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SL Green Realty Corporation (NYSE:SLG)
Q1 2021 Earnings Call
Apr 22, 2021, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you everybody for joining us, and welcome to SL Green Realty Corp's First Quarter 2021 Earnings Results Conference Call. [Operator Instructions]

At this time, the Company would like to remind listeners that during the call, management may make forward-looking statements. Actual results may differ from any forward-looking statements that management may make today. Additional information regarding the risks, uncertainties and other factors that could cause such differences appear in Risk Factors and M&A section of the Company's latest Form 10-K and other subsequent reports filed by the Company with the Securities and Exchange Commission.

Also today, 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 measures 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 both the Company's website at www.slgreen.com by selecting the press release regarding the Company's first-quarter 2021 earnings and in our supplemental information filed with our current report on Form 8-K relating to our first quarter 2021 earnings.

Before turning the call over to Marc Holliday, Chairman and Chief Executive Officer of SL Green Realty Corp., I ask that those of you participating in the Q&A portion of the call to please limit yourselves to two questions per person. Thank you.

I will now turn the call over to Marc Holliday. Please go ahead, Marc.

Marc Holliday -- Chairman and Chief Executive Officer

Good afternoon, everyone, and thank you for joining us today. After a year defined by lockdown, closures and restrictions, New York City is now undergoing a vast reawakening. Businesses, restaurants, and hotels are reopening and restrictions are being eased. The leisure in hospitality industry is starting to bounce back as domestic tourism is increasing in Manhattan. 100,000 jobs have been regained over just the last three consecutive months, during the first quarter of this year. Leasing volumes for the period January through March were higher than any quarter since the outset of the pandemic, these are just some of the signs indicating a robust and perhaps, unprecedented recovery is under way.

The cycle of a sharp downturn, followed by large monetary stimulus, followed by increased business activity and profitability and ultimately followed by increased demand for office space is a familiar one, and one we believe will once again be played out during this recovery. Just about every company we've spoken within our portfolio is making firm plans to have their workforces return to the office sometime between June and September of this year. Big New York City employers like Google, Bloomberg, Amazon, and JP Morgan have reversed course and have set hard dates for return to work this summer or even sooner upon workers being vaccinated in certain cases.

Leading the way, Mayor de Blasio has called back 80,000 New York City government workers to city offices on May 3rd, it's right around the corner. With the goal of 5 million people vaccinated by June, employers will have every expectation of seeing their employees back in action and working together. While some employers will undoubtedly experiment with a hybrid workplace model, giving employees the option of working one or possibly two days away from home, I believe this will be at first limited in practice and over time will become even less and less prevalent. I think we have a bright future for New York City office properties because we have the most important thing and that's a growing successful business space in a diversified economy.

Last year, Wall Street firms made $51 billion, that's the second-highest profit ever recorded since the date it was first kept over 30 years ago. The first quarter Big Five bank profits were up 163% year-over-year and the technology sector in New York is absolutely booming. This rising momentum resulted in our leasing 178,000 square feet during the first three weeks in April, bringing our year-to-date leasing results to 530,000 square feet putting us well on track to meet or exceed our 1.3 million square foot goal for the year and One Vanderbilt is front and center in these results.

I couldn't be more pleased with the way One Vanderbilt turned out, it exceeded all expectations and it's just simply a wonderful addition to the East Midtown and to the New York City skyline. A very special building that is resonating with tenants and establishing a blueprint for the future of sustainable development in New York City. East Midtown needed this development and it is sparking a wave of new development projects all throughout East Midtown, the number one business submarket in New York City.

Earlier this morning on Squawk Box I announced 35,000 square foot lease at One Vanderbilt that was signed last night at 10:30 p.m. to be exact, and moments after I went off air, we signed another 17,000 square feet this morning, bringing total building occupancy at One Vanderbilt to 77%.

As we are trading paper on another six deals that OVA, we expect to achieve 90% lease status by the end of the year, which is much faster than originally projected and higher than our goal for the year of 85%. The success we are having with One Vanderbilt is an enormous endorsement for our development at One Madison, which we are now well under way with. The One Madison project will be the only project in Midtown, Midtown South delivering in 2023 to offer the desirable combination of well-designed, parked front, new construction on an amenity package to arrive at One Vanderbilt and direct subway access. Project completion is scheduled for more than 30 months from now, but we nonetheless have good activity from tenants in the market who have shown significant interest in this new development.

We are about to experience the confluence of low-interest rates, approximately $100 billion of federal stimulus, making its way to New York over the next 12 to 18 months. Surging financial sector, significant business activity upward swinging, hiring trends, and a gradual lifting of COVID era restrictions. That's a recipe for what could be a truly explosive recovery in New York City. And SL Green is well-positioned to meet the growing tenant demand and develop the future of New York City.

So with that, we'd like to open it up for questions on the quarterly release that we sent out last night.

Questions and Answers:

Operator

[Operator Instructions] Your first question today comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hey, good afternoon. I guess, Marc first because you mentioned stimulus coming to the city. One of the big issues has been, obviously, in excess of folks for lower tax climates more regulatory friendly. So maybe you could just offer some of your own thoughts on how we should think about the $4 billion in tax increases is Albany [Phonetic] past. The fact that we're peeling the salt would be sort of a tough hurdle because it's really a tax give away for the 1% and then obviously there is potential that a reimposition of the AMT would sort of mitigate that to the middle class. So how do you think about what's going on the political scene versus your comments about employers trying to bring people back and how that plays as far as New York going forward?

