Earnings Call: Q3 2018

Oct 18, 2018

Thank you everybody for joining us and welcome to SL Green Realty Corporation's Third Quarter 2018 Earnings Results Conference Call. This conference call is being recorded. Additional information regarding the factors that could cause such differences to appear in the MD and A section of the company's Form 10 ks and other filed by the company with the Securities and Exchange Commission. Also during today's conference call, the company may discuss non GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non GAAP financial measure discussed and the reconciliation of the differences between each non GAAP financial measure and the comparable GAAP financial measure can be found on the company's website at www.slgreen.com by selecting the press release regarding the company's 3rd quarter 2018 earnings. Before turning the call over to Mark Holliday, Chief Executive Officer of SL Green Realty Corp, I ask that those of you participating in the Q and A portion of the call, please limit your questions to 2 per person. Thank you. I will now turn the call over to Mark Holliday. Please go ahead, Mark. Thank you, everyone, for joining us on our Q3 earnings call. We will discuss some of the highlights and accomplishments of the quarter as well as take as many questions as we can afterwards. But first, I want to put the quarter's results into the context of the big picture. The engine behind our current strategic plan is the extraordinary value creation we've been able to generate in this current cycle, which really began after the 2008, 2009 recession. As many of you know, we have been hard at work since 2016, finding ways to optimize and harvest the extraordinary gains in our portfolio as evidenced by over $8,000,000,000 of total gross transaction values, dispositions and recapitalizations, which resulted in well over $2,000,000,000 of cash inflows to the company since 2016. We've been very thoughtful and deliberate in redeploying these proceeds in ways we believe best benefit the company and our shareholders. Notably, we brought our aggregate and relative debt levels down considerably in this current cycle, and we're also projecting to have record net cash balances on hand by year end. In addition, and as you know, we've been moving along a path of being among the most aggressive REITs in the country in terms of share buybacks, having bought back over 8,000,000 shares in OP units year to date with the expectation and intent that we will round out our $2,000,000,000 share buyback program in the coming months. This continues to be an area of investment that we identify by far as the most attractive opportunity in our investment horizon right now, and that opportunity has only increased with the recent sector performance resulting in FFO multiples for the company that I can only describe now is shockingly low. As we have reduced our leverage, shed non core investments, improved our asset quality and leased our portfolio, we have notwithstanding seen our FFO multiples decrease to as low as 13 times, implying well in excess of a 6% capitalization rate on our prime New York City office portfolio. And given the extraordinary quality of that portfolio and substantial discount to net asset value, we conclude that there is a dislocation that continues and warrants a continuation of our share buyback program. We have also kept our eye on the ball and made sure to take advantage of a number of limited strategic new investments in 2018 as and when we saw them arise. Most notably, 2 Herald Park and 245 Park are just 2 of the examples where we were able to put new money to work in ways that we feel will be highly accretive to the company. And we do have a pipeline of additional opportunities that we hope to be able to expand on further at our December Investor Conference. As it relates to the positioning of the company for the future, we have ongoing and future development projects that we will be devoting our time and resources to in order to continue to maintain our standing as one of the leading real estate growth companies in terms of same store NOI and FFO per share growth, metrics which we again lead the office sector in 2018 and areas we will continue to try to demonstrate leadership in going forward. The development pipeline, which we will present in December in much more detail, will provide the new seeds of growth in 2020 and beyond as these projects begin to come to fruition, irrespective of same store rental levels between now and then because these are all inventory right now out of any same store metric that we follow, all of which will just be aggregate incremental NOI growth as these projects complete. Fortunately, market conditions in New York City continue to be fairly strong, such that we've been able to execute our program consistent with guidance we gave back in the beginning of the year. Taking a look first at leasing activity, our volume for the quarter was obviously quite strong. And as we sit here today, we are 3,000 square feet shy of our 1,600,000 square feet leasing goal for 2018. So maybe Dorels wants to get out ahead of this and sign up a small