on page 20 of our Investor presentation. It assumes 2019 monthly levels as the baseline visitation comparison reference point and that we will reopen on July 1st. We anticipate an opening of July 1 with admissions at 20% of the 2019 level and we subsequently project that admissions will ramp up 40% for the August 2020 through March 2021 period.By Easter 2021, we expect admissions to be at 60% of the 2019 level. Admissions then ramp up to 75% by June 2021 followed by 90% in August 2021 and hold for the remainder of 2021. We anticipate return to full admissions by January 2022. These estimated visitation levels are entirely of our own derivation, and just happened to align with certain independent consulting work of which we are aware that was prepared for other market participants.We anticipate initially that we will have a higher local visitor…

Thank you. We’ll now be conducting the question-and-answer session. [Operator Instructions] Thank you. And our first question is coming from the line of Craig Mailman with KeyBanc Capital Markets. Please proceed with your question.

Hey, guys. So Tony I appreciate the commentary here particularly surrounding the balance sheet and kind of how you guys have been deliberately conservative there and now potentially you have the ability to unleash it. So I'm just curious on two things. Number one, what's the incremental appetite for buybacks here? Then just number two, with the hiring of a CIO, I mean, are you guys expecting to see a real ramp in opportunities coming on the other side of this?

Yes. Thanks Craig. First of all, the buyback is a decision made from time-to-time. We have unused capacity in our Board authorization. In all cases, our effort is to buy at a time when we can avoid impact on our stock price. And that means candidly we can take advantage of really significant volumes. It's harder when they're center trading.Outside of that, I would say that we look at how we deploy our capital in the way that's going to create the greatest benefit over time and really don't want to add any more other comment with regards to the buyback.With regard to our plan, we do have for external growth, our plan for external growth, we do have a candidate that is -- will shortly be announced, number one. Number two, just some color. Candidate is from a private equity background. We expect to build out a team. And we do think that this situation will create a significant change in the economy and in the valuation and availability of assets. And we view this as a really a 12-month to 36-month opportunity set. And I've always said -- we've always said we'd come to a fork and -- then we'll take it. We think this is a fork in the road. And therefore it's time for us to move to this different footing.

That's helpful. And then just as a follow-up would you guys be interested in if there's any dislocations in buying debt positions? Are you solely focused on kind of equity positions?

We'll look at equity joint venture we'll look at participations we'll look at fee positions. We will look at ground lease positions. We will look at senior preferred equity. We'll look at MEZ. We will be omnivorous opportune of ours. That is what we were in the past before our IPO. That is what we will be going forward.

Thank you.

Our next question comes from the line of Jason Green with Evercore. Proceed with your question.

Thanks. On office collection coming in at 72% so far for the month of April are you able to elaborate on the tenants that are driving this figure lower whether it's their average size or general common characteristics?

Hey, Jason. This is Tom. What we've seen is that as of April 20 there are roughly 170 office tenants and re-tenants representing about 32% of our annualized rental revenue have requested rent deferrals. We've seen tenants make deferral request tenants of all sizes, public companies, private companies and companies in various industries.Clearly, there are certain industries that have been more severely and directly impacted by COVID-19, particularly, those with direct ties to retail, hospitality, travel and then even some of the advertising, consulting and legal firms that support those businesses. I will say that we have seen opportunistic requests by both office and retail tenants with good balance sheets and credit and we're surprised by those requests and we will pursue aggressively collection of rent.These tenants are obligated to pay their rent. But overall the tone out there by tenants is to conserve cash lengthen the runway of cash spent through the downturn and some of this approach has showed up in tenant's attitude towards rent payment. We'll work with some tenants on deferrals. We will reject certain deferral requests and we will pursue all collections across the board. What we saw in April is not an indication of the future. And at this point we certainly can't make any prediction about May and the months ahead.

Got it. And then just on the capital allocation side I mean how should we think about $1 billion of capital you have for some of these collection issues that you guys are experiencing? Can you opportunistically utilize capital in this environment? Or do you need to see collections back to a normal level before do so?

