Heidi Gillette - Director of Investor Relations Marc Holliday - Chief Executive Officer, Director and Member of Executive Committee Andrew W. Mathias - President Matthew DiLiberto Steven M. Durels - Executive Vice President and Director of Leasing James E. Mead - Chief Financial Officer

James C. Feldman - BofA Merrill Lynch, Research Division David Toti - Cantor Fitzgerald & Co., Research Division Joshua Attie - Citigroup Inc, Research Division Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division Mariano Lopez Peliza - Center for Financial Research and Analysis, Inc. Robert Stevenson - Macquarie Research Brendan Maiorana - Wells Fargo Securities, LLC, Research Division Ross T. Nussbaum - UBS Investment Bank, Research Division Jordan Sadler - KeyBanc Capital Markets Inc., Research Division Steve Sakwa - ISI Group Inc., Research Division John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division Omotayo T. Okusanya - Jefferies LLC, Research Division Vincent Chao - Deutsche Bank AG, Research Division Michael Knott - Green Street Advisors, Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 SL Green Realty Corp. Earnings Conference Call. My name is Lacey, and I'll be your coordinator for today [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Heidi Gillette. Please proceed.

Thank you, everybody, for joining us. At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. Actual results may differ from the forward-looking statements that management may make today. Additional information regarding the factors that could cause such differences appear in the MD&A section of the company's Form 10-K and other reports filed by the company with the Securities and Exchange Commission. Also during today's call, the company may discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website at www.slgreen.com, by selecting the press release regarding the company's second quarter 2013 earnings. Before turning the call over to Marc Holliday, Chief Executive Officer of SL Green Realty Corp., I would like to highlight that in our earnings release, we did announce that the company will host its Annual Institutional Investor Conference on Monday, December 9 in New York City. To be added to the conference's e-mail distribution list or to be -- or to preregister, please email slg2013@slgreen.com. [Operator Instructions] Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc.

Okay. Heidi, thank you very much, and thank you, everyone, for joining us this afternoon. We're going to try to keep these initial remarks somewhat abbreviated so we can get to the many questions we generally have on this call. Obviously, if it wasn't sort of apparent from the release itself, we were very pleased with the results that we announced late yesterday afternoon. We're running generally ahead of our December guidance in many of the areas we had outlined for investors about 6 or 7 months ago. And while we are running ahead, we're running ahead in a manner that, I think, is very much consistent with our expectations that have been communicated throughout the first half of this year on our last conference call and also at NAREIT. It's important to note that we've achieved this success in a wide array of areas, not -- no 1 single area: such as leasing, where you see the leasing activity and mark-to-market was very robust in the second quarter; investment sales, where we're executing on our strategy of monetizing gains and harvesting selectively, where we're finding best pricing; financing activity, such as the refinancing and upsize of 1552 Broadway and 1560 Broadway, which we did in this quarter; and certain operational efficiencies that Matt and Jim can expand on, which point towards the benefits of scale and the benefits of an improving market. Redevelopment efforts are well underway at projects at -- like 280 Park Avenue and also, our project at 635 Sixth Avenue. And in the pipeline for next year, we're finishing our design work on projects like 180 Maiden and 10 East 53rd Street, which we'll be commencing on those projects sometime towards the end of this year. But with those being some of the prominent areas, let…

Thanks, Marc. Our big announcement of the quarter was our contract to sell 333 West 34th Street, which we announced several weeks ago. This asset was acquired in 2007, strategic to our overall relationship with Citi, our largest tenant, and a year when a lot of people would look and say, it's a tough year to be buying assets back at the top of the last cycle. We stabilized the asset and retenanted it with a minimal capital program. And we're able to sell the asset for nearly a $20 million gain. So really successful execution by our leasing team and our construction and operations teams. This fully stabilized asset sold for $630 a foot to 4.4% going in cap rate, so it's an execution we were very pleased with. The quarter otherwise in the investment market was really characterized by huge deals, which were going down in the city. Just going through the list: 1211 Sixth Avenue; Worldwide Plaza; 237 Park Avenue; 75 Rockefeller Center; 605 Third; and 1345 Sixth Avenue; 650 Madison; 125 West 55th Street, just to name a few of the gigantic deals that were announced this quarter. So we're looking at a serious spike up in terms of velocity and sales volume. And these are all deals we've underwritten, taken a close look at. They all traded on the basis of a very strong expectation of rental growth, and we will be involved in the financing side in some of these deals but more to come on that in the future. On the structured finance side, we have a very solid pipeline in the business with $211 million of net originations year-to-date and more than $100 million of deals in application. The rising rates seem to be creating some opportunity for us to at least maintain, if not moderately increase our yield on our ultimate hold positions there. And we continue to be very active talking to all the buyers, that I mentioned, of those properties and more of the smaller properties that don't make sort of the big building list. And they're still in active demand from mezzanine and preferred equity and bridge loans. The continuing trend also in the city is residential values rising and a lot of office buildings being looked at for conversion to residential, a lot of land trades. The Park Lane Hotel went under contract reportedly last week, really record-breaking prices for any assets that have a reuse as residential, hotel or some combination of both. And that's a trend we expect to see continue as we -- the strength in residential sales across really all neighborhoods of the city and very strong residential rents are buttressing a lot of conversion plans and new construction plans on the residential side of the business, which is taking some office inventory offline. So helping to eat away at the vacancy rate, Marc mentioned, in Midtown and downtown. And with that, I'd like to turn it over to Matt.