lease before this call is over. That's very possible. Okay. I think it's in the bank to make it happen. So of course, everything we do in the Q4 is a bonus. And more good news is that we expect to have a fairly strong Q4 of leasing, which should bring us to or above 2,000,000 square feet of leasing for the year. We want to remind everyone that when looking at statistics like mark to market with same store mark to market NOI and the like, they are highly dependent on the leases rolling in any given quarter. And right now, we're rolling off a lot of leases that were signed in or around the 2,007 peak. They've escalated pretty substantially over that 10 year period. So the fact that we have positive growth off of that, I think, is quite extraordinary. Notwithstanding, we may feel a little shy, may fall a little shy of our ambitious goal at the beginning of the year of 6% to 9% same store NOI growth I'm sorry, same store mark to market on leasing, and we will track that closely. It will be dependent on a few leases that will either make hopefully by December or may trip into January. But there's certainly a possibility that we'll be at the low end or just under the 6% to 9% range of the original guidance. You might recall that we had hoped to see stabilizing of concessions and affirming of rents in the second half of the year. And I think we got it pretty much right. There's been clearly stabilization in TIs and concessions that we see in the portfolio now. We think the rental market is very stable and demand is quite good. So all in all, I would call it a healthy leasing market, which is, I think, reflective of a very good New York economy, and I'll have more to say about that momentarily. And good news furthermore is that we have a these results have been occurring while new product from the Westside and Downtown has been coming online. So we've shown an ability to absorb this new inventory, keep the vacancy rate roughly in check and maintain stability in these key leasing metrics, which we do think will only get better as the available inventory is winnowed. Another big part of our big story is the success we are having with our development at 1 Vanderbilt. Construction continues on a pace ahead of schedule and under budget as steel has now reached our 39th floor of construction well ahead of our original goal for the year, reflecting really a lot of hard work by 1,000 or so construction workers that are on that site day in, day out. We had a worker appreciation day last week attended by all. And you could see the passion in their eyes and how proud they were not only to be working on a project of this magnitude and this importance, but also how proud they were that it's been the job has been going like a well oiled machine, just really a great job by the team. And if you haven't been to the site recently, I would encourage you to do so as the beautiful terracotta curtain wall and 10 foot glass panels are now installed up to around the 8th floor and is really truly a spectacular addition to the cityscape of East Midtown. Tenant demand for the project continues to accelerate on the heels of signing our lease with Carlisle for approximately 100,000 feet in the middle part of the building. And the Q4 pipeline of deals I mentioned earlier certainly has some more activity included within it that will hopefully bring us well ahead of our goals for 1 Vanderbilt come year end. The project continues to reinforce the basic themes, which drove our decision to pursue it initially, which included a dramatic addition to the Grand Central submarket, leading the way for other new development projects like JPMorgan's announcement of their 2,500,000 square foot new headquarter project, providing over $200,000,000 of funding for critically important public ground and transportation improvements and the delivery of state of the art new construction right in the heart of Midtown to provide tenants with the best of class choice near New York's greatest transportation hub, which will soon see 100,000 additional riders a day from the completion of Long Island Railroad Eastside Access. We will continue to monitor the New York City economic indicators and reveal directionally our thoughts for the market environment in the coming for the coming year at our December Investor Meeting. The job numbers right now are a bit scattered and hard to get a precise read on. The non seasonally adjusted numbers are quite strong and almost on par with last year's non seasonally adjusted. However, the seasonally adjusted numbers diverge from that fairly significantly, albeit all still positive numbers, bringing into question whether there will be a significant revision sometime after the year that brings those 2 closer together. In either case, Wall Street profits were nearly $14,000,000,000 through the first half of the year and are on track to eclipse the city's projection of $20,500,000,000 for the full year. And furthermore, the big five banks that have already reported their 3rd quarter earnings showed a 6% year over year increase through September 2018, proving that the banks are benefiting more than I think expected from