Thank you, everybody, for joining us, and welcome to SL Green Realty Corp.'s Second Quarter 2025 Earnings Results Conference Call. This conference call is being recorded. At this time, the company would like to remind listeners that during the call, management may make forward-looking statements. You should not rely on forward-looking statements as predictions of future events, and actual results and events may differ from any forward-looking statements that management may make today. All forward-looking statements made by management on this call are based on their assumptions and beliefs as of today, additional information regarding the risks, uncertainties and other factors that could cause such differences to appear are set forth in the risk factors and MD&A sections of the company's latest Form 10-K and other subsequent 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 Regulation G under the Securities Act. The GAAP financial measure most directly comparable to each non-GAAP financial measure discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on both the company's website at www.slgreen.com by selecting the press release regarding the company's second quarter 2025 earnings and in our supplemental information included in our current report on Form 8-K relating to our second quarter 2025 earnings. Before I turn the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I ask that those of you participating in the Q&A portion of the call, please limit yourself to 2 questions per person. Thank you. I will now turn the call over to Marc Holliday. Please go ahead, Marc.

Okay. Thank you. Good afternoon, and I appreciate all of you joining us. I'm very proud of what we at SL Green accomplished this past quarter and I'm pleased to be able to share some of the highlights with you today and some thoughts on the market as well as field your questions coming out of these results. The achievements for the quarter were particularly impressive, in my view, when you put it up against a volatile economic backdrop, and a higher-than-optimal short-term rate environment. For some firms, the confluence of these events and the current market environment presents challenges, but SL Green is adept at dealing with the volatility and it's in these types of situations that I believe our platform truly shines the brightest. We are well adapted to threading the needle, finding the best investment opportunities when others are less certain as to where to find that value. Ultimately, it's the diversity of our platform, business lines and skill set that keeps us well balanced offensively and defensively and enables us to outperform expectations quarter after quarter. In this second quarter alone, we concluded over 540,000 square feet of leasing bringing our year-to-date total to 1.3 million square feet of space leased, inclusive of last night's announcement, and we have refilled the pipeline to over 1 million square feet for near- term execution. What's notable about the deals done to date and the deals in the pipeline is that they're not really chunky in size, rather they are a broad cross-section of midsized leases that are renewing, expanding and relocating within our portfolio at a rate which is bringing down vacancy levels in Class A Midtown buildings. A good stat I have on that is that the pipeline of 1 million square feet, I referenced, 80% of…

Thanks, Marc. Clearly, been an extremely busy 6 months for this team. Because we're a very active company across multiple business lines, there are dozens of items that can affect our results each quarter as well as the trajectory of earnings over the course of the year. And yes, some of those income streams are unpredictable or that a lot of people use the word lumpy. This is why we set guidance on an annual, not a quarterly basis and use a relatively wide guidance's range. When we give guidance, we are confident in it. Needless to say, we are very pleased that our successes so far this year allow us to not only increase our FFO guidance range, only 6 months into the year, but by a meaningful $0.40 or 7.4% at the midpoint. The drivers of this upward revision are most easily summarized into two basic categories. First, in our debt and preferred equity portfolio, the repayment of our mortgage investment at 522 Fifth for $200 million, which was substantially more than what we purchased the position for generated about $0.69 a share of incremental FFO. I say incremental because our original guidance included various forms of income from holding this investment over the course of 2025 as well as income from other debt and preferred equity investments. This incremental income is offset by $0.19 a share of reserves that we booked in the second quarter on our preferred equity investment in 625 Madison Avenue. This is pursuant to the sale that Marc alluded to a 50% of that investment which closed earlier this week to generate incremental liquidity. While this transaction closed in the third quarter, because the deal was largely known at June 30, accounting rules require us to not only take a reserve on the…

[Operator Instructions] Our first question will come from the line of Steve Sakwa from Evercore ISI. Stephen Thomas Sakwa Evercore ISI Institutional Equities, Research Division Marc, look, I'm sympathetic about you focusing on the annual and not really focusing on quarterly trends. But I think the market might have been a little bit surprised at the slight dip in occupancy in the second quarter. And I don't know if maybe a couple of deals slipped from a timing perspective. But maybe can you just -- you or Steve, kind of walk us through the pipeline, the timing? And then just any known move-outs that could affect your ability to hit that 93.2% leased occupancy by the end of the year?

