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SL Green Realty Corporation (SLG) Q2 2019 Earnings Call Transcript

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SL Green Realty Corporation (NYSE: SLG)
Q2 2019 Earnings Call
Jul 18, 2019, 5:00 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 Second Quarter 2019 Earnings Results Conference Call. This conference call is being recorded. At this time, the Company would like to remind listeners that during the call, management may make forward-looking statements. Actual results may differ from the forward-looking statements that management may make today. Additional information regarding the factors that could cause such differences appear in the MD&A section of the Company's Form 10-K and other reports filed by the Company with the Securities and Exchange Commission. Also during today's conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G.

The GAAP financial measure most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the Company's website at www.slgreen.com, by selecting the press release regarding the Company's second quarter 2019 earnings.

Before turning the call over to Andrew Mathias, President of SL Green Realty Corp, I ask that those of you participating in the Q-and-A portion of the call, please limit your questions to two per person.

Thank you. I would now turn the call over to Andrew Mathias. Please go ahead, Andrew.

Andrew W. Mathias -- President

Thank you, operator and good afternoon, everyone. It's Andrew Mathias filling in for Marc, who unfortunately had a death in the family last night. So is unable to join the call today. The rest of the management team is here with me though. Hopefully, everyone had a chance to review the earnings release, which should convey that this was another strong quarter across our business and the New York City market in which we operate.

We have a very deliberate plan and we are executing on it in a way that drives value across our portfolio and continues to be justified by a robust New York City jobs, capital markets and leasing environment. New York City OMB again raised its 2019 jobs forecast for both private sector and office, using employment by about 25% in each category to 71,000 and 26,000 respectively.

And hiring to date in most major sectors continues apace. As the jobs base continues to diversify away from the fire sector in New York City. We were very busy this quarter in support of our business plan in all areas of SL Green. We signed 40 leases covering more than 500,000 feet this quarter, well ahead of projections as leasing pace shows no signs of slowing up. We closed on the sale of 521 Fifth Avenue, concluding our very successful history with that building, which began with a mezzanine loan in 1999, continued to an equity acquisition, then recapitalisation by a joint venture and then an additional recapitalization via joint venture and ends with our sale to Savanna generating a 13.4% IRR over our 13 year equity hold period for the asset.

Not easy to generate 13 plus compounded returns over that longer hold period, but SL Green found a way. We also finally converted our structure investment in 460 West 34 Street into a controlling equity interest in the property coupled with efficient acquisition financing and the masterstroke of signing First Republic Bank to a major lease at the property prior to closing. We expect the newly redeveloped 460 West 34 Street to become a signature asset for us in the far west side.

Also in the quarter, we acquired the remaining interest in 110 Green Street, an asset that's performed very well for us and we believe has significant upside yet to be achieved. In the DPE portfolio, we originated more than $130 million this quarter with debt markets remaining highly liquid. One Vanderbilt construction remained ahead of schedule where we will turn the face -- of the first space over to tenants next month and the topping out ceremony for the building is planned for September. The lease we announced with private equity firm Sentinel Capital Partners brings us to nearly 60% leased more than a year ahead of opening our TCO. With the portfolio performance consistently strong and stock price continuing to trade at a significant discount to NAV. We remain staunchly committed to an aggressive share buyback program.

We successfully purchased 1.3 million additional shares this quarter, continuing to rely on dispositions to fund the buybacks prudently and anticipate continuing this program if conditions remain unchanged. The leasing pipeline remains robust at over 1 million square feet, and we would clearly expect to exceed our annual targets on leasing volume and mark to market based on leasing to date and pending transactions.

The real estate business is as active as we have seen it in the dog days of summer here, and all our various disciplines here at SL Green are busy executing on the business plan. The development teams are building One Vanderbilt 609 Fifth, 460 West 34 Street, 2 Herald and 185 Broadway and heavy implanting on One Madison and others, the operations teams are dealing with blackouts and heat waves the leasing teams are generating great transaction volume. The investment team is buying, selling, lending and scouring the world for the next great source of capital and the finance team is making sure it all stays on business plan. We appreciate all of their efforts.

And with that, we're happy to answer any questions you may have.

Questions and Answers:

Operator

Thank you, sir.

[Operator Instructions]

Our first question comes from the line of Manny Korchman of Citi. Your line is open.