Marc Holliday -- Chairman and Chief Executive Officer

Well, a much more optimistic on the sold cap repeal. It has bipartisan support Senator Schumer and send majority with the Schumer has I think made a very big point about needing to and wanting to repeal the sold cap, not just for New York, but for all the states that were affected by what essentially is a double taxation. Tom Suozzi has the build out there with a lot of support is on both sides of the aisle. And whether or not AMT is a part of that, that's a separate question, but the sold cap affected much more than 1%. This is not a 1 percentage. This is a much wider swath of individuals in predominantly blue states that are now subject to double taxation. And I think in accordance with what could be coming out of Washington, with some potential increases for taxes, I do think a sold cap repeal is on the table. And I think would go a long way toward mitigating some of the tax increase that was just passed.

So nobody wants a tax increase, I mean, that's for sure, but I do think that notwithstanding that tax increase, New York will have to just step up even more in providing reasons for people to be in what's consider I think still one of the most dynamic and diversified places to live and work. And regardless of my particular feelings on the matter, condo sales in March were at very, very high levels. We see occupancy gains in multifamily, we see commercial leasing gains, as I mentioned earlier and we just see a general come back in New York.

So the tax increases are unfortunate, because they were aggressive not progressive. But I think there hopefully is effort under way in Washington to bring some level of equity and fairness to those that are now subject to double taxation, which is like I said, a lot more than 1% of the populous, and that's what we're all hoping for.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. And then second question and I don't know if you want this or Durels wants this, but this morning on Squawk you mentioned the rent spreads and that the premium buildings are holding up, and obviously there has the degradation on the older stock. Just sort of curious what that spread is, and if your view is and maybe Steve toward prospective tenants, that we're going to see a bigger shift in the rent levels between the newer modern buildings that are more efficient versus the older ones and how that may play out well?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Well, what Marc said this morning I think holds true, which is that our commodity product you've seen face rents dropped somewhere between 5% to 10%, but in the better quality buildings, the highly redeveloped or new construction buildings, face rents have held. As -- and if you use One Vanderbilt as a barometer of that, as we are rapidly leasing up, we are actually pushing rents in this building.

There is clearly been a large shift in tenant demand toward the better quality product, and that doesn't necessarily just new construction, it means better quality product at all price points, and we see it throughout the portfolio. So whether it's One Vanderbilt Avenue, because if it's a particularly unique asset that checks all the boxes for what people aspire to in a modern workplace, or in our better-quality buildings, like a 100 Park Avenue, or 461 Fifth or 10 East 53rd Street, we've got good leasing traction in those buildings.

And more of the commodity buildings that for those owners that haven't invested in their buildings, which are really not -- you couldn't say that about anything in our portfolio, but for those owners in the marketplace that haven't invested and haven't been of forward thinking, they are ones that are going to suffer.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. Thanks, Steve.

Operator

Your next question comes from the line of Michael Lewis with Truist Securities. Please proceed with your question.

Michael Lewis -- Truist Securities, Inc. -- Analyst

Great, thank you. You talked about reasons for optimism on the demand side. I wanted to ask a question about supply and this -- New York had always been a barrier to entry market. You've got a great chart in your investor presentation, showing how the net new supply in New York City hasn't grown for many years, but now we kind of entered the age of Hudson Yards. You built One Vanderbilt, and now it seems like there's this new wave of -- to meet that high-end demand you're talking about, now we'll be talking about the Penn District, we'll be talking about Towers on 11th Avenue. I saw the Grand Hyatt now has a plan for a potential super-tall skyscraper. How do you kind of think about that high-end demand that you just talked about versus the supply that seems to be coming to meet it?

Marc Holliday -- Chairman and Chief Executive Officer

Well, the -- first I think what you're seeing is a number of projects now being announced in East Midtown area, where the pendulum sort of swing back to Midtown, where there was a lot of leasing velocity in the first quarter, relative to almost every other commercial sub-market, and I think that's very healthy. I mean, you talk about a project like the Grand Hyatt, that project, I think is sort of a best case delivers in seven years and possibly more. So the optimism I expressed in my opening commentary really is reflective of my outlook over the next 12 months, 12 to 18 months for the most part, in which I don't think there is any new construction being delivered in Midtown East, but I'm just looking around the room here, is there any.

So I would say, at least through '22, nothing. In '23, you'll have One Madison, which is the point I was trying to make in the opening commentary, is that will be one of the only new construction projects in 2023 for delivery in Midtown, Midtown South of any scale. And projects like Grand Hyatt, like some of the other more recently announced projects on the west side, I think you're looking at six, seven years plus. So I don't want to diminish the importance of that because inventory is inventory, but you've heard me say before, I'm not against growth. I mean, I think growth and regeneration of the commercial stock is a good thing because it gives tenants options, those that want to pay more for state-of-the-art office, and those that want to be in the value part of the spectrum, but there -- these are all market rate deals. There is no government subsidy like you had with Hudson Yards.

So that again, all we ever escort it is that it'd be a fair competition for tenants, because subsidy is what distorts that and on a fair playing field we feel that One Vanderbilt, One Madison, and some of the other developments we have currently under way are both timely, because they're near-term, because we went forward in 2019 and 2020, very difficult time, but we went forward to make sure that we'll be able to deliver this product at a time when we think we'll have good demand, and not a lot of competition. So that's how -- that's sort of the basis for our near-term outlook.

Michael Lewis -- Truist Securities, Inc. -- Analyst

Thanks.

Matthew J. DiLiberto -- Chief Financial Officer

You also have to always balance supply against private sector job growth. Office using growth which pre-pandemic there was office using growth to absorb all the new supply I mentioned. And we expect as that growth returns, there'll be a need for more office inventory.

