SLG - SL Green Realty Corp

[fareastwarriors]

Thanks for the update.

Nice little rally today.

[thepupil]

I think the below is a positive announcement from SLG as it relates to the state of the financing market. SLG was unable to sell this building because of but they were able to borrow 62% of the pre-COVID sale price from some foreign banks. Given that this isn’t the “best” building, the fact that guys are still lending in size at $500 $430 ish / foot (building is 1.2 not 1.0) is indicative that the lending market is not (for now) significantly hair cutting the values at which they lend against. Also it’s not coincidental that the banks are foreign as they are undoubtedly starved for yield and making loans in what has been the most liquid and deep CRE market doesn’t seem entirely crazy way to get it.m, notwithstanding the prognosis of urban office buildings imminent death.

 

Most of the NYC REITs trade at or below this implied square foot value, meaning (in theory) they could more or less distribute their market caps in cash if they fully levered up all their buildings. In practice that will not happen.

 

I think a lot of people rightly ask “who cares about NAV if the company isn’t for sale or if liquidation is below NAV because of transfer/gains taxes”.

 

Well lenders focus on NAV/private market value, so it matters as it relates to how much cash one can extract from buildings which is a very material consideration at the prices for which the REITs (particularly NYC office) trade.

 

 

 

 

After having announced last October that it had sold The News Building in Midtown and then subsequently seeing that $815 million sale fall through, SL Green Realty Corp. announced  today that it has refinanced the asset with a $510 million mortgage.

 

SEE ALSO: Valentino Suing Landlord to Get Out of Fifth Avenue Lease

Aareal Capital Corp. — a New York-based subsidiary of German financier Aareal Bank — Citi and French lender Credit Agricole teamed up to provide the debt financing, according to information from SL Green. The firm said the liquidity generated by this transaction also allowed it to “repay the company’s unsecured revolving credit facility.”

 

SL Green president Andrew Mathias said in a prepared statement that he credits the closing of the transaction at this time as a “testament” to the firm’s track record and its history and relationship with the lending community, adding that the deal “is another example of the significant liquidity in the [New York City] market.”

 

The 1-million-square-foot skyscraper at 220 East 42nd Street — between Second and Third Avenues — was built in 1930 and is called The News Building due to its history as the former headquarters for The New York Daily News, which now operates out of offices in the Financial District.

 

SL Green had announced a $815 million sale — $715 per square foot — of the 37-story art deco office tower to Jacob Chetrit in October last year, with an expected closing date aimed at the first quarter of this year. Chetrit eventually pulled out of the deal in March, amid the height of the COVID-19 pandemic, after its lender Deutsche Bank decided that it wouldn’t move forward in funding the transaction. Afterwards, SL Green sued Chetrit in an attempt to retain the $35 million contract deposit he had made, according to a March report from Connect New York.

 

Nevertheless, the building remains in a strong position and is nearly fully leased out to around 60 tenants, as per data from CoStar Group. And this month, SL Green was able to sell two commercial condominiums for $26.7 million to the Young Adult Institute, The Real Deal reported.

 

Current tenants include local TV station WPIX, the United Nations, Visiting Nurse Service of New York, which has leased more than 308,000 square feet, and Omnicom Group, which is currently housed in around 231,000 square feet, as per data from CoStar.

 

SL Green bought the asset for $265 million in Feb. 2003, almost two years after it had made a $53.5 million preferred equity investment in the fall 2001. After its purchase, the firm underwent a multi-year “repositioning and retenanting” of the property, as per previous information released by SL Green.

 

Two of the three banks in the deal are foreign, a trend also seen in Brookfield Properties and Douglas Development’s $500 million refinance of 655 New York Avenue in Washington, D.C. last week, as CO previously reported. In that deal, the entire lending consortium consisted of foreign financiers.