the overall absolute rate increase in the lending environment and keeping those earnings still on an upward trajectory. Tax withholdings are showing indications that 2018 will be another strong year of compensation levels in the city And retail sales, which are tracked by the state, show that retail sales tax is up around 7% for the year. That includes bricks and mortar and online sales for which the state collects taxes. So we have this extraordinary New York City economy that's operating right now at a 4.1% record low unemployment rate, and it keeps moving along while population growth year over year has been somewhat muted, but you have people rejoining the workforce that had been on the sideline. That's what's contributing right now to that job growth. And it's like with our leasing portfolio, as you get towards full occupancy, there are not as many jobs that can be created and filled. And as you get towards I'm sorry, you get to a philosophy, there's not as many tenants that are available to sign, so you don't have as many spaces. I think you see a little bit of the same thing in the jobs picture. You have sequentially lower job growth, but it's still indicative, I think, of a very strong economy, which is almost at full employment. So with that, I would like to stop there and open it up for questions. Thank Our first question comes from Craig Mailman with KeyBanc. Your line is now open. Hey guys, good afternoon. Just curious, Mark, you kind of mentioned that you have a pipeline of opportunities here that you're going to explore at the Investor Day. But just ahead of that, you guys have been active on the buyback. You sold a lot of assets. Just curious from here on out, how you're kind of weighing those buybacks, the potential kind of pipeline of assets to sell and thinking about other financing options such as JVs on some of your larger assets to kind of unlock the sources for some of the uses you're going to be talking about at the Investor Day? Well, okay. I mean, I guess, instinctually, I want to say let's wait until Investor Day because we're going to go through in detail, but I'll give you sort of a framework within how we think about it. Assets, we can sell, recap or otherwise monetize, tax efficiently lends itself towards the buyback program because we get to retain all of the proceeds or most of the proceeds and that's right before reinvesting in our stock, which we think is the best single investment opportunity. Then there are transactions we have slated that may be somewhat less tax efficient. And in those instances, we would typically reinvest those proceeds in other new opportunities, whether it be acquisitions or new development. And by doing that, we're able to shelter the gain. We've been doing that for 20 years, so that's not a program or a strategy that should sound new to anybody on this call because that really prior to the buybacks had been our stock and trade was buying, adding value, monetizing, reinvesting the gains into higher growth opportunities and moving on. So those two investment opportunities, I think, are somewhat parameter by whether we're generating tax free or taxable gain on execution. That's one element of it. Then there are other elements that will guide ourselves towards looking at strategic investments that may have return attributes that are as strong on a risk adjusted basis as the stock itself. And where we do that, you'll see us be active as we always have been. We try to maintain never an on or off approach. In every market, we're selling, we're buying, we're investing in our stock at this moment. And that we're not looking to call the market. What we're looking to do is simply buy low and sell high and reap the benefits of our arbitrage of that in a tax efficient way via in our stock or in new investments. It's Jordan Sadler with a follow-up. Just on tenant demand in the wake of the new tax regime for Mark or Steve. This year we saw pretty big headlines from AllianceBernstein's plan to move to Nashville seemingly a one off. But maybe can you speak to trends you're seeing if any in terms of tenant migration plans either into or out of Manhattan as a result of sort of the tax burden on employees? No, I think there's been the rare occasion where you see that that's been maybe an influence, but it's hard to draw any kind of conclusion that taxes are having a negative impact on the leasing environment given the fact that Midtown Leasing is 6% ahead of last year and is going to have its best leasing year in the last 12 years. So in the face of that, velocity is extremely strong. We're seeing it within our portfolio and where we have the majority of our portfolio surrounding Grand Central Terminal, it's one of the best submarkets from a leasing velocity perspective. So I think it's all cylinders are firing straight ahead. Okay. Thank you. Thanks. Thank you. Our next question comes from Manny Korchman with Citi. Your line is now open. Hey, guys. Can you give us your updated views on the co working space, especially following the recent announcement of largely fee signing of WeWork? Sure, Manny. I think VUE is still consistent, which is it's