Michael Lewis -- Truist Securities, Inc. -- Analyst

Great, thanks. And then my second question is about, I guess, net effective rents and what it takes to get deals done in the current environment. I think, the deals you signed this quarter seven months free, $60 in capital is about -- is roughly a year of rent and that's on deals with an average term a little less than six years. How should we look at that and signing deals now versus -- in the apartment sector I think we've seen some people try to take inventory off the market, and try to weight this out a little bit. What are your thoughts on kind of the deals that are getting done now and the pricing, and how that might look six months or nine months from now?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Well, I think as we sit here today, I'm a strong believer -- we are strong believers that the market has stabilized as far as where net effectives are. The concessions, we're not seeing is increasing. They are brutal right now, they are historic high as far as the amount of concessions go, but I think over the past 90 days they've clearly stabilized. We're not doing more TI or more free rents for new tenants coming into the market, as opposed to what then we were doing at the depth of pandemic.

So, I think, we've seen the worst of the of the rents erosion. And I think at this point we're bumping along the bottom and waiting for a turn back up. With regards to holding space off the market that's never been our philosophy in the 20 something years that we've been a public company. We're a strong believers. We have a large portfolio. We keep the portfolio full. We meet the market as necessary. And if that gives up a little bit of opportunity in the short-term, we'll catch it on the next wave, because we've got plenty of well-staged expirations. We don't suffer any one year where all of our space comes back to us on exploration. We are very careful stewards about how we manage our lease expiration so that in every single year we try to make it as even as possible or as level as possible so that if there is an uptick in rents we'll ride that wave when it gets here.

Michael Lewis -- Truist Securities, Inc. -- Analyst

Okay, thank you.

Operator

Your next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

Thank you. Good afternoon. I had a question on the permanent financing at One Vanderbilt, which is reportedly imminent. And I know you mentioned it's a little bit in your press release yesterday, but can you comment on the use of proceeds of the capital being returned back to SL Green? And also how does the bank lenders view the loan to value of the financing?

Andrew W. Mathias -- President

The second part, we're targeting around a 60% loan to value loan. The final structure and proceeds of the loan are not set. The Real Deal article this morning was inaccurate in many respects. And in terms of use of...

Matthew J. DiLiberto -- Chief Financial Officer

Use of proceeds, it's not that will be for other debt repayment. So we will -- we had bonds maturing over the summer. We had revolver balance, we'll take out existing debt with the proceeds from the new debt on One Vanderbilt. And we hope to have that closed in the -- we're targeting the second quarter.

John Kim -- BMO Capital Markets -- Analyst

On that revolver balance, Matt, you drew down $520 million on it this quarter which didn't seem like it was necessary given the cash balance you already had. Can you just provide some color on that?

Matthew J. DiLiberto -- Chief Financial Officer

Yeah, the biggest component of that is we unencumbered 885 Third Avenue, it's about a $300 million mortgage.

John Kim -- BMO Capital Markets -- Analyst

Okay, great. Thank you.

Operator

Your next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Steve Sakwa -- Evercore ISI -- Analyst

Yeah, thanks, and good afternoon. Maybe, Steve, could you touch on the leasing pipeline and how it's kind of changed over the last couple of months and maybe the composition of tenants and what you're seeing in terms of expansions, any contractions stand the same space configuration?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Sure. Right now, it's a pretty diversified group of tenants that we're dealing with, I'd say, if it's heavy in one sector, it's financial services. Seems to be particularly active, but more activity than we've seen in prior couple of quarters from law, insurance. We've got a couple of sizable deals with tech tenants. So kind of a broad swath of tenants, but not so dissimilar if we've had this conversation three to six months ago where we don't see a lot of activity is media type business, advertising firms and media businesses they're still kind of on the sidelines. But I think most of the other businesses that we historically have dealt with they're back in the market and some of them are clearly expanding the financial service guys, the hedge funds, the private equity guys clearly expanding. The law firms that we're dealing with, some are expanding, some are consolidating locations. And there is a good chunk of tenants that are relocations, new tenants coming into the portfolio.

And I think how they're going to use their space, it's a great question to everybody ask. Is COVID really changed the way people are using the space. And the short answer is, not so much they're programing more square footage per employee, they're programing more amenity, more meeting space, greater diversity on size of meeting rooms, the spaces are flexible, but I don't see those as earth-shattering changes.

So, I think, ultimately, if you talk to these people about what they're planning in the long-term, ultimately, everybody will still be in a fairly dense world, although, not nearly as dense packed as we were pre-COVID. And we'll still be in an open plan work environment and I think that's here to stay.

Steve Sakwa -- Evercore ISI -- Analyst

And sorry, do you just have a size of the pipeline today versus maybe three months ago just to help kind of frame it out?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Yeah, we're at 760,000 square feet of pipeline, comprised of 217,000 square feet or 220,000 square feet of leases outs in some form of negotiation. And another 525,000 square feet of term sheets that we think have a good chance of converting over to lease.

Steve Sakwa -- Evercore ISI -- Analyst

Great. And then maybe, Marc, just on kind of dispositions. I know you've talked about $1 billion goal and likely may be exceeding that. Can you just talk about your plans for dispositions the rest of the year and the share buyback program?

Marc Holliday -- Chairman and Chief Executive Officer

Well, we have a -- I'd say, we have a pretty ambitious program ahead of us that I think was pretty well documented back in December. And as we sit here in April having done some exploration, investigation, pre-marketing, we think we're going to get a lot of stuff done. We just announced those two residential deals. We just closed Tower 46. Obviously, at the end of December, we had that big sale of 410 Tenth. And there is a couple of sizable joint venture situations we're looking at. So not everything is going to be in the form of an asset disposition. We have certain assets that we feel have long-term upside and warrant more of a JV execution in there are some that you'll see we'll bring to market for harvesting. So we are still -- we're good with the number, we'll probably feed that number for sure. And Matt can respond to the share repurchase question.