Manny Korchman -- Citi -- Analyst

Hi. Good afternoon, everyone. Andrew, you ended with a point on scouring the worlds for capital. Just wondering, what your sort of current uses of that capital are. Is it all that construction that you talk about. Is it going out and trying to acquire another building, where that is and sort of where you're seeing the brightest spots for that capital right now?

Andrew W. Mathias -- President

Well, I would say, we're using it across all those various disciplines. So in the DPE portfolio, we're using, you know, efficient senior capital to try to lever up our returns on the mezzanine position. As owners, we're bringing in JV partners, so that's where that capital comes into play, as sellers oftentimes, we're selling to that capital. So we'll meet, we met in Israel with a -- with a group that we wound up selling a building to downtown in the past.

So I would say in the last six months, our teams have been in Asia, the Middle East, Europe, Canada and across the United States, meeting with different sources of capital, actually David, you met with some South American capital here in the office, too. So I would say, we have most of the continents covered and there's still an enormous amount of interest in New York City from both debt and equity capital, people still view it as the safest haven for their money.

And a lot of new capital is looking for ways to get into the market, with every every group, that kind of steps to the sideline and says, we're full up on allocation, and new group seems to come forward.

Manny Korchman -- Citi -- Analyst

Thanks. Maybe this is one for Matt, we're looking at your spending needs over the next couple of years and you obviously have the big projects which we've been through. You've got about $300 million at 460 West 34 the total share. What about some of the sort of updates or brightening of buildings like 625 Mad, how do we think about how much money can be spent on sort of all those types of buildings over the next couple of years?

Andrew W. Mathias -- President

Sure. So most of our development projects are funded with financing that we've put in place already. So One Vanderbilt, the equity financing, we completed in the second quarter, so we have no more equity funding to put into that project that's all now to the construction financing, 460 will be construction financed, 185 Broadway is construction financed. Those are the largest near-term projects. 625 Madison we're -- and 609 Fifth. Sorry, we have 609 Fifth in process. That's also financed. 625 Madison really until we have some line of sight to what happens with the ground rent reset. We won't be doing anything in earnest there and One Madison is further out. So from a funding perspective, we are, everything is -- is funded at this point or spoken for and capital throughout the rest of the portfolio, given that it's all redeveloped, is actually at historic lows when you are talking about just base building or non revenue enhancing capital. So our funding plan over the next couple of years, we also are generating a lot of free cash flow is in great shape.

Manny Korchman -- Citi -- Analyst

Thanks, everyone.

Operator

Thank you. Our next question comes from Alexander Goldfarb of Sandler O'Neill. Your question, please.

Alexander Goldfarb -- Sandler O Neill -- Analyst

Oh, hey. Good afternoon. So two questions. First, Matt, just maybe looking at where you guys are trending year-to-date. It looks like on FFO, you guys are sort of trending toward the upper end of your current guidance range. I think, you outlined at the Investor Day some potential for more lease term fees that may or may not happen. JVs that may or may not happen, but it looks like on a run rate basis, you're trending toward the upper end. So maybe you could just talk about what some of the negatives, if you will, or what some of the headwinds may be in the second half that would get you lower in the range versus something that would boost you either to the high end or maybe even above?

Matthew J. DiLiberto -- Chief Financial Officer

Sure. So for the first half of the year, on our numbers, we're running a penny or two ahead just on that first six months. If we look at over the balance of the year, we are still squarely within our range, which is why we have not adjusted guidance at this point. We've had some positives in the first half of the year, some income events that we didn't anticipate and some performance in the portfolio that's better than expected. But offsetting that to the balance of the year, you mentioned lease termination income. We had $12 million wired into our guidance. We recognized just over 5 [Phonetic] so far this year, but unclear whether any of that 7 [Phonetic] remaining will come through, and if so, how much. We also layered into our guidance joint ventures of both One Madison and a further joint venture of One Vanderbilt, which may or may not happen this year. We did market JV interests in One Vanderbilt or the Sear. We elected not to move forward at that point. And One Madison, we shall see, we had between $15 million and $20 million of fee income off of those JVs laid into our guidance for the balance of the year, you have not recorded any of that thus far. So all told, again keeping us in our guidance range for the balance of the year.

Alexander Goldfarb -- Sandler O Neill -- Analyst

Okay. And then my second question is just on the buybacks, which you guys have been very clear, your match funding. You got the news building out there, which presumably once you know that sales will fund more stock. But the same time, you guys have spoken about reducing the DPE and maybe using that to buy back stock. So maybe you could just update us on where you stand. I think you had 400 million of buybacks in guidance.

