Welcome to the Q3 2008 SL Green Realty earnings conference call. (Operator Instructions). Thank you everybody for joining us and welcome to SL Green Realty Corp's third quarter 2008 earnings results conference call. This conference call is being recorded. At this time, the company would like to remind the listeners that during the call management may make forward-looking statements. Actual results may differ from predictions 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-Q and other reports filed 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 third quarter earnings. Before turning the call over to Marc Holliday, Chief Executive Officer of SL Green Realty Corp, we would like to ask that those of you participating in the Q&A portion of the call to please limit your questions to two per person. Thank you and please go ahead Mr. Holliday.

Thank you, good afternoon and thank you for joining us today. I think we should just get right into it as events of the past three months since our last call has raised a number of questions and concerns from shareholders and analysts. The basic theme seems to be questions regarding Gramercy, our structured finance portfolio, core New York City office metrics, and our balance sheet. We are keenly aware of investor uncertainty relating to these core items and I believe we will be able to clarify much of it on this call and leave plenty of time for questions. Effective yesterday evening, I resigned my position of CEO and President of Gramercy Capital Corp. I have done so in the belief that Roger Cozzi, Gramercy's new CEO, will be able to lead the company forward and tackle the significant challenges that the finance industry faces in the current economic climate. Roger has many years of experience in the finance business and is considered to be an expert in the area of structure debt and equity investments. In addition to his successful track record, Roger brings significant energy and a fresh outlook to a company that is operating in a very difficult credit environment. Also announced this morning were the resignations of Andrew Mathias and Greg Hughes from their roles as Executive Officers of Gramercy. One or more of these positions are likely to be filled by new hires that I expect Roger will undertake in the future. To further underscore Gramercy's efforts to reposition itself, SL Green has agreed to reduce or eliminate a number of fees which will improve Gramercy's operating performance and cash flow by approximately $20 million per annum. A significant reduction in the non-renewal fee also paves the way for a complete internalization of the manager and all of its employees in the future. Greg, why don't you give some more color on the earnings impact that these modifications to SL Green third and for the future quarters?

I think as we've talked about previously our earnings contribution from Gramercy really comes from two sources. One is the net management fee income and reimbursements that we receive pursuant to our management agreements, and the second is from our pro rata share of their FFO resulting from our 15.8% interest that we own in that company. The net management income in reimbursements from GKK are summarized on page 20 of our supplemental and they had been running around $4 to $5 million per quarter. These amounts will be substantially reduced with the elimination of the outsource fee, the collateral manager fee, and the reduction of the base management fee to 1.5%. You will note for the third quarter that the decline is already occurring since the contribution is only around $2.3 million resulting from the CDO collateral manager fees and the incentive fees being waived for the third quarter. For the quarter we estimate that our pro rata share of GKK's FFO will be approximately $4.9 million. We expect GKK to finalize its earnings in the next couple of days. Prospective contributions from SLG's stock investment in GKK will depend on future operating results of GKK. However, it is worth noting that GKK's total contribution to SLG for the quarter was approximately $0.12 per share or just 8% of our quarterly FFO of $1.45 which we reported today. At 9:30 our stock investment in GKK has a book carrying value of approximately $142 million. While Gramercy's book value is currently in excess of the carrying value of our investment, if GKK stock continues to trade at levels significantly below our carrying value, we will likely be required under GAAP to reduce the carrying value of this investment in future periods.

SL Green made these concessions in an attempt to help Gramercy succeed in stabilizing its financial condition in the near term while poising it for future growth when the credit markets unthaw. In the short-term, SL Green will be foregoing significant fees, however, we believe that these steps being undertaken to benefit Gramercy will result in long-term value for Green's holdings in the company. While Green has provided additional support to the company in the form of overhead reduction, there is no intention of SL Green acquiring additional stock or making loans to the company. The only possibility under consideration right now would be a selective asset purchase or purchases of positions that are already co-owned by SL Green, but even if this were to occur the approximate amount under consideration would not exceed about $75 million. Today's announcements should dispel any false rumors that SL Green may acquire or that there are any crossover financial obligations or commitments of Green to Gramercy of which there are none. In addition to our investment in Gramercy, we have received a number of questions regarding Green's structured finance portfolio. While most financial assets have decreased in value, SL Green's portfolio is unique in one very important respect and that is that almost 70% of our total structured investment portfolio is secured by interests in Manhattan properties. I believe that the Manhattan centric composition of Green's structured finance program will prove to be a benefit, not a detriment as being viewed by some. The fact is New York is relatively more liquid than other U.S. office EBDs due to the presence of international capital, albeit temporarily sidelined, and a deep and diverse tenant base not withstanding the retrenchment within the financial services industry. A number of these investments have substantial sponsor cash equity…

Our structured finance portfolio sits at an $855 million balance today after [power] repayments of $71.2 million since quarter end. No asset on the portfolio is directly financed and thus there are no term or mark-to-market issues associated with liabilities on this portfolio. In our supplemental this quarter we provided further disclosure with respect to our ten largest positions representing 75% of the entire outstanding balance of the portfolio. We took a $9 million reserve this quarter against our non-New York City structured finance positions, as Marc indicated, and those positions aggregate approximately 22% of our current outstandings. Eight-five percent of the top ten positions are secured by New York City properties. The top ten of aggregate subordinate cash equity invested of over $2.1 billion. Many of these positions are fixed rate providing sponsors with enormous incentives to perform and enjoy the benefit of what is today below market financing. Although liquidity of these positions in today's market is strained, we view these investments as ultimately liquid and also in a downside case continue to view these properties as potential pipeline for the company. The only meaningful new activity during the quarter was our mezzanine investment in the retail condominium at 666 5th Avenue. This deal was committed in June and closed in July and the investment thesis is our long-term belief in prime 5th Avenue retail space. Jeff Sudden who is partners with us in our retail business also co-invested in this transaction with us. The deal features $233 million of new subordinate cash equity from Carlisle Group and their partners, and returns on the position are over 15% with fees amortized. This position shows up as the second position on the top ten lists.