Matthew J. DiLiberto -- Chief Financial Officer

Yeah, I would say on the heels of what Marc said about testing the market and getting a feel for the market and putting some assets out maybe more than we originally anticipated. We're now looking at a targeting debt repayment for some of the proceeds from those asset sales along with the share repurchase program. We did $100 million of share repurchases in the first quarter. A lot of these sales that we have teed up will close in the latter half of the year, so you'd see the volume of buybacks coincide with that. But we're balancing any additions to the pipeline of dispositions allocating those proceeds, debt repayment as well.

Steve Sakwa -- Evercore ISI -- Analyst

Got it, thanks.

Operator

Your next question comes from the line of Manny Korchman with Citi. Please proceed with your question.

Manny Korchman -- Citigroup -- Analyst

Hi, everyone. You talked about the split between the higher class assets and maybe some of the older less high-class stuff, what do you think happens with the Class C or Class B product? Is that conversions like we've seen in the past? Is it that those owners do step it up and put in a capital and make it look more like an A or somewhere in between?

Andrew W. Mathias -- President

I think it's primarily affordable rent product. I mean, you do have a lot of businesses in New York that can't afford high-end Class A products. So it becomes affordable rent or it may get repurposed and converted other uses. But, I think, for the most part, it's going to stay as affordable rent product.

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Those owners will -- they'll suffer on execution they just won't get the same rents by comparison to the better located, better capitalized landlords that have repositioned their product.

Michael Bilerman -- Citigroup -- Analyst

It's Michael Bilerman, Marc, or Andrew, or Matt, just in terms of OVA with the refinancing, what is the potential for your partner to perhaps use those excess proceeds to buy more of the project from an equity perspective. So lowering your stake from 70 down to 50 or something below. And then can you also just remind us of the math rounding Marc and Andrew sort of profit participation 2.5% to 3% and whether that gets triggered at all now that you're going to do the permanent financing closer to stabilization and do you have to start recording that liability on SL Green's balance sheet?

Andrew W. Mathias -- President

Well, we'll let Matty take the second question.

Matthew J. DiLiberto -- Chief Financial Officer

I'll work in reverse order. There is nothing that would trigger putting anything on the balance sheet related to Marc and Andrew's investment triggered by the refinancing.

Marc Holliday -- Chairman and Chief Executive Officer

Yeah. Recall we paid for those interests.

Matthew J. DiLiberto -- Chief Financial Officer

Yeah.

Marc Holliday -- Chairman and Chief Executive Officer

We own our interest in when the project starts to cash flow and the capital has been returned we have our sort of pro rata interest alongside the rate in those, but -- just as a reminder of how that works. The other question....

Andrew W. Mathias -- President

So the part of a buying on recap or purchasing a portion of our interest, it's too early. I mean, we're not marketing any of our 71% at this time. It's on goals and objectives for the year to evaluate in the future, but the goal is to close the most efficient and most secure in terms of tenure, put away financing as possible in the next 45 days or so.

Marc Holliday -- Chairman and Chief Executive Officer

Yeah, in terms of a strategy for selling down interest in the future if we want to, I think it would be -- I mean, sure the existing partner in concept could do it, might have an appetite for it, but I also think it would be one of the most liquid assets of any asset in New York City. So I think the source of the money in the identity investors is secondary to a strategic decision by us, whether to hold the existing position or sell down further.

Andrew W. Mathias -- President

Also recall, our partner on One Vanderbilt did become our partner on One Madison as well.

Michael Bilerman -- Citigroup -- Analyst

One Madison, that's right, yeah.

Andrew W. Mathias -- President

They might have anticipated getting proceeds. They were obviously pleased with how this deal went, pleased enough to be a significant part of the next deal. So...

Michael Bilerman -- Citigroup -- Analyst

Okay. And then, Andrew, can you just clarify just in terms of the new financing on OVA? Obviously, it's a substantial part of your initial construction costs, and you just talked about a 60% LTV, which I guess at a 235 [Phonetic] would put in about $4 billion. I know you've been talking about a value of OVA of like $4.4 billion to almost $5 billion at the most recent Investor Day based on that 2025 NOI stream and applied cap rates. So I know there's lender values, there are your own values, but I'm just trying to get a perspective of the underwriting of this loan to the NOI streams and leverage levels?

Matthew J. DiLiberto -- Chief Financial Officer

Michael it's Matt. So we'll talk more about the financing, when we get it done in the next 45 days. I will say Andrew made the point earlier, there is press out there that is inaccurate. Just to be clear as to where we stand. We did forward starting swaps totaling $2.25 billion in anticipation of financing that is in excess of that. We haven't said what the proceeds level will be. There are various rumors out there about what it is, it will be 60% financing whatever the number is and when that's finalized and announced, we'll discuss it in more detail.

Michael Bilerman -- Citigroup -- Analyst

Okay. Thanks, Matt.

Matthew J. DiLiberto -- Chief Financial Officer

Yeah.

Operator

[Operator Instructions] Your next question comes from the line of Craig Mailman with KeyBanc. Please proceed with your question.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Hey, guys. Could you just give a little bit of color on what tenant was behind the lease term fees this quarter?

Matthew J. DiLiberto -- Chief Financial Officer

It was retail location, AT&T location at 590 Fifth Avenue, property we just acquired recently.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

And then just an update on -- you guys gave when most tenants are coming back, but just has the utilization in your buildings picked up at all as people have been getting vaccinated or where does that stand currently?