I think, Matt, is just going to -- just a quick statement on the FAD, Matt. A little more meat on the bone there as to the, what's behind the $0.20?

Sure. As many of you noticed, our capital trend through the first 6 months of the year are trending ahead of what we expect to be and we're spending less, as Marc stated. This is primarily attributable to the Viacom capital that we focused on at the end of the year and again, in the first quarter. Recall, we had projected for the year around a $53 million spend. We don't control any of that spend. It's all through the discretion of Viacom. Through June, they had spent none of it, so we revised that number significantly lower. And also, to Steve's credit, the leasing that has been done through the first 6 months of the year has been -- has had less capital attributable to it than what we had originally forecast. So those 2, in combination, account for the $0.20 adjustment to FAD. I'm obligated to say, FAD is funds available for distribution. The difference between FAD and FFO are noncash accounting adjustments and second-generation capital.

Thank you for that clarification, Matt.

SEC obligates me.

Okay. So with that, we'd like to turn it over to the operator to begin the Q&A portion.

[Operator Instructions] And our first question will come from the line of Jamie Feldman with Bank of America Merrill Lynch.

I guess, Marc, just following up on your comment about landlords raising rents. Can you give us your thoughts on where you think rents are today on a net effective basis versus the bottom? And then I guess year-over-year and then how fast you think they could grow?

Well, I don't have an answer for you, Jamie, on net effective. I can tell you nominal rents. Nominal-taking rents are up from the very bottom, I would say, on average about 25% off the bottom. Net effectives would be up greater than that. And I don't know, it's a very hard number because it's all over the place in terms of free rent and concessions and the degree in which people are paying out broker commission. So that's tougher, but -- and you have to amortize over the term [ph] leases, whether it's a 10-, 15-, or 20-year deal. So I can only tell you that nominal-taking rents are probably up 25% off the bottom and concessions are up -- would put that number up significantly more because you could see where concessions were at the trough, if you will, in '08 versus where they stand today in '13. And we've made significant improvement particularly on renewal rents. Renewals we're pushing, in some cases for bigger renewals, almost like new concession deals at the bottom. And now, I'd say, the renewal market is much more in line with what we traditionally see in terms of limited free rent TI and better achievement on mark-to-market.

And then just some comment on rents as well.

Well, the outlook on mark-to-market, I haven't really changed our view from the beginning of the year, which was 3% to 8% in mark-to-market. I think, I said on the last call and I would reiterate on this call, that we're probably trending towards the higher end of that. I think year-to-date, we're probably, combined, 7% first and second quarter average. It's very hard to predict what we're going to achieve over the next 2 quarters because it really depends on which leases in particular are expiring at any given quarter. Sometimes you may have a tenant coming off of very high effective rents, sometimes very low. But on average, I think the high end of that range is still where we would target things. And I think looking out to next year, it would not at all surprise me if the guidance cracks into the double digits, 10% or more. So I think we're into that part of the market where you start to get above-average increases after a few years of kind of low single-digit increases.

Okay, and then my second question. There's a lot -- in talking to brokers, it sounds like there's the most concern over the Sixth Avenue corridor, especially if Time Warner moves. Can you talk about your outlook for that submarket if Time Warner does move, and kind of how you think your portfolio will perform?

Well, remember, we've got 2 buildings on Sixth Avenue, one is 1350 and one is 1185 Avenue of the Americas. We have leases out on 1185 that will take the building to 100% and with no near- to medium-term rollover in the building. 1350 is equally pretty well locked down and we've got a little bit of space. We have some deals pending. So I think both those buildings are in a very healthy place. Overall in Sixth Avenue, you saw a lot of subleased space coming into market, and the best example of that is the AXA sublease. But that got pulled off the market very, very quickly. I think everybody was shocked by how quickly Morgan Stanley and Sirius stepped up, and at the end of the day 450,000 square feet was pulled away. And I think you've seen some other moves along Sixth Avenue where there's been reasonably good velocity, both on direct deals and on sublease deals. So from our perspective, we're not -- we don't think there's anything endemic about Sixth Avenue. It's sort of the way Third Avenue was a couple of years ago, where it happened to be a confluence of events where there was a lot of inventory that came on, and it's repaired itself over the last couple of years. And Sixth Avenue is going through that process as well. The nice thing about it is Sixth Avenue is seeing a good diversity of types of tenants that are doing deals over there.

And our next question will come from the line of David Toti with Cantor. David Toti - Cantor Fitzgerald & Co., Research Division: Given some of your early commentary on relatively stable caps, better absorption rates, the residential bids heating up, are you guys looking at more opportunities within your own portfolio for an acceleration of redevelopment or development? I would think that given a market that's looking a little bit more frothy, some of those opportunities might surface a little sooner than expected?