[thepupil]

looks like a good Q for SLG

 

https://slgreen.gcs-web.com/news-releases/news-release-details/sl-green-realty-corp-reports-second-quarter-2020-eps-074-share

 

To date, the Company has collected gross tenant billings for the second quarter of 2020 of 95.7% for office, 69.6% for retail and 90.7% overall. To date, the Company has collected gross tenant billings for July of 91.7% for office, 61.5% for retail and 87.0% overall as of July 21, 2020, with additional collections expected thereafter.

 

Same-store cash net operating income, or NOI, including our share of same-store cash NOI from unconsolidated joint ventures, increased 2.1% for the second quarter of 2020 excluding lease termination income and free rent to Viacom at 1515 Broadway, as compared to the same period in 2019.

 

Signed 35 Manhattan office leases covering 280,002 square feet in the second quarter of 2020 and 65 Manhattan office leases covering 596,156 square feet in the first six months of 2020. The mark-to-market on signed Manhattan office leases was 0.8% lower for the second quarter and 4.6% higher for the first six months than the previous fully escalated rents on the same spaces.

 

Manhattan same-store occupancy was 95.2% as of June 30, 2020, inclusive of leases signed but not yet commenced, as compared to 95.5% as of March 31, 2020 and 94.8% as of June 30, 2019.

[Gregmal]

Beat me to it. Was going to say, definitely not a doomsday quarter....

 

During the second quarter of 2020, the Company signed 35 office leases in its Manhattan portfolio totaling 280,002 square feet. Twenty-nine leases comprising 226,308 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $73.05 per rentable square foot, representing a 0.8% decrease over the previous fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the second quarter was 4.3 years and average tenant concessions were 4.5 months of free rent with a tenant improvement allowance of $8.42 per rentable square foot.

 

....

 

 

Significant leases that were signed in the second quarter included:

 

Renewal with HQ Global Workplaces LLC for 27,825 square feet at 100 Park Avenue, for 5.0 years;

Expansion with Oak Hill Advisors for 23,848 square feet at One Vanderbilt Avenue, for 16.3 years;

Renewal with Sentry Center 810 Seventh LLC for 23,362 square feet at 810 Seventh Avenue, for 5.0 years; and

New lease with InTandem Capital Partners and Sagewind Capital LLC for 10,165 square feet at One Vanderbilt Avenue, for 7.4 years.

 

 

[fareastwarriors]

SL Green still believes in New York

 

Pace of rent collections has gradually improved, while most office workers are still waiting until fall to return

 

https://therealdeal.com/2020/07/23/sl-green-still-believes-in-new-york/

[CorpRaider]

Getting the Lipstick Building?  Nice.  It's not loan to own, but loan to look and talk and maybe to own kind of makes sense to me.

[thepupil]

https://www.reallylist.com/2020/07/31/sl-green-shopping-amazon-anchored-office-in-hudson-yards/

 

If they sell this building for the rumored price of $1.1 billion ($1750/foot), (relative to the total project cost of $650mm), then I think that would be confirmatory of the narrative that SLG management = the best of the 3 and continue the pattern of SLG raising boatloads of liquidity and disproving thepupil's hesitations regarding its balance sheet and DPE book.

 

of course, selling a brand new redeveloped building in hudson yards that just inked a pre-covid long duration lease with Amazon in December 2019 proves nothing about the broader NYC market given that's like the easiest thing to sell ever, but it'd still be a nice chunk of change heading SL Greens way and the $1,750 / foot implied price is quite a heady number in the context of the NYC REITs valuations.

 

First Republic Bank also has a 15 year lease in the building.

 

 

SL Green Realty, which has been bulking up its coronavirus cushion, is looking to sell an office property in the Hudson Yards area for $1.1 billion.

The office landlord is marketing 410 Tenth Avenue, which is anchored by Amazon, Business Insider reported. SL Green acquired a majority interest in the 640,000-square-foot building in 2018, valuing the property at about $440 million. SL Green then leased over half of the building’s space to Amazon.