Marc Holliday -- Chairman and Chief Executive Officer

I think the -- the return to office, I don't think is going to be random or in a haphazard format. The companies we're speaking to which really drive the bigger companies that drive the population within our portfolio, are very forward looking in terms of what their protocols are going to be for return to office. Really the earliest we're hearing from anybody at the moment is May, June and with what I would say vast majority by September.

So I think that the relevant time period to look at those stats are going to be between June and September, as you'll see it start ramping up, and it's April, I don't think we've had some uptick, but not material. And it wasn't planned. I mean, we've -- assuming we are in dialog with every tenant we surveyed our tenants, we have schedules of what tenants are telling us when they're moving in, and I think they are on track with their plans. But most of those plans are not for an April return.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Okay, great. Thank you.

Operator

Your next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Great, thank you, and good afternoon. So I wanted to focus on the debt and preferred equity book and just any kind of distressed opportunities you guys might be seeing in the market today. So could you talk about maybe the health of the book or do you expect to see -- to get any health back anytime soon? And then how are you thinking about distressed buying here?

Marc Holliday -- Chairman and Chief Executive Officer

Question with health of the existing book. Dave why don't you...

Matthew J. DiLiberto -- Chief Financial Officer

Yeah, I mean, I think we haven't taken any credit marks recently against and I think we're very comfortable with the assets we have. Where they're marked there may be an opportunity to, I would say, accretively take in one or two of the assets, but there is nothing that we're seeing out there that's real distress in our own book. I think likewise there are a few opportunities out there. I think a lot of distress out there is mostly in the hotel sector. I think office has held up, you've seen with our portfolio rents have been paid and collected. Retails obviously had a little bit of distress, but a lot of the guys who've made made it through kind of the toughest part are now being positive and seeing kind of the upswing and a lot of the lenders have worked with them.

So New York is a very strong institutional market with good sponsorship and there aren't usually tons of distress. I think we've done well finding there's one or two assets out there, which we continue to look for.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

All right, thank you. And then, we have a mayor election coming up. I'm just curious to get your thoughts on kind of what you think are the most important initiatives for the next candidate or the next Mayor to kind of get right for New York City?

Marc Holliday -- Chairman and Chief Executive Officer

Well, the most is probably 10 most important initiatives. But I think you'd have universal agreement among many that addressing homelessness, and vagrancy and quality of life issues which degraded somewhat during the pandemic, in part -- in large part because the streets weren't full and the mass transit nodes weren't full. And I think a lot of that will be self-correcting when people are back and everything is back up to 100% utilization and there is life on the street, not just on weekends or not during the day, but at all hours of the day. I think that has a tendency to be -- to deal with that issue along with tremendous amount of effort now the city is starting to put behind. More ambitious efforts to get things cleaned up and get things put on the right track, so that the city at large can feel safe and good about being out at day-night and work and commuting.

So I think for an incoming mayor candidate, I think that's the number one issue on my mind because that's what everybody wants, whether you're a business owner, tenant, landlord, a resident, commuter, I mean, everybody wants to feel safe at all times.

I think it's imminently achievable. I think the NYPD is still considered the best security for us in the country and for any municipality, for any police force. And I think that they've gone through a lot of changes and reformation, and we have to get back to a point where there is a balance between keeping everyone safe, secure and also making sure that people aren't unduly infringed on the other side. So hopefully the next mayor will have a solution to working with the police force to make that happen.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

All right, thank you.

Operator

Your next question comes from the line of Derek Johnston with Deutsche Bank. Please proceed with your question.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everybody. Thank you. Do you expect lease termination income for the rest of the year to dry up? Given that first quarter's $10.5 million surpassed full-year '21 guidance of $7.4 million. And I guess secondly, like what change that drove the ramp in first quarter versus the December expectation guidance.

Matthew J. DiLiberto -- Chief Financial Officer

So when we come out with guidance every year, we basically just look at historical trends in lease termination income and put a number in there. The historical trend has been $7 million to $8 million a year. We have no visibility into that for the year. Sometimes we exceeded and oftentimes, we've come in below it. We had -- we did not have visibility into this termination that happened in the first quarter when we put out guidance in December. It does exceed our full-year number by $3 million, but there is no way to tell what the remaining nine months looks like.

As of now, we don't have anything in the pipeline, so it could be zero. But there could be somebody comes in next week and wants to pay us to get out of somewhere else. So it doesn't cause us to rethink guidance levels or anything like that, it's only $3 million and we'll have to see how the rest of year plays out.

Derek Johnston -- Deutsche Bank -- Analyst

Okay, I know. Thank you. That's fair. And as I look at on space 350,000 square feet of leasing looks pretty strong, especially emerging from the pandemic. I'm actually going to say it is strong but -- and someone else on the call mentioned starting rents of just $57.16 so I kind of went back and looked at it, I mean this is the weakest since 4Q '13 and then the TIs and the free rent incentive packages, these are the highest they've been since we've been keeping track. So, I guess, do you guys expect these levels of concessions and low rent to kind of remain in order to achieve the lease volume guidance you gave in December?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Well, let's -- there's one other thing you left off of that observation which is, first quarter was strong. The start of the second quarter has been blistering, 178,000 square feet signed in the first three weeks, I think, is one of our strongest quarters in quite a while. And then when you look at the rents in the concessions, you really need to break it apart because, on our renewal product, we've done a bunch of deals that have been net effective deals. So the rents were kept low or they were netted down by concessions.