But just where you stand on reducing DPE and then also just given where the stock is, would seem like rather attractive to be out, you know, buying meanings [Phonetic] like.

Andrew W. Mathias -- President

On the DPE front, we are via repayment bringing down the DPE balances, we've gotten actually some repayments that were expected since the close of the quarter and we plan to continue taking some additional repayments throughout the year. So we do expect that balance to trend lower with the stock price where it is. We may very well elect not to reinvest it into -- into new DPE originations or as as much as we had planned on and instead allocate those funds for stock buyback.

Matthew J. DiLiberto -- Chief Financial Officer

But in addition to that, the near term use of the funds, because we are trying to match fund buybacks with asset sales, is repayment of debt, particularly our line of credit. Our line balance is higher than we historically keep it as of the end of the quarter. So in the near term, raising those DPE repayments to pay down the line.

Alexander Goldfarb -- Sandler O Neill -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from John Kim of BMO Capital Markets. Your line is open.

John Kim -- BMO Capital Markets -- Analyst

Thank you. On the discussion on global capital into New York. I was wondering, you know, the public markets are basically saying that the private market valuations in any of these -- of the New York office REITs are incorrect. And I'm wondering, if that has influenced pricing at all in the private market.

Andrew W. Mathias -- President

Short, short answer, not at all. I think the private market players that we speak to don't really look to REIT pricing as any kind of indicator of the market. They view it as somewhat divorced from reality or not an indicator, a leading indicator, or even an indicator of where the spot market stands. They are long term investors and they're only interested in their own long term returns.

Unfortunately, the volatility in repricing makes it somewhat difficult to attract new capital into actual REIT equities. But building equities, the demand is still very strong out there. You have to look no further than the transactions for 521 Fifth, for 540 Madison, for 360 Lexington, the list goes on and on. The private markets have spoken very strongly that there is still enormous demand for New York City real estate.

John Kim -- BMO Capital Markets -- Analyst

And do you have any conversations with the capital sources as far as they could buy assets on one level, but they could buy capital into your stock at a much discounted value and are those conversations happening?

Andrew W. Mathias -- President

All the time, I would say, and that was the genesis of my prior comment, which is they view the volatility and that the necessity to mark to market -- mark to market in REIT stocks as an item [Phonetic] that's a long-term real estate investing where they don't have the same issues. So unfortunately, as we go meet with these guys, everybody wants to own -- fortune, I guess and unfortunately, everybody wants to own direct real estate and the REITs, the volatility has scared away a lot of these investors.

John Kim -- BMO Capital Markets -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from Nick Yulico from Scotiabank. Your line is open.

Nicholas Yulico -- Scotiabank -- Analyst

Thank you. A quick -- I guess, Steve Durels. Do you mind giving a little update on -- on the leasing market, trends you're seeing? And then I guess, we're hearing -- I mean, tech, it feels like it's getting a lot more active in the city. I know it's early, but maybe you can talk about early interest in One Madison?

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

Sure. Just to comment on tech, the Tammy sector was 40% of the leasing for the second quarter in Manhattan. So it's clearly a big driver of leasing. So both Tammy Financial Services is still active in the marketplace and coworking continues to be a driver as well. We're seeing demand across the board in all the buildings. And I guess couple of examples to talk about specifically. One Vanderbilt has continued to be extremely active with half a dozen active proposals being traded with prospective tenants. So we're hopeful that we will land, one or two of those and safely hit our 65% lease up target for the end of this year.

We've got a very strong pipeline of, as Andrew said, well over 1 million square feet. That pipeline has been growing since the first quarter, dominated by both the three major sectors of legal, Tammy and finance. And across all price points, we're busy as well. We're starting to see some early renewals driven partly by tenant expansions through -- excuse me -- throughout the portfolio. So we've got a couple of big deals in the hopper that we're trading paper with some tenants, driven by early renewals and we're seeing new tenants come into the portfolio as well. Concessions, as we said last quarter, have leveled off. We haven't seen any movement off of that. And rents are modestly up.

Nicholas Yulico -- Scotiabank -- Analyst

And that's helpful. And then I guess question for Andrew or Matt. As we think about, they look at the portfolio and a lot of people look at your top tenant page and they see buildings where you have some move outs over the next several years. I think, we know it's capital [Phonetic] with One Madison. For others, it's not as clear. Even if you pick a building like, say, 1185 Avenue of the Americas, I mean, what is the thought process there?