While we spend time talking about Gramercy and structured finance which clearly these items seem to overshadow what I would consider the most important component of our company, which is the core fundamentals of the New York real estate portfolio which is ultimately paramount to the success of this company. I think that that goes without saying. Buildings in our portfolio remain well leased at 96.5% with an expectation of a modest uptick as opposed to downtick in the fourth quarter. We continue to chip away at our near-term exposure. Our leasing in 2008, as in prior years, far exceeds contractual expiration during the year and by doing this our singular focus is on chipping away at '09 and '10 exposure which we've done throughout the year. We continue to do it in the month of October as you may have seen this morning with our additional post 9/30 leasing achievements that we announced. And additionally we have to our benefit buildings that are very well positioned to retain tenants due to our superior management and well maintained infrastructure which is primarily attributable to our portfolio repositioning that we executed over the years. We can be aggressive if we want to retain tenants, which we do in this market for sure, by leasing to levels that others can't since we have generally low basis and low leverage in our predominantly Class A portfolio. We also enjoy the benefits of a very favorable starting point, if you will, with deeply embedded rental mark-to-market and I think the advantages of that are clearly evidenced in today's release. You saw the kind of mark-to-market we had in the third quarter as in the first nine months of the year and we were able to achieve that even in today's worsening leasing market. Recall that we clearly forecasted rental declines back in December and acted accordingly and defensively even though market rental decline won't begin to be more fully visible and evidenced until 2009. We clearly have been operating in this defensive posture for all of 2008 and some of 2007. So, with some more detail on our leasing achievements in the third quarter and today's announcement from this morning, I'd like to have Steve Durrels run you through some of those data points.

There were a number of notable third quarter leases starting obviously with DDO's lease covering 121,000 square feet for three base floors at 100 Park Avenue. This is a transaction we started working on in April. DDO will anchor our building and redevelopment at 100 Park Avenue which won the 2007/2008 BOMA award for best renovated building of the year. The rent averaged $81 a square foot over 15-year term and the lease is in addition to several recent partial tower floor leases where we're pre-building space and starting rents have averaged $96 a square foot. At 750 Third Avenue we leased the entire ninth and part tenth floors to Regent Business Centers, 52,000 square feet. Regent replaced RSM McGladrey who we relocated into a 27,500 square foot extension at 1185 Avenue of the Americas after negotiating a buyout of an existing tenant to create the expansion opportunity. At 810 Seventh Avenue we leased 26,000 square feet to ION Media Networks, who is moving from 1330 Avenue of the Americas. They're the entire 30th and part 31st floors at an average length of $83 a square foot. A big driver of their attraction to 810 is the ongoing capital program which should be complete during the first quarter of 2009. Additionally, we continued with strong leasing of 461 5th Avenue, where we closed four leases covering 31,000 square feet, and that averaged rent around $94 a square foot. Taking into account the leases already signed in the fourth quarter, we've closed leases with a combined square footage that exceeds our total 2007 production. Leases signed in the past 30 days post-Lehman Brother's bankruptcy include Work Environment at 1515 Broadway, for approximately 65,000 square feet. Rent averaged $83 a square foot over 10 years, which is almost 89% above the previously…

Thanks, Steve. Not withstanding strong and active leasing performance, the investment activity in the market has flowed to a trickle with the debt markets frozen and investor capital on the sidelines in a game of wait and see for expected new pricing levels. Despite this freeze we completed three sub [sift] transactions since our last call, all on the sales side. Last week we closed on the previous announced sale of 1372 Broadway. The final price is $274 million, representing a 4.6% Cap rate on net operating income, and $539 per square foot. The buyer in this transaction assumed our loan on the building. Recall that we owned a 15% interest in this building, having sold 85% of the property at a $335 million valuation last year. Also this period we closed on the sale of 1120 White Plains Road in Westchester, which was held in a joint venture with [teachers]. The sale price there was $48 million, representing a 6.25 Cap rate and $227 per square foot. The buyer in this instance got new third party financing from a life insurance company at an advance rate of between 50% and 60% loan-to-purchase price. In the retail portfolio we closed on the sale of 80% of our interest in 1551 to Broadway to Jeff Sutton. With expected fees on this transaction we will have earned a 40% IRR on our capital after payment of Jeff's promote. Whole dollar profits on this deal should be in excess of $23 million. We retained a 10% un-promoted interest in the property, and if you've been to the heart of Times Square lately you've seen steel rising at the site at a rapid clip. We expect to turn the building over to American Eagle early next year.