 

Analysts say attaining an attractive price for SL Green would send a message that the real estate investment trust, led by CEO Marc Holliday, is not down for the count. “They want to demonstrate they’re creating value and that the public markets are discounting the stock too heavily,” BMO Capital Markets analyst John Kim told the paper.

 

In its second quarter earnings call, SL Green announced it would resume a $3 billion program to buyback its shares, which were trading at about $47.31 at the market’s open on Friday, down from a 52-week high of $96.39. The firm reported net income per share of $0.74 for the second quarter, down from $1.94 a year before.

 

The outlook for office landlords is unclear. Google announced this week that its 200,000-strong workforce would stay home until at least summer 2021. On Thursday, listings giant Zillow announced that its employees can work remotely forever. And few workers have returned to office buildings in New York City despite being allowed to do so. But SL Green is one of the few firms to get a deal done during this period. In May, it sold a 49.5 percent interest in One Madison Avenue, which it plans to redevelop. The company also offloaded loans from its debt business. [bI] — Georgia Kromrei

 

[CorpRaider]

Here's hoping.  One thing that struck me when I read that was, "Wow. I will never have access to other "GPs" who can buy some bricks and ink a deal with Amazon and ~3x the thing, while charging me what...a sub 1% all-in fee?"  Same deal really with "dirt guy" building something and signing Facebook during pandemic/greatest depression.  So maybe, overall, I should buy moar REITs.  I think Swensen tried to tell me that 5+ years ago.

 

Just anecdotally observing a few cycles recently it also seems like the "greater volatility" versus non-listed real estate is largely just because that market becomes frozen and takes longer to discount the same realities.  Seems like a REIT feature not a bug.

 

Then again, I'm on this Canadian and Australian bank kick lately.

 

[BG2008]

Here's hoping.  One thing that struck me when I read that was, "Wow. I will never have access to other "GPs" who can buy some bricks and ink a deal with Amazon and ~3x the thing, while charging me what...a sub 1% all-in fee?"  Same deal really with "dirt guy" building something and signing Facebook during pandemic/greatest depression.  So maybe, overall, I should buy moar REITs.  I think Swensen tried to tell me that 5+ years ago.

 

Just anecdotally observing a few cycles recently it also seems like the "greater volatility" versus non-listed real estate is largely just because that market becomes frozen and takes longer to discount the same realities.  Seems like a REIT feature not a bug.

 

Then again, I'm on this Canadian and Australian bank kick lately.

 

On the "it's a feature, not a bug" statement, one of the nice features of public equity for RE is that you can basically buy out your partners at a cheaper price assuming that the REIT pays a dividend.  When it comes time to get out, you can also sell in pieces.  In the private market, you are likely selling 100% or not.  It's an discrete function vs a calculus function.  Obviously, the bigger assets can sell portions from time to time.  But no one is going to buy 1/10 of your single family home. 

[thepupil]

Corp, it is probably a 3x+ on the equity (I don’t know exact capital structure) but it’s more like an unlevered 1.7x ($1.1/$650) if they get it done because they bought the building @$450mm but the “total project costs” per SLG deck is $650mm. It’s still a great result if they pull it off, of course.

 

A huge portion of my portfolio is designed around REIT volatility being a feature not a big so I agree; though I still am continually surprised.

 

The CFA curriculum has a whole section of REITs not being equal to RE because they have significant equity correlation and volatility equal or greater to small cap stock. There’s no denying that this is empirically correct, but for head in the sand value guys like myself; it also seems true that they do own real estate and regularly transact and borrow in that other completely different private market.

 

But no one is going to buy 1/10 of your single family home.

 

BG, actually there are FinTech types that will buy 10% of your SFH! Bad terms if you expect appreciation, but it's the only way I'm aware to short your own house's value.

 

https://www.hometap.com

https://point.com/

https://www.unison.com/

 

https://www.nerdwallet.com/blog/mortgages/shared-appreciation-tapping-home-equity-without-taking-out-a-loan/

 

 

 

[CorpRaider]

Interesting.  Thanks. 

