Greetings, and welcome to the Empire State Realty Trust Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Tom Keltner, Executive Vice President and General Counsel. Thank you. You may begin.
Good afternoon. Thank you for joining us today for Empire State Realty Trust Second Quarter 2022 Earnings Conference Call. In addition to the press release distributed yesterday, a quarterly supplemental package with further detail on our results and our latest investor presentation were posted in the investor section of the company's website at esrtreit.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in applicable securities laws, including those related to market conditions, property operations, capital expenditures, income, expense, financial results, and proposed transactions and events. As a reminder, forward-looking statements represent management's current estimates. They are subject to risks and uncertainties, including ongoing developments regarding the COVID-19 pandemic, which may cause actual results to differ from those discussed today. Empire State Realty Trust assumes no obligation to update any forward-looking statement in the future.
We encourage listeners to review the more detailed discussions related to these forward-looking statements in the company's filings with the SEC. Certain of our disclosures today are added specifically in response to the SEC's direction on special additional disclosure due to the changes in our business prompted by the COVID-19 pandemic and are unique to this instruction. We do not expect to maintain the same level of disclosure when we resume normal business operations. During today's call, we will discuss certain non-GAAP financial measures such as FFO, modified and core FFO, NOI, same-store NOI, cash NOI, and EBITDA, which we believe are meaningful in evaluating the company's performance. The definitions and reconciliations of these measures to the most directly comparable GAAP measures are included in the earnings release and supplemental package, each available on the company's website.
Now I will turn the call over to Tony Malkin, our Chairman, President, and Chief Executive Officer.
Thanks, Tom, and good afternoon to everyone. We are pleased to report our strong second quarter and first half of the year. ESRT's top priorities are to lease space, sell tickets to the observatory, and achieve our sustainability goals. Through all of that, we will enhance our shareholder value through proactive portfolio management and capital allocation. ESRT is well positioned with a modernized portfolio that takes advantage of the flight to quality, signed leases that will contribute to earnings, and a strong and flexible balance sheet that allows us to take advantage of investment opportunities. We are a great way to play New York City's upside with our revenue streams from office, tourism, residential, and retail. There's no doubt about it, New York City is busy again. International tourists have returned, and their numbers are growing.
Seats on planes to New York City in the second quarter reached 87% of second quarter 2019 levels, and hotel demand is up. Foot traffic nears pre-pandemic levels in many of the neighborhoods that surround our portfolio. We are well positioned with modernized buildings close to mass transit with great amenities and more to come. Add our industry leadership in energy efficiency and indoor environmental quality, and we have a very attractive set of buildings with a tremendous pricing advantage. If you want to see some great independent validation of how the market values our portfolio, I encourage you to view the new video by our largest tenant, LinkedIn, on slide six in our updated investor presentation. In fact, there are several new videos you can view in that new presentation.
The Empire State Building Observatory, rated by Tripadvisor as the number one attraction in the United States and number three in the world, is strong. We have already passed 1 million visitors year to date. We are on target for our hypothetical recovery. More on this in a moment. Our stock has presented a very compelling opportunity, and we accelerated buyback activity during the second quarter. That said, we continue our focus on the identification of accretive external growth with an eye to how we can recycle our portfolio for better performance and give ESRT its next legs of growth. We have a history of success in unstable markets, and we see opportunity ahead. Tom Durels will cover our healthy leasing this quarter. ESRT is the beneficiary of the flight to quality trend.
Tenants focus on buildings with tenant amenities, including healthy building features, energy efficiency, low emissions, indoor environmental quality, convenient access to mass transit. Are attracted to our modernized buildings and their compelling price points. We continue to see robust expansion activity from our existing tenants who know and love our product, including recent expansions with iCapital and Burlington, which followed the Signature Bank expansion signed last quarter. LinkedIn, our largest office tenant, has expanded many times within ESRT's portfolio and recently created a great video that showcases how their office space at the Empire State Building is an asset that helps them attract and retain talent. Again, their video can be found on slide six in our updated investor presentation, which also includes several other great videos to watch. We continue to build our leased percentage, and that will drive higher occupancy and earnings in the future.
Two years after we reopened from the COVID shutdown, our entire team is over the moon that the Empire State Building was declared the Tripadvisor's number one top attraction in the United States and number three in the world in the 2022 Travelers' Choice Best of the Best rankings. Our newly reimagined and iconic observation deck continues to lead in unmatched brand recognition and historic prominence. The authentic must-do for a visit to New York City. Our new timed ticketing and reservation system implemented post-COVID delivers our visitors fantastic experiences without lines, and even with our higher prices, people love it. We have already passed 1 million visitors to our observation deck year to date. Second quarter visitation to the Empire State Building was in line with our expectations of approximately 60% recapture relative to 2019 levels.
Visitation recapture rates in July continue in line with our hypothetical recovery. As visitor numbers increase, the percentage from our pass program and tour and travel partners steadily grow. Our revenue per capita remains at record levels relative to prior periods with a comparable direct versus third-party traffic mix, a big win for the observatory and ESRT shareholders. As a result, while second quarter traffic was 59% of 2019 levels, NOI recapture was 80%. That is the pricing power we have achieved from this best-in-class experience that we provide to visitors. Christina will update you on our buybacks.