Okay, with that Greg is going to finish up with a discussion of Q3 operations, and also a discussion about the current balance sheet position of the company. And I think this will enable us to finish up with strength because Q3 was, I thought, a very, very good quarter, especially on a relative basis given all the challenges in today's market. We were obviously quite pleased to be able to have achieved on an operating basis what we were able to achieve in the third quarter. And also, when looking at our balance sheet, Greg is going to run you through a lot of different metrics, but the conclusion will be we've got a substantial amount of cash on hand. That cash, most importantly in my mind, does exceed our recourse maturities over the next three years. That's balance of '08, all of '09, all of '10, all of '11. So you can never have enough liquidity and that's for sure, but it does make us feel that the steps we had taken going all the way back to '06, whether it be property sales in excess of $2.5 billion over the past years, or the capital raising that we did corporately in '06 and '07, all of that basically were steps that have positioned us to be – and I think a relatively good position – understanding that we will continue to look for ways to monetize assets and build liquidity. Because having money available at some point in the future, to be very offensive as opposed to defensive, is clearly a priority of ours; although, not at the moment. Obviously we've been very quiet on the new investment front, and I think that's what you just heard from Andrew, but why don't I turn it over to Greg and take us through those pieces quick.

Sure, thanks, Marc. I'm going to go ahead and jump right into the liquidity section of the presentation, which I think is kind of paramount in everybody's mind given what's happening in the credit markets today. And I think we have a fairly good story here to tell. At 9/30 we had $711 million of cash on hand, which has increased subsequent to quarter end to over $800 million. Additionally, we have $48 million of availability remaining on our credit facility. During the quarter on our line participants failed to fund it's obligation under our credit facility, and this coupled with the turmoil in the financial markets led to the proactive decision to draw down on approximately 97% of our credit facility. In response to numerous inquiries that we have received, we have expanded our disclosures on page 26 of our supplemental to summarize the significant covenants which governed this facility. A review of these covenants finds that our total debt-to-assets for the quarter at 49% compared to the 60% that's required. Our fixed charge coverage at 2.01 times compared to the requirement of 1.5 and our secured debt-to-total assets, a ratio that has plagued a number of our repeaters, at just 22% compared to the 50% requirement. Our corporate finance model has left us with substantial flexibility as we currently have 17 high-quality properties comprising 8.3 million square feet, which are not encumbered by specific mortgages. Our maturity profile looks manageable. We have no remaining maturities for the balance of 2008, having recently completed two financings in September. We refinanced 717 5th Avenue, increasing the loan proceeds from $192 million to $245 million with the ability to go as high as $285 million, and we're borrowing there at a rate of LIBOR plus 275. We also financed 28 West…

I think we tried to shorten as best we could that portion of the call so we could get right into questions. There are – there’s a lot of people on the phone today so we’re obviously going to just try to get to as many as we can. So I’d ask people to really try and limit the questions as best you can so that everyone, or most, people have the chance to get on the phone and ask what they want to ask about it, and with that operator I would say let’s get the questions.

(Operator Instructions). Your first question comes from Chris Hayley – Wachovia Chris Hayley – Wachovia: Glad to see the GKK news and the recent hire. I’m sure you’ll have more information on the GKK call separately, but for SL Green’s benefit or detriment, can you offer any color on any potential claw backs. Or any other puts or issues that we should know about related to some of the investments at Gramercy? And whether or not SL Green has any potential liability regarding some of those investments? Just want to make sure that you have the opportunity on this conference call to clarify any issues related to that.

I alluded to the $5.1 million incentive fees recognized in 630 which could be subject to claw back. And I think that Marc made pretty clear there is no recourse obligations, there’s no contractual obligations, there’s no loans forthcoming. There, by the way, we do have crossover in investments with that company which is, some time in the future may or may not make sense to consolidate those positions, but there’s no contractual obligations to do so. Chris Hayley – Wachovia: The magnitude of those crossovers?

We may have it right here. This tally goes up but again this, first of all there is no indication that Gramercy is necessarily selling, a seller of those positions. We have several positions we’ve done with Gramercy over the years. Typical have been I would hazard to say 50, 50 arrangements but that can vary from time to time. But I think Greg’s point was if any of those positions are openly deemed as quantity liquidated by Gramercy future. We could be a natural buyer but we have no obligation to. And we would assess that as we would any other investment. I think that’s the main point to your question.

The next question comes from Jonathan Habermann – Goldman Sachs Jonathan Habermann – Goldman Sachs: Just sticking with the structured finance I guess on balance sheets. Can you just give us a little bit more detail? I know you went into a lot of specifics but loan-to-value and sort of where debt service covers exist today. And then as well you talked about the reserves the $14 million you’ve taken to date. Can you give us a sense of how you arrived at those values? I mean are you looking strictly at Cap rate changes or is it really a function of changes in occupancy and debt service coverage?

Why don’t we hit the reserves first because I think you need to understand the nature of the reserve we took in this quarter which may be different than you’re looking at it, and Greg, why don’t you do that and then we maybe have some of these others mention it, too.

Yes on the reserves I mean we looked to, we do detailed discounted cash flow valuations of the underlying collateral to come up with those. So we’re looking directly at what we think the real estate is worth and I think it’s noteworthy, I mean, so we’ve gone ahead and set up those reserves. Virtually all of those loans where we have reserves are still performing in accordance with their original terms. So we’ve tried to be proactive there and it’s based upon a range of cash flows that we’ve developed for the underlying collateral. Jonathan Habermann – Goldman Sachs: How much of those declining values did you calculate?

How much did they in decline in value – Jonathan Habermann – Goldman Sachs: Percentage of total the original investment?

Have to go back and look at our original underwriting.