I think it's a silly overreaction. I mean to measure 30 million square feet on quarter-to-quarter variations, go with management guidance. If we feel confident that we're going to be at the levels that's the reiterated guidance. We're not going to do quarter-to- quarter. If a lease signs three days after June 30, that pops it up. I mean we just announced I think how big was the deal [indiscernible] would go. 54,000 foot. Now so if that's two weeks earlier, it might drive occupancy. It's something really that I think is not a productive use of time for this call. The leasing volume that we do is the best and the most in the business. We have 1 million square feet of pipeline. We reiterated our guidance for the year. We generally hit our reiterated guidance. You guys -- it's only been 27 years together as a public company. We set these outperformance goals. We don't hit all of them. We try. We're -- my commentary was meant to convey that we see a very strong and diverse leasing market out there, which is increasing occupancy market-wide and in the portfolio. If we had a couple of roll-ups, Steve, who rolled off in the second quarter.

Executive VP and Director of Leasing & Real Property Well, the blip is really driven by -- there was an unbudgeted tenant to fall at the 711 Third Avenue. So nobody could have predicted it, space went dark, so there we go. The other thing worth noting is where we have that occupancy in same store, of course, is only half the story, rest of the story is where we're doing a lot of leasing and redevelopment properties like One Madison Avenue. So the pipeline is full. The leasing velocity is strong and the focus on one narrow part of the portfolio is, I don't think giving a true justice to the accomplishments.

Let me give you a stat that's interesting, Steve, on sort of expanding on what [indiscernible] just said. The AI and tech demand in Midtown South is just starting to get revved up. We had two deals done in the quarter, one with Sigma, one with Pinterest, and we've got two more pending in pipeline one at One Madison, one at 11 Madison. In total, that's 287,000 square feet of net new demand in those two properties, both done and part of pipeline in size that are all driven by AI and tech. And that's only increasing in our opinion. And financial services is still half the market and the money being made in financial services as a result of the profitability -- I'm sorry, as a result of volatility that you saw in the first half of the year. People look at that volatility and say, "Oh my god, what's that doing to the economy?" Well, look at the trading profits of the big five banks and look at the trading profits of the Wall Street member banks, which was, I think, $15 billion in the first quarter alone. I've got stats here, the investment banking, the M&A and equity issuance is down, but far more offset by the trading profits. So volatility yields opportunity, volatility yields profit, no city in the country benefits more from that than New York City does. And that's why the city budget passed a few weeks ago, unanimously fully- funded, credit ratings affirmed, tax receipts at like all-time highs, private and public sector employment at all-time highs, tourism trending towards all-time high I don't -- there's no narrative of weakness that we see. And if we did, we'd be the first to tell you.

Our next question will come from the line of John Kim from BMO Capital Markets.

Congratulations on the gain that you had at 522. I guess my question is, if you -- when you made the investment, did you expect it to be monetized so quickly and also, the disclosure on the investment is a little bit murky. We couldn't find it on your balance sheet. It's not in your DPE investment disclosure, wondering why that was the case. And then finally, should the game be larger than the amount that you raised guidance.

Okay. Those are for me. So the answer is, I mean, we had -- when we take these kind of positions, which are on the more opportunistic ranges of scale, we have a range of outcomes, some of which are expedited, some of which are long and protracted. So I don't think we had a singular resolution in mind when we made the investment, we had a range of outcomes that we projected anywhere from CPO to restructuring to sort of ultimate enforcement of remedies, that's typically the full gamut in any nonperforming loan acquisition. And this one happened to be a relatively rapid resolution which I think also plays into the strength of the kind of collateral that we identify, it's collateral that is capable of being refinanced, sold or recapitalized and not looking at deals that you have to hang in for long periods of time for market improvement to get to ultimate resolution. So probably a little faster than expected, but certainly within the range of expectation. Matt, on the accounting?