But then on the other hand, if you look at deals in our higher price point buildings One Vanderbilt, in particular, where the rents range between -- anywhere between $135 to $220 plus a square foot, you would expect the concessions to be disproportionately high relative to -- given the high level of rents that we're achieving in the building.

So I think we have to -- to properly answer the question, we'd really have to slice and dice the portfolio for you to say, what are we doing on renewals, what are we doing on commodity buildings, what are we doing on the high price point in ours -- where a lot of our recent leasing has been done particularly at One Vanderbilt with big rents and appropriate concession packages that can skew the numbers that you've seen in any particular quarter.

Matthew J. DiLiberto -- Chief Financial Officer

And I'm just going to add to what Steve said. So $57 is not on the full 350,000 that was done, that's just on the mark-to-market leasing, which is only 180,000 of the 350,000. On the full, 350,000, 330,000 of that is at a $65 rent. And the remainder is at One Vanderbilt, which is excluded from the number and it's in the range that Steve was talking about, well into...

Marc Holliday -- Chairman and Chief Executive Officer

So I just want to repeat that, that's an important. Forget about -- mark-to-market is its own world of sub-category of the leasing. But if we're talking about 300,000 it include One Vanderbilt. If we're talking about 350,000 square feet of leasing, which was the question, what was the blended rent on the 350,000?

Matthew J. DiLiberto -- Chief Financial Officer

Well, you're going rent around 70 bucks a feet.

Marc Holliday -- Chairman and Chief Executive Officer

70 bucks. So I think, what you have there is just a little bit of a mixing and matching apples and oranges. That's what I was looking for, apples and oranges, where you're looking at the rent on a subset of 350,000 not the entire 350,000. And, boy, you stood me up because I was saying, wow, how this was that lower either, so I had Matt, pull it. It looks like actually the blend on that 350,000 with 70 bucks and that's -- I'm not saying that that's -- your question remains, what's that trend and where our rents head and everything, but I don't want to leave the call with the impression that our average rent for the quarter was $57.

Derek Johnston -- Deutsche Bank -- Analyst

Right. Thank you. It's very, very helpful.

Operator

Your next question comes from the line of Vikram Malhotra with Morgan Stanley. Please proceed with your question.

Vikram Malhotra -- Morgan Stanley -- Analyst

Afternoon. Thanks for taking the questions. Matt, maybe just first one, you talked a lot about, obviously, the One Vanderbilt leasing has gone well 90% target. Can you remind us what the GAAP FFO contribution is for this year and how should we -- what we should anticipate for the next? I think was about $30 million this year, if I'm not wrong, but if you can give us more color on that, that'd be really helpful, given your 90% target.

Matthew J. DiLiberto -- Chief Financial Officer

Yeah, just bear me one second. I know the GAAP NOI, our share for One Vanderbilt was about $7 million for the first quarter and I think your recollection is about right, about $30 million, thereabouts for the full year, on a GAAP basis. Obviously, on a cash basis, it's going to be significantly lower. It was negative for the first quarter because a lot of the tenants are in free rent periods when they move in and the leases we're executing now won't even be an occupancy until into 2022.

Vikram Malhotra -- Morgan Stanley -- Analyst

So then, given your comment on '22, does the GAAP contribution kind of more than double?

Matthew J. DiLiberto -- Chief Financial Officer

I'm going to stay away from '22 numbers until sometime in December, as is typical, but it is a substantial increase. Yes.

Vikram Malhotra -- Morgan Stanley -- Analyst

Okay. And then just -- I know somewhere on the call, it was referenced that there are few distressed opportunities maybe that pertain to the DPE book. But given your bullish commentary over the next call it 18 months and longer-term, I'm kind of wondering how you think about opportunities -- acquisition opportunities for the more call it value add or troubled asset, given there are few but isn't there a just a short window before fundamentals really turn according to you. And so, I'm just sort of wondering is there an opportunity for you to deploy more capital, get more aggressive given where we are in the cycle?

Marc Holliday -- Chairman and Chief Executive Officer

Well, there is a couple of ways to answer that. First, we did acquire, I guess, within the past six months, the Lipstick Building. At -- that was something that came through our DPE book. The prior ownership and lenders to that ownership, unfortunately, there was hundreds and hundreds of millions of subordinated equity don't remember how much?

Matthew J. DiLiberto -- Chief Financial Officer

Off the top of my head, $200 million.

Marc Holliday -- Chairman and Chief Executive Officer

A few hundred million dollars of subordinate equity that we were senior to and have now taken possession of that asset, which I think is one of the more notable and attractive assets were at a basis we're comfortable with. We're executing a significant redid -- upgrade and repositioning of that asset, which I don't think has been undertaken since it was built in the 80s. And where I look at that as an addition to the portfolio coming out of this period of time for sure that's one. Two, I'd say one of the biggest opportunities, which we invest heavily in is our own stock. That generally tends to be more attractive than almost anything that we come across, not always, but just usually, and we did I think $1.5 million?

Matthew J. DiLiberto -- Chief Financial Officer

Yes, which is about $100 million worth.

Marc Holliday -- Chairman and Chief Executive Officer

$100 million worth in the first quarter. You might see those -- our projections were that for the full year closer to...

Matthew J. DiLiberto -- Chief Financial Officer

Our goal for the year. Yeah, $400 million.

Marc Holliday -- Chairman and Chief Executive Officer

So that obviously leaves quite a bit more to do assuming we stick with that plan, which for the moment we are on that plan and that's how we're going to deploy a lot of the net proceeds, which we spoke about earlier. And there are new opportunities on top of that, the most compelling of which we think is new development. I think given my commentary earlier about the rent premiums, if you will, for the best assets in the best locations at this moment, and frankly, for the past two years, we view development as a better approach than buying and repositioning existing generally it's -- like just a world-class asset, like a Lipstick. And that is something we still believe deeply. And so new development, our own stock and kind of rifle shot opportunities like Lipstick are ways in which we are taking advantage of this market.