a thriving part of the market. We generally view it as a positive. We work as an enormous consumer of space in the market and that certainly helped keep things tight in the market. And it's going to be a portion of our portfolio we anticipate as it has been for the last 20 years, whether it's with an HQ or Regis, New York office Suites or other tenants and Emerge 212, which is our own co working business, or one of the more recent guys like a WeWorker and Notel. And Steve, any updates on the lease with Polo? No, nothing to report at this point in time. Thanks, guys. Thank you. Our next question comes from John Kim with BMO Capital Markets. Your line is now open. Thank you. A question on your DPE. One of your objectives of the year was to keep the DPE balance flat. But I was wondering if there was an update on this, just given your balance sheet has shrunk considerably over the last year and looks like it may continue to do so. John, it's Matt. Our guidance was actually to have the balance be lower by about $100,000,000 year over year, and we are on a trajectory for that, while meeting our target of $200,000,000 of income from that portfolio. So from quarter from Q2, Q3 went down as we anticipated. I expect there to be modest amount of more diminution over the course of the Q4. And can you just discuss your appetite to take the gun further and potentially get some more earnings dilution because of that? Well, I don't know. I don't think we look at it as appetite for earnings dilution. So I have to think about how to answer that question. If the question is in our 2019 plan, where do we see us pegging that and might it be lower, I think you had to wait till December for that. And we're going to lay that into the context of all the other planned activity we have for 2019, not really in isolation, and we'll have guidance for you then. But clearly, we our I don't want to say our target or constraint, but our self imposed cap, if you will, was something to the effect of 10% of total asset value of the company. We're certainly below that. So within the range of whether we're 6%, 7% or 8%, I don't think there's a magic number there. The answer is we have a portfolio stands today about $1,900,000,000 or so. A little over $2,000,000,000 About $2,000,000,000 Completely scalable. We have we believe in net asset value that certainly which would put that at well under 10% even on enterprise value. So it's really going to be something we'll look at and look at the opportunity set and decide whether to size down further or maintain. Thanks for the color. Hey, Matt. Thank you. No, that's consistent. Our next question comes from Alexander Goldfarb of Sandler O'Neill. Your line is now open. Hey, good afternoon. Good afternoon there. Just two questions. First, in one of your recent investor decks, you guys commented on doing another $300,000,000 of capital for 1 Vanderbilt to reduce your equity. Would this be bringing in an additional joint venture partner expanding the current JV partner? Just what are your sort of thoughts as you're looking at that project, especially as it leases up? Presumably, you're getting more inbound calls of interest. Yes. Specifically, we talked about a refinancing, which we're undertaking as we speak for the in place construction financing. We've obviously, the project has gone very well, exceeded a lot of our expectations along the way. And so we are looking for up to $300,000,000 that could come in the form of financing. It could come in the form of additional equity. But the refinancing we're undertaking right now would result in additional proceeds, longer term, lower rate and less recourse as we anticipated. Yes. I would add to that. That refinancing was unintended and is a good news aspect of just how well this project is going and evidence of the project success that we are in front of a group of banks for the refinancing interim refinancing unplanned and it will be highly accretive to the deal and the joint venture and really just is an affirmation, I would say, if we can get that done. Okay. And then the second question is just in some of the local press, Mark, there's been talk about city council bringing up commercial rent control. And I know that it's come up in the past. Just sort of curious in today's environment, what your view is, if you think this is real in the past, especially as you think about midtown rezoning where the city is trying to encourage redevelopment, this would seem to be the opposite. Yes. Well, look, this is something there's many bills that come to counsel and some get passed and many don't. We'll see where this shakes out. There's been some form of this hanging around out there, I think, for decades. And I honestly think that it's they're on the wrong issue. Retailers today, as you know, are having problems unless they're very well capitalized and very well situated. But a lot of these smaller, less creditworthy, what will be called small business or mom and pop businesses are having a hard time, but it's not the rent. And I think that'll be the debate on the floor. It's all the other things that don't seem to be in that bill, which a lot