You're talking about conversion to residential or... David Toti - Cantor Fitzgerald & Co., Research Division: Well, just general site redevelopment, some conversions. I mean, the opportunity should begin to expand theoretically right in a frothy market?

We've got a lot of redevelopment going on now. I mean, we're -- we have a -- with 10 East 53rd, 180 Maiden, 635, 641 Sixth, 280 Park, we're in sort of full redevelopment mode here. So I think we're looking certainly for properties that have alternative uses than maybe good sale candidates. And -- but in terms of redeveloping what we have, that's the path we've been on. I mean, we haven't bought a large office building since last March because we're completely focused on our existing portfolio, getting our buildings redeveloped and restocked.

Yes, there is -- Dave, I just want to be clear. I mean, we have more opportunity in the portfolio to mine. I think there is a prudent and physical limitation as to what we can and should be executing at any one time. I'd say right now, from my vantage point, we're full tilt, and you're seeing -- you're just starting to see the benefits of that effort starting to flow through into our earnings, which I do believe will accelerate into the coming years. And we've tried to be very specific in guiding people as to the 15 or so properties you're going to largely see that coming from. And we're generally on or ahead of schedule, with respect to all of those properties. So we're very focused on what you're saying. We'll execute kind of to the fullest we can. But at a certain level, you always have to run a bit of a hedge book, I think, and just in case, the unforeseen in a year or 2 or whatever, you don't want to get caught too far out, obviously. So we're right where, I think, we need to be in a balance between kind of redeveloping and mining and mining the internal opportunities. David Toti - Cantor Fitzgerald & Co., Research Division: Okay, that's helpful. My second question is a bit left field. Have you guys considered the Empire State building at all? That's speaking of froth, I understand that's been -- there's been sort of, an acceleration of bidding and potential outcomes there?

What -- I'm sorry, had we considered the Empire State building? Look, we look at everything and I wouldn't -- there's a fairly substantial portfolio of assets all comprising a part of what is potentially going to be a new REIT. Empire State, maybe being the most notable or notorious of the bunch, but there is a -- do I have it here? There is, I think, 18 total properties within ESRB and thank you, I got my notes right here. And I'd say 10 or 12 of those, from my recollection, in Manhattan, the rest in some of the suburbs, suburban markets that we deal in. And I think it's all very interesting. And we've been sort of watching it play out. Tony Malkin seems to be navigating the waters on his way towards trying to get something done and it seems that they're on that path. But like anything, when no different than us or anybody else, when you expose your assets to the markets, you're going to get a lot of interest from the private market as well. And I think there is generally a perception that the private market valuation for that portfolio probably exceeds what would likely be the public market valuation. That's my opinion only. But that's, I would say, it's an educated opinion from having looked at it. And I'd say the private market valuation, probably somewhere between exceeds or well exceeds public market valuation. But we'll have to just have to kind of wait and see how that deal moves along and where the ultimate IPO valuations come out and what kind of disparities exist. But you could be sure that in a market this efficient, there's somebody out there that's going to be looking at public versus private. And if there's a feeling that there is a disparity there, then there will be activity and you've seen that activity. People have sailed in, what I assume are unsolicited offers, and you'll probably see more of them.

Our next question will come from the line of Josh Attie with Citi.

What are your thoughts on the new supply that may come online, both on the West side and World Trade Center? It's greater now as a result of the pre-leasing that was recently completed. Has that changed your view of fundamentals over the next few years at all? And also what submarkets do you think will be most impacted?

Yes, I'm going to -- Steve Durels will sort of answer that. I just want to lead in by saying, I don't think the pre-lease, the leasing or pre-leasing adds to it. I think it's really -- subtracts to it from my vantage point because even though the pre-leasing hadn't occurred, the inventory was out there on the market, World Trade, Hudson Yards and whatever else that you referenced. So that space is starting to become leased in whatever building. It's not limited to those. We bought some properties building over on 8th or 11 Times or downtown or Hudson Yards. Any leasing of any of those projects that are being heavily marketed to tenants, I think is, in my opinion, a net positive because it takes space off the market. Obviously, with taking space off the market it might add to the market elsewhere. But net-net, most of these deals that you're seeing signed up tend to be new deals plus expansion. I'd say they're rarely contraction, although sometimes. And you have other space being taken off the market in terms of conversion to residential like 1107 Broadway, like the Sony Building on Madison, and like a whole host of other buildings. So you've got some new supply that I think has been known. You've got other supply being taken off. And net-net, you've got some pre-leasing, which I think, overall for the market is good. But as it relates to specificity, addressing the question, Steve?