We continue to underwrite new acquisition opportunities which are complementary to our New York City focused portfolio, where risk-adjusted returns can be compelling and where we think we have an edge with our local knowledge, ability to spot unique opportunities, and ability to be nimble with our flexible and strong balance sheet. We continue to review our portfolio to monetize assets in which we have added value so that we can reinvest the proceeds in accretive acquisitions. We are happy to report additional sustainability milestones achieved during the quarter. Notably, ESRT was awarded the new 2022 Platinum Green Lease Leader award by the U.S. Department of Energy's Better Buildings Alliance and the Institute for Market Transformation. ESRT is one of only nine awardees to achieve the highest platinum distinction.
With this award, ESRT is recognized for its integration of high-performance leasing and sustainability practices into business operations, which deliver energy efficiency, cost savings, air quality, and sustainability for our tenants. Now I will turn it over to Tom Durels.
Hey, thanks, Tony, and good afternoon, everyone. We have said for some time that we benefit from flight to quality, which we provide at a great price point with modernized energy efficient and healthy buildings, newly built tenant spaces with indoor environmental quality at convenient locations with excellent access to mass transit and fantastic amenities to which we will add.
We had great results in our portfolio this quarter, including over 320,000 sq ft of total leasing, major lease expansions by existing tenants, and a 25% increase in net effective rents in our Manhattan office portfolio in the second quarter year-over-year and 16% increase sequentially. Overall leasing volumes were consistent quarter-over-quarter this year, marking significant improvement from the environment we were in one year ago. In the second quarter, we signed 37 new and renewal leases totaling approximately 320,000 sq ft, which includes 260,000 sq ft in our Manhattan office properties, 57,000 sq ft in our greater New York metropolitan office properties, and 3,000 sq ft of retail.
The weighted average lease term increased to 10 years this past quarter, which reflects our tenants' long-term commitments to our modernized, healthy, transit-oriented portfolio. Notable leases signed this quarter include a 59,000 sq ft expansion lease with iCapital for two full floors with a term of over 15 years at One Grand Central Place.
This is iCapital's fourth expansion at One Grand Central Place, and it now leases a total of 141,000 sq ft across six full floors in a long-term lease. We signed a 35,000 sq ft expansion lease with Burlington Stores, Inc. for a full floor with a 15-year term at 1400 Broadway, where Burlington now leases 103,000 sq ft. The expansion space was formerly under lease to Uber, who paid us a termination fee upon their early exit from this space. We always look to obtain termination payments, recapture space, and sign direct leases rather than facilitate subleases when tenants have excess space. As a reminder, lease termination fees are a regular part of our business and have averaged $13 million annually over the last five years. During the quarter, we signed leases for 18 pre-built office spaces in Manhattan.
Following the close of the second quarter, we signed a long-term renewal lease with Franklin Templeton for approximately 79,000 sq ft that will extend their lease term through 2035 at our First Stamford Place property. Blended lease spreads signed at our Manhattan office properties improved in the second quarter to a +5.3% on a cash basis compared to the prior escalator rents, driven by new leases up by 8.2%. Consistent with our expectations, which we communicated during our last earnings call, the total commercial portfolio leased percentage was up 80 basis points quarter-over-quarter in the second quarter to 87.8%, inclusive of the removal of 333 Main from our portfolio. Burlington's lease is scheduled to commence in the first quarter of 2023.
Therefore, overall portfolio occupancy will be reduced by 35 basis points in the second half of this year due to the timing delay between Uber's termination and Burlington's commencement. That said, our occupancy guidance for the year is unchanged with other positive offsets from leasing activity. We remain focused on the lease up of our vacant space and tenant retention and are on track to reach portfolio occupancy by year-end between 84% and 86%. Recently, tour volumes have slowed somewhat, though this likely reflects the typical summer slow, combined with a more stabilized environment following the post-pandemic catch up in leasing activity that we saw over the past year. The good news is that the people showing up on tours are ready to make decisions, and our tour to lease conversion rates have trended higher.
We have a good pipeline of leasing activity for the third quarter, and we have $53 million of contracted income at the rent from signed leases not yet commenced and free rent burn off. We believe our portfolio offers a compelling value proposition to tenants, especially amid an inflationary and potentially recessionary environment where price point will be a significant factor in leasing decisions. We announced an expansion of our amenities, and that announcement has been very positively received by the brokerage and tenant communities, including at Empire State Building, a new 300-person town hall presentation room, basketball and sports court, tenant lounge with bar service and golf simulator lounge, all of which will be added on the concourse level in previously unutilized space. At 1400 Broadway, a 140-person town hall presentation room adjacent to our recently built tenant lounge.