of these small businesses are coming out and talking about now, such as the increasing minimum wage, which is a great goal for the city, but it has with it the intended impacts of raising operating costs it's real estate taxes. I mean, the real estate rents are down almost in all submarkets of retail anywhere between 10% on the low end and 35% on the high end. But all the while, real estate taxes keep increasing and keep increasing annually at very, very high compounded annual rates. And the regulation, the things these retailers have to do to open up businesses, maintain their businesses and stay compliant. When you put that all together, it doesn't seem to be the rent to us. We have adjusted our rents in ways that have met the market and have been almost immediately reactive to the system. Now in real estate, nothing is immediate. It's not a nanosecond, it's not a day. But over the course of the past 12 to 18 months, we, as long as other leading landlords, retail landlords have repriced their portfolios generally to meet the market, and it's been sizably down and quick as demand has dropped. And yet, even with that, a lot of vacancy remains, projections between 20% 25 percent in some submarkets. Now rent is only a piece of it and the rent is corrected quickly. It's probably the only parameter I mentioned that went down and went down significantly. Everything else, more regulation, higher wages and higher real estate taxes, they're going to have to figure out a way to solve that issue, I think, in order to make meaningful progress on this point, and I think the rent for economically motivated people will take care of itself. I'd like to see possibly inserted into the bill some kind of incentives for landlords to give breaks to tenants. We do it with affordable housing, why not do it with small business retailers. Okay. Thank you, Mark. Thank you. Our next question comes from Jamie Feldman with Bank of America Merrill Lynch. Your line is now open. Great. Thank you. I wanted to talk about rents for a minute. So it sounds like you think you're trending below your original target of 6% to 9 percent growth. Can you just talk about what's different than maybe at the beginning of the year that you're on this trajectory? Well, it's not that the rents have moved lower than expectation. It's just really that when we focus only on mark to market and compare the rents that we're signing against the rents that are burning off from those select leases where the space is being filled with 12 months or less of downtime, it gives a distorted view of the rental landscape. If you looked at our mark to market, which we posted at 1%, if you spun out the 2 leases, of all the leases that we signed, there were only 2 leases that really had a negative mark to market that watered down the overall performance. If you pulled those out, we would have posted a 6% positive mark to market. So I see rents that are still going up modestly, as we've said all along and we projected at the beginning of the year, but we are seeing rental appreciation. But when we focus on the mark to market, it's just I think it gives a distorted view of rents. Okay. That's helpful. And then I guess for Andrew, just some thoughts on the investment sales market, cap rates and asset values. And then it looks like you took a $0.01 impairment on a debt investment that was repaid. Can you talk about what happened there? Sure. Investment sales, there's going to be a lot of price discovery because there are a lot of assets on the market now. So I think Q4, we should see quite a few assets clear and get a much better sense. But we still see a lot of demand from foreign and domestic investors. Obviously, we're getting we announced the sale of a development site on 72nd Street and an asset that came back to us through the debt portfolio on Third Avenue, being able to quickly sell those assets and redeploy that capital is an indicator that not just core income producing real estate, but also development oriented real estate, there's still quite a liquid market for us. So I'll let Matt comment on the impairment. Yes, I mean that's more of an allocation than anything else that we have a multifaceted transaction, the Upper East Side assemblage sale twelvethirty one and that has multiple aspects to it. It's a matter of basis allocation and we've taken an impairment on the partner loan inside of that deal. Okay. Thank you. Just one other point, operator, I want to make to Jamie in answering the first question that he asked of Steve. Steve referenced a couple of deals that were done in the quarter that brought our mark to market for the quarter down to 1%. I think Jamie was asking about our guidance of 6% to 9% for the year. Another factor is we had in our initial expectations a rather large early renewal couple of 100,000 plus square feet that may or may not make and may or may not be this year. We expected that to be this year, in which case we'd be squarely within our guidance range. If that does not make this year, I would expect us to be below our the low end of the guidance range of 6% to 9%, and that deal could make next year. Thank you. Our next