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The call conveyed a strongly positive operational and leasing momentum: record Q1 leasing, meaningful mark-to-market rent gains (16%), low trophy vacancy (3.4%), raised occupancy targets, development progress (346 Madison, 7 Times Square), and encouraging capital markets/financing demand. Near-term challenges include a lagging economic occupancy (85.9% vs ~89% target), Q1 SUMMIT weather-driven underperformance, and elevated leasing-related capital spend that pressures FAD/FFO timing. Management presented clear plans to normalize cash flow by 2027–2028 (expecting FAD to align with the dividend by 2028) and showed active disposition and financing execution that support liquidity and deleveraging.
Management reiterated upbeat guidance: Q1 leasing was a record 51 leases totaling 930,000 sq ft (mark-to-market +16%) and year-to-date leasing exceeds 1.0M sq ft with a 900,000 sq ft pipeline (30% of which are “leases out”), and they raised year‑end same‑store occupancy guidance from 94.8% to 95% (currently 94.4% leased), expect economic occupancy to climb from 85.9% toward ~89% by year‑end (historically ~200 bps below leased), reported Q1 same‑store cash NOI +2.6% (300 bps above plan) and reiterated a 10% same‑store cash NOI growth objective for 2027, aim to drive portfolio toward 96–98% leasing, pursue $2.5B of dispositions (roughly half expected by midyear), have committed ~$567M of $1.3B debt fund (put out $226M since last call), have about $3B remaining of a $7B financing plan, set the dividend at $2.47 (retaining ~ $50M of capital) with FAD expected to be in line with the dividend by 2028, expect zero new Midtown deliveries for the next ~3 years, are advancing 346 Madison (~850,000 sq ft) and other developments, and see upside from SUMMIT (including Paris opening summer 2027), fee income and potential DPOs and buybacks.
Signed 51 leases totaling 930,000 sq ft in Q1 — the largest Q1 in company history — with mark-to-market rents 16% above previously fully escalated rents; year-to-date leasing exceeds 1,000,000 sq ft and pipeline stands at ~900,000 sq ft (30% of pipeline are 'leases out').
Trophy building vacancy declined to 3.4% at quarter-end, supporting continued rent escalation, improved net effective rents, and strong demand for prime Midtown/East Midtown space.
Reported leased occupancy of 94.4% and raised year-end same-store occupancy target from 94.8% to 95%, with management indicating potential upside given pipeline momentum.
Q1 same-store cash NOI came in +2.6%, which was ~300 basis points ahead of internal expectations; company reiterates objective of ~10% same-store cash NOI growth for 2027.
Closed on 346 Madison site; issuing 100% schematic design within six months and targeting ULURP filing by year-end for an ~850,000 sq ft tower. 7 Times Square/53rd Ave: final tenant cleared, mobilization and procurement underway and tracking on or below budget.
Entered contract to sell residential/retail at 7 Dey and closed sale of 690 Madison JV interest; progressing toward a $2.5 billion disposition plan with ~6 of 11 targeted transactions expected closed or under contract by midyear — roughly half of the year's $2.5B target.
Debt fund deployed $226M since last call, total committed ~$567M of a $1.3B fund; One Madison financing demonstrated strong credit demand (44 investors; certain classes 7x oversubscribed) and management reports robust CMBS/SASB liquidity.
City fundamentals supportive: 2025 city tax revenues $80B (16% above pre-pandemic), real estate tax collections +3% YoY, personal income tax +12% YoY, Wall Street profits $65B (record), VC raised $31B (+25% YoY), and 160 unicorns — all cited as drivers of office demand.
SUMMIT remains a strategic growth asset; although Q1 impacted by weather, management expects strong summer demand (World Cup, Semiquincentennial) and plans Paris opening in 2027 to drive incremental NOI.
Repriced revolver and reduced spread to SOFR; ~$3B remaining on the financing plan for the year with intent to reduce WAC via natural hedge/derivative roll-off; management plans disciplined allocation of incremental liquidity (debt reduction, development, share repurchases).
Good day, everyone. Our conference call will be starting soon, within approximately two minutes. Thank you for standing by. Thank you everybody for joining us, and welcome to SL Green Realty Corp.'s first quarter 2026 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, as 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 belief 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 conference 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 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 slgreen.com by selecting the press release regarding the company's first quarter 2026 earnings and in our supplemental information included in our current report on...