At 1333 Broadway, a new rooftop tenant lounge with private cabanas that may be reserved by tenants for special events and social gatherings. Tenants located in our Times Square South campus will benefit from shared access to the new rooftop lounge at 1333 Broadway and town hall room at 1400 Broadway. Along with a new LinkedIn testimonial video that Tony highlighted, you can preview these new amenities through video links in our updated investor deck on slide five. Building utilization as compared to 2019 levels for Tuesday through Thursday has reached 50% for our Manhattan office portfolio and 70% for our greater New York metropolitan office portfolio.
Same-store cash property operating expenses and real estate taxes in the second quarter were $64.3 million, roughly consistent with first quarter levels, but a $4.5 million increase from the second quarter of 2021 due to utilities, labor, and R&M related to increased utilization. We continue to project same-store operating expenses in 2022 to run approximately 7% below pre-pandemic levels due to a combination of earlier permanent cost-saving measures and gradual return to office through the year. Turning to our multifamily assets, occupancy remains strong at 98.4%, up 80 basis points quarter-over-quarter. We continue to see strong mark-to-market increases and reduced concessions, which validates our earlier investment decision.
In summary, we had another solid leasing quarter with 320,000 sq ft of total office and retail leases signed. We have a good pipeline of leasing activity heading into the third quarter despite somewhat slower summertime tour volumes. We continue to benefit from flight to quality as tenants seek energy efficient, healthy buildings with robust amenities at convenient locations. We continue to see strong fundamentals in our multifamily properties. Now I'll turn the call over to Christina. Christina?
Thanks, Tom. I'm pleased to provide comments on what was a solid quarter that emphasizes the strength of our portfolio, comprised of quality office assets, the Empire State Building Observatory, the number one attraction in the United States, our strong everyday retail assets with 95% national retail tenancy, and our well-located, well-amenitized multifamily assets. For the second quarter of 2022, we reported core FFO of $79 million, or $0.29 Per diluted share, which compares to core FFO of $49 million, or $0.18 Per diluted share for the second quarter of 2021. Notably, core FFO this quarter includes $0.07 Of lease termination fee income, which was not contemplated in our prior guidance range. Same-store property cash NOI, excluding lease termination fees, was down 7.1% year-over-year.
This was primarily due to the normalization of operating expenses amid higher building utilization, as well as the impact from the occupancy loss of GBG in late 2021, as assumed in our 2022 earnings outlook. For the second quarter of 2022, observatory visitation was in line with our hypothetical forecast of 60% of 2019 levels, while observatory NOI at $19.6 million was approximately 80% of 2019 levels, reflecting our progress in higher revenues per cap. Second quarter NOI was up significantly from $3.1 million in the second quarter of 2021. We feel confident in the path back to pre-pandemic levels of performance. As a reminder, the observatory historically contributed roughly a quarter of the company's NOI and stands at approximately 9% on a trailing 12-month basis through the second quarter, but is steadily building back.
Based on our 2022 full year guidance, we expect it to reach roughly 20% of NOI. As we look at our significantly discounted share price today, we believe this upside is not fully appreciated by the market. Turning to our balance sheet, as of June 30th, 2022, the company had liquidity totaling $1.2 billion, which is comprised of $359 million of cash and $850 million of undrawn capacity on our revolving credit facility. At quarter end, the company had net debt at share of $2.3 billion, with a weighted average interest rate of 3.9% and a weighted average term to maturity of 6.9 years. Notably, we are well positioned in a rising rate environment with 95% fixed rate debt.
We have a well-laddered maturity schedule with no outstanding debt maturities until November 2024. Our ratio of net debt to total market capitalization was 48.7%, and net debt was 5.8 x our Adjusted EBITDA, notably well below peer averages. Pro forma for full year contributions from our December 2021 multifamily acquisition, net debt to Adjusted EBITDA would be 5.6 x. Our well-positioned balance sheet affords us flexibility to engage in activities that generate shareholder value. This includes the repurchase of our shares at discounted levels, the pursuit of investment opportunities that are additive to our New York City focused portfolio, and potential capital recycling.
In the second quarter and through July 21st, 2022, the company repurchased $53.7 million of its common stock at a weighted average price of $7.90 per share, a significantly discounted level that presents a compelling opportunity to purchase our shares and benefit from multiple sources of New York City upside that are underway. This brings the cumulative amount repurchased to $256 million at a weighted average price of $8.48 per share, which represents approximately 10.2% of total shares outstanding as of March 5th, 2020, the date our share buyback program began. On acquisitions, our investment team continues actively to pursue and underwrite investment opportunities in New York City across the office, retail, and multifamily sectors.
That said, we will remain disciplined in our underwriting against the backdrop of record levels of private equity capital, higher financing rates, and more selective lending environments. We are in a period of dislocation in the market with wider than usual bid-ask spreads as New York City sellers seek yesterday's prices and buyers seek tomorrow's. On capital recycling, we take a hard look at each and every asset within our portfolio and will seek opportunities to monetize assets in which we have added value and reinvest the proceeds to fund share buybacks and acquisitions. That said, we want to reiterate that we are not for sellers thanks to our flexible balance sheet and liquidity position, so we will be patient to act on the right deals at the right prices.