Are you -- you're willing to ride this out and deal with the retenating or can you figure out that, you know, maybe it's better to try and sell the building, let someone else deal with the releasing CapEx? And you know what type of market is there for buyers to be buying assets like that right now?

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

Well, before either Andrew or Matt responses, let me give you a little color, as to what -- what is in the market on some of those buildings. 1185, we're close to going to a lease for a two floor tenant for some of that early renewal, 750 Third Avenue, we just put a lease out for almost a 100,000 square foot for a tenant for some of that space is rolling off in a couple of years.

So, you know, all of those buildings where we have role, 750 Third, 919 Third Avenue in particular, which seems to be on everybody's sort of inquiry list, are perfectly suited at the right price point in great locations with great assets to be extremely competitive within the market. And we're already seeing tenant demand well in advance, if any that space rolling up.

Andrew W. Mathias -- President

Yes, I would say, you know, we see a lot of that role as opportunity. You know what -- what we do? I mean, 220 East 42nd Street is a great example. That building had a ton of role. We redeveloped the building, leased it up to Visiting Nurse Services and Young Adult Institute and a bunch of other great tenants. Now we have the asset on the market for sale.

So I don't think, we would look to sell, because we're afraid of having some vacancy, that's still our core business is. Redeveloping those buildings, bringing in new tenants, moving up the rent roll, hopefully, and sort of making the assets better. So we're more likely to redevelop any of those assets and then sell to a core buyer, then try to sell to a -- to a redevelopment buyer is going to require a higher return.

Nicholas Yulico -- Scotiabank -- Analyst

Thanks, everyone.

Operator

Thank you. Our next question comes from the line of John Guinee of Stifel. Your line is open.

John Guinee -- Stifel, Nicolaus & Company -- Analyst

Right. Nice quarter, guys. Just a couple of net questions. Steve, you'd mentioned 1185 Avenue of the Americas, I think you had a big lease out there. At the same time, it has, it looks like the final year of the operating lease, ground lease is 20/43 [Phonetic]. Is there a strategy to get at that ground lease and get to the fee sooner than later? Or how do you think about relatively short-term ground leases these days?

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

Well, John, I'd say, we're always in dialogue with the fee owners of our various leasehold positions. And it's always a test of wills to try to figure out kind of the right time, because obviously the fee owner wants to get the asset at the end of the lease in the best condition possible. And the lease holder also wants as much term to offer to prospective tenants, so those dialogues are always ongoing. And 1185 is certainly an asset. That's on the radar screen. But there's nothing, no further detail to report at this point. But we are always constantly in dialogue with the owners. Yes.

John Guinee -- Stifel, Nicolaus & Company -- Analyst

And then just another one. Looks like your four suburban assets, about 1.1 million square feet Summit Drive etc. You're levering up to the tune of $229 million, which is about $208 a foot. What's the thought process there on an asset which I think is on your for sale list?

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

There we saw a very efficient capital provider and decided to take advantage of it. Much the same way that we did in Landmark Square in Stamford with the loan we have on that building from JP Morgan Chase. It is still part of the disposition plan, however, this was an efficient, aggressive bid from a lender that we decided may -- at least will take care of the capitalization in a short term and may be very attractive to a future buyer as the loan is assumable in the future.

John Guinee -- Stifel, Nicolaus & Company -- Analyst

Great. All right. Thank you.

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

Thanks.

Operator

Thank you. Our next question comes from Craig Mailman of KeyBanc Capital Market. Your line is open.

Craig Mailman -- KeyBanc Capital Market -- Analyst

Hey, guys. Matt. Maybe I just want to go back to your earlier comment on the process you guys ran for additional joint venture of One Vande and the decision, not to proceed. Can you kind of just give a little bit more color on the reason why.

Matthew J. DiLiberto -- Chief Financial Officer

I think just the -- in a -- we are in a -- straight answer the lease activity was too good at the time. And you know, Marc and I really feel, the closer we get to opening and if we can, you know, if we can -- if we wind up feeling like we want to leg it out to opening, the higher price we're going to get for the building. You know, it's a, you take a discount for construction risk that we really don't view as a risk because the jobs are 100% bought and there's not a lot of variability between now and opening.