Yes. Disclosure wise, this is a CMBS investment, which we make a lot of and we don't put the disclosure that we do for CMBS investments that we do for that preferred equity portfolio. And that's that. That's -- we do a lot of investments that don't get that disclosure. And by the way, the disclosure is going in the other direction with the fund where we're not going to go to the level that we did on the DPE book. Your last question was, is the gain larger than the guidance increase? Is that what it was?

Yes.

Yes, yes, definitely. But remember, we had some income office investment for the balance of the year. So it's not all -- my point in my commentary was not everything we got off 522 was incremental, right? We expected to get income off of the investment. We got repaid on it, so that generates a big gain, but there was income expected to receive of the investment over the course of the year.

But where could we find this on your balance sheet? And are there other CMBS investments like this or?

There are two lines, and you're not going to get any more detail than this. Two lines called consolidated CMBS vehicles or securitization vehicles as an asset line and liability line, the net of those is our investment. And we can't disclose more than that.

Our next question will come from the line of Alexander Goldfarb from Piper Sandler.

Congrats [indiscernible] on closing the first $1 billion on the fund. Two questions here. Marc, you know the city well, you know Albany well, and obviously, good pulse on the city. Have you noticed any change in tenant discussions since the primary, the [indiscernible] primary just obviously, it's impacting the stocks as people think about New York. And just curious if tenants are talking about it and if it's impacting their leasing decisions or thoughts of expansion?

Question about whether it's impacting any of our ongoing tenant negotiations answer, no, we've not seen a single instance of that being an issue or I'll even say a discussion point, Steve, I mean, a discussion point.

Executive VP and Director of Leasing & Real Property No, nothing. I mean maybe it's too early to tell, but it doesn't seem to be a driver of any kind of decision.

Yes. No. So look, New Yorkers love their politics. So there's no shortage of discussion about mayoral races and other races, but nothing that we've seen that's impacting leasing.

Okay. And the second question, Matt, and sort of your response to Steve's question on the guidance and the cadence and just look at the full year, you guys have spoken for some time about all the aggressive leasing and the capital spend you're doing now, which will then show up over the next few years in increased occupancy and obviously increased NOI and that's what definitely we are focused on. My question is, is that sort of -- that trajectory remains on track that we should think about next year being where we'll start to see a lot of this aggressive leasing start to take hold with meaningful upticks of occupancy or the time it takes for these leases to take effect and show up in the P&L and earnings may take longer than that.

Well, generally speaking, you would expect to see the economics of a new lease, renewal lease or faster, new lease in 12 months. That's just rough average, how long it takes for tenants to build that space. And at that point, we can recognize revenue, which shows up in GAAP NOI. So if you take all the leasing we did in '24 which was a lot, and we increased same-store occupancy by a lot. You would expect that to materialize over the course of '25 and then be more fully apparent in 2026. And if you look at where our economic occupancy trend, which is based on commenced leasing is headed between now and the end of the year. That holds. I'll reserve any other commentary on '26 until we get to putting out our '26 guidance in December.

Our next question will come from the line of Nick Yulico from Scotiabank.

This is [ Victor Feddevon ] with Nick Yulico. On your other income line item, what drove the $15 million quarter-over-quarter decline? And what is your expectation for the second half of 2025 for this line item?

We have not changed our other income expectations for the full year on that line item. Quarter-over-quarter, I think we just had less fee income this quarter than we did last.

Got it. And then a quick question on your $1 billion disposition target. Is it still intact? And are there any assets on later stages of negotiations as of now.

Harrison will touch it.

I'll touch it. It's Harry. We're still working through the disposition plan this year, as you've seen us accomplish the past 4 to 5 years through this market. We set out a lofty goal, and we usually try to get every single one of those opportunities done. You may see us shift 1 or 2 of those opportunities to something else that's more suited for this market or a specific buyer. But the investment team here is working tirelessly to get done our business plan and no specific changes at this point.