Vikram Malhotra -- Morgan Stanley -- Analyst

Great, thanks so much. Just one more, if I could quickly clarify you did a big Street retail lease at Soho, it's one of probably the larger leases I have seen in a while. How did that deal come about and maybe you could clarify roughly at grade what was the per foot rent?

Andrew W. Mathias -- President

It's 5,000 feet grade. There were actually two tenants competing for the space. The space is all currently occupied by a furniture store and another retailer, and this was leased in advance of their expirations. 110 Green is on the best block in Soho, both really for retail and for office and there was -- the space is still very desirable. So I think it was a very successful execution. We got very good security package, and it's a great luxury tenant for the block. So we were pleased to get it done.

Vikram Malhotra -- Morgan Stanley -- Analyst

Thanks so much.

Operator

Your next question comes from the line of Peter Abramowitz with Jefferies. Please proceed with your question.

Peter Abramowitz -- Jefferies Group LLC -- Analyst

Yes, thank you. I just want to ask you about lease negotiations, heard some anecdotal evidence about just needing to be more flexible in working with tenants. So what are tenants looking for I guess in terms of lease flexibility, whether it's options to decide how much space they take partway through the lease or possible termination options midway through the lease? Any color you can give on that would be helpful.

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Sure. I don't think it's a -- what we're seeing is what we always see when there is a big disruption in the market and where tenants feel that they've got some added leverage in a competitive environment, which is they want as much flexibility as they can get and that generally, I would say from our -- from what we're experiencing right now is mostly about growth, where tenants are coming in and saying they want right of first offer positions, or they want fixed date expansion options.

In some cases slightly shorter terms, but I don't want to be misleading on that that's, I'd say, in some cases we're writing plenty of deals right now that are 15 and 20 years in duration, but flexibility is mostly what they talk about and in the world of flexibility I'd say it's more oriented toward growth as opposed to termination options. Not to say that they don't look for rights to shed part of their space, mid-term or cancel, but three out of four tenants are -- fight very hard to make sure they have a clear path for future expansion.

Peter Abramowitz -- Jefferies Group LLC -- Analyst

Okay. Thanks, Steve. And then one more, just kind of a macro question, I guess, in the last cycle and kind of the lead up before the pandemic, a lot of office using job growth in the city, and a lot of the net absorption as well is kind of driven by the tech sector, even though it's still compared to some other markets, not a huge part of the market. Just curious what's kind of your outlook for office using job growth? Anything about the pandemic on the other side of it that kind of changes those dynamics over the next few years?

Matthew J. DiLiberto -- Chief Financial Officer

It's Matt. So Mark said in his opening comments, we said it back in January, and it's been reiterated, office using job growth is expected -- in the city is expected to return to pre-pandemic levels meaning all the jobs that were lost are regained by the end of 2021. The job growth has accelerated from January into February, into March. Technology is part of that private sector job growth is 100,000 jobs, and office using jobs has accelerated from the 20s, the mid-20s. So that is why we feel confident about the return of demand for office spaces, because we are seeing. It's not a projection, but we are seeing the return of office using jobs.

Marc Holliday -- Chairman and Chief Executive Officer

There were about 156,000 office jobs lost, about 30% of those have been regained through March. I expect April will continue that trend. The city believes and we have no reason to doubt that all of those jobs will be returned by year-end. If not, it seems like it would be early 2022 in any case. So the bottom line is, we should be back hopefully to what prior pandemic levels were, about 1.5 million office using jobs, and I would think sometime end of '21 or in '22 we'll be back to those levels. And then hopefully growing from there. I mean, the idea isn't just to get back, the idea is to get back and exceed like we have in prior downturns, and we think that the environment is right for that to happen for all the reasons we laid out early on.

Peter Abramowitz -- Jefferies Group LLC -- Analyst

Got it, thank you.

Operator

Your next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question.

Nicholas Yulico -- Scotiabank -- Analyst

Thanks. I just want to go back to this topic of work-from-home and the hybrid workforce, and Marc you said that you thought employers will experiment with hybrid probably be limit and practice it first and then less prevalent. But, I mean, you clearly have a view that even before talking about office using jobs coming back, but somehow those jobs are still going to be taking up the same amount of office space in the city, and I guess I'm wondering why you think that's the case, because even pre-COVID there were firms that were already talking about changing their workplace in terms of making it more flexible, reducing the real estate footprints. And even during the pandemic, we've seen some examples of firms who were starting to move to unassigned seating, because they're of the view that employees are not going to be back in the office, five days a week. So you may have more space per desk, but you're not going to have more space per employee because the employees may share desk.

So I guess I'm wondering with those factors being in play here maybe it's not every company who is going to do that, what is your insight here about that not being a problem? Because implicitly you're saying it's not going to be a problem, I guess.

Marc Holliday -- Chairman and Chief Executive Officer

No, I don't think it is. Hoteling or hot seats, whatever you want to call it, this is not a new concept. This is a concept that's been around I mean for years and years and years. There is like nothing I know -- people look at this and say, oh my god, COVID. I mean it's got a new name hybrid. I mean, who cares about the new name, it's called whatever it's called, it's called you have a ratio of more than one employee per seat.