Turning to guidance, we now expect 2022 core FFO to range between $0.80 and $0.85 per fully diluted share. The increase is driven by the inclusion of $0.07 or approximately $19 million of lease termination fee income recognized in the second quarter. Our updated FFO range does not contemplate any other meaningful lease termination fee in the balance of the year. All other underlying guidance assumptions for the year are unchanged from our prior expectations. In 2022, we expect same-store cash NOI, excluding lease termination income, to decline 10%-12% from 2021 levels. Again, this change is primarily driven by the normalization of operating expenses as building utilization increases this year, as well as the annualized impact of the large occupancy loss of GBG in late 2021. We are not providing 2023 guidance at this time.
However, we do expect a more normalized growth rate next year. We expect same store occupancy to be between 84%-86% by year-end, unchanged from prior expectations and up from 82.4% at year-end 2021. Turning to the observatory, we still expect 2022 NOI to be approximately $74 million-$77 million, with the base case reflecting the hypothetical observatory ramp up that we provide in the latest investor presentation, which assumes 70% in the third quarter and 80% in the fourth quarter. This NOI reflects stronger revenue per caps and observatory expenses increasing from an average of $7 million per quarter in the first half to $8 million-$9 million per quarter in the second half of the year, depending on the pace of ramp up.
Lastly, as a reminder on G&A expense, 2021 reflected certain temporary cost savings and amidst a rising cost environment, we expect G&A to trend upwards in 2022 more comparable to 2020 levels. The low end of our guidance range reflects the potential for a slower than expected observatory ramp up due to uncontrollable factors such as another COVID variant, war in Ukraine, and any other shutdown of borders that adversely impacts travel. The high end of our guidance reflects a slightly better than expected observatory ramp up and pace of tenant return to office, partially offset by higher operating expenses from increased building utilization. Please note that the guidance estimates and assumptions just described do not include the impact of any meaningful future lease termination fee income or any potential future property acquisitions, dispositions, or capital markets activity beyond July 21st, 2022.
As we look ahead, we advance through the balance of 2022 with a well-positioned and flexible balance sheet, a focus on disciplined capital allocation, and continued commitment to ESG. We also look forward to benefiting from companies' return to office and recovery of New York City tourism. With that, I now turn the call back to the operator for Q&A. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your questions.
Thanks. Good afternoon. Tom, I was wondering if you could provide a little bit more color and detail around the leasing pipeline and maybe talk a little bit about the new versus renewals and just, you know, where the tenants are coming from, the industries and you know, to the extent that they are new, are they looking to expand, contract or roughly stay the same?
Sure, Steve. We've got a good pipeline of activity going into the third quarter with tenant prospects in a variety of industries that ranges from professional services, financial sector, legal, healthcare, some tech and some consumer products. Similar to what we've seen in the past, our portfolio attracts a wide diverse range of tenant types in various industries. You may have seen, we just signed a 30,000 sq ft lease for an expansion of a tenant that moved out of One Grand Central Place and into our 501 Seventh Avenue for a full floor of 30,000 sq ft. We have about roughly 160,000 sq ft of new and renewal activity for leases in negotiation.
This is aside from proposals for which we're exchanging paper, but these are actual leases in negotiation, and includes about a dozen or so prebuilt. That's a mix of new and re-renewal tenants and also includes a sizable renewal of a multi-floor tenant in our Times Square South portfolio. We've got a couple of expansion deals at Empire State Building, one of about 15,000 sq ft. Another new deal with a credit tenant of about 15,000 sq ft at 1359 Broadway. We've got a mix of good activity.
Of course, all this follows on the heels of a really solid quarter of over 320,000 sq ft of total leasing activity, which is a really solid performance by our leasing team who've did an outstanding job and achieved a weighted average lease term of 10 years. So, you know, I think we're in really good shape. There's a lot of great things happening, a lot of great things that we're doing. With the expansion of our amenities that I commented on earlier, a lot of fantastic things happening at the Empire State Building. You got to look at the videos. Look at that LinkedIn video that Tony mentioned, and look at the videos about the expanded amenity offerings both at the Empire State Building and in our Broadway Plaza campus.
Great. Thanks for that color. Maybe Tony, on the observatory, is there any color you can just provide on the mix of tenants between, say, domestic and international? You know, what is your expectation for that mix going forward and how might that impact kind of per capita pricing in the back half of the year?
Okay. I think you meant visitors, and I'll answer it as mix of visitors. Look, first of all, we're thrilled to be able to share the quarter with you folks. Strong leasing, strong performance from the observatory, really firing on all cylinders. Our residential has done well. We typically, as you know, in the past, have seen a larger percentage of international visitors versus domestic visitors. That international component continues to grow. As that international component grows.
As visitorship in general at the observatory grows, we're having a very good week this week. What we see is a higher percentage of participation in past programs and people who come in through our tour and travel partners. That said, on a revenue per cap, even with comparable blend to what we have seen in the past, we are much higher. Though there is some dilution by the fact that more people have come in through our, as we have said, would happen over the prior quarters, through our past programs and tour and travel partners. I really think that we have yet to see the full force of the observatory visitor from overseas. I think there are really three factors which come into play. One, I think that they've really botched the reopening.