Our next question will come from the line of Vikram Malhotra from Mizuho. Vikram L. Malhotra Mizuho Securities USA LLC, Research Division I guess I was wondering if you could build and give us a bit more color on what this, I guess you said strengthening and widening out of demand in the Sixth, Third Avenue, et cetera. What this could mean for sort of your investment opportunities? And how you see that sort of filtering into ultimately effective rent growth.

Well, I think, first of all, what are the drivers of that. One, tenant demand, there were a lot of mid-market tenants that had delayed their decision-making or had been later on the curve in return to office, but now seems to be a proliferation of these type of deals. And the core Park Avenue Spine has just gotten just too damn expensive. I mean, for many of these tenants. So they're looking where they traditionally do for good value relative to great well-located real estate, but somewhat off the run in a price point that you can afford. And now those deals are getting done. And there's also a little bit of a concern with the diminishing supply because in some of those peripheral corridors, there's a lot of conversions of office to resi that are happening and space is rapidly being taken off the market. So tenants in those buildings, no different than 750 Third have to relocate and they typically relocate on those same corridors, so there's more deals getting done as inventory is kind of coming off the rolls as buildings are being converted, compounded by the fact that core Midtown has gotten very expensive and compounded by the fact that there's just more tenants looking for space, and there's no new supply really forecasted for the next four years of delivery. So some of it is immediate demand. Some of it are people accelerating their decision time lines, because they don't want to be left out in the cold, come '26 and '27 when the market could be much tighter than it is today. Vikram L. Malhotra Mizuho Securities USA LLC, Research Division Okay. That's helpful. And then just, I guess, assuming the casino process goes your way, what does that -- does that mean -- or would you think that submarket become sort of a broader opportunity set for SLV.

I think the casino would be absolutely transformational for Times Square. Times Square is the beating heart of New York. It's one of the greatest entertainment assets in the world. And it certainly has great attraction of tourism, people coming through the square, which is not really a square to sight see and to sort of be in the moment those Instagram moments. But Times Square can be much more than that, and that's really what we hope to achieve with this project is making Times Square, again, a place where people stay, shop, eat, continue to go to Broadway, but also other forms of live entertainment, music, comedy, non-Broadway live performance. I mean, the potential is so great and the halo effect of what it means for small businesses, for the community, for hundreds of millions of dollars, which we've committed in and around the area to daycare centers and safety and security enhancements, decongestion strategies, mental health awareness. So it just goes on and on that I think the way in which One Vanderbilt kind of helped to transform Grand Central into the experience it is today, partly because of development, partly because of the enabling zoning I think you're going to see that exponentially exhibited in the surrounding areas, Times Square, Hell's Kitchen, West Side Manhattan, New York City, there's no limit to I think the benefits that will come from a very high-end, world-class destination-oriented casino. And we're very hopeful to make that happen. And we have lots of properties in and around that area that will benefit, but that's a tangential benefit. The #1 goal is to really make Caesars Palace Times Square, one of the greatest localized economic development projects of this decade.

Our next question will come from the line of Blaine Heck from Wells Fargo.

Wells Fargo Securities, LLC, Research Division Marc, you talked about a large portion of the leasing pipeline that smaller or midsized leases, which I agree, seems healthy. But I'm wondering if that implies you're seeing [ any ] slowdown in demand or hesitation from larger tenants given the macro and rate uncertainty that you referenced at the top of the call.

No, not in the least. I mean, Steve can expand on it. But I think what you're seeing is there's a lack of availability. I mean that's the issue. Again, I don't know how to hammer it home. There's only like 1 million square feet and change of net new contribution to inventory over the next 4 years. This is a big market, 400 million square feet space. The market grew by 1% a year, that would mean you need 4 million square feet a year of new space. It was 0.5%, 2 million square feet a year. If you only look at Midtown, 1 million square feet a year, 4 years, 4 million square feet. We're talking about just somewhere over 1 million square feet in the next 4 years of delivery. So part of what I think you're seeing is -- there's not a lot of space to do deals. There were a couple of big deals, Deloitte did a big deal over in Hudson Yards. I think that was what 800,000 feet or something. And Steve, was there another big one?

