Glen Weiss: The bulk of the number is at 280 Park, 770 Broadway, and 1290 Avenue of the Americas. At 1290 and 280, we’ve taken care of, as Michael said in his remarks, 51% of the roll, so call it 500,000 feet of 1 million feet. And as we said, at 770 Broadway, we have Meta rolling in June. Along with the current vacancy, we have pipeline activity on that space. So that’s how we’re approaching the big ones that are in that occupancy number. So, as we take into account our pipeline of deals, as we take into account our expirations going through ’24, we may see more of a dip in occupancy, and as we complete transactions during the next six months to nine months, we expect that occupancy to then climb back as we get into 2025.
Michael Lewis: Okay. Great. Thanks. And then my second question is about THE MART. So, occupancy dipped down to 77.6% in the most recent quarter. Pre-pandemic, that was always 95% to 100%. Could you maybe talk a little bit about kind of the roadmap there and what you think stabilized occupancy or given that there’s obviously some volatility at that asset, what maybe like a stabilized kind of revenue figure might look like for THE MART?
Michael Franco: So I’ll start, Glen, then you jump in. Like, the Chicago market is obviously challenging right now, probably one of the more challenging ones in the country. But we do have decent activity on the asset. I would say that alluding to some of the prior questions, there’s quite a bit of distress in Chicago office. Many landlords do not have the wherewithal to lease their assets, given the debt situation there. We have an asset that has no debt on it. And so, I think the sponsorship, the strength is well-known by the brokers and the tenants, and I think that’s helping us. We just finished what we call MART 2.0, which is the second stage of amenities that we put in, fitness, conferencing, et cetera. And again, the reaction to that’s been positive.
So, the market’s tough, cannot dismiss that, but I think we’re seeing more than our fair share there. And I think that’s going to take probably three years to get back to stabilized occupancy realistically. Maybe it’s two, but I think when the income fully comes online, it’s probably in the neighborhood, and our objective is to get it back into the 90s-percent occupied, get it 95%-plus and get the income back up to that $90 million to $100 million on a cash NOI basis. So there’s a fair amount of growth to come there. But the market is, as I said, challenging right now.
Operator: Thank you. The next question is from Caitlin Burrows with Goldman Sachs. Please go ahead.
Unidentified Analyst: Hi, this is Julien on for Caitlin. Thanks for taking the question. One quick one. Can you comment on whether the leasing spreads in the quarter benefited from the PENN District leasing and what that leasing spread might have been ex PENN leases?
Michael Franco: Yeah, I think the answer is that the spread, PENN 2 was Major League Soccer with the big lease in this quarter. That’s a new lease, first generation. So, didn’t affect the spread.
Unidentified Analyst: Okay. Good to know. And then a second one, on the debt covenant, it looked like interest coverage and fixed-charge coverage tightened a bit in the quarter. I know longer term, the metric is going to benefit from the occupancy gain you talked about from PENN District NOI, and it also sounds like you have some sales underway. But can you give us a sense of maybe the trajectory over the coming quarters, given the fact that — I know there’s that sort of big swap expiration at 555 Cal.
Michael Franco: Yeah. No, you’re accurate. I think the impact this quarter was predominantly the big item was the swap increase on PENN 11, we were coming up, I think — if I go from recollection, I think it was 17 basis points. So, too bad that couldn’t go forever, but that was the material item this quarter. A couple of other things as well, but that was the big one. Next quarter — second quarter, if you will, you’re accurate, 555, we put in place another swap. That would kick in an increase. So, as we look forward, we continue to have sufficient cushion in our covenants. Fixed charge will tighten up over the next couple of quarters, but we still have sufficient buffer there. And then as the income comes online from some of these leases, that number will grow again. But it will tighten up a little bit based on the 555 swap rate increase.
Operator: Thank you. The next question is from Nick Yulico with Scotiabank. Please go ahead.
Nick Yulico: Thank you. I just wanted to go back to the $0.25, $0.30 impact this year from vacancy. So, I guess, that adds up to about $55 million, $60 million of NOI versus your total NOI share last year of $1.14 billion. So it’s somewhat like a 5% NOI loss on that math, if that’s correct. So, I guess I’m just wondering, how does that — is there other moving parts here besides just some of the vacancy impact you talked about? Because if I look at your supplement, in the fourth quarter, you had 5% of your rent expiring in New York and you’re obviously not all expiring. So, the 5% NOI loss number seems a little bit high relative to what your expirations were this year.
Michael Franco: There may be a one-tenth that expired December 31st last year, but I think in a nutshell, that’s it. I mean, it’s pure and simple. The vast majority of it is 1296, 280 Park, and 770, and you get to that sort of number. I mean, there’s a little bit of positives, a little bit of negatives, but those are the three main drivers. So, we just we came through a period where there was some known move-outs and we’re backfilling those, as we discussed, but that’s it. And it just occurred at various stages everywhere from December 31st through — probably the last one is Meta, which is in the middle of this year.
Michael Franco: There may be a one-tenth that expired December 31st last year, but I think in a nutshell, that’s it. I mean, it’s pure and simple. The vast majority of it is 1296, 280 Park, and 770, and you get to that sort of number. I mean, there’s a little bit of positives, a little bit of negatives, but those are the three main drivers. So, we just we came through a period where there was some known move-outs and we’re backfilling those, as we discussed, but that’s it. And it just occurred at various stages everywhere from December 31st through — probably the last one is Meta, which is in the middle of this year.
Nick Yulico: Okay. Thanks. And then I just want to be clear on the way to think about occupancy and, Michael, last quarter, when you were talking about sort of a flattish occupancy this year, does that mean that by the time we get to the fourth quarter of this year, it’s a sort of a flat year-over-year occupancy? I’m assuming it’s not a sort of average occupancy for the year, that would be flat year-over-year based on that.