Everyone can see they've botched the reopening of their airports. I think it makes internal travel in the United States look like a dream. As the August travel season declines over there, we expect to see more people able to travel in September who are our typical visitors who come in off season. Number two, I think with the fact that the dollar is strong, people will focus more on the authentic experiences out there. We've already seen a significant deterioration over time in the performance of One World Trade Center. We have similarly seen the bright, shiny penny effect, as I referred in prior quarters of the Edge. Visitorship there is down.
Look, we've already clocked over 1 million visitors at the Empire State Building this year, and the Summit has announced that sometime in the near future, they expect to hit the 1 million visitor mark since they opened in October. We are the number one attraction, not just by Tripadvisor's rating. We think that with inflation and with the change in currency, the visitors who come to New York, and they will continue to come because that's what they've done in the past through various currency transitions and inflation points, will stick with the most authentic. We do need to be prepared, though, that as has been the past, I think more of them will come through our tour and travel partners.
I will note, because we're reservations only, that gives us an opportunity to sell them upsells, visits to the 102nd floor, other benefits, that they might like to pay for. That's been part of our revenue per cap success to date.
Great. Thanks. That's it for me.
Thank you. Our next question has come from the line of Michael Griffin with Citi. Please proceed with your questions.
Hey, thanks for taking the question. Just wanted to ask on guidance. It seems like it implies a deceleration into the back half of the year, and I'm kinda curious if you can give some additional color on that. Maybe it was from the expense side or anything you can add there that would be helpful.
Okay. Thanks for the question, Michael. In our earnings release on page five, we actually lay out a key assumptions table, and what we outline there is we expect operating expenses to go up by about 10%. If you look at the numbers in the first half of the year, we're at sub that level, right? We're around 7%. That implies a ramp up in the back half. That will have some impact. In other areas, we do have a recovering observatory, but we also have expenses trending a bit upwards there as well from $7 million a quarter in the first half to $8 million-$9 million a quarter in the back half as we continue to ramp up that portion of the business.
You could see overall, we expect, you know, very clear results across the business that we've reiterated, but we do have some expense picking up in the back half.
Griff, I might add one additional point, and that is that as occupancy increases, our costs of operation of our properties, we need to provide more services. For instance, we have materially expanded the hours of our gym at the Empire State Building based on demand and increased membership. As we look at the amenities we operate and at the services we provide and the number of square feet we have to clean, it depends on occupancy, building occupancy. As that building occupancy has continued to grow, those expenses grow.
Great. It appears to be just like a timing issue more so than anything, just given the beat and, you know, no change in guidance, kind of adjusting for that lease termination income.
Correct.
Okay, great. Then my next one was on, you know, just the multifamily portfolio. You know, obviously, you guys entered it early, you know, late last year. You know, we've seen reports about other, you know, apartment guys in New York kind of lightening their exposure. I'm curious why it would make more sense to add exposure there and maybe any additional color. I think Durel's touched on it a little bit, but any color you could give there as to, you know, why it might make sense to add more multifamily to the portfolio would be appreciated.
Thanks, Griffin. First of all, we're very pleased with the performance of the multifamily property so far. The demand environment in New York City is strong and the occupancy at our two properties increased again this quarter. We continue to see strong mark to market increases and reduce concessions and outside broker commissions. The rationale for our investment in multifamily, look, it's consistent with our previously stated focus on New York City office retail and multifamily assets. We do need to look at the fact that we are a New York City play. We are office, we are a destination attraction, we are multifamily, we are retail.
We don't play in other markets. We play in this market. Within this market, when we look at multifamily, when we have an opportunity to trade out of assets where we see the opportunity to perhaps sell properties that are better suited to a new owner, and we can exchange for more efficient cash use and growth, that's something, a trade, that we're prepared to do. We like the inflation adjustment of multifamily, just as we love the inflation adjustment of our observatory. We have inflation protection through operating pass-through with our office. However, that does not adjust the rents on a regular basis with the greater periodicity of multifamily.
We like the fact that we think we can buy multifamily when we choose to buy it in a way that's capital efficient, not just when we apply the capital to purchase, but also as we go forward through our ownership.
Okay. I appreciate the color there. Thanks for the time.
Thank you. Our next question has come from the line of John Kim with BMO. Please proceed with your questions.
Thank you. On page 10 of your supplement, you provided some more clarity on your 2023 expirations, both on the positive and negative. I'm just wondering if you could provide some commentary on the leasing activity you've done to address that, as well as some of the additional, known vacates.
Sure, John Kim. Well, you've seen the breakdown that we provide on page 10. Just to comment on that, we do expect the largest renewal in our New York City office portfolio to be at 1333 Broadway. It's about, you know, 60,000 sq ft or so tenant. The rest are relatively, you know, mid-size to smaller tenants. Not a lot of change on our forecast of vacates. Reminder, as we do with new tenants, whether it be, you know, in a given year or early renewal, they come off of that report entirely. We haven't changed our forecast significantly from the past quarter as it relates to vacates and renewals. I gave comments previously on the health of the leasing market.