[BG2008]

Corp, it is probably a 3x+ on the equity (I don’t know exact capital structure) but it’s more like an unlevered 1.7x ($1.1/$650) if they get it done because they bought the building @$450mm but the “total project costs” per SLG deck is $650mm. It’s still a great result if they pull it off, of course.

 

A huge portion of my portfolio is designed around REIT volatility being a feature not a big so I agree; though I still am continually surprised.

 

The CFA curriculum has a whole section of REITs not being equal to RE because they have significant equity correlation and volatility equal or greater to small cap stock. There’s no denying that this is empirically correct, but for head in the sand value guys like myself; it also seems true that they do own real estate and regularly transact and borrow in that other completely different private market.

 

But no one is going to buy 1/10 of your single family home.

 

BG, actually there are FinTech types that will buy 10% of your SFH! Bad terms if you expect appreciation, but it's the only way I'm aware to short your own house's value.

 

https://www.hometap.com

https://point.com/

https://www.unison.com/

 

https://www.nerdwallet.com/blog/mortgages/shared-appreciation-tapping-home-equity-without-taking-out-a-loan/

 

The finTwats can take their 10% and shove it up their #$@.  Haha.  In the private market, I am a little bit old school (become more so over the years).  If I own something, I'm going to own all of it with full control. 

[bonkers]

Does anyone have historical background what happened to SLG (and REITs in general) during the GFC?

 

Most REITs dropped like stones, and traded at truly distressed valuations even if little trouble was visible from the financials. So I guess it was related to concerns over liquidity and future leverage levels, if anything. Reading old financial reports does not reveal the amount of pressure in the background.

 

I mean, SLG went to 8.69 USD in March 2009, that is like P/FFO = 1.3 x  (:o)  Vornado went to 4.3 x. Many top REITs had to, or decided to issue equity at rock-bottom valuations, including BXP.

 

Any insights or anecdotes from those years would be highly interesting.

[thepupil]

https://www.valueinvestorsclub.com/idea/SL_GREEN_REALTY_CORP/6907542209#description

 

see this january 2009 VIC article that thought (very incorrectly) that SLG would go BK. it gives you a feel for the bear case at the time.

 

beyond some of the stuff you have already said (frozen CMBS / financing market, presumed additional bank failures, tons of funds/banks going BK and leaving NYC, equity dilution), I don't have much to add as I was in college at the time.

 

also if you can't see the comments (read from the bottom up)

 

5

biv9301/26/09RE: rating 3   

i would respond in 2 ways:

 

1) if you look at the rents rolling over in the next few years, they are 10-20% below the asking rent as of 3Q 08 but effective rents are already off 10-30% from the 3Q 08 level depending on where you are in Manhattan so even if everyone rolled over today, you coudl see a hit to revenues. However, i think rents will fall over 40%+ from the 3Q 08 levels similar to declines seen in the early 90s which would mean that SLG will take a big hit to the rents rolling over.

 

2) i would also say that just as we saw in the early 90s and as we saw after the tech bust, many tenants that have leases in place from the peak levels and have many yrs left on their leases, they will renegotiate down rents closer to the spot rate.  this will eat away at revenues as well.

 

3) you combine the above with accelerating vacancies (run rate is over 100% for manhattan in next 12 months) and it is not hard to see how revenues could get hit by 20%. but even if its 10%, they are breaking covenants.

 

     

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  4

thoreau9411/26/09Property Level Data 2   

You mentioned that you track property level data monthly. Where can I get that data?

 

     

view available tags

  3

agape10951/26/09rating 

I gave this a 2 because I think several of your key analysis is flawed.