Executive VP and Director of Leasing & Real Property There was couple, but to Marc's point, I mean, I think the real way to look at it is what's overall tenant demand in the market. And there's a known 28 million square feet of active tenant searches right now, as compared to a year ago, it was only 22 million square feet. I mean that's a big step to say it's 6 million square feet of known active tenant searches and what he was really trying to hit on, okay, the big blocks, there's plenty of big tenants floating out in the market. I've got proposals on my desk. They're not in my pipeline because they haven't matured to a point of a conversation where I would add them yet, but they're indicative of big tenants searching the market for several hundred thousand square feet. I've got 3 of them on proposal stage at 245 by itself. I don't have the space to satisfy all those. So those tenants will land somewhere, but a lot of these guys will end up renewing, because there's a dearth of quality big blocks, just to put a pin in it, if you looked at the best building category in our 400 square foot marketplace, there's only a two 100,000 square foot contiguous direct availabilities in that category. It shows you how tight the market is. That will drive more renewals and in place expansions by a lot of these tenants. That will then drive the other tenants to be overflow into the rest of the market, which is really what Marc was driving home earlier when he said, that's why we're seeing this proliferation of small- to medium-sized deals. There's no room left at the end for these guys.

Yes. Another example on the investment side is going back to 522 was Amazon buying 522 Fifth Avenue. It's just another example of when blocks of space come available, which they rarely do, tenants are trying to gobble them up and even buy them in many -- that's 525,000 square feet.

Wells Fargo Securities, LLC, Research Division No, that's great color, and it all makes sense. Second question, can you talk about any progress you've made on securing the development site you alluded to at the Investor Day, whether you still think that, that's a priority for the company this year? And whether you're seeing any increased competition for those potential development sites.

Yes. So I think the goal was development and/or large-scale redevelopment site. The good thing is we're working on both. And it's among the highest priorities of things we're working on right now. It's not, I would say, one, I'd say we're working on multiple opportunities. These deals take time, but we're sticking to our guns, and there's still a lot of runway in the second were-just July, what, [indiscernible] guys, something like that. And we got some time, and we've got opportunities well within our sites, and we're going to work hard in Q3 and Q4 to put them under contract.

Our next question will come from the line of Ronald Kamdem from Morgan Stanley. Ronald Kamdem Morgan Stanley, Research Division Just two quick ones for me. Just one on capital markets, if you could just comment on what you're seeing in the transaction markets and cap rates and specifically, sort of post-Liberation Day on the tariffs. Just any signs that foreign buyers are maybe pausing or are not participating in the market?

Yes, sure. The markets on the equity side still feel healthy. The most obvious example to point to would be 590 Madison that was a very competitive process. Three buyers were really there at the end, all with contracts, all negotiating right down to the finish line. The deal ended up getting done at about $1.1 billion, which was about $1,050 a foot and in the mid-5% cap range. Another example to just point to, which was another entrant back into the market, Blackstone at 1345 [ AOA ], which closed in May of this year. Both really good examples of trophy assets that are seeing assets that for a little while, you weren't seeing clearing or trading, now trading again and getting big capital demand. The capital behind those deals. In the case of Blackstone is obviously Blackstone in the case of RXR, mostly private equity capital is our understanding. Ronald Kamdem Morgan Stanley, Research Division Great. And then my second question was just going back to the same-store NOI sort of targets for the year. And obviously, we're not talking about 2026, but if you're -- if we're following your logic in terms of occupancy building in the second half of the year and into sort of '26, is that -- should the same-store sort of follow the same trajectory in terms of a build in the second half of the year and into 2026. Just why does that logic not make sense?