We -- it's Tony here. We've done extensive stress testing of our company model. We've done this internally through a granular breakdown of our expenses. We have modeled a broad variety of run rate and runway length experiences. We have reviewed this in pieces and with our finance committee. It would be a presentation to our Board, shortly.And we believe that we have two things going for us: number one, we have the $1 billion of cash, but we can always increase that to $1.5 billion with our line. And again on that first leg on the finance side that we will proceed with us to look at terming out those borrowings against our line so that we have an opportunity to restore that.And number two, we have the strongest balance sheet amongst our peers possibly aside from companies and liquidation in the office sector in total. We have the ability to commit new capital. We with confidence continued our share buyback. We feel very comfortable that this is -- this is life during more time if you will and the fact is this is where we should shine and we look forward to the opportunity.

Got it. Thank you.

The next question comes from the line of Manny Korchman with Citi. Proceed with your question.

Hey. It's Michael Bilerman. I'm not here with Manny, but Manny is on the phone with me. Tony, I wanted to go through a little bit the decision to hire an actual CIO. If we go back to the IPO process a number of times on these conference calls, you've talked a lot about your relationships, your family's relationships with potential other families and investment opportunities that have come about.I think about your executive management team today the top five executives are making close to $30 million. Total G&A is approaching $65 million in aggregate. You are still acting as CEO. You have Kessler as a President; Durels obviously as the Operations to be hiring a CFO that sounds would be much more a CFO as then acting as a quasi capital markets investment person.I guess -- I'm struggling why hire another person in to an already pretty bloated management team that has their relationships relative to the size of your enterprise, which is about $6.5 billion $7 billion gross assets? So can you sort of explain a little bit how you sort of see this evolving in different roles and responsibilities across the management team?

I'm -- there -- Michael. I think it will be clear what our actions will be towards your thinking and your question in the months ahead.

I guess what is that -- are you realigning your existing management team? Or are you reducing base salaries or comp of the existing management team to fit more people in? What does that mean?

As I said, I think it will be clear what we're doing in the months ahead.

What you're doing on the management team? Or are you doing in the external growth front? I'm just trying to figure out what question your answer?

Mike, your question wasn't about external growth. Your question was about the -- if I recall correctly the term used was bloat and we will be clear on our actions in the months ahead.

Okay. Thank you.

Your next question comes from the line of Jamie Feldman with Bank of America Merrill Lynch. Please proceed with your question.

Great. Thank you. I was hoping you could dig down a little deeper into 32% of the tenants that didn't pay April rent versus the 8% that sounds like you're going to give deferrals to. How do we think about what's in that pool? Is it -- does it include any of the tenants on your top 20? And what -- how do we kind of handicap the buckets of which -- how much of that is opportunistic versus how much of that is stuff that you'll seriously consider?

Jamie, it's Tom. I just have to repeat some of the comments I made before, but as I said, we've seen requests for deferral from tenants of all sizes, public companies, private companies and in various industries. And certainly, those tenants with direct ties to retail hospitality and travel have been more severely impacted. But then as you work down the tenant list, some of those appropriate firms that have tied to those businesses such as in consulting and legal have also been impacted and they've made requests.We're going through a very methodical approach. We are not granting blanket deferrals across the board. There's not one formula that that fits all. In fact, it's just the opposite. We have established SOP. We take very clear deliberate steps with our tenants. We seek information from them that we've outlined in our investor deck. And that those requests range from updated financials seeking a verification that tenant has applied for financial support under the CARES Act. We want to understand the impact to their businesses. And then actions taken to reduce costs.And then of course, we're looking at the existing lease and the conditioner space and things like that. We are also looking at opportunities to extend term or do early renewals where we think there's an economic benefit and it makes sense for us. But for those tenants that's taken an opportunistic approach to seek a deferral or not pay the rent we will aggressively pursue collection of the rent. Because candidly we're surprised by some of those requests. So there are tenants with good balance sheets that have the ability to pay the rent we will pursue them.