 

1) your analysis on valuation..."Its bonds trade at 15%+ YTMs which implies zero equity value", "Assuming a 200bps spread to investment grade bonds implies a 10% cap rate which also implies no equity value".  First, IG bond spreads changes DAILY. A lot of companies have bonds trading way above 15%.  It doesnt mean their equity has no value.  Second, most of SLG's financing is locked in, they do not rely on ST financing.  As long as SLG pays on time, they are fine.

 

2) you ignore the fact that most of the rents SLG is receiving now is signed YEARS ago and is way below-market market rents.  For example, SLG just renewed its lease with Viacom Inc at Times Square in November 08, terms were not disclosed.  The old lease was less than $50/sf.  Current market rents at Times Square is around $80 - 85.  It would be safe to assume that SLG got more than $50/sf in the new deal.

 

Currently, SLG gets $45/sf in rents on its portfolio.  So your assumption of a decline of 20% in revenue seems quite impossible.  In fact, I will place my $$ that SLG could increase their top line because of this below-market rent issue.

 

   

biv9301/26/09RE: corporate structure/liquidity 1   

i think it is very unlikely that SLG will be able to utilize any unencumbered assets as NAVs are likely to fall by over 50% and many of their properties i believe are already under-water.  as they start breaking covenants, this will be a problem.  i track the property level data monthly and they have properties that look like they will not meet interest payments or covenants in just the next 12 months.  Lenders may be willing to push some of these issues off, but if fundamentals dont improve on their properties, mortgage lenders will foreclose. Im not sure bank debt and unsecured holders will be so lenient if fundamentals continue to deteriorate at the run rate they currently are (and they start tripping covenants).

 

I think the question on inflation is a good one.  Inflation is good for hard asset values but the supply/demand will likely be very bad for Manhattan and rents are likely to decline dramatically.  in the long run, if you make it through the next few years, inflation shoudl be good for property owners, but i think several levered REITs/private property owners will be carried out in the interim.

 

     

 

ag3011/26/09corporate structure/liquidity 

you present an interesting macro story -- but how does a company with $3-4bn (give or take) in unencumbered assets (cash, properties, structured investments, land and air rights) and less than $1bn of corporate level maturities (over the next 3 years) go bk in 12-24mths --- do you have a liquidity analysis? are you consolidating property specific (ie non-recourse)debt with corporate level debt? why does it make sense to consolidate non recourse with recourse debt? (hint - it probably doesn't) -- the stock might trade down, but due the structure of the company's debt (secured non-recourse and unsecured corporate), maturity profile and unencumbered asset base, SLG is highly unlikely to file bk in the next 3 years --- now NY could have a 5-10 year downturn and SLG might run into trouble in 5 or so years - but not in the next 3 ----- how do you feel that inflation will impact this short over the next 2-3 years? -- given that there is no realistic chance for bankruptcy

[CorpRaider]

Does anyone have historical background what happened to SLG (and REITs in general) during the GFC?

 

Most REITs dropped like stones, and traded at truly distressed valuations even if little trouble was visible from the financials. So I guess it was related to concerns over liquidity and future leverage levels, if anything. Reading old financial reports does not reveal the amount of pressure in the background.

 

I mean, SLG went to 8.69 USD in March 2009, that is like P/FFO = 1.3 x  (:o)  Vornado went to 4.3 x. Many top REITs had to, or decided to issue equity at rock-bottom valuations, including BXP.

 

Any insights or anecdotes from those years would be highly interesting.

 

I think I remember that they hived off their CLO/finance business or a big chunk of it into Gramercy something which they externally managed (GKK ticker I think).  Eventually sold/combined with American Financial Realty (I think that was the name); maybe like right before/during GFC stuff really blew up.  AFR was a sale-leaseback reit focused on bank branches/offices. 