Well, just to build on Marc's point, the -- there's been a -- there was a drag on the market for the past couple of years because there's not a big tenant that was out there shopping the market that wasn't using out of the Trade Center or Hudson Yards as sort of leverage in a negotiation on pricing and forcing landlords to stretch to make deals. So the -- much like 11 Times Square for a considerable period of time and some other big blocks over the past couple of years, were drags on the market. So as those -- as that product gets leased up, it's a great thing for the health of the overall market. And combine that with the fact that in a 400 million-square-foot market, it's not a lot of inventory over a 10-year period. These tenants are going to move, these buildings will lease-up, that's a good thing. The overall market needs a certain supply of new -- of new construction, and the types of businesses that are going there are the few types of businesses that absolutely want new construction, doesn't mean it's right for all tenants out there. And I think it's -- overall, a positive thing for us and that's not going to force a lot of new supply coming on in the near future because the delivery of these buildings are still years away. So I think net-net, it's great news. I think it's great long-term sort of on a -- from a 30,000-foot level looking at what's that -- what makes it a healthy market and keeps us a world-class city. And I think from a supply-demand side, it's great because it gets the competitive product off the market and starts to shift some of the leverage back to the landlords as the big blocks get a little of the way.

And you also mentioned, I think, a spillover from Midtown South to downtown, could you elaborate on that? And also update us on the activity at 180 Maiden?

Yes, so as you can sort of answer that, the answer to both of those questions come in the -- at the same time. We are seeing more and more Midtown and Midtown South tenants both kick the tires and starting to negotiate deals downtown. Case in point, being World Financial Center and World Trade Center seem to be in legitimate, active lease negotiations for some big blocks of space with GroupM over at the Trade Center for about .5 million square-feet, Jones Day and Scotiabank for a combination of another .5 million-square-feet over at World Financial Center. It's something that we've said all along we thought was going to happen as far as downtown goes. We're early to the game at 180 Maiden Lane, but I can tell you, we've got 4 or 5 real proposals on our desk for blocks of space in that building, ranging between 70,000 and 150,000 square feet that we're not -- we don't, I would not signal that we have a chance of landing any one of those deals, but I think the fact that our -- that building is on the shortlist of some of these tenants, some of which are coming from Midtown, is indicative of where we think the building is -- where the demand is for that product. And we're seeing it from a couple of different types of industries, we're seeing it from nonprofits, we're seeing it in publishing, insurance, technology, and education. So we've got a good diverse group of tenants looking at the building, at the price points that we've been targeting for that product.

And our next question comes from the line of Alex Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: As you guys look at both adding to your finance book and then you guys are obviously always in the market looking at buying a physical property, where in some of the spillover markets, whether it's outside of Midtown South, so maybe Garment District or Penn Station Area, or the in-between, not-quite downtown but heading down towards that way, do you guys see better opportunity on the financing side or on the direct side?

Well, there hasn't been a lot of availability, a lot of sales in South of -- on the way to financial district, as you put it. So yes, I think most of our activity has been financing. But we sort of take them as they come. And there have been some very good leasing deals made, particularly more towards the financial district, 101 Sixth has been very active, and the Soho area has been very active in terms of leasing. So that's where we probably see the better direct opportunities. Penn Station, we just -- we've sold 333 West 34th Street in Penn Station. So it's not been an area we've invested much capital in.

Okay. And then the second question is, just going to 10 East 53rd and 180 Maiden, just curious if you guys can provide some dollars that may go into these buildings. I don't know if it's normal TIs or maybe there's some bigger redevelopment, maybe not the grand scale of 280, but just some of your thoughts as the capital needed for both of those buildings. And then on 10 East 53rd, just because of the floor plate size and some of the park views, if you think there's any optionality of some of the upper floors to do something other than office?

I think that as it relates to any specificity on dollars on 180 and/or 10 East, that's probably going to be sort of front and center in December. Because it would be -- just be too speculative at this point given that we haven't nailed the designs down. And then once we get the designs, we got to send it out, do the CDs and price it. So I mean you can look at the amount of square feet that's available in both, and just multiply that by a TI and commission package. I mean, that is fairly easy to get your hands around, kind of a leasing cost aspect. But as to the redevelopment, I mean, we've got several different scenarios from modest to less modest to very aggressive and we just haven't decided. As the market is improving, it kind of encourages us to invest more, because we think we can invest more and then get more top-end rents. Especially at 10 East 53rd, I would say that's one where we've got a wide range of decisions to make and opportunities. We'll sort of finalize that, if you will, over the next, I'd say, 3 months is probably the right time frame. And then, sometime around November, December, I think we'll be able really, not only give you some numbers but get into what we're doing and who we're targeting, and the kinds of rents we expect to achieve. But again, those are -- we're probably just a quarter too early on those to give you guidance on the redeveloped portion. But again, the leasing cost portion is sort of just math to a certain extent.

Okay. What about any optionality at the upper end of 10 East 53rd, is that one of the potentials?

When you say optionality meaning... Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Like just take one [indiscernible] smaller floor plates, the park views that maybe...