That logic makes sense. The trend into the end of the year from economic occupancies as I talked about earlier, is upward such that the spread between leased occupancy and economic occupancy is a few hundred basis points tighter than it was at the end of 2024. That sets -- and a lot of the NOI of 2024 is leasing, therefore, not in 2025. That is the setup for same-store NOI increases, along with the leasing we're expected to do this year, because same-store occupancy is going up another 100-plus basis points this year. That is the setup for same-store NOI increase in 2026 yes.

Our next question comes the line of Omotayo Tejumade Okusanya from Deutsche Bank.

Good afternoon, everyone. I just wanted to go back to Goldfarb's question a little bit about Albany in general and the New York City Mayor kind of election race just kind of curious, again, just kind of given how New York City real estate seems to have reacted to the idea of Mamdani becoming the next mayor. Curious how you guys are thinking through that scenario or thinking through any other kind of mayoral scenario when we eventually get a new mayor.

So question is, -- what are we doing here at the company? Is that...

Executive VP and Director of Leasing & Real Property What you thought if Mamdani were to...

Well, what's the company doing and how do you kind of think through that scenario, like if it's a lot of like the Mamdani type socialist event policies become reality for New York City if he becomes mayor, like how you go think about operating in that environment?

Well, I don't -- I mean, we already operate in an environment that's one in which we have to be very adaptable to a city council that's very progressive, very -- has a high level of representation of democratic liberal and progressive counsel people that make the laws. We've had -- we've been through 5 administrations, I think, as a public company, 5 different mayoral administrations, and we flourished under all of them. So I mean, we've been supportive of Mayor Adams from his time before he was a mayor. We think he's done a very good job with taking situation in New York City in 2022 and bringing it to a place today that's much better on almost all metrics, including supply of affordable housing and safety and crime, et cetera, but the voters are going to determine the outcome, and I'm very confident in our ability and given our relationships across the board spectrum of the political ideology to continue to operate and succeed in whatever political environment that we're facing. But we've been pretty clear in what we look for in a mayor in terms of being both pro business, but also active and social causes and affordability, and we think Mayor Adams has achieved that, but the voters will have their day in November.

That's helpful. And then one other quick one on SUMMIT and any update on additional locations, what progress was being made there?

For SUMMIT? Rob Schiffer is not here at the moment. Rob and Mike Williams and the team are the ones who -- and [ Kenzo ], of course, are, I would say, on the road almost every other day, our target cities are Tokyo, London, Seoul and others. And I think we're very optimistic that we'll have something hopefully to announce by end of the year with respect to a new location. Obviously, Paris, you guys already know about -- that's proceeding along well. We're still on track for a Q1 '27 open. The plans are absolutely spectacular. For those of you that have seen SUMMIT at One Vanderbilt, I think SUMMIT Paris is just yet a whole new level and can't wait to unveil it. We should be in construction by Q1 '26. We're finishing up our plans and CDs right now.

Our next question will come from the line of Peter Abramowitz from Jefferies. .

I think earlier in the call, Marc mentioned that there were some sort of mid-market tenants that were coming back to the market because they had sort of overcorrected in space reductions post-pandemic. It seems that because New York has had a stronger recovery and utilization is much higher than a lot of the rest of the country that were kind of in sort of the late innings of the tailwinds from return to office -- but just based on your comments, I guess, I'm curious on how much incremental absorption or demand is still out there that you think you can capture kind of as companies come back to the market and possibly correct some of their prior overcorrections for space reductions.