Look, we had two really strong quarters back-to-back, this past quarter being really strong with improvement in net effective rents over the prior quarter and certainly over a year ago. We continue to see activity throughout our portfolio, and I'm excited about the expansion of our amenities that I mentioned earlier. I think we're getting a really great response from brokers and prospective tenants. Reminder, all of the things that tenants are looking for today and they're focused on in terms of health, wellness, you know, in-building amenities, neighborhood amenities, convenience to mass transit, newly built spaces, which we've been investing in our portfolio for, you know, well before COVID. These are all the things that we provide that attract tenants, and that's the reason we're benefiting from this flight to quality.
We've got good activity going into the third quarter, and I'm pleased with what we see.
Tom, has the capital markets and pause in hiring, has that led to any, you know, additional indecision on leasing decisions?
Well, we've seen a bit of slowdown in tours over the past four-six weeks. Some of that, I think, is due to the normal summer slowdown. But as I mentioned earlier, what we're seeing is that the tenants that are out touring space are much more decisive, and our conversion from tour to lease has improved over prior periods. You know, I would say that the tenants that we're engaged with are being decisive, combined with, as I mentioned, a bit of a slowdown of tour activity, that's typical for this time of year. A lot will be. We'll see as we get into the latter part of the summer and into Labor Day.
Maybe a question for Tony or Christina. Can you just provide an update on the priorities you have, on investments between multifamily, office and retail, just given probably the big price disparities among the three, and then also versus, additional buybacks?
Yeah, sure, John. As we've mentioned, that is our, you know, focus area, right? All three categories. It really depends on finding the right deals. I think we end up speaking more on multifamily because that's an area that we get asked on more, and that's a new addition into the portfolio as of late last year. Similarly, we look for the right return, and we will look at all three of those categories and ways in which, you know, we can add value and generate upside for our shareholders. I'm glad you brought up the point on buyback because in all instances, it's not at the expense of not doing buyback. Fortunately, we have a well-positioned balance sheet. We also have an eye towards capital recycling, as Tony elaborated on earlier.
That means if we've added value and it makes sense to consider a sale, we can take those proceeds and redeploy it into any of those categories, maybe multifamily, could be office or retail. To the extent capital recycling satisfies the proceeds for acquisition, then our balance sheet can be utilized towards further share buybacks as long as the market continues to misprice our portfolio. We view all of those as attractive opportunities provided we find the right deal. Clearly, with share prices at these levels, the shares are very compelling.
Yeah. I would just add, we bought a lot of stock in the last quarter, and we bought it well. We were pleased, and I second all of Christina's comments.
Appreciate the color. Thank you.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your questions.
Great. Thank you. It sounds like you're having some good success, you know, leasing up office here, clearly some broader market headwinds. You know, we've seen some buildings get handed back to the bank in your submarkets. I mean, do you think that, you know, that's an opportunity for you now that maybe you're just doing something different than some of the competition?
Well, look, Jamie, I'll start that and let Tom jump in if he'd like to, or Christina to add any other color. We spent a lot of money when we modernized our properties, focused on energy efficiency, built out amenities, and maintained indoor environmental quality, so that we're in a position to offer outstandingly located assets at a great value. We are a receptor of flight to quality in our competitive set at the top of the price range. The fact of the matter is, takes a lot of money to do that work. We spent the money. You need to have the right basis to spend that money to make the profit that's out there.
We'll definitely continue to look at, and our investment group looks at office as an opportunity, for sure. At the same time, we haven't seen anything that really is attractive to us at this point. That's just the bottom line. I don't know if, Tom, you want to add anything.
I echo what Tony said. We certainly keep our eye on everything, and we'll look at all of the certainly office and multifamily. We apply our expertise and our knowledge when we're underwriting assets. When we see an opportunity, we're ready to, you know, to seize upon those opportunities.
I might throw in two other comments, if I might. You know, this office is still in a price discovery point. You know, if you look at the purchase price of 450 Park and the cap rate there, and you look at the just announced transaction at 1330 Avenue of the Americas and the cap rate there's a material increase in the cap rate. Forget about the difference in assets. There's a material increase in the cap rates. Frankly, you know, less of a perhaps an upgrade releasing load at 1330. We still think office has a way to go in price discovery. We think that movement is justified. Again, you know, our assets are extraordinarily well-positioned.
All this conversation about older properties and everyone's going for the newer stuff, what we said before, not everybody wants to pay $150, $200, $250 a sq ft for office space. Or even if they wanted to, they can't. We're a primary beneficiary there and it's shown by the strong leasing we did in the second quarter.
Okay, thank you. Would you say the pickup in leasing, are these tenants who didn't have office for a while? Like, they kinda, they shut down during the pandemic, or these are tenants who are already in the city, you know, didn't close down at all. They're just looking to either upgrade or be in a different building.