 

I think it was a Nicholas Schorsch formed/ramped deal, but it didn't blow up from fraud (Like VER/AFRP or whatever that one was called American something...that was his schtick).  I think he was gone from AFR before the combo with GKK/Gramercy.  It eventually became Gramercy Property Trust; SLG took an equity stake in them I think.  There's a long thread on here about that REIT coming out of the GFC; some people crushed it with that one and I think SLG did alright.  I did well with it too but was much later to the story.  As liquidity returns, it sold all those assets and eventually was a diversified triple net play (focused on industrial) with a WP Carrey hotshot guy coming in as CEO.  I remember him talking about SLG as their kind of anchor unitholder.  Blackstone bot it out. 

 

Imop, SLG has sort of a debt/finance co. REIT rolled into the office equity reit.  It is definitely a bit of a different animal.  CEO Holiday was a merchant banker before taking them public in the early 90s.  Makes the BS look shittier than normal equity reit, but they get info and access from that operation and sometimes end up lending to own the lipstick building...stuff like that.  I have observed that the "paper" has proven more/quite liquid in this environment than the office towers as well to my casual observer eyes.

 

I don't remember that VNO, BXP, and SLG all cut their dividends and issued equity.  I didn't own any REITs at the time as far as I recall, so I'm not sure if they had a bunch of short term debt or what (like everyone else did).  I have been looking back at that for a frame of reference on valuation for some industries including SLG.  Both they and VNO shrunk the float materially (for a REIT) after the GFC when they were still cheap. 

 

GFC was totally different from now, in one respect (so far).  Debt markets were closed.  Like money market funds froze up.  You could be triple A one week and frozen out the next.  Right now pretty much anyone can issue debt.

 

[More as I remember; but the gramercy thread is on here somewhere I remember some bad asses on here followed a south Korean value investor shop and crushed it....I got into it much later and did ok]

[fareastwarriors]

Manhattan’s Newest Skyscraper Opens Up to a Dead Midtown

 

https://finance.yahoo.com/news/manhattan-newest-skyscraper-opening-dead-103000949.html

 

The company signed a pair of new leases at the Midtown building during the pandemic and is on track to complete two more deals, Holliday said.

 

TD Bank, private equity firm Carlyle Group and SL Green itself will be among the first tenants to move into One Vanderbilt, in December or January.

[thepupil]

https://therealdeal.com/2020/10/07/one-of-sohos-priciest-retail-spaces-heads-to-foreclosure/

 

#non-recourse

[thepupil]

looks okay to me to me

 

https://seekingalpha.com/pr/18053095-sl-green-realty-corp-reports-third-quarter-2020-eps-of-0_19-per-share-and-ffo-of-1_75-per

 

the bear thesis of renewals happening at shorter term, w/ significant concessions is absolutely coming to pass, but it's not quit apocalyptic just yet.

 

During the third quarter of 2020, the Company signed 33 office leases in its Manhattan portfolio totaling 187,469 square feet. Twenty-seven leases comprising 133,543 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $66.16 per rentable square foot, representing a 6.7% decrease over the previous fully escalated rents on the same office spaces. The average lease term on the Manhattan office leases signed in the third quarter was 5.3 years and average tenant concessions were 4.7 months of free rent with a tenant improvement allowance of $19.33 per rentable square foot.

 

 

[CorpRaider]

Listened to the call:  The begging for bosses to force workers back to the office is unseemly and kind of disconcerting.  Not as bad as the op. ed. by the related guy but reeks of desperation almost as much. 

[thepupil]

Agreed; I don’t think stuff like that is productive or helpful.

 

I did love the “I’ve been hearing we’re overlevered for 21 years”  bit by Marc.

 

 

Richard Skidmore

Market Cap: 3460.33398993 Current PX: 46.7200012207 YTD Change($): -45.1599987793 YTD Change(%): -49.151

Bloomberg Estimates - EPS Current Quarter: -0.382 Current Year: 2.667

Bloomberg Estimates - Sales Current Quarter: 224.2 Current Year: 1013.286

Good afternoon. Marc and Matt, can you just talk about how you're thinking about leverage in terms of debt to EBITDA has gone north of 10x. If you annualize the third quarter, it's probably north of 12x. Can you just talk about how you think about leverage and use of capital as you go forward between leverage and share repurchase? Thanks.