Do you mean for the whole, for those loans where we took a reserve? Jonathan Habermann – Goldman Sachs: Right well for the assets ledger underlying those loans?

Right we can maybe figure that out real, real quick, or? I don’t think we have that right here, I mean obviously – Jonathan Habermann – Goldman Sachs: Well is it 15% ,20% just a ball park?

Well it's different Andrew do you have sort of a feel by either product type or market that you could generally, I mean, everyone is different.

I mean really it varies by asset and a lot of our loans are on transitional assets whether lease open at various stages. So I would say typically to your first question we were originating at loan-to-cost or loan-to-value in our determination of between 60% and 80%. Most of the, all of the positions in the top ten obviously are either B note mezzanine loan or preferred equity. We did not do much whole loan business in SL Green. And I would say the debt yield in those positions, meaning the NOI at the property over the last dollar exposure of our debt, obviously aggregated up for any senior debt, stands today at about 6.2%. Now that’s skewed by many properties in that pool that are as I said in various stages of lease up so if they have large vacancies they'll obviously show at a very low debt yield. And also in our positions in residential where it is stabilized rent controlled assets where they’re in the process of decontrolling tenancy and some other factors. But to give you a sense on the average the debt yield is 6.2%. Jonathan Habermann – Goldman Sachs: Second question can you just comment broadly on the New York City office market? What’s the update on sublet space, just vacancy trends and also can you give us a sense of where you think Cap rates are trending. I know you mentioned transactions are pretty much at a trickle.

Well let’s, Cap rates I don’t even know. It would be very hard to assess that because no one has raised to sell at New York at whatever pricing that might be relevant in a market where there’s just no debt. So I think rather than try and predict a Cap rate you just have basically buyers and sellers realizing this is not a good market to sell in. Buyers still are expecting very high prices and sellers are expecting prices that are evidence of a market without debt. And in rare instances where debt does accompany a transaction in-place assumable low rate debt. Then the pricing can still be –

You saw this quarter our investment activity we ranged between 4.6% in New York and 6.25% in the suburbs.

Right but the answer is Cap rates are up structurally from where they were last year, that’s obvious. And where they’re going to settle I don’t think people necessarily know, but I don’t, when we run our numbers, and you can settle them at different Cap rates. Four five six, six-and -a-half seven eight, you can do that whole matrix; we still get to levels that we think are still very representative of making us view our stocks as a good buy and as you saw we still continue to buy stock in. And I think that those Cap rates, whatever they might be in this market, will start to compress again or at least mature into more of the normal, historical normal, once there is debt in the market. But right now there really is no debt and I think you know that. On the leasing front, that has really surprised us to date in terms of its strength. I would not have guessed sitting here in October we would be, – had the ability to make an announcement like we did this morning. So that’s been a surprise to the upside clearly there is a lot of sublet space that is somewhere between rumors and in the market, [Steve] I think if you can sort of target, rumored, it’s just you just don’t know. Why don’t you go with what is in the market or very close to being in the market.

Well it’s helpful to understand that if you watch the official stats depending on who is producing them as far as sub lease space availability goes, it’s clearly increased over the past six to 12 months. A year ago we were roughly at half a point of the availability with sub lease space. Today it’s officially at 1.7%. That doesn’t tell the whole story though. The reality is over the past, I’m going to guess four or five months, anybody who is monitoring the market closely has run kind of a parallel list; there's that amount of square footage which is officially listed for sub lease. And then there is the shadow space that’s out there which, always kind of run a list on that, assuming that, whether it was a piece of Lehman Brothers space or some other banking space or other kind of space. That we either expect it to come on market or could be made available for market if there was a tenant ready to grab it. The interesting thing is that some of the shadow space has shifted over to being directly available for sub lease. So that’s what’s driven that increase in the availably rate of sub lease space to half a point to 1.7%. And secondly I can’t think of a major piece of new sub lease space that’s been added to the shadow list. Kind of interesting to see that it’s fairly stabilized in sort of a global overview, but we are expecting with the anticipation of some additional layoffs that there will have to be some additional sub lease spaces that come into the market. But right now the past several months, it really hasn’t changed.

Your next question comes from Louis Taylor – Deutsche Bank. Louis Taylor – Deutsche Bank: Maybe I missed it but Marc or Greg when you talk about the preferred equity portfolio just what does the maturity schedule look like for the underlying senior debt there? Is there much coming due in 2009 or '10?

You’re asking about senior debt on the structured finance portfolio. Louis Taylor – Deutsche Bank: Correct, correct.

Yes in every case its coterminance with our, whatever type of investment we have if it’s mezzanine preferred equity or B Note. It varies between longer term fixed rate and shorter term floating rates, but in every case we’re matched up with the senior debt. Louis Taylor – Deutsche Bank: So then roughly or can you give a rough profile in terms of he holders of that debt, CMBS or life company, bank debt, etc?

I think for the most part the majority is CMBS. There are also some syndicated bank groups, but for the most part its CMBS and the senior debt. Louis Taylor – Deutsche Bank: And last question just in terms of the internalization of the GKK manager I guess what track is that on? I mean is that something expected to do year end. Do you think it’s going to drag into next year; just what’s the status of the process?