By the way, 10 East -- the way we're looking at 10 East right now is it's perfectly positioned and it's going to be an excellent redevelopment for us. I mean, financially that's going to be -- I don't want to use a euphemism, home run, but that's going to be a very strong product for us. We're going to be marketing that product very aggressively as a lower-cost provider to some of the top-end rents that are being positioned in and around that area. And I think the question is, who are we targeting? And to what degree are we going to spend and orient the redevelopment to achieve those rents? And that's really what Steve and Ed Piccinich are spending a lot of their time on, and we're close to that conclusion. But yes -- I mean, Steve, at the top end of the building, what's your expectation of rents today given, let's say, the middle-of-the-road redevelopment?

I think we're -- if the building were fully redeveloped today, I think the market for those top 7 to 10 floors is in the $110 to $115 a square foot range.

Yes. So well in excess of our underwriting, which is probably -- should be apparent just because of where the market has headed. And we're going to execute on that shortly.

And our next question comes from the line of Rob Stevenson with Macquarie.

Steve, can you talk about where the leasing stands in a couple of major vacancies in the same-store portfolio, 100 Church, 125 Park and 120 West 45th?

I'm sorry, repeat those. 100 Church...

125 Park and 120 West 45th, which I believe are probably the 3 big vacancies in the same store?

Well, remember, 100 Church has been fully leased at this point. You may not see it in the stats where the leases have commenced. But at this point, the -- we have -- we're at 99% leased as far as signed documents and we have leases out on the last 1%. So that's pretty good news on that one. 125 Park, we announced the deal today where we just signed a deal with -- 2-4 deal with Pandora Music for a little over 50,000 square feet. We have leases out on another 50,000 square feet, and we think we're on track to get that building pretty much stabilized, hopefully by the end of the year, assuming that we close the deals that we're working on. And Tower 45, which is a different kind of product, it's a small space building where we've had rollover that kind of started -- expirations that started last year and will carry through a pretty good roll over this year and next year as a result of D. E. Shaw, who was migrating out of the building to Sixth Avenue. That's basically come back to us. So we've been doing a lot of deals. I mean we've -- I think we've signed half a dozen leases in the past 8 months. We've got 4 or 5 leases out right now. And because it's small space, it -- you don't get a lot of ramp up time for it, its the kind of stuff that leases once it goes vacant and once we start to spend some dollars on improving the floors on. So we've got -- and we're getting good rents over there. That building is -- always shocks us as to how high the rents are on the upper floors there. We've been landing deals in the $62, $65 price point, and I think that's great for a size 3 building.

Okay. And then Marc or Andrew, can you talk about what the demand is for the Suburban assets these days given the price point and where yields are for the CBD stuff? You sold one, or are in the process of selling one. Is there a potential to sell additional assets at decent prices that are well leased at this point?

I think it's probably a little early for the Suburbs. The financing markets are still not terribly liquid and the sale markets -- there's not a lot of transaction activity. So we're still in a hunker-down mode out there trying to block and tackle and do as much leasing as we can in some very challenging markets.

And our next question from the line of Brendan Maiorana with Wells Fargo.

Steve, your response to Rob's question about some of the lease-up in a couple of the buildings, is that -- can I read between the lines to suggest that you still feel pretty confident in the year-end occupancy number, which I think was in the high 95s?

Yes, yes. I think we're on track to hit the number that we provided guidance to.

Yes, I think that number tends to be well ahead. It's just convincing Matt to actually show it in the statistics. He's got a fairly disciplined rubric between commenced, signed, leased, occupied, whatever. But the -- I would say, the actual activity as and when it properly shows up at year end is probably to the positive of what you might see looking at the portfolio as a whole at a point in time now just based on passage of time in order to get those reflected in the stats. Matt, maybe you have to advise your...

I think what we're saying is that the leasing velocity is there, we're going to close enough deals. And if there's any kind of slippage, it's simply a function of timing because the deal signs today but starts 30 days later and it falls outside the quarter. But the velocity is clearly there to support the guidance.

Okay, yes, that's helpful color on the disconnect between the leasing activity and the occupancy change in the quarter. And then just, also this is probably for Steve too, but I think on the value add portfolio, my recollection was that you guys are expected to get some decent leasing done at 280 Park this year and 3 Columbus and I know you signed some leases in both of those buildings during the quarter. But can you maybe give us an update on the prospect list for the balance of the space that you have at both of those properties?

Yes. 280 Park Avenue, we signed 2 50,000 square foot deals in the quarter. They were -- both deals were in the bottom half of the building, in the base. Both of whom were rents that were in the $92 to $96 starting rent, which were certainly on the high end of where we had underwritten that part of the building. Both -- one of the tenants was financial services and we've seen pretty good prospect towards coming through the building. The development side of it is well underway. We're on track to open up the Park Avenue lobby right about Thanksgiving time. So that when we do the Investor Conference in December, we should expect to have an opportunity to walk people through and really start to unveil what this building is going to be all about. And I can tell you that when we do tours over there, it is -- now the people could sort of touch and feel it, the brokerage community, the prospective tenants, they get why we think this is going to be one of the 2 or 3 best buildings on Park Avenue. 3 Columbus, we've got -- we're down to sort of a handful of spaces over there. We've got part of the second-floor, we did the big retail deal with CBS for the ground floor and 1/3 of the second floor, so we've got part of the second floor, a little bit of the 16th and 17th floors and we've got 3-tower floors. So we're kind of down to 150,000 square feet of office spread about the building. We think the top portion of the building will go to sort of a small spaced program to financial services, we just chopped up a floor and signed our first pre-build lease over there last week in a rent in the low 70s. And I think the middle of the building will continue to sort of attract the Y&R type tenant, the Young & Rubicam type tenant who's our anchor tenant, going more to the creative type industry. That's where were focusing our marketing.