Some firms manage to 1.1, some 2.2, bigger firms tend to utilize what I call hot seating, but you call it anything you want. More than others. So my comments about the future is incremental to what existed pre-pandemic, because I look at that as kind of the established baseline and the question in my mind is, do I think COVID is going to greatly increase that ratio? And I don't think it will be, because most of the firms that I've spoken with they are talking about the kind of flexibility that might allow for up to one or two days of work-from-home and that's at most for most of the big firms.

When you're only doing that kind of rotation once or twice a week, you really can't downsize the desk count, the seat count that efficiently. In order to really downsize you got to go to a four or five-day a week work-from-home, and then you can obviously get tremendous efficiency. But the moment somebody is in the office four days a week and they are home one day a week, that's their desk. They are not hot seating that desk because the math doesn't work if you have five people coming four days a week, and they're taking random one day a week off, you can't plan for that one day. It becomes a very complicated set to manage.

So part of it is, I don't think it's as easy as it sounds to make that work, because when people are there 80% of the time they're being in the office, they need whatever it is a desk, a cubicle, a workspace or an office. And so on the leasing that we've done since COVID, and I guess we've done since COVID almost 2 million feet, right. We did 1.3 million feet last year and 500,000 this year, so 1.8 million square feet. We have not seen the kind of reductions that I read about. And a lot of these leases we're signing right now are 10, 15-year leases.

So people are thinking about it and I think people will do it, not so much from a management of real estate, but more from a in consideration of the workforce as something that contribute toward in their eyes some form of live-work balance. The only problem is, as I see and this is my own personal opinion, is that live-work balance comes at a cost of productivity and efficiency. I mean, god knows we could not have done anything close to what we've accomplished over the last 18 months, if we were work-from-home, there's just no way. I mean, maybe some firms can, we couldn't, it's impossible, knowing just how much we get done as a group.

And I think that when I speak to the business leaders, they all sort of acknowledge year we're at our best when we're together. So it's not an optimal situation, it's more of a concession, I would say where businesses are considering working, let's call it, hybrid workforce into place. But I just don't see it yet as a trend that's resulting in significant downsizing of space. And as you mentioned, there is the offsetting concern that the packing together of workers as there is a de-densification that is definitely working into floor plans. It's very arithmetic, a five-foot work station is now six-foot. A six-foot is seven and seven is eight and those are big changes. When you go from just adding a foot or two to a workstation, that dramatically changes the density of a floor, especially in open-plan floor. And we are -- that I'm seeing a lot of de-densification. We're also seeing a lot of more amenitization of space, which works its way into the total square footage per worker when you're working more amenity into space.

So I don't want to dismiss the concept that, no, there -- because of COVID, there will be firms that will experiment with work-from-home, but that's a different statement than what I think that's going to do in the real estate footprint.

Nicholas Yulico -- Scotiabank -- Analyst

Okay, that's helpful. Thank you, Marc. I guess, just a follow up on that is, I mean, as you look at -- I mean, in many cases, it feels like firms are just kind of waiting until they have to make a decision on this. And that's when a lease renewal is coming off, or they're planning to move or that you plan to expand, right. And then we just think about your portfolio on the lease expirations that are coming up this year, next couple of quarters is that when you're starting to learn about this impact? Meaning that in many cases, we don't really know how tenants are going to behave. You're just kind of learning about this impact as the renewals are coming up and how is that? Are you gaining any new insights as this process is going along?

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Well, I don't think we have to wait around for future expirations to understand what tenants are doing. We've done a lot of leasing over the past period through the pandemic period and certainly into the first four months of this year. So we have a very good sense as to what they are and are not doing. And I think we've said it a couple of times on this call, which is tenants are providing a little more space, they're providing more amenities, they're providing a little more flexibility to their employees.

But the headline examples that I think you may be focusing on when you talk about gigantic firms that incorporates a more flexible or hybrid work environment into their world is not necessarily the rule of thumb for everybody. If you look around Manhattan and you see businesses that are 1,000 square feet or 25,000 square feet, those tenants probably aren't thinking anything in terms of hot desking or anything that impacts their real estate decision.

In those people's mindset, hybrid simply means, I work some of the time mobile, I work some of the time in my office, and at the end of the day, I just work a whole lot more, because I have the flexibility to do so whether that's at home or in the office or at the Starbucks Cafe. And I think from a manager's perspective allowing their employees that latitude, that's really the core shift of what we're seeing employers talk about, where they don't get all bent out of shape because their employee is a day from home as opposed to five days in the office, and I think you got to sort of bifurcate between guys that really do true hot desking in the majority of the world that really don't just provide a little more flexibility. Andrew, you want to add to that?

Andrew W. Mathias -- President

Well said, Steve.

Nicholas Yulico -- Scotiabank -- Analyst

All right. Thank you, everyone. Appreciate it.

Marc Holliday -- Chairman and Chief Executive Officer

Okay. Well, thank you, everyone, for calling in and the great thing is we're back in three months so we'll be able to share with you results, which obviously we have a fair degree of confidence in. And we think we're going to have a good second quarter, off to a great start and we hope to carry the momentum through June into July and look forward to speaking with you then.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Marc Holliday -- Chairman and Chief Executive Officer

Steve M. Durels -- Executive Vice President, Director of Leasing and Real Property

Matthew J. DiLiberto -- Chief Financial Officer

Andrew W. Mathias -- President

Alexander Goldfarb -- Piper Sandler -- Analyst

Michael Lewis -- Truist Securities, Inc. -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

Manny Korchman -- Citigroup -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Vikram Malhotra -- Morgan Stanley -- Analyst

Peter Abramowitz -- Jefferies Group LLC -- Analyst

Nicholas Yulico -- Scotiabank -- Analyst

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