I think the main part of the process has been culminated and announced as of last night or this morning. There’s really just one of two outcomes; there’s – the contract matures at the end of ’09. And part of the revision we’re structured to make a renewal or non-renewal of that contract at the end of ’09 much more feasible and executable for Gramercy than the terms that were previously in place. Or if there is reason to want to accelerate that into the next couple of quarters, we have the flexibility to that now. But I would say that a lot of what the special committees wanted to accomplish in terms of reorganization, senior management changes, on both sides, Green and Gramercy. Fee reduction and making that back end portion of the contract nonrenewal fee something that was within parameters that Gramercy would be much more comfortable with. That will occur and I would say that’s substantively a lot of what special committees wanted to accomplish. Louis Taylor – Deutsche Bank: So for, just our purposes so we just assume that the contract will run its course through next year?

You can certainly assume that as your base case and if it internalizes earlier it will, but I would look at the two events as not having much economical differential at this point because of the fee concessions.

Your next question on the line comes James Feldman - UBS Securities

Can you give a little bit more color on the whole Gramercy negotiation process? And I had a lot questions from people just wondering about kind of the arm's length nature on it and could you add some color on that?

Can you give a little bit more color on the whole Gramercy negotiation process? And I had a lot questions from people just wondering about kind of the arm's length nature on it and could you add some color on that?

Well I think it was as arm's length as you would want in this situation, which was completely arm's length; two special committees; each committee made up of independents. So Steve and I were recused on each of those committee meetings. They met separately. They hired their own advisors. In the case of Green, they were advised by Citigroup and in the case of Gramercy they were advised by Golden Sachs. Two separate sets of attorneys, neither of which was our common corporate counsel, [Clifford Shant], so in the case of Green in was [Frey and Frank]. In the case of Gramercy, it was [Hogan and Horten]. And each committee ran numbers, decided I guess, what was in each company’s best interest. There was pretty protracted negotiations as it turned out this process was started, I seem to think three or four months ago. Certainly on the last conference call I had highlighted it and really just culminated over the last several days. So, that was the process. I think it was looking back both at the reaction from both Green and Gramercy shareholders as we've heard it today, we think it was a win-win for both companies given these economic conditions. I mean everything that is done is done in the backdrop of an extraordinarily challenging operating environment. So I think each company tried to do the best that it could do. I think we’ve done that. And I think there’s a lot of optimism now that this is a first step towards really advancing Gramercy to be able to really turn things around for itself by giving it at its core substantial reduction in G&A. And therefore a better operating performance, that in itself is a huge benefit for Gramercy. And for Green and our 16% investment in the company is a huge benefit for Green. So that’s basically how the process seems to be.

Yeah, Steve could you just talk a little about where you think normalized market TIs are right now. It sounds like the 100 Park deal is a little bit higher than average.

Yeah, Steve could you just talk a little about where you think normalized market TIs are right now. It sounds like the 100 Park deal is a little bit higher than average.

We had said, I think consistently over the last several months certainly made the point at the last conference call that TIs for vacant space has been increasing. I think by and large, where we’re doing deals for raw space, and again it always depends on the price point of the building you’re dealing in, so if it’s a kind of $50 plus rent type deal, then I think by and large TIs are in the $45 and $50 a foot range. I think free rent has been edging up and we said that last time as well, that it’s been going up an extra month or two. And to some extent we were leading the charge in order to close out leases so if I had to I'd give the extra five bucks or I had to give the extra month of free rent. We were doing it in order to lock down our leases. So I think broadly speaking in the market right now $50 a foot is probably the most common TI for vacant space. It would be less if we’re doing renewals. It would be less if we were doing a deals on space that already that has installation that's salvageable. And I think free rent runs anywhere between six and eight months. Although there are plenty of comps out there that are both dramatically lower and dramatically higher, but I think those are good sort of general comps.

One point that was made to me is that the concession packages will widen and we’re going to have to meet the market in order to meet those deals. I think Steve was telling you that we are doing that. But I would also just point out ,which is somewhat of a subtlety, is that we have the capital to do it and many of our contenders in today’s market do not. As Greg said earlier there are a 105 million restricted two-thirds of that for making capital and some other reserves. So, that’s available specifically and solely for these kind of deals where those reserves exist. And then we've got a sizeable cash balance that enables us to be able to do those kinds of transactions, where others right now who are high-basis, high leverage, cash strapped, maybe the early maturing debt, they can’t do that. So on one hand concessions are rising. We've said that now consistently now – it’s just that now you’re seeing it. But I’ve been talking about that net effective rents as the measuring and the first part of that being concession that you would see gapping out – and they are. Where that’s headed I think maybe we will have a better handle on that in the next three to six months as we see how much of the shadow space that Steve was referring to actually converts into direct sublet space and we’ll see. But the point is for the deals that we want to make and think make sense we have the capital to do it.

Your next question comes Mitch Germain - Banc of America

Greg, I don’t think I missed this. What are the parameters for writing down the carrying value of the GKK investment?

Well you have to look at a number of considerations including the current trading value of the stock. But you need to look at where it traded, how long it’s traded for that period, and make an assessment based upon the underlying value. There are a number considerations that go into it including the book value of the company, the trading value and the timeframe under which the trading value has declined from its previous lows.

You don’t know that time frame off the top of your head?

Well I mean you can look at the historical stock chart of the company and that’s one point of reference. It’s very much like the other then the temporary decline analysis that you find a lot of the securities and lending folks having to go through.

Ok. Thanks and Andrew the investment have been somewhat void of distress outside of a few instances, just based on your estimation when should we expect some of that distress to potentially start to begin to enter the market?