You take a less -- a discount from space left to lease that we see the leasing activity on and we feel highly confident in our ability to get leased. And then obviously you see a discount, because the observation deck is -- the operations are still speculative at this point. So we really, as we sat and considered it, we had some very aggressive offers and we really felt that we weren't maximizing the potential of a building for, you know, sort of a short term use, that we felt was better off, pulling it back and reintroducing it in the future for joint venture, once we get closer to stabilization.

Craig Mailman -- KeyBanc Capital Market -- Analyst

That's helpful. And then, Steve, I'm just curious what you're seeing in some of these tenant expansions or just leasing in general in terms of tenant space uses, is it, what really changed one way or another in terms of kind of space per employee?

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

I mean, you know, I think people continue to migrate to a more open plan environment with a dense operation, although we continue to hear people concluding that they can't densify or it's not really as successful densifying as much as people at one time thought they could. So this sort of idea of going down to a 100 square foot per employee is, you know, was always kind of wishful thinking -- a lot.

A lot of the tenants that are coming to our portfolio, where they're changing their layouts, they're ending up at sort of in anywhere from the 200 square feet to 225 square feet per employee. I would say, so that's when they're in an open plan environment, that's a good metric that I think people have been landing on, once they factor in communal space and meeting space and support space.

But it's clearly still, a lot of businesses are changing how they use their office space compared to five years or 10 years ago. And I don't think that's going away.

Craig Mailman -- KeyBanc Capital Market -- Analyst

Great, thank you.

Operator

Thank you. Our next question comes from the line of Blaine Heck of Wells Fargo. The question, please.

Blaine Heck -- Wells Fargo -- Analyst

Thanks. Just to follow up on the private market and investment sales discussion, some conversations we've had with brokers in the market suggest that there's more interests in core plus and value add deals than core this year. Just wondering if that's what you guys are seeing on the market as well. And if there are any implications to pricing within those segments of the market?

Andrew W. Mathias -- President

Yeah. I would have characterized 521 as a fairly poor deal. And certainly 30 Hudson Yards, which is a sale leaseback, is about as core as you can get. 540 Madison had some vacancy. It was about 80% occupied or 88%, 80%?

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

About 80%, 85%.

Andrew W. Mathias -- President

80%, 85% occupied. So I don't really -- we see demand really at every level core, core plus and value add is basically development here and there is still developments either 520 Fifth Avenue just got recapitalized as well. So I think, we're seeing strong demand across each sector of property investing.

Blaine Heck -- Wells Fargo -- Analyst

Okay, that's fair. And then given your decision on foregoing the JV partner and One Vande for now, can you talk about the process related to getting a partner at One Madison or whether you'd reconsider that as well?

Andrew W. Mathias -- President

No that's -- there's no -- we haven't commenced that process. I would say, we're really trying to fine tune the exact plan for the building, which we're very close to doing, so we can present somebody with a model, an economic model that will meet their expectations. Hard to go with a blank canvas. And we've had a lot of different opinions and testing on different levels of expansion at the building. There's the base building, which is great, million one foot building. And then there's obviously everything up to new development on top. And we're running all the different scenarios there while Steve's out having tenant conversations as well.

So the building is fully in the market for leasing, but has not been in the building yet for joint venture. And I would just say, it's a -- still a second half of the year. Or if it trips to early next year type of exercise.

Blaine Heck -- Wells Fargo -- Analyst

All right, thanks.

Operator

Thank you. Our next question comes from Steve Sakwa of Evercore ISI. Your line is open.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. Good afternoon. I guess just following up on some of the conversations and questions around the, some of the tenant move outs. Matt, can you maybe speak to some of the, I guess, leasing upside or opportunities or leases that may not be so obvious that that could replace some of that lost income like, the Polo lease at the end of the year, or Credit Suisse coming off line like, what are some of the net positives that we should be looking out on the other side?

Matthew J. DiLiberto -- Chief Financial Officer

Yeah, we're going to spend some time, Steve, in December laying out in a more fulsome way. The next several years, I think of upside coming out of some of these properties, not the least of which are, you are going to start to see income off 609 Fifth Avenue later this year, as the retail portion that opens up, then expect the office portion sometime next year. One Vanderbilt will be turning over space, as Andrew said, next month, and if you expect a year or so build out, we'll see some income off of that next year. 625 Madison, you know, we're losing Polo at the end of the year, but then it goes into a redevelopment capitalization kind of structure until we retenant the building.