Well, we have a mix of tenants. iCapital was an expansion of One Grand Central Place. They've been in the office, and their business is doing well, and they're looking at their future needs, and they've expanded with us several times now. The professional services firm that I mentioned earlier that moved from One Grand Central Place and doubled their space to take a full floor at 501 Seventh Avenue. Again, their business is doing well, and they've been in the office. We renewed a, you know, sizable multi-floor tenant at 1,333 Broadway. We announced following the close of the quarter an early renewal for 79,000 sq f t Franklin Templeton out in Stamford, Connecticut. They're in, you know, obviously, financial sector.
These are all a mix of tenants that are, you know, see the long-term needs for their offices, for their place for their employees to work, and for them to conduct their businesses, they're making long-term commitments. It's a mix of new, renewal, and expansion tenants.
I'll add again, as is in our investor presentation, with fantastic videos, I might add, 2.2 million sq ft of expansions in our portfolio since October of 2013. I don't think that's a coincidence. It means that our tenants really like what we offer, the price point is good, and we choose our tenants well. That's a benefit. iCapital Network, Signature, these are just the most recent meaningful expansions, and we continue to try to exercise very good tenant selection. Be very clear. We built our portfolios. We got the best deals in the good times, and we get deals in the bad times. That's what we've always said, and that's what we hope to see.
That's helpful. Do you plan to build out amenity spaces in more buildings? Can you talk a little bit more about the cost to do that?
Well, we have the three expanded amenity projects that I have mentioned, and that's all that we have planned for the time being. Again, it's the basketball sports court convertible to a 300-person town hall presentation room with tenant lounge, with bar service and golf simulators. That is in addition to this New York City's largest tenant-only fitness center of 15,000 sq ft, our executive gym conference center, and then the 23,000 sq ft Starbucks Reserve is opening up later this year. That's an incredibly robust amenity offering at the Empire State Building.
The Broadway campus amenities that I mentioned, the town hall presentation room at 1400 Broadway, alongside the tenant lounge at 1400 Broadway, and the very cool 1333 outdoor space with private cabanas and landscape will be available to all of our tenants in this Times Square South portfolio. This is on top of the in-building curated food and beverage options. We have 23 of them throughout the New York City portfolio and the neighborhood amenities. That's what we have planned right now. We think it's an incredibly full offering, and we're quite excited about it. Lastly, we're adding a wellness facility at a building at 250 West 57th Street with private showers, cabanas, really for those that want to exercise, bike, run, and such so forth in Central Park.
I would just add, you know, among the amenities, if you make note, some of it is a rooftop on one building, another is a town hall, within another building. We don't need to build the same amenity for each one of our buildings, and that's a major benefit of having a campus-like portfolio. These set of amenities can benefit six buildings by building one rooftop, one town hall. That's amazing cost synergy. As we look at the marketplace, you hear more and more about amenities, and you really need to question. I think we all need to question, should the building, every building build a gym, build a rooftop, build these centers, and will they see the return on that? It's definitely a trend. It is in demand.
How many tenants and square feet can you service from that? We find the synergies to be very compelling. Some amenities we pay for in the build-out cost, and some we benefit by adding it into the portfolio. For example, the Starbucks Reserve concept, that's going to be fantastic for ESB.
Okay. Is this in all or in any way a revenue source, or no, this is just purely amenities?
You know, the space on 1333 Broadway, that roof, when it is built out, will be absolutely drop-dead fantastic views of the Empire State Building overlooking Herald Square. It's a very sizable place, and because of the way 1333 Broadway is configured, we've actually decided that we will make that a separate entrance on 36th Street rather than gum up the lobby with that. We have excess freight elevators at 1333 Broadway. It was a former manufacturing, shipping and showroom building. So we think that's a big opportunity for that. Other than that, though, no, the priority for 1333 is definitely as an amenity for our tenants.
Okay, great. Thank you.
Thank you. Our next question is coming from the line of Blaine Heck with Wells Fargo. Please proceed with your question.
Thanks. Good afternoon. Just a quick one here on your dividend. You guys reinstated the dividend at $0.14 annually in May of 2021, and it seems like that's more than well covered at this point. How do you think about increasing that dividend level in the future versus kind of maximizing free cash flow for uses elsewhere, whether that be, you know, repurchases or other investments?
Sure. Thanks for the question, Blaine. On the dividend, we review that, you know, quarterly, and we have an eye towards having that go back to higher levels as the business continues to recover. That's constantly on the agenda. You might recall the history behind it is, we will do it based on REIT requirements. If we have taxable income, we will do it. If not, we'll evaluate whether it makes sense and the alternative uses of that capital to return capital to shareholders, which does include share buybacks, as well as providing continued operating runway for our business and evaluating other opportunities. We'll certainly provide a dividend to our shareholders, and we look at what is the best way to generate value across the board.
Okay. That's helpful. Thanks.
Sure. Thank you.
Thank you. Our next question has come from the line of Michael Griffin with Citi. Please proceed with your questions.
Yeah, it's Michael Bilerman here with Griff. Tony, you expressed a little bit about looking at your portfolio for sale opportunities, and I was wondering if you could sort of frame for us maybe a goalpost of sort of how much capital you can draw out of the portfolio. I say that just from the perspective of, you know, I think about, you know, some of your assets obviously have tax protection. Obviously, a number of your assets also have mortgage debt on them. Sometimes it's the same asset that has tax protection. A number of your assets have ground leases to them. Obviously, the Empire State Building and the observatory is key to the company. As Christina just walked through, you think about the campus approach that you have with those buildings around ESB.