Executive VP and Director of Leasing & Real Property Well, I don't think you can quantify it because it's an ever-changing dynamic as far as tenants coming into the market and where their businesses are going. But the trends that we see are all of our major industries are active in the market as opposed to us being relied upon just one industry like financial services. Right now, we're seeing tenant demand from financial services, from tech, from general businesses services like whether that's accounting or engineering or something like that, health care, government, education, all are active in the marketplace right now. And the biggest change from a year ago was clearly the tech demand. And in that world, we're seeing tenants of size. Marc laid out some of the activity that we're seeing just in our portfolio in the Midtown South market where we've got two deals that were signed, two deals in the pipeline, all 50,000 to 100,000 square foot type deals. And we couldn't have said that a year ago. I mean that is a game changer for the overall Manhattan market and certainly for where we think we're headed with our portfolio on some of our big buildings. The other thing I'll say is with the return to office initiative, this idea of hybrid work environment and stuff like that is really out of the narrative. And I say that not to promote our industry, but more to just as an observation, we're not hearing that from our tenant base. It's all about bringing the employees back to the office. And I think it's trending more that it's more square footage per employee than it was 4, 5 years ago. Sure, densification, going to open final layouts is still there, but the introduction of more amenities and giving people more space at their workstation is resulting in more square footage per employee -- so I think there are several different trend lines that are all positive. And that, combined with supply coming off the market because of the 13.5 million square feet of resi conversions that are either actively in construction or announced and the lack of new construction, those are dynamics that create a very healthy leasing market.

Okay. That's helpful. And then just wondering if you could comment on concessions, specifically sort of Class A or A- assets kind of below that trophy space, but the kind of group of assets across the market that are benefiting from the trickle down of lack of trophy availability. Just how concessions are sort of trending in that space?

Executive VP and Director of Leasing & Real Property I still think the concessions have been flat and have been flat for the past, I don't know, 1.5 years or so. I think what you're really seeing, and I've said this the last couple of calls, is face rents are going up. And that's true not just for the best buildings, but you're seeing it in some of the tighter submarkets. So if you look at Grand Central, right, or you look at Park Avenue or Sixth Avenue, you're starting to see rent appreciation. So face rents are going up before the concessions come down. I think ultimately, we will see some tightening in the concessions. Hard to say whether that's this quarter or next quarter or whatever. But first thing that happens is rents will go up in a material way before the concessions come down.

That's -- Steve's giving you that perspective for the market generally. I'm just looking right now at the supplemental page. I guess this is your new supplemental table, Matt, right, and I find it very useful. So good job on this. This shows free rent for the quarter at 6.3 months average free rent per, I guess, per lease done, and that's the lowest it's been in the last 5 quarters. The TI was $78 -- close to $79 a foot which is the lowest it's been in the last 4 quarters and equal to what it was 5 quarters ago. And the mark-to-market over the past 5 quarters have been positive in 4 of those 5 quarters. So there's the trend in the market and then there's the trend in the portfolio and the trend in the portfolio at this moment seems like it's decidedly in the nature of what Steve said, leveling or, in our case, possibly tightening and improving concessions, combined with increases in rents. So you get sort of a double compounder on the net effectives. Now next quarter might be different. And there might be a blip up, a blip down. But looking at it over 4 or 5 quarters, I think you start to really see the trend. And so we hope and expect to see that trend continue.

All right. That's all for me.

Our next question will come from the line of Seth Bergey from Citi. Seth Bergey I guess just given your comments on the strong demand environment and the 1.3 million square feet of leasing activity to date -- just kind of how comfortable are you with the 2 million square foot leasing goal? And is that something you could hope to kind of do better than expected on.

Executive VP and Director of Leasing & Real Property Well, I think we're -- I think we feel very confident that we'll hit that goal, and there's a lot of reason to believe that we'll exceed it.

Timeline right now is 1 million feet. But do remember there's going to be more addition to pipeline in July, September, October. And Steve is going to be under enormous pressure to get all of that signed by [indiscernible]. So I wouldn't look at the 1 million is finite. We will be adding the pipeline as time goes on. Seth Bergey That's helpful. And just a second one, kind of going back to the mayoral primaries and just thinking about the office supply picture, but how does the plan to kind of freeze rent impact the underwriting for office to resi conversions for projects such as the 750 Third Avenue, and does that kind of change how people are thinking about those opportunities overall?