Yes, that's helpful. So just for clarification, 280 Park, would your expectation be that -- or should we assume that you get another anchor signed by year-end? Or is that more likely to be a '14 event?

No, I think that's a next year event. I think there is a -- that building seems like it's, because of its price point, is likely to trade sort of on the 1- to 2-floor type of trade. It'd be nice to say we're going to get a big media anchor but I think, ultimately, it's -- we're going to knock it off in 1- and 2-floor type deals.

And our next question comes from the line of Ross Nussbaum with UBS.

Can you talk a little bit about Citi at 388-390 Greenwich and just talk about when would you expect to know when they make a decision as to whether they stay or they go?

Well, I don't know that we are in a position to answer that. I mean, they have 7 -- years plus on their lease. And like a lot of tenants, they're kicking tires, looking, talking with us, talking with others. But I don't -- I mean I don't know if it's imminent, next year or 5 years. I mean it's just -- I guess it's as and when they're ready to make a decision. But I don't think -- this early in the process it would be pure conjecture on our part.

Can you talk a little bit about the potential development that 42nd and Vanderbilt and where that stands from a timeline perspective, given your view on where rents may be trending in the city?

Well, I think we're -- the timeline we put out there December is exactly where we are at. The pacing item before there's any real initiation there is the Midtown East rezoning proposal that has to be fully -- has to go fully through the ULURP process and then be voted upon at the end of the year, so that is step 1. And then step 2 would be project-specific, which would start towards the end of this year and approvals carrying over into next year. I think we -- that's consistent with what we had set out for people and I think we're still very much on that track. Recall that there is a Sunrise provision in the current iteration of the proposal, which doesn't really allow for the bulk of the construction to occur prior to the middle of 2017. So that hasn't changed. And although, maybe it will, we think it should. But that's yet to be seen. And so we're on track, but it's going through its necessary channels in order to first get the zoning in place.

Do you have a view in which of the mayoral candidates would be the most positive for SL Green?

No, not at this point. We're familiar and have dealt with many of them and there's several candidates that I think would be favorably inclined towards continuing the positive aspects of what has helped this city to be at the point it is in terms of business activity and quality of life and security, et cetera. So I think we're just going to continue to monitor and stay close and we'll see how it plays out.

And our next question will come from the line of Jordan Sadler with KeyBanc Capital Markets.

Curious about the condition of the market. I don't know if this is for Steve, maybe. At what point -- and we sort of dance around a little bit, but at what point do you see the market becoming a landlord market again if you were sort to handicap it? I mean traditionally, we've seen -- and the market's been in kind of the state that it's in, large tenant A followed by large tenant B requirements in the market, act and then all of a sudden, we start to see a tightening. But I'm kind of curious, are those tenants around and/or what would it take for us to sort of see one of those tenants for these conditions to sort of change in your favor?

Well, I think, you'd have to see availability down around 9% and -- but we're -- the fundamentals are certainly there, right? You're seeing these big chunks of sort of subsidized, low-rent type spaces getting pulled off the market, so that's fundamentally, that's a very strong thing as far as the supply side goes. You're seeing tenants out in the market, big tenants out in the market shopping and making long-term commitments. You're seeing a greater number of smaller type deals at $100 a square foot being done than at any time in the past. You're seeing an improving national economy and a very strong local economy. So I think the fundamentals are there and it's at a point in time that job growth continues to get us to a point of supporting the demand that we'll enjoy that spike in rents. We saw it a couple of years where rents certainly spiked 15% in 1 year because the way the market was trending. And tenants in the brokerage community certainly were counseling their clients that rents were poised to continue to spike for the long-term, and it's coming, but it may not be in the short-term but it's around.

What -- along the same lines, what are you guys underwriting in terms of market rent growth in your submarkets as you see some of these assets crossing and even as you look to sell some of these assets in the next 2, 3 years?