question comes from John Guinee with Stifel. Your line is now open. Great. As you know, cost of capital is everything in this business and there's a lot of very inexpensive JV equity out there, which is obviously available to you guys. Big picture, what do you think is the spread now between cost of JV equity on an asset by asset basis and issuing stock? Or said another way, where would your share price need to be that you would find common equity a more attractive cost to capital than JV Equity? And then the second question is, any update on 245 Park? And if you talked about it early in the call, I apologize, I was late too at the party. Okay. We didn't in any details, so we'll come back to $245,000,000 But John, let me just let's just hit that first question again. The question is at what stock price would issuing common be better than a joint venture? Is that something? Yes? Yes. Well, one, I'd say we're so far away from that. We probably aren't tracking that number very closely right now because it would have to be my view is generally at or near NAV. I mean, that's sort of the let's call it that's the mathematical answer would be you generally don't want to issue discounted securities below value, it's like selling $1 for $0.98 or $0.9765 Now selling $1 for like $0.70 $0.75 is even more objectionable. But really, when we have issued in the past, use the ATM quite aggressively, as you might recall, leading up to mid-twenty 15 or so, generally, we like to think we're right at or around NAV. It could be off $1 or 2 percent or 2 percent. But issuing it 10%, 15%, 20% discounts, not very attractive. On the flip side, joint ventures, you're typically doing those right at the market. People who come in and invest in a $1,000,000,000 building expect to pay $1,000,000,000 not $900,000,000 not $800,000 not 7 100 dollars They expect to pay the market. And you could almost say it's a premium offering because in addition to bringing a JV partner in at the value, you then get fees and promotes, which we've talked about and broken down and analyzed in the past that could increase the yield on our retained interest between 300% to 500%, depending on that fee and promote package. So that's I think that's how we analyze it. But again, since we're so far away from that, we haven't been running those numbers recently. I'm sorry, 245, we made initial, what we call, Phase 1 investment. We're working towards a Phase 2 that contemplates more direct equity investment with control that is still uncompleted at this time. And we'll just have to wait and see what the further update is as of December Investor. But for the moment, we have our investment, money is working. We're having we're deeply embedded within the asset with our partner on that deal. And I guess more to come in the next 30 to 45 days. Great. Thank you. Thank you. Our next question comes from Derek Johnston with Deutsche Bank. Your line is now open. Good afternoon. Any further commentary regarding how leasing or the leasing pipeline is trending versus plan at 1 Vanderbilt? And secondly, are there any issues tied to the Carlyle lease in light of today's news? I'll address the first one, which is that we've got a good pipeline of deal flow at 1 Vanderbilt. We're trading paper with 4 or 5 tenants. We're in advanced discussions with 2 in particular. And we expect to have something positive to report before the end of the year. Okay. So I guess you had asked a question about Carlisle and their efforts to assign the lease to SLG Funding, which is our $2,000,000,000 finance subsidiary, I think as the paper state, the landlord in that case has rejected the assignment. Carlyle believes improperly, so it's brought a lawsuit. SLB is not a party to that lawsuit and that lawsuit in no way affects the one Vanderbilt lease, which stands apart and alone. So I can't really comment any further on that other than to say, it's unfortunate. Got it. Thanks. Thank you. Our next question comes from Steve Sakwa with Evercore ISI. Your line is now Mark, I guess I wanted to come back to your comment about the tax efficient asset sales that allow you to do buybacks and the less efficient ones, which sort of maybe force you to do kind of 1031 deals. Can you just give us a sense for what within the portfolio would be characterized as tax efficient asset sales and kind of just gross dollar terms? And I guess to Well, Steve, we've gone through this in, I think, some fair amount of detail. We have assets where I'll give you structured finance. I mean, it's tax efficient. We've got $2,000,000,000 of assets that are marked at par. And as we reduce balances there, there's no gain typically unless we have some kind of exit fee or something like that. And we that's a potential source. We have other asset sales that either don't have as much tax gain or we're able to structure around it through creative JVs or whatever it is. So we have assets, and I mean, you've seen us do almost $2,000,000,000 of it. So we clearly have been able to generate a significant amount of tax free proceeds for use in stock buybacks. We have more we can do going forward. So the question will simply be