 

Matthew J. DiLiberto, Chief Financial Officer

Yes, Rick, it's Matt. I'll hit the math first. I think if you're annualizing a quarter, you're going to come up with a bad number and of course, everybody does debt to EBITDA differently and debt to EBITDA is of course, the most unreliable and least relevant leverage metric you can use in real estate, particularly when you do a lot of construction. So we look at our leverage as still holding steady. We look at it on an LTV basis in mid to high 40s in a market that generally sees 70%. So 50 plus percent equity cushion is where we feel comfortable and we've been managing that very closely as we balance capital in between debt repayment and share repurchases with the construction that we have and use debt to EBITDA, you're basically saying One Vanderbilt, One Madison, 410 Tenth, 185 Broadway, are all worth zero, and I don't think anybody in the call would actually say that. So we look at leverage differently and we feel we're comfortably protected.

 

Marc Holliday, Chairman & Chief Executive Officer

Yes, Rick, I would just urge us consider what Matt says, I've been hearing we're over leveraged for 21 years and we we're a company that's always got a large pipeline of active projects that we're going through heavy redevelopment or ground up development. And by its nature, we incur a lot of financing on those projects. In the case of One Vanderbilt, something that's finished and yet are recognizing a little to no income and it skews those numbers. So if you take the leverage associated with properties not in service out, our operating portfolio is widely underleveraged.

And then on an overall LTV basis, even including all the leverage on assets that are among the most, the irony is the most valuable assets in the portfolio are the ones that have the leverage and aren't yet producing income. So right now, when Vanderbilt, soon to be One Madison, 410 Tenth, which is fully leased, but we're not recognizing income yet. What else you got, 185 Broadway, which is going to be I think, one of the best rental buildings in downtown, but obviously, not yet leased up because we don't have our TCO.

So you got to dig -- we don't have to, but we would suggest people dig way beyond debt to EBITDA and really dig into property by property, loan to value, look at stabilized values, look at the quality of the earnings. But we -- on an LTV basis, probably 45% or less, tons of interest coverage, a lot of capacity, very little outstanding on our line of credit and we think, we're in a no near-term maturities, which I actually think is more important than level of leverage is the balance of terming out your maturities. So I guess it's a matter of perspective, but we would disagree with the notion that the company is highly leveraged.

 

 

[thepupil]

also, Marc's "two years" answer can be translated as "if you think we're going to fully recover in 2 years, you're kidding yourself...these next few years are about surviving/stability not growth"

 

that's how i read it. whoever the hell thinks 2 years is the recovery time is smoking something special. no way. it will be longer.

 

 

Sure. A couple of points of clarification. In saying the city's on pause and we'll -- and we're investing for the future and it will recover. But what if it goes two years? This could go two years. I don't want -- I didn't know -- hopefully, the comment to income across is like there's going to be some kind of V-shape recovery right after January because that's -- in December, we'll have a -- will express a form view, but that's not our form view. So this is -- but I look at, I guess the difference Nick, between how you pose and how I say it. I don't look at two years is a long time.

 

I look at -- if you said to me, there's going to be sort of a one to two-year, not to pause in the sense we are now because every month, we see things improving somewhat. But I'll call it a very slow recovery over the next one to two years before things get sort of cooking again. We don't want that and hopefully will be quicker than that, but that's not something where we change. Fundamentally, these are One Vanderbilt is built for 100 years, and One Madison, we're going to deliver at least in 2024. So whether it's one or two years, the goal for companies like us right now is to stabilize and get through this, you buy time, the way we buy time as we renew our tenants.