Well, depends on the building. Depends on the submarkets so it's hard to generalize. But I think we're generally looking at somewhere between 15% plus, which is very conservative. So it's not -- it's not really -- it's a tough question because the better question is what's the market underwriting. And what I said in the previous call is that the market seems to be underwriting rental growth over the next 3 to 5 years of as much as 30% to 50%. I mean the fact that our bias tends to be a little conservative at the top and more aggressive at the bottom, that's just the way we execute the business. So if our estimates are 15%, 20%, 25%, depending on building, depending on market, with greater growth in some submarkets and less in others, and the market at large is 30% plus, I would -- I mean, you'll take from that what you want to take from that, as to who's right and who's wrong. The deals being brought today have very heavy rental growth assumptions and they're being capitalized in this equity that wants to stand behind very heavy growth assumptions. We're a little more conservative. We could be wrong, could be right. But I think more importantly, whether it's us or the market, there's a view that over the next 3-plus years there's going to be significant growth, just based on the job growth in the city, which is what I spoke about earlier and Steve just confirmed. If you have 100,000 jobs, private-sector jobs, added annually and a good proportion of those are office-using, you're going to drive down vacancy and you're going to drive up rents. So at the moment, it seems to be that the job growth fundamentals in the city are very good and therefore, people are very optimistic about where rents are headed. We have -- still have about half a dozen questions remaining. So I would -- if we've spent a lot time on the leasing in the market and we can do more. But if -- to the extent we're going to be starting to cover some ground we've already covered, if there are any other questions dealing with any other topic. If not, we'll just stick with the leasing.

And your next question will come from the line of Steve Sakwa with ISI Group.

This should be very quick. First, Matt, on that $20 million of savings from the Viacom deal, is that just a deferral or is that natural savings of your part meaning they're never going to spend it?

So the full $20 million, Steve, isn't Viacom. I would say Viacom is probably 3/4 of that. It's a deferral in that they still are entitled to the money. But again since we don't control it, I can't say whether -- when that is deferred until.

Okay. So it's more just a timing issue as opposed to the natural real savings.

Accurate, exactly.

And then just for Steve, on that 1 million square feet that you have on the pipeline, I'm just curious, how much of that is early renewals, tenants coming to you like the teacher situation, and how much of that is actually for the roughly 5% vacant space that you have in [indiscernible]?

It's sort of about 2/3 of new deals and 1/3 of renewals on a rough count.

And our next question will come from the line of John Guinee with Stifel. John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division: And maybe this is something that you need to think about and get back to us on, and maybe Ed has this off the top of his head, but 1 thing that's incredibly interesting about the conversion from office to residential or hotel is that when you go from gross billable square foot to New York board of realtor's net rentable, you're actually leasing 110%, 120% of the building, but when you get down to a net salable square footage, it's much -- maybe 70% -- 60%, 70%, 80% of the gross square footage. So there's a huge gap between New York City net rentable office measurement versus salable. Then you've also got different issues in terms of what floor plate size works and what doesn't work for conversions. And then you also have a situation where you've got just incredibly different valuations for land to the extent that's available on the island. Is it possible for Ed or someone to give a very, very quick tutorial on that or is that something you maybe talk about offline?

Well, Ed is dialed in remotely because he is on a job site right now. But Andrew, you want to -- you've done a lot of the underwriting on the potential conversion and the -- what John is saying is accurate. There's an extraordinary loss of salable real estate in the conversion from commercial to resi, and that does act as a hindrance in some, but not all cases in doing that. So do you want to quickly...

In a lot of cases, office loss factor is 26%, 27% generally, so the conversion back down to gross and then to sellable, a lot of times you're looking at between 30% and 40% shrinkage from rentable office to sellable residential. And I think that's pretty consistent across the deals that we've underwritten. It doesn't get much more efficient than that. John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division: And then what square footage is sort of the maximum floor plate for which residential or hotel might work?

It sort of depends on where the core is and how much span there is from the windows to the core. The core depth, the city maxes out around 30 feet, the city code. So beyond the 30 feet, the space is technically not habitable. So you wind up with storage units or -- it used to be home offices but they really -- they discourage heavily home offices without windows that a lot of people treat as bedrooms. So you really, you want core-to-glass ratio -- core-to-glass depths of less than 30 feet. And generally side core buildings set up better for residential because you can put a hallway up the middle and sort of branch the apartments off of it. But it totally depends on the building. We've seen floor plates as large as 50,000 feet, probably, and obviously, smaller floor plates work great, generally.

And our next question will come from the line of Tayo Okusanya.

Just had a question about the structured finance portfolio and how we should think about yielding some of that portfolio and how large it could get, especially in light of our rising interest rate environment?

I think we've said consistently, we try to keep the books somewhere around 10% of assets, which is about where we are now. I think, there's always some fluctuation. In the [indiscernible] I think it went from 1 4 to 1 2 with a pay off, but we had some originations in the pipeline. I don't think you can always time things perfectly. But I think kind of within that range, somewhere, we're going to stay. And I think we'd not only [ph] keep deals either through kind of creativity taking down stacks and kind of breaking up pieces or, as you said, when yields rise, obviously it tends to get a higher yield. So I think we've been able to keep our yields relatively consistent. We think we'll stay in that range and in terms of outstandings, we'll kind of a remain in the range that we've been for the past couple of months.

Okay, that's helpful. And then also, regards to the Midtown rezoning, it seems like there's been some news recently that, that may involve a bit more residential. Just wondering if that has any impact on 1 Vanderbilt and how you think about that development project?