Okay. Can you say, how much of that 32% is comprised of that last group you were talking about?

No. We haven't provided a greater breakdown than what I've already provided. As we did report that, we have agreed to three deferrals that represents about 8.8% of the rental revenue. But the -- again, as we move through this in a very methodical approach, certainly we will give further updates.

Okay. And then -- that's helpful. And then thinking about just when people start to go back to work, two questions. One is, can you talk about what tenants are requesting what type of changes tenants might be requesting immediately to their workspaces and kind of building flow or anything like that? And then also to the extent there needed to be upgrades to air quality and ventilation. Do you think your portfolio that would take a lot of CapEx to your portfolio to be able to meet those standards? Or the renovations you've done already are at the highest end?

Yes. I think it's a really good question Jamie. And I will say it first we will follow the guidelines laid out by the government authorities and any new guidelines that they come out with. But as I commented in my opening remarks, our operations team is incredibly hard at working in the development of plans for when our tenants return to work.Those protocols which will be guided by the authorities, but augmented by our own considerations may include things like, temperature checks, through thermal scans, requirement of face masks before entering to the building, hand sanitizing before entry to our buildings that's going to apply to tenants, building employees, visitors, vendors, contractors, delivery personnel.We'll look at staggering and restricting certain deliveries. We request food delivery and pickups by tenants outside the building lobbies. We will certainly increase our frequency of cleanings and high-touch point areas require social distancing in lobbies stagger occupancy of elevators. And then we will also use a reservation system to limit the number of persons allowed into our gyms and other amenity spaces.There may be some added costs and staffing costs associated with these. But I view most of the changes being operational in nature along the lines of what I just mentioned and many of our tenants have requested the things that I just stated and we give our tenants updates on regular town hall meetings.As far as air filtration systems, we already meet or exceed ASHRAE 62.1 standards for a dilation and we expect to use MERV 13 filters which are high-performance filters for all our fan systems. And we already perform annual indoor air quality testing in all our properties and we'll look to see if we want to increase the frequency of those air testings.

Okay. And is that the air quality you're talking about, I mean is that standard across a lot of New York City or because you've done so many renovations that's actually -- you kind of upgraded all of that?

We exceed the industry norm MERV 13 filters are high-performance filter.

And that's in all of your buildings?

Yes except for where we have a handful of legacy systems, but for the vast majority of systems out there they are currently using MERV 13 filters.

All right. Thank you. This is helpful.

You bet.

Our next question is from the line of John Guinee with Stifel. Please proceed with your question.

Great. Thank you, very much. Nicely done guys. Question just looking and doing a back of the envelope so I might have this wrong, but it looks like your cash balance went up by $775 million this quarter, but your debt outstanding went up by $843 million. So, that's a $68 million gap. How much of that went to share repurchases in the quarter? And how much of it was just cash bleed?

Hey John, it's Greg Faje here. The vast majority, we gave you some details there in the share repurchases it was $80 million. The vast majority of it did occur during the quarter, but there's some remaining CapEx that's also detailed in the supplemental.

So how much of the $80 million was spent in 3Q and how much was spent in 4Q?

I'm sorry you're talking about third quarter or second quarter?

I think you need -- want to give me a...

Yes. I think once...

I'm sorry what...

1Q, 2Q John. Don't you?

Yes. I'm sorry.

We're not going to break up.

We're not going to break out the share repurchase. We're just giving you a year-to-date total there. I'm happy to talk about the CapEx off-line and to give a little more color.

Okay. And then the share count went down. You...

It's safe to say John as to Greg's earlier comment that that the neutral component of this -- meaningful component that took place in the first quarter, but a very meaningful component, but also it took place in the second quarter.

Why would you not give this answer? Is it something that you have not seen...

We'll talk about it John over the past few weeks. We did not.

