Steven Durels: Well, we’ve got — I’ll make a couple of points. Right now, our pipeline is almost 1,400,000 square feet. That’s up over 100,000 square feet where we were at an investor conference and in the face of signing over 100,000 square feet of leases since that time period as well. I would say probably 60% or more of the deals pending right now, our financial services businesses. I don’t think that’s necessarily commentary as if they’re the sole driver in the market. As a matter of fact, we’re seeing a lot of tour activity from law firms, government, education, even some tech firms right now. It just happens to be a reflection of where we have availability within our portfolio. And it’s a pretty broad range of sizes. A lot of activity in some of the more moderate price buildings like Graybar Building, some of the third avenue buildings that are kind of small to midsized requirements.
But then on some of the bigger financial service tenants, we’ve got a number of notably large deals that are in negotiation. And every single one of them is driven by those tenants having a growth component of their space requirement.
William Catherwood: Appreciate that, Steve. And then for a second question, maybe Marc or Matt, First off, congrats on getting the refinancing done at 7 day and Marc had mentioned the $5 billion that you — of refinancings you had laid out at the investor conference. I know we’re early in the year, but kind of what are the next priorities on your list when it comes to refinancings? And how are those conversations trending so far?
Marc Holliday: Well, I think just for conciseness, we set out asset by asset in December, which we’ve never done before. Our plan, and we noted in each case where we thought we would be able to be successful in getting some kind of modification extension done on debt that has maturities mostly in ’24, ’25, ’26. We want to try and take care of almost all of certainly ’24 and ’25. And with the goal of getting new maturity dates of — end of ’27 and beyond so really ’28. And so in terms of like next priority, that group of assets is all the priority. I think there’s 5 or 6 in total that we’re probably working on in various stages. And it’s — look, like nothing is easy in this market for sure. But between what we showed you last year and what we continue to show in this quarter, is there’s going to be differentiation in this market between sponsors that partners and lenders are going to want to work with and sponsors where lenders and partners may not want to.
I mean it happens every time you get a bit of a market dislocation like this. There’s a weeding out process. And then the market recovers and sometime in the future, it happens again. So I’m just happy and feel fortunate that as a company, we’ve got the reputation and the platform and the resources to be able to work productively with our counterparties always trying to come up with solutions that are sort of the best available solutions for all, sometimes a great solution, sometimes they’re more painful solutions, but we’re always trying to do it in a way that knowing that these counterparties or people in this market, we have to deal with year after year after year. And what comes around from these efforts, I think, pay off for us in the future.
So I feel pretty good about where we are and the job we have ahead of us this year and next to get all of that debt sort of firmly landed restructured, extended on terms that we can that we can manage, but it’s only January.
Operator: Our next question is going to come from the line of John Kim with BMO Capital Markets.
John Kim: Kudos on to [indiscernible]. But going forward, the cost of carry is still pretty high given the ground lease. And it sounds like if you’re going to reposition it, it’s going to be fairly capital intensive. At this point, are you more inclined to sell it or joint venture the asset? Or do you plan to keep it on balance sheet? And will this stay in your alternative strategy portfolio?
Unidentified Company Representative: This is Harry. Right now, we’re working through various avenues. We got through the first half of this, which is with the lease of lender. But we have a lot of time here. We’ve got a lot of time. We’re working through the asset. We know it very well. We’ve gone it for a few years now. and we’re working through the avenues and we’ll present it to you over the coming quarters.
Marc Holliday: Yes. I think this is a business plan that we’ll be developing over the course of the year. It’s not one we highlighted for you guys in December. Our priorities were elsewhere. Now it’s — now that there’s a reordering of the capital stack, it’s now feasible to start thinking about long-term value. but we can’t do it in a day or two. I mean this is something we’re going to study and we’re going to be testing the market. And certainly by 6 to 12 months, we’re going to have a game plan for this asset and we’re going to try to — on a reset basis, something that might not have worked in the old formula will work now, and that’s the process we’re going through in this situation.
John Kim: And will stain your ASP? And should we just view this as option value going forward?
Matthew DiLiberto: Yes. For now, John, that will stay in ASP.
John Kim: Okay. My second question is on your month-to-month leases or holdover. It looks like it was 200,000 square feet combined, which is higher than previous quarters. So I was wondering if you could just comment on the likelihood of these tenants moving out versus renewing or just remaining in the month-to-month portfolio?
Steven Durels: I think a lot of that is driven by some of the tenancy at 625 Madison Avenue. That’s right.
Matthew DiLiberto: The leases there have technically been terminated, their holdovers.
Steven Durels: So that building, as you know, is in contract for sale. So it’s not really an indicator of anything else that’s going on in the broader market.
Operator: Our next question is going to come from the line of Anthony Paolone with JPMorgan.
Anthony Paolone: Marc, you talked about the big retail trades that occurred earlier in your comments. Can you just talk about any shift in sentiment though, that you picked up in terms of investing in office and whether that’s changed much?
Marc Holliday: Well, I think that goes back to the pools of capital that I was referring to. So yes, I’d say it’s changed a lot because there’s like I don’t know how many billions and billions of dollars of announced capital for me for credit and equity, targeting not exclusively, but certainly a significant amount is going to be targeted towards the office sector, including our own efforts. And that’s the first sign of — this is a playbook you guys have seen a couple of times before. It’s not anybody’s first rodeo. And it’s already been 4 years since pandemic. And the business fundamentals in this city are very strong and people are back to work. And it’s time for a lot of investors who have been sort of off to office, except for what I’ll call sort of the special assets in great locations, et cetera.