I think you’ll certainly see more in 2009, than we did in 2008 as interest reserves run short. And then the real forced selling to the extent there’s not a replacement debt market and you depending on where Cap rates shake out will be in ‘10 and ’11 as you start getting floating rate loan maturities. There are unlikely to be a lot of maturities - final maturities next year without extension options, but you’ll see the stress of where people bum their interest reserves and don't come up with cash.

Your next question comes from the line of Michael Bilerman – Citi.

Marc, you talked a little bit about having liquidity and having the cash. Obviously throwing down your credit line bolster and take that liquidity before it goes away. You also talked about buying back $50 million of your convert post quarter end. Could you talked a little bit about where you able to purchase those notes and how you thought about the effective yield there given the coupon was 4%? And were you were able to buy it, but also whether you’re going to use any of this other liquidity to buy back any of the unsecured notes or redo another share repurchase program and how you think about maintaining liquidity versus buybacks.

And so the question is cash, buyback stock, buyback bonds? How we look at it?

And then specifically on the $60 million convert where was the pricing that you were able to obtain.

I’m sorry, let me just – let me address my question, my interpretation of the question first because look there are, if we do intend to buy anywhere within that stack, I’d say as a company we’re slightly better served by not necessarily broadcasting specifically where we would intend to buy. You would want us to buy at the best possible levels and certainly we do. So, and I actually, when you say $50 million in converts we have several offerings that would show.

No, I’m saying the $60 million that you purchased in the quarter.

Oh in the quarter. OK, so what we’ve done already. In terms of how we look at it, we think putting aside, whether stock is ultimately the higher return analysis, I guess if money was not an issue, we wouldn't want to buy all of the stock up right? I mean, let’s just call it what it is. If we had instead of whatever is on the that several million plus or minus, if we had $3.8 billion instead of $80 million, we'd just buy all the stock back because we would look at that in the long run and in the long term as being the absolute best use of our cash if we had it. But we don’t, so when you have, when you’re constrained I think retirement of debt takes on a whole higher level and more attractive feel to it than retiring your permanent with it and that’s simply a result of the uncertainty. If we knew in 2012 or 2013 markets would be back, we’d be able to refinance at levels that we’re accustomed to or anything close to it, so if you had that certainty you might still say let's use it all to buy back the stock and we’ll just meet our debt maturity requirements in those years when you can, but nobody knows that. Everybody hopes and thinks that but nobody knows that and if you don’t know that it sort of pushes you towards devoting that cash more towards retiring debt than equity, even if you think the equity’s a better buy. So again, just on a pure heads up price-per-pound return basis, we’d probably love to continue buying the equity but I think due to the uncertainty until we see better where credit markets are headed and will ultimately settle out, then I think you have to keep as much capacity on the balance sheet as you can and just deal with your near term maturities. Near term debt means, well you can sort of create your own interpretation of what near term is, but near term to us certainly less than four or five years.

I mean specifically on buying back $60 million of the convertible note that’s due in 2010, I mean what price do you buy that back at?

Well look, it doesn’t make sense to share the pricing at this point in time. You can safely assume it’s a high teens plus type return which we see as being attractive as anything else we’re seeing in the market and having the added benefit of delevering the company in an environment where companies that are over-levered are slowly being punished in the stock market. So it has the benefit of being a very, very attractive return in de-levering the company and so it's an argue, a win-win.

But you’ll effectively mark the difference into earnings next quarter.

Yes, that is one of the last variables that I had mentioned for the fourth quarter earnings, that there would be gains from those, yes.

But they convert to trade is like $0.50 to $0.60 on the dollar at this point. I'm just trying to understand.

There's different classes out there so that.

And just going back to the structured finance book, you have about $200 million maturing in each of the next, in 2009 and 2010. What specific loans are coming due and given the higher leverage levels and some of the leasing requirements in some of the cases? Can you just talk about the potential of refinancing and maturities of those pieces?

Well, I think those are initial maturities on the maturity profile. I think a lot of the loans as I mentioned had extension options as their rights. They were often structured as two-years loans with two or three one-year extension options, mostly for Cap purposes to try and lessen the burden of the cost of interest rate management products. But we expect most of those positions given the current refinancing environment to exercise those extension options.

And how much, is there, I guess from a LIBOR perspective, Greg, you talked about having a lot of floating rate date; I see you having $900 million of LIBOR- based finances. There's losses there.

Should I just finish out, Michael, my last one, because we're trying to get everybody in here.

We didn't hear that one, Michael.

Your next question comes from Anthony Parlone – JP Morgan. Anthony Parlone – JP Morgan: Thank you. With respect to leasing in your supplemental, you showed asking rents for the portfolio down just a little bit sequentially maybe less than two bucks. And I’m just wondering if that, how reflective that may be of the market and how that may, and how that percentage change or debt may look if you threw in what free rent looks like in TI? So how effective rents have really changed on lease economics.

The question is how close are those asking rents TI or how close is the reduction in asking to reduction taking, I'm just not sure I understand. Anthony Parlone – JP Morgan: I’m just trying to get a sense as to how lease economics have pulled back thus far because looking at your supplemental just the change in what you show as the ask is pretty modest so far.

Well, and as I mentioned, Tony, for the third quarter the asking rents that we had published in June, the actual leasing activity for the third quarter exceeded what those published rents are and Steve actually goes through a very detailed review of each of the properties that are rolled up into this, which he can walk you through and make modifications.