Okay. All right. Tom, I was looking at your lease economics for this last quarter on both Greater New York and New York City on Page 7 and 8. And as you know they were extraordinarily weak. I think you spent a $120 afoot to have rents go up 3.4% in the city and out in December you just spent about $55 a foot maybe $60 a foot have rents go down by 8%. Is that the new normal? Or is that just a bad hear day?

I think it's a good question John. Thanks for raising it. I would first point to you Page 15 of our investor presentation that I talked about historical net effective rent growth. But specifically this quarter with regards to lease costs, our lease costs for office for Manhattan were about $14.62 per square foot per year which is higher than where we would have been trending over the last four to five quarters, but this was due to a higher percentage of our leasing was comprised of first-generation pre-builds.And in fact roughly 2/3 of our leasing in Manhattan was for first-generation new pre-build. Now the good news is, as we've seen in prior quarters depending on the volume of leasing that we're doing and depending on the mix of spaces what we have seen is that when those first-generation pre-builds second-gen, we spend significantly less leasing costs. So that will appear in late quarters.Next on retail, we did have higher leasing costs related to the Starbucks lease that was announced by the press. We think it's a unique deal and what it brings to the building. And then we did have some relocation costs one for Chipotle in connection with a relocation that's necessary to implement the Starbucks installation and FedEx relocation down at Union Square in order to consolidate the corner. So I think that these -- this was unique quarter from those two perspectives, higher percentage of first-generation prebuilds and then these unique retail leases.

Great, thank you.

John just a quick follow-up. I want to get back to you on the share repurchase activity. It was a $61 million in the first quarter.

John we're not trying to be -- but John we're not trying to be cute here. We're -- all of us in different locations. And so -- let me take a moment to go forward. You know us well enough to know we're not cute. We're not that attractive.

Thank you.

[Operator Instructions] The next question is from the line of Daniel Ismail with Green Street Advisors.

Great, thank you. I understand it's still a bit early, but can you maybe share any insights on the conversations you're having with both new and renewal tenants on rental rates and tenant concessions?

Sure Dan. This is Tom. As I mentioned in my opening remarks, new leasing activity is largely frozen at this time at least physical lease tourists have stopped. But we have seen some leases that were in negotiation before the shelter and place orders have continued.Some of those leases and term sheet remain in negotiations. Some have been placed temporarily on hold and we expect that they will resume once the shelter in place orders have lifted and some deals have died. So we're seeing a bit of a mixed bag out there from the carryover of the activity we had in the first beginning of the first quarter.But as far as new leasing activity it's pretty much frozen at the current time until lease tourists can resume and the shelter and place orders are lifted. We are in discussion with a number of tenants on renewals. We -- into the second quarter we signed a good-sized renewal lease out in the Greater New York metropolitan portfolio and have some other renewal activity underway right now.

But -- so anything you could share on the rental rates or the level of succession for those cases?

As far as rental rates with the absence of transactions there really are no comps and its really difficult for us -- we cannot speculate. So it's -- is in fact as you see in our investor presentation we removed the market rates typically shown in our mark-to-market slides. But at this point where we are right now with the absence of transactions and they're not being any leasing comps. We just don't want to speculate on where asking rents are headed.

Okay. And then maybe just if I could sneak one in. If I take a step back, is there anything about -- specific about the Empire State portfolio that would make it more or less impacted by these types of branch collections? Or I guess said differently, is this a citywide -- it would be comparable for us and offline modes this level of rent collections?

Well, I think our portfolio is a pretty good reflection of the broader market and economy because we have a very, very diversified portfolio and a diversified rent roll. And we have seen these requests come in from a variety of tenants. So as I mentioned earlier, there are those industries that are clearly more directly and severely impacted.What we do like about our portfolio in our rent roll is that that it is diversified. We are multi-tenanted and we think that at least it gives us some protection going forward. We're not too heavily weighted in one single industry. But beyond the remarks that I made earlier, we can't really give any further insight.