when we meet again in December and discuss it as a Board, whether and to what extent we want to keep going based on market conditions, price and capital availability versus the opportunity set, which is still meaningful out there. I mean, we do have a pipeline of deals that are very high yielding. You see the kinds of returns we print on these deals, both levered and unlevered. They're very high double digit yields, and we hope to be able to continue to balance our core investment strategy as we've done in more limited amounts of late with share buyback program. Steve, what was the second part of your question? Well, it was just I guess in terms of as you talk about trying to be leverage neutral, you sold you put out the press release recently on the asset sales, which was several $300,000,000 to $400,000,000 You have about $350,000,000 to $400,000,000 left. I know you didn't do a lot of buybacks in the Q3 waiting for more sales to unfold, which you just announced. So I guess how much more do you sort of like feel like you need to do just to complete the current buyback program, I guess was sort of the question? Yes. I mean, we're almost fully funded on the full 500. We have a couple more sales that are in the process, primarily the suburban portfolio, which we've said we are slowly winnowing down, that would round out the program and do it on the leverage neutral basis that we've executed the first $2,350,000,000 Okay. And I guess just second question maybe for Steve. You've historically talked about kind of the size of the leasing pipeline. I'm curious where it is today and did you get the 3,000 square foot lease signed in the last week? It's funny you say that. I just got an e mail that said we signed a 20,000 square foot deal that is waiting for me to counter sign when I get on the stairs. All right. So it was 945,000 square feet of pipeline. So now we're actually 925,000 square feet. And it's down from last quarter because we did a lot of leasing this quarter. But we've got very good deal flow and we've got a lot of leases that are in very advanced stages of negotiation out of that pipeline. And can you characterize just kind of types of tenants, new tenants? Is this kind of pulling forward renewals? Or how would you characterize it? Yes, sure. In the pipeline, it's finance, real estate, legal, non profit education is the large part of it. Of the leases that we signed, it was dominated by finance and legal between the 2 of those industries that was 60% of it. But it's good broad based group of tenants. Thanks, Steve. I think we have time for one more, is it, Ashish? We have one more question. Yes, sir. We do have a question from Nick Yulico with Scotiabank. Okay, thanks. I just wanted to make sure that the 2 Herald JV sale, is that still set to close in the Q4? And do you have a number for just overall sales proceeds you expect in the Q4? The answer is yes, we expect it to close in the Q4 and that's going to be coupled with a financing. I mean, I have a roundabout number from 3 Columbus and from 2 Harold, you're talking several $100,000,000 of proceeds. Okay, thanks. And then just lastly, going back to 245 Park, I mean, it sounds like there are some redevelopment plans that have started to float around the leasing market for that building. I mean, is that what is first need to be sorted out before you have you consider making an additional Well, I don't really I think it's not until we have a conclusion to where we stand on Phase 2, I wouldn't want to start talking about redevelopment plans or strategies for the building, I think it would be inappropriate. So I mean, I would just say at this point and not even at this point, I mean, you've heard from the day H and A first bought the asset way back, we think it's a spectacular asset. Great location, great building, now directly across the street from JPMorgan New World Headquarters, caddy quarter to 280 Park, which has been a very successful redevelopment and only getting better through developments like 1 Vanderbilt, 425 Park and others to come as a result of East Midtown rezoning. So it's a good piece of real estate. We like it very much. We've been we're in the we're already we were part of the original acquisition financing. We made an additional substantial investment about 3, 3.5 months ago. And we're in dialogue with HNA to recast that investment into something that will have longer term more permits. That's really all I can say for now. Okay. Appreciate it. Thanks, Mark. Thank you. That concludes our question and answer session. So I'd like to turn it back for closing remarks. Okay. Thank you. See you, the investor conference is December 3rd. Yes, just to remind you, December 3rd, doors open at 8:30. It's at Jazz at Lincoln Center, same venue we've been at the last couple of years. Program will begin at 9, so please get there ahead of that. We expect it to be roughly a 3 hour presentation, then there will be an optional property tour for details on how to register. Please look at our press release or go on to our website. Thank you. Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may all disconnect. Have a wonderful day.