I think it’s important to understand that with regards to the asking rent in the first place, we’ve always been very conservative as to the asking rents that we publish. Consequently, where we have seen reduction in the net effective taking rents, the need to address, to reduce our asking rent really isn’t as great as you might otherwise think. Each of the buildings, at the end of every quarter I go through and assign an asking rent, an average asking rent to every one of the buildings and I think the numbers that we’re using right now are very realistic as to where our expectations are as far as an ask, assuming that there’s, again, it depends on where you are in the building and space by space, but generally the taking rents are within 5% or so, 5, 10% of the asking rent. Anthony Parlone – JP Morgan: I’ll maybe ask this a little bit different. Steve, in the last few leases that you’ve actually signed, if you were to do those deals or look at those same deals a year ago, how far off are the economics on the deals you just signed versus what they would have been at say on the peak on a percentage basis?

Tony, they’re probably down 10% on the nominal rent with a slightly bigger concession package than we would have offered a year ago. So I think squarely within the 10 to15 that we’ve been referencing in the past; some less, not many more on a net effective basis. It’s very hard, we do dozens and dozens of lease per quarter but if you had to generalize, I think it’s safe to say that we’ve taken most of those taking rents down, would you say by 10%?

Yes, I think we were one of the industry leaders to recognize a change in the market. I remember a year ago last summer, or a year ago this past summer being on investor tours and at that point we were signaling the world is changing, the leasing market is changing. We were ahead of it. We recognized it. We already started to adjust our asking rents. We started to adjust out transactions at that point in time. I think that's one of the reasons we've been successful at really keeping the portfolio full and still realizing deal volume where maybe it's contrary to what you see in the rest of the market.

Yes, but someone raised the issue earlier on the call. And you're right the concessions for the past quarter were higher. And, I think that's just the function of the market. So, you don't think it's not surprising to us in terms of the incremental dollars we have to put on the table to close the deal. But they are higher than they were a year ago for sure and I think the range that I gave you is a good range for where we see the market right now.

Your next question comes from Michael Knott – Green Street Advisors. Michael Knott – Green Street Advisors: It sounds like you're addressing the near term debt maturities with the cash you drew done from the line, but can you talk about the 11 and 12 maturities and particularly the exchangeable debt that comes due? Or, can be put back to you in 12? What would be your current plan even though it's a little ways off now, to address that.

We have a plan for that. Greg you want to talk about the oncoming?

I had made mention to a bunch of the unencumbered notes that would come due, particularly the 2012 that we had issued last year which would be purchased in 2012. I think if the market didn't change dramatically from where it is today. First you would look to do corporate unsecured financing would be first choice to refinance those. That's probably not a viable alternative as we sit today; don't know where it's going to be in four years from now. We do have the 8 million square feet that I reference, equates to roughly $4 billion plus worth of real estate. And so I think a likely add from the 2012, would be to go ahead and mortgage those properties. So if you went around through the portfolio we own 1185 Sixth Avenue. We own 810 Seventh Avenue. We own 1350 Sixth Avenue. We own 750 Third Avenue; major fully occupied office buildings with credit tenants that don't have mortgages on them? You would go ahead and likely mortgage those and retire those obligations. Michael Knott – Green Street Advisors: You wouldn't come across covenants on your lines that would restrict that activity?

Again, if you look at the covenant package, we're in very, very solid shape. We have the unencumbered asset pool is the one that we're probably closest to. But again, when you're mortgaging a property, where we have tons and tons of room on the secured indebtedness test, and you're using those proceeds to retire unsecured notes in the form of the converse that would be put, that helps the ratio.

Because you're delevering Michael, so, if your securing up and delevering your not worsening the covenant. Michael Knott – Green Street Advisors: Then this is the last question, can you just address Viacom and 1515 Broadway as well as the plan to refinance that debt I think in 2010?

So Viacom is – we're not going to begin the refinancing plan until we know exactly where we stand with Viacom, even though that goes without saying. And that situation we would think will be much more clearer to us towards the end of November or December. But we're not – but the debt doesn't mature until the middle of 2010, if I recall. So there's nothing to do in terms of refinancing it now in October until you know where you stand with Viacom in November and December.

But I would add the property is relatively conservatively levered and the debt yield there is approximately 10%.

Your next question comes from Jordan Sadler – KeyBanc Capital. Jordan Sadler – KeyBanc Capital: Just following up on that last question, in terms of capital, can you maybe talk about your view on the dividend on this source of capital.? You're paying out almost $200 million a year, at this point. I recognize some of that is requisite for your REIT status, but have you looked at that as maybe a source? I mean you've got an appropriately conservative posture with all of this cash drawn down on the balance sheet; just curious as to the thoughts on the dividend?

Well, look I think there's a lot of question of in that question and the one before, kind of about what does 2012 look like. Because, I think what we're saying, what I said, what I think Greg said is that where we are our cash exceeds our recourse indebtedness maturities for the balance of '08, all '09, all '10, all '11. And I think that at some point you have to look and see and try to get a feel for what our market's going to be like in 2012 and beyond. That doesn't mean we don't plan for it today. But, I think Greg rolled out a contingency plan which is if they're no better than they are today they could always be worse, and how much worse that's hard to project. But we look at it as if they're no worse than they are today but, no better what's our plan? Our plan would be probably to encumber some assets. Clearly if AFO looks like it's not there to support the dividend, than you have to reevaluate the dividend. But I think we would look to the real estate first to encumber as a source to repay other debt because it's debt for debt. So what Greg said; there's no lever up there. It's just replacing debt. Before we would touch a dividend if the AFO covers it and we think that that's an approved use of funds which we do at this time, but if the situation changed and we feel that the situation was not improving. As we get out there towards 2012, then like every company you've got to reevaluate your dividends. But that's just not the situation as we sit here today. Jordan Sadler – KeyBanc Capital: Then a separate question just talking about your view of the market, I know its visibility is very difficult here and in the past you've talked about a 10 to 15 % market rank correction. Bu, if you were to underwrite market vacancy, sort of peak market vacancy here, I know it's very difficult to do at this point, but including and taking into account some of Steve's estimates of the shadow pipeline of sublease space. Where do you think we might get this time on the down cycle in terms of total vacancy?