I think that it's great to have the optionality worked in for us to evaluate, and there are clearly certain sites within the rezoning district that'll benefit more from residential than others. We happen to have what we consider to be an extraordinary retail and commercial site and location. And now, we'll assess separately the residential viability and compare it to what we've already underwritten, if you will. So I don't think we have the conclusions there. It's great. It makes sense, we think, for that flexibility to have been worked into the proposal because most of the successful submarkets we see today are 24-hour submarkets where you have live, work, recreate, and not just one or the other. And even by working it in, it's not that Grand Central is or probably could become a prevalent residential market given the -- just given the extraordinary inventory commercial space. But like I said, I think that having that option makes sense, obviously, enough people did say that the city went back and revised its proposal and we'll evaluate whether it has any applicability to our site.

And our next question will come from the line of Vincent Chao with Deutsche Bank.

At the risk of asking another market-related question, just curious if there's something you think we should asking about that we haven't so far?

That's a good question. Well, why don't we turn it over. Jim and Matt have been a little bit sidelined in this Q&A today, which is not customary. So I'm going to turn it to you guys and if there's a particular thing, Jim, that want to get through on what I think is as important as everything else we're discussing but hasn't gotten a lot of play today, balance sheet, liquidity, metrics, Moody's [ph], things like that. What -- why don't we just cover that for Vincent?

Sure. I think that if we were talking about the balance sheet, the balance sheet has come along in the same way that the rest of the company has come along. It's -- we've taken a number of opportunities over the last 6 months, year to really work on our maturity schedule to maintain our liquidity. We accessed the market for equity through the sale of 333 West 34th street, which was enormously efficient for the company. At the same time, we've been deploying capital carefully into high-returning investments, not just to add preferred equity but also investing in our redevelopment program. And so I think that as we look at where we are today, we have never been stronger from the standpoint of our balance sheet. As we talk to our lenders and we talk to the rating agencies, we've gotten across to them that the wind is behind us in terms of the market performance that the -- overall, we have no maturities, material maturities, coming up in the near term. We have very few maturities in the next couple of years. We've maintained an incredible amount of availability on our credit facility. I think we only have $40 million or something outstanding on it today to -- it's a $1.2 billion credit facility. And we've done a number of things to extend our average maturity of our debt portfolio, or of our loans that we have. So overall, I would say consistently with the evolution of our market and the improvement in our leasing and everything else, we've also, as well, put to bed any kinds of things you would think of as being important to address in our balance sheet, while maintaining liquidity and the ability to invest going forward. So I think that's substantially what we would get across, what I would get across in terms of our activities for the last 3 months and also the last year.

Our final question will come from the line of Michael Knott with Green Street Advisors.

I know your comment on cap rates for buildings are unchanged. But I'm wondering if the rise in rates has adversely affected the probability that you might sell the land fees at 885 Third and 2 Herald?

No, I don't think so. I mean I think it's often what you see in cases like this is the underlying rate rises and the risk spread or credit spread shrinks such that the overall rates of return people are looking for are not terribly unchanged. So I think that we have a number, not a number, but we had several deals that are out there in a somewhat formal or less formal way as we always do. We're a buyer and a seller and we're always looking for those points where we think we can kind of get the best execution on the margin relative to our goal. So we, I think, sell as much as any REIT. Certainly any of our peers out there where we are active buyers but we're active sellers. I think the fees today are still extremely attractive, notwithstanding a little run-up in the treasury. Because as I said it's...

Some of the buyers were looking at diffusing the in-place debt. So those -- defeasance costs have actually gone down as rates have gone up.

That's a good point. So it's not as -- everyone likes -- well, not everyone, but a lot of people like to draw a sort a linear distinction between the 10-year U.S. Treasury in real estate. I think that's dangerous. I think it's not -- doesn't correlate all that well. And I think it's much more about, in some cases, with that kind of asset overall rate of return and kind of a point of view as to where cap rates and values and rents are headed. And in the near term.

So I'll be rooting for a good price on this. And then last question is, just curious if you guys are feeling bearish about your acquisition volume guidance just given how competitive the marketplace is out there?

Well, say it again?

Acquisition volume.

Acquisition volumes? Well, I think, we had broken it down to a few different areas, right? Retail -- office, resi and retail, right? I think of the 3 probably, office will trail behind the original guidance. I think resi retail -- I don't have the guidance here in front of me, but just knowing the pipeline and where I think roughly we had guided in December, we'll probably -- we wouldn't modify anything there. But on the office front, I would say, we've been a bit more careful and judicious in terms of how we're going to deploy capital in that asset class. And even though we're bullish on rents, a lot of that, as I mentioned earlier, is reflected in the cap rates and rates on return. I think that the market is balanced for office. I don't think it's heated, I think it's balanced. But we tend to look for value-add redevelopment off-market opportunities. And at this point in the cycle, there are fewer of those than there were 3, 4, 5 years ago. So our plate is very full right now in terms of mining internally the opportunities from acquiring those properties over the past 3 to 4 years. And I think that's where the focus will be, unless we see some compelling opportunities hit the radar screen. Okay. Thank you. It's -- we've made it through the queue. We appreciate the attention for those of you still listening, and we look forward to speaking again after the summer.

Thank you for your participation in today's conference. This concludes the presentation. You may all disconnect. Good day, everyone.