 

When you say, the tenants are demanding shorter -- free rent and shorter terms. Nick, we went to those guys, they didn't ask for it. We had a program. I think we might have talked at the last call, we went to every single tenant that had a renewal in the next one to three years and proactively said to them, do you want some free rent in exchange for signing up for an additional one, three, five years. And if they did, great, if they didn't did, it was to help them because we knew they needed and wanted that free rent most during the early months of this pandemic.

 

And for us, whether we get free rent now or a year or two from now when they actually did their renewal, it didn't matter to us because we have plenty of cash liquidity. So we went to these guys and said, look, you need this help now. We'll give you this help now and let's talk about a short-term extension, so you don't have to make -- we could have pigeon hold them and said, listen, fill or kill, you've got to either sign up or move out. And it's not what we did, and don't know what the answer would have been, had we done that. It seemed much more prudent to us to go to them almost as partners and say, listen, here's some free rent, sign it for an extra one to three years, which is why you see shorter terms and then let's work on a longer-term restructuring of your lease, whatever that means, whether it's for more equal or less space because they don't really know right now.

 

So what we're doing now is very proactive on this company's part. I don't know if other companies are doing the same thing or not. You'd have to check away with those companies, but that's what we're doing and we're sort of -- because we are 30 million feet in the city, we sort of drive that market. If this sort of scenario plays out, we're making the earnings we're making and we're 96% collection, 94% lease. We want growth as much as our shareholders do, but I wouldn't call another one to two years before a sharp recovery. Anything that shouldn't -- that couldn't be expected or negative. I think that's positive for the city after two years where sharply coming out of this. Hopefully after one year, I mean we'll have to gauge that. But again it's really up to people.

 

I don't think they're buying it based on whether people come back six, 12, 18 months from now, where the economy -- but their view is this city will be back. And if you want to be an investor in the city, you got to have a view, it will be back and if you don't think that, you're not going to invest in the city. But there are investors, we know that because we're selling assets, we know that because we're marketing other assets, that changes and changes. But right now, in kind of the worst of times, there's still, I would almost call it decent demand at an asset level.

 

David is selling DP assets at very strong marks. We've got multiple bidders for assets like 410 and others. So investors are out there, tenants are out there. Steve's got 865,000 a pipe, half of which is new. So that's got to mean there's a lot of interest in signing them new. So I think the trends are good. That's how I come to my -- people may differ, that's what makes the market, but that's how we come to our conclusion that we'll get through this, New York will be back. How long it will take? It's a little bit of a crystal ball and we're not really in a position to give that right now. But we've been 31 years in the business, exclusively in New York City and this feels like one we can get through.

 

 

[fareastwarriors]

You tell him !

 

[Gregmal]

Ive said it plenty of times before, but some of the "best" short sellers, ie Chanos, Left, Block....very often trade their own noise and juice the noise by deliberately misrepresenting information. Its the art of lying without lying. NOI is down 24%!

[CorpRaider]

Man it has been sort of an eye opener for me.  He's spinning/cherry-picking soooo hard.

 

Steve Eisman doesn't really do that.  He's like "I'm short Canadian banks. This is not like the GFC, I'm just saying they are not priced for the continued existence of normal credit cycles and I don't think credit cycles are dead."  (This was before the covid).

 

SLG's short-term renewals with free rent seem pretty smart to me.  You were going to give free rent in any case, back during shutdown (or really/permanently damage the relationship with your tenant) so why not get a little extension in return?  It also seems like a plausible explanation for the phenomenon, because how else would you be getting any (material) volume of extensions during this period.

 

[thepupil]

i know and responding is an exercise of pointlessly spitting into the wind.

 

he's perfectly in his rights to selectively choose his data points. a risk to the short thesis on any stock is the stock going up (for good or bad reasons) and the company issuing shares.

 

particularly for a REIT (capital market dependence), the stock price can negatively / positively affect the fundamentals, so it's in his interest to talk it down.

 

i can promise you his analyst know what SS NOI did and why NOI is down 24%.

 

it's naive and pointless to respond, but i nevertheless do.

 

you might saySearching for honesty on the Street