Yes. The proposal, I think, is out there as a concept. It requires, for the most part, state involvement when you get to things like the rent stabilization board, et cetera. And is as I understand it, refers only to the stabilized pool of assets and is completely inapplicable to free market and affordable -- new affordable housing that was passed by the governor back in the last budget. So I think there's a conflation, I think there's a misunderstanding. I'm not going to go through it on this call. There will be time in the future. And I think step one is to figure out first, see where things shake out. I think it's going to be a tight race. We'll see. And when we have better visibility into where things are in the fourth quarter of this year. Certainly, in December, we'd be able to address that much more head on and specifically, but we are not in the rent-stabilized business. I'm going to hazard to say we have -- No -- I mean, we don't -- I don't think we have a single rent stabilized or rent- controlled unit in the portfolio. So if you're asking specifically about the impact on us, I would say, negligible to not. But it will have an impact on other building owners in rent. I don't think it's a healthy thing for the market in general. I think that rent freezes are only going to cause landlords to warehouse, more units than already warehousing, which puts further pressure on the availability of units. I don't think it helps the affordability issue as attractive as it may sound to some. I think in the long term, we've seen that if there's no fundamental economic basis for improving and redelivering stabilized units into the market, then landlords won't do it, and there'll be pressure on those landlords. But we don't have investment in that sector.

Our next question comes from the line of Brendan Lynch from Barclays. Brendan James Lynch I want to ask about trends with the special servicing designation. Are most of the distressed situations known at this point? Or do you still think there's some more to come?

I think as you noted -- as we noted in the earnings release, we grew our special servicing quarter-over-quarter. I think that's been a consistent trend in the past 6 or 7 quarters. We now have about 17 billion of current assignments, 6.1 billion of which are active, 10.5 billion are not active, but could be at any time or we get called upon for specific assignments. I would expect to see -- continue to see those numbers grow over the next few quarters. And there are a handful of deals that we're working on now where resolutions are imminent, and that will lead to additional fees paid to the company. Brendan James Lynch Great. And then also on office to resi conversions, have you identified any additional opportunities within your portfolio? Or has the tightness in the office market made that a less attractive opportunity than it might have appear couple years ago.

Well, it's not -- I mean our buildings are almost entirely leased. So those are not the most attractive candidates. We do have some that may have some near-term role or figure about the words near term, role coming up in the portfolio where we could consider such a move. But I would say that beyond 750, we would expect most of our participation, either as a converter or a financier of conversions to be for new pipeline and new property not necessarily coming out of a portfolio that's close to 92% leased for reasons, I think, are mostly obvious. Successful office buildings don't make great conversion candidates. It's either antiquated or obsolete or where there's full building or significant role. Those are the best candidates, and we don't really have a deep inventory of that.

Our next question will come from the line of Caitlin Burrows from Goldman Sachs.

Maybe just two quick ones, following up on the discussion about pricing and strong demand limited supply as you look across your portfolio, what are the in-place lease escalators that you guys have? And as you're signing new leases, I guess, have you seen any shift in that over the last 5-plus years?

Executive VP and Director of Leasing & Real Property Well, majority of leases have a pass-through in increases of operating and real estate taxes. So the tenants pay their proportionate share of any increase in the building's operating expenses or real estate taxes. Then typically, there's anywhere between a $5 and $10 a foot base rent increase in addition to those pass-throughs every 5 years of lease term. Some of our leases, we've gotten away from a pass-through of operating and we've used a CPI escalator but that's a small percentage and typically smaller-sized deals. But when we do that, that's a profit center for the firm.

Got it. And then just on the casino bid, do you guys have any idea like how many bids are still being reviewed and whether you're 1 of 5 or 1 of 20 at this point?

Well, we've got a pretty good handle. We're either 1 of 8 or 1 of 7 because 1 of the bids is, I think, in question as to whether the land use will enable it to continue on. But I think of filed applications, I believe we are 1 of 8 for 3 licenses.

That's all the time we have for Q&A. I would now like to turn the call back over to Marc Holliday for any closing remarks.

Thank you, and it's great catching up. Have a good rest of your summer, everyone. We'll be back to you in October.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.