I would imagine that all this capital you're spending, you wouldn't want to then take an asset out of that. How should investors think about really the total amount of capital that could be generated from asset sales and effectively the cost of that capital, given some of the limitations from a tax protection, mortgage debt, ground lease on some of them?
No, appreciate the question. I'll start, and then maybe Tony will add some comments. As we've mentioned, we've taken a hard look at every asset, and that includes tax, that includes the future capital needs, includes future prospects. We take everything into consideration. Having said that, nothing's off-limit. It's all about having the right transaction. We're definitely not forced sellers, as we've, you know, communicated based on our balance sheet positioning, our debt maturity schedules, so we don't have pressure. We will look at it opportunistically. Right buyer, right price, right deal, right structure that allows us to get around any of the items that you reeled off. If it makes sense, it's available for sale. If it generates value for shareholders, it's available for sale.
There's a number of options. It's about looking for the right deal in the categories that we've already mentioned in the market, New York City, that we are focused on, and there's also share buybacks. If we can buy back more of the rest of our portfolio at a highly discounted valuation, that's very much on the table as well. Appreciate all those challenges that you mentioned. We definitely think about it, and we will take that into consideration as we evaluate each and every one of our options.
Right. We'll just do this in as tax efficient and logical a way as possible. We know the numbers. We've done the calculations. We just approach it from there. The same effective way that we transferred out ownership at MerrittView.
Right. I'm just trying to get a sense of how much of the portfolio really investors should expect could be liquidated now that you've gone through this review. You know, I don't know if it's $500 million. Is it $1 billion? I'm just trying to get some goalposts, Tony, around, you know, how much you're looking to sell because, you know, I know you're not happy where the stock price is. I recognize you're not a forced seller, but, you know, where the stock is, there's a pretty large disconnect from what you're talking about.
Well, we were certainly happy buyers in the last quarter, and we bought several tens of millions of dollars, and that's the benefit of having this fantastic balance sheet with no maturities until the earliest. We've got one loan, a mortgage in 2024, late in the year. We've got a lot of cash. We have 5% of our debt is floating rate. Everything else is fixed. Number one. Number two, we really can't give any forward-looking comment. However, it's public knowledge that 500 Mamaroneck and 10 Bank Street are on the market. We've put our real estate retail on Main Street and Westport on the market. Candidly, we had a price we like.
That potential buyer's stock, you know, didn't work out, so we like the cash flow we get from that. We've got eight and a half years weighted average lease term. Unless it's compelling, we won't sell it. You know, that's where we are. Outside of that, we weigh each thing as we go. We've got a lot of flexibility on our balance sheet, cash on hand, undrawn line, in order to take advantage of things as we go forward.
Right. To that point, Tony, the balance sheet is in good shape with that cash and low leverage. You know, if you take that hindsight approach of where the stock has come from, right? You look over the last five years. You know, the stock's down well over 60% underperforming peers and significantly underperforming REITs. Even benchmarking it relative to last October when you announced the multifamily entry, you know, the stock's off 25%, 30% relative to REITs down 10%. I just don't know how much time you and the management team and the board are sort of just saying, "Okay, we've taken all these steps. The market doesn't seem to be reacting the way we want them to.
What else can be done?" That's where, you know, it's all sort of coming to a head, and you can keep on buying back stock, but perhaps that there's other issues of why the stock is trading where it is. I mean, is that part of your and the board thinking?
As this sounds like your last quarter, Michael, when you asked what's our reason for being? No, I think we're fine.
Well, no, it's not about being. You are being, right? You're a public company, Tony. I know you exist. At some point, as I think a board and a CEO, you have to look at how the market is pricing. If the market's not willing to price it, then maybe they're not endorsing the strategy you're going now.
Totally appreciate this, and I appreciate your continued questioning. I look forward to continue this conversation with you in the future. Our four priorities are clearly stated. Rent space, sell tickets. We wanna fulfill our goals on sustainability, and we wanna work with our strong balance sheet, recycle and apply it as and where it makes good sense. As far as I'm concerned, we've done a great thing by our investors with the stock that we've repurchased. We did a great thing by our investors with the resi assets that we acquired. I just have a feeling that if you're asking me whether or not I plan to push on a wet string to tow the company forward, no. We're just gonna be intelligent and logical as we go through this period.
Thank you.
Thank you. There are no further questions at this time. I would like to turn the call back over to Anthony Malkin for any closing comments.
Thanks everybody for attending. Please remember that forward-looking statements, including guidance, are meant to be helpful with forward modeling, and they are not guarantees. Many thanks to our great team who have worked incredibly hard. The folks at the Observatory who won that number one in the United States, and the folks who've shown up every day and really delivered on behalf of stakeholders. We look forward to the chance to meet with many of you at non-deal road shows, conferences, and property tours in the months ahead. Until then, thank you for your interest and onward and upward.
Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy your day.