So there is an offset to the NOI, that's lost there. And then we have the leasing that's gone on this year. You know, we're almost 1 million square feet through our goal, there are properties like, you know, 220 and 919 and some of the other Third Avenue properties that Steve mentioned that are gonna be contributing as well, headed into -- into next year.

So you know, on the redevelopment properties alone, offsetting some of the potential move outs, we're going to lay out the growth profile of those and get more detail in December.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. And then, I guess, just going back to the asset sale of 220. Can you just talk about the timing and kind of the interest level and when you think that asset could ultimately get sold?

Andrew W. Mathias -- President

Well, we certainly expect this calendar year to get it sold. Steve, you know, the interest has been great, tours are ongoing. Obviously, it's summer. So got to get everybody through and give them a chance. But we would expect, you know, in hopefully in third quarter to have an agreement there depending on what kind of bids we get. I mean, look, we're in a great position, because we're sellers, but we're not foresellers on any of this product.

So we're going to evaluate the bids versus all the other capital alternatives working on now and decide which is the most efficient for us.

Steve Sakwa -- Evercore ISI -- Analyst

Okay and then just on the Westchester assets, and now you put the mortgages on. But just from a timing and interest level perspective, is that looking like that might get pushed out to 2020 from a sales perspective?

Andrew W. Mathias -- President

No, we're still hoping to get some more assets sold this year for sure. The Stamford, Connecticut asset specifically, and then the balance we will address, timing is not as certain now.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. That's it from me. Thanks.

Andrew W. Mathias -- President

Thanks, Steve.

Operator

Thank you.

Our next question comes from Vikram Malhotra of Morgan Stanley. Your line is open.

Vikram Malhotra -- Morgan Stanley -- Analyst

Question, just wanted to focus in a bit on street retail, the asset you bought back, that were -- where you made investments in the DPE book and then 106 Spring, any update? I know there was a -- there was potentially couple of tenants that you were prospecting for some of those assets and then just related to that, is your view still that Madison Street retail is bottoming?

Andrew W. Mathias -- President

Sure. The assets, the 106 Spring, 133 Green and 712 Madison, are the three assets, each is a different situation. 106 Spring, we've signed the tenant through the holiday season there while we do a sort of more fulsome worldwide marketing for a longer term tenant. 133 Green and 712 are both occupied now pretty much through the holiday season. So there hasn't been -- 106 is the only one that's currently vacant and we filled it. Albeit on a temporary basis.

So we still feel good about our basis in those assets and the level of interest from tenants. And we do feel strongly that Madison has bottomed. As you say, there's a good core of demand out there. From different tenants, there's a lot more activity on the street. So when we do see 712 Madison back with David Yurman's move out, who is the tenant there, we have -- we're already entertaining inquiries for that space. So we feel confident that we'll be able to get it filled.

Vikram Malhotra -- Morgan Stanley -- Analyst

Okay. And then just bigger picture question. With one of your peers, Renato doing the big JV at that cap rate, do you view that sort of as a good comp for the market and maybe for your own portfolio?

Andrew W. Mathias -- President

I can't really speak to the specifics of their JV. I mean, I think there's still a strong capital markets bid for a New York City retail. I don't think, the view is as dire as people are making it out to be. And it's also we've worked hard over the last five years to really shrink the amount of our NOI that's attributable to retail, stabilizing and selling quite a few of our assets, including the sales of 720 and 724 Fifth Avenue last year. So we still feel like there's a strong bid out there for retail and I think, it continues to be part of our strategy. But on a very selective basis.

Vikram Malhotra -- Morgan Stanley -- Analyst

Okay, thank you.

Andrew W. Mathias -- President

And. Any further questions, Operator?

Operator

No, sir.

Andrew W. Mathias -- President

Okay. Thank you, everybody for joining us. And I'm sure Marc will be back in three months and we speak again.

Operator

[Operator Closing Remarks]

Duration: 36 minutes

Call participants:

Andrew W. Mathias -- President

Matthew J. DiLiberto -- Chief Financial Officer

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

Manny Korchman -- Citi -- Analyst

Alexander Goldfarb -- Sandler O Neill -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Nicholas Yulico -- Scotiabank -- Analyst

John Guinee -- Stifel, Nicolaus & Company -- Analyst

Craig Mailman -- KeyBanc Capital Market -- Analyst

Blaine Heck -- Wells Fargo -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

Vikram Malhotra -- Morgan Stanley -- Analyst

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