That's a very tough question. We're sitting right now around 8% or so. And, that includes the shadow direct vacancy that Steve was talking to, the 1.7 of direct. Steve, total square footage of sublet that you think in addition to that number could be delivered in the next 24 months. I'd rather sort of look at it that way than predict a vacancy rate, but how much additional beyond the 1.7?

I think that it's widely believed that that could go up to kind of another point or so. So it would be maybe 2.5 to 3% of sublease space. But I think you've got to be careful. If you look at the overall availability of the market and you use that as any guidance as to the impact on our portfolio, because a lot of the vacancy that's reflected out there are in very large blocks of space, whether it's new construction at 11 Times Square that’s come on. Or big block of space like Pfizer is putting on, which is basically almost the majority of 635 Third Avenue. Those are the kind of numbers that move the needle on the availability stats but then when you ask yourself, how does that impact our portfolio right now, recognizing that through the end of next year we only have one or two pieces of space that I'm going to be marketing that's in excess of 70,000 square feet. So just because the availability goes up, doesn't necessarily mean that I'm competing against the same inventory; it's more about what's happening in the small to mid sized type tenant space that's out there because that's the space that I've got to fill over the next 12 months

I would add it's important to distinguish between mid-town and other markets, so midtown, downtown, Midtown and you see numbers floated for the New York Metro area which incorporates suburban activity, which is very different. If you go back to the last downturn, in the early 2000s, it got down as low as 87, 88% occupancy, but if you look back then we were able to out perform the market and operate it closely to 10 points above that level. What we did see then, and we think you'll see again this time, is tenants moving towards well capitalized landlords who operate their buildings professionally. So the performance back then was dramatically different than what the market was.

Your next question will come from Michael Knott – Green Street Advisors. Michael Knott – Green Street Advisors: I was going to ask isn't the absolute dollar size of that loan today, fairly problematic, even though it is conservatively levered on a LPV basis?

No, I don't believe so.

It’s not problematic, Michael, until you know what the leasing status is and even if Viacom does renew, we have 18 months and funded reserves in the loan at a fairly low rent per foot that we think – that would be one the least expensive products on the market today. If we offered that as we sit, now today and we've got a lot of runway to lease it. So, the answer is, I think our first order of magnitude, we'd like to make a deal with Viacom and have been working with them on and off for years. Try and make that occur but, I think that they have their own needs that they'll – I think will become clear to us over the next couple of month or two and if we make the deal then we'll know what our refinancing strategy is and if we don't make the deal and we're delivering that to the market we think we can lease fairly aggressively, lease it up. And, I agree with Andrew the loan is –

I don't believe that 600 million takes it out of the syndicated loan market, not at all. I mean We just closed 245 million dollars with a sole arranger on principle basis in September.

Your last question comes from the line of [Nick Pearsos] – [The Choir]. [Nick Pearsos] – [The Choir]: The cumulative 14 million established reserved of your structured portfolio, structure finance portfolio. Other than it being from the non-New York portfolio. Have you been able to identify any common characteristics that are generating the losses

No, just I would just say in each one, yes, the common characteristic is our non-New York portfolio is performing, as you might expect or would expect, not as well as our New York portfolio. That's the common characteristic. Beyond that, the property types involved vary, the locations vary. I would just say the common characteristic is they're in markets where values have dropped more precipitously than they have here in New York and liquidity is less and unfortunately we have to find a lot of areas outside of Manhattan right now. So we – many of those loans, several of those loans, we think are restructureable and/or get repaid and/or I think we're in relatively good shape. Others will become problems but what we try to do was dimension the bucket of what we think the problems may stem from to a bucket or 200 million; certainly not the whole 200 million. If that’s not obvious I want to state that. But a portion of it, we've reserved I guess 14 million of that $190 or $200 million and if there's further deterioration we'll take more reserves, as we see it. But beyond that there's no common thread.

Your next question comes from Michael Bilerman – Citi. Michael Bilerman – Citi: My question was asked and answered.

Your next question comes from the line of [Ross Wenner] of [D'Amico] Capital. [Ross Wenner] – [D'Amico] Capital: Rationale for why you chose to waive the management agreement, for this quarter with GKK?

I was just part of the overall arrangement that the boards, each pertain to determine I guess there and appropriate in light of all the back and fourth consideration. So I can't tell you how one specific piece related to another, but it was an overall package that included some fee relief in Q3 and then additional relief in Q4. And then the incentive fee for 2009 is still present but with an option on the part of Gramercy to pay that in cash or stock if there incentive owed in 2009, and it was all considered as part of a package. Okay, operator, that's our last question, so thank you everyone for calling in and if there's anyone that we missed we'll try to – please give us a call directly and thank you for listening in on this call today.

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a great day.