Thank you.

You bet.

Thank you. The next question is from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Great, thanks. Good afternoon. Just following up on Dan's first question, Tom. You guys have done a good job of capturing some of the additional demand from tech tenants that has come to the city this cycle. And I think before the coronavirus hits there was an expectation for a substantial amount of leasing to be done by some of the large tech players that were growing their footprint in Manhattan. Can you comment at all on what you're seeing from those guys and tech tenants in general? Are they going ahead with leasing? Is that leasing on hold? Or is there any chance of them just backing away from those expansion plans?

Well, I would prefer that you refer those questions to those other landlords that you may be talking about that are in negotiation or having a negotiation on some large tech deals. But I would say overall, we have certainly seen an increase in the tech demand in the city. And as you know within our portfolio, we have a good collection of really high quality tech tenants that includes Microsoft and the Lengthen division of Microsoft Expedia, Shutterstock, Workday, ServiceNow, Anaplan.These are all really, really solid tenants. And they had been growing with us pre-shutdown. And I'm happy that they're in our portfolio and look for more growth going forward. But as far as the -- those active lease negotiations, yes, of course, we hear things, but I really would not want to comment on those others activities.

Okay. That's fair and helpful response. And then just real quickly as a follow-up, sorry, if I missed this, but can you talk about the terms of deferral that you guys have agreed to thus far? I think you mentioned on average you're referring for three months. How long are you giving them to pay back that deferred rent? Or is that also kind of on a case-by-case basis?

Yes. Blaine, first, just remember we're not necessarily approving every deferral request. We will reject many deferral requests. On average, the requests have come in for a three-month deferral or less. And as a reminder this is -- we will only consider a deferral not an abatement. Generally we're looking for a payback within 12 months or less. And then separately opportunistically if there's an opportunity to recast the lease or do a blend extent or do an early renewal, where it makes economic sense and the tenant has a good business, then we'll certainly look at those opportunities. But generally, the payback is 12 months or less and a three-month deferral or less.

Okay. We're going to move to the speed round here, because we realize people are going to want to get to the SL Green call. So that's one more call. We have some closing comments to make. One more question. Let's keep it quick.

[Operator Instructions] And next question is from John Kim with BMO Capital Markets.

Thank you. Can you provide any more color on why you decided to draw down the line at this time without a use of proceeds? Did you fear of any like counterparty risk on capital?

We're concerned of what occurred in prior crisis. So with our Board we decided to flex our lines.

On the investment team and CIO hires, are you contemplating providing any capital to your tenants or making any investments outside real estate?

No.

If I can squeeze in one more, the 170 deferral requests, are any of those related to May?

No. No, no. Let's go to BMO please. Operator?

Mr. Kim from BMO on the line.

Are any of those deferral requests related to --

Do we have anybody else?

There are no additional questions. It's Mr. Kim.

Okay. Let's go.

Please proceed. Mr. Kim.

The deferral requests, are any of them related to May rent, or that's just for April?

Yes. John, its Tom. The deferral request came in April, some of those have paid April rents and still seeking as much as a three-month deferral, which would commence in May.

Great. Thank you.

Thank you. Mr. Malkin?

Okay. That's a wrap. Just as a reminder, if we could please, the depth and breadth of our disclosures this quarter are unusual and specifically to address the SEC direction to share the impacts on our business of the 19, we'll anticipate that in our return to normal much of this additional disclosure will fall away. Spread kindness in compassion towards each other and the opportunity to engage with each other helps global health, its coordinated teamwork, smart thinking and turn it to a good luck will see us all through this, and a good balance sheet helps as well.Things will continue to develop over time. Please remember the forward statements on plan to reopen our Observatory and return to business for discussion purposes only and to help you with your models, they are not guidance, nor are they guarantees. So we thank you all very much. We'll be busy on our end and we look forward to our second quarter results in July. Until then, please stay safe and onward and upward.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.