ALX - Earnings call transcript Q1 2022

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Operator

Welcome to the Vornado Realty Trust Earnings and Webcast for the First Quarter of 2022. My name is Vanessa and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. [Operator Instructions]. the to turn now will call Mr. over I and Borenstein, Senior Counsel. President Vice Steven Corporation begin. may you Steven

Steven Borenstein

statements for to filings uncertainties call during Form results variety XXXX ended annual The differ any be include In financial these undertake will be materially duty www.vno.com, statements, only information Welcome may the Trust information release Reconciliations documents on Form during are regarding to Vornado the our Please uncertainties. well including Commission, statements. forward-looking other year these issued quarterly website, to as Relations supplement. Realty on and report our under Securities call to Securities this factors. forward-looking we our afternoon, of call. may non-GAAP on Investor report financial earnings These our first we deemed our a December and Yesterday our and Exchange statements be financial quarter with today's documents refer comparable are measures discuss these to section. due certain time-sensitive directly that the XX, XX-Q actual risks supplemental company GAAP measures. the may available from of earnings call, release, and today's Exchange risks, made most of included does XX-K date. as Form and accurate The these not and for aware update and that a Commission. our first and filed may the with quarter as Please more XX-Q measures earnings package information in

President Roth, Executive Michael opening today Officer; call the Officer. Steven for Franco, our Financial and Chief are Chief from Chairman and On comments and management

turn Our senior and Roth. will present also for call now available team to I over the Steven questions. is

Steven Roth

Steve you, and morning, good Thank everyone.

my our I year, had business, streets good the counts continued waiting traffic thought begin a from in of and last quarter utilization recovery full, Partners trends Let continue and many to across the to reflecting up see restaurants literally FFO we business. are is long XX% saying, positive very with eye, in and To me we are by pre-COVID with beloved full [ph] our by booming of are pedestrian York office full congestion. lists, back I climbing. New terms mean, and the

as We we like a utilization speak. of are are couple over now things highlight. There XX% to I'd

reserve First, in now year. economy and federal their mountain, role but every as we appropriately quickly to fall out have inflation inflation, quickly a climb in and the prolong, so. If other floating is is of years, expect rates that correct is than hands The and most then up fighter down economy the the and past side. of XX we XX the slow more is rate nine the debt strategy this

Second, for lease pending and time sheet quarter, income GAAP ground statement first X the reflect our balance of XXXX the Penn this the June, financial effect renewal. statements

rent $XX proceeding. new have arbitration We pending ground the as estimated million the act

will that online as very will two Penn and growth short come Farley, substantial X numbers slow we believe While these be our X and those are Penn term, substantial. very,

Now over to Michael.

Michael Franco

Steve you, morning, Thank everyone. good and

another As had quarter. Steve strong mentioned, we

new was first of adjusted last FFO they our businesses. increase to primarily for and was increase leases, continued and XX%. per quarter, share to $X.XX $X.XX This rent office as $X.XX recovery from First comparable compared year's of on retail quarter an variable commencement

on in a quarter-over-quarter release have Page financial Page We X. on supplement earnings our our provided in bridge X

full-year the straight balance are record draft the sheet Under required value liability mentioned, recognizing on additional time Steve the we estimated and This our actually million $XX GAAP, ground renewal. the until $XX an reduction by pending cash FFO this recognizing rent the start our overall lease impact on earnings paying impact our XXXX of not in are in quarter however, a we for increased As XXXX. June earnings impact reduced $X to and financials, our The in and we of million X quarter first the reduce million earnings. by it basis. Penn approximately this in and we'll lease start will present

balances for this year but we expected on XXXX up recovery year's this of now Looking when originally particularly LIBOR a ahead, driven would recovery variable now per previously and of year share to first FFO to gave mid-to-high quarter. growth this year. we platforms variable the single hikes businesses. expect had initially rate will now the to preview rates move like we up in impact the Keep expected fed at headwind than With office to the by last a to our as projected percentage greater We continued of leases mind; looks in quarter, cash had we more FFO deliver anticipated. Farley it XXXX, move the both But retail, growth debt signed interest a the we than our by be also see more on for in we're earning growth our it in to increase. strong rate the expect share we and double-digit primarily digits. our variable We respect in contained our be assumed businesses,

bookings Our Times its dominant look healthy. signage our and quarter forward signs and district first and strongest Square the Penn continue led by to ever had business

due year's as business show shows rebound pandemic. were first the Our Mart the there we to during four the is hosted quarter during quarter, whereas trade successful continuing to at trade none last

Our to business this pandemic BMS perform to contain levels. recover be continues garages, year back near our to finally, pre fully which and we expect

our businesses the X.X% Company-wide to quarter. most of increased recover the first year full with for return the prior from first by income the over variable expect quarter same-store We this XXXX. year's cash NOI in

office New X.X%. was Our overall core where compared business the first up year's York office business to X.X% was our up prior while

to up Avenue, primarily leases new Madison Our strong XXX Avenue. on commencement retail the Fifth NOI was cash and Broadway XXX same-store Union a Square, rent due Four at XX%, very XXX

which at XXXX, consistent from fourth up end second XX.X%, Our of basis office a the the quarter trough of the by And of is New XXX York the from XXXX. documents with quarter points. the quarter

New Our after year of end occupancy at versus ended sales quarter flat quarter for York basis quarter bottoming since XX.X% the XXX points asset adjusting the retail up first this XXXX. and in

year, of modest We the to XXXX and expect this by pipeline both documents deal on our improve expiration continue remaining schedule. office end based

and a remain all of stabilized. in fierce turning companies submarkets. expansion pipeline while their availability utilization, market. of continued resulted office and indicating job in placing XXXX, market collaboration the CEOs growth, trend are is Deal competition concessions The activity quarter leasing to across continue out recovery higher long-term value across media has markets, Now In towards asking tenant with teamwork, currently robust using leasing have during on tech, Leasing financial combination and activity Manhattan an to the overall to the continue of rate for securing strong. in town is all the first and by conditions space rents, workplaces. resiliency. morale, large leases amidst several high pandemic labor ever foster order tightening

theme redeveloped the of new class assets. signed dominant increased which in As at offerings in of such XX% remains in rents or in the the leases first redeveloped is amenity evidenced transit new Accordingly, have to the quality centric consisting construction relocations by market. the or flight rich best This assets, quarter leasing to locations. provide

York New well best-in-class in Our this office portfolio to positioned thrive is environment.

and X.X% feet footprint to expansion XXX,XXX cash square during square of NYU in Focusing a completed square the quarter, foot, totaling bringing XX building GAAP. rents we the including starting per leases XXX,XXX and feet. portfolio, now mark-to-market square first at XX,XXX with total at positive during in a with the key Park Leasing X quarter metrics, our their healthy Avenue, X.X% highlights included foot $XX

all transformation The X three tenants. XXX,XXX work totaling first the this X eight all is and ecosystem square rents X center are per the square the rent also And totally including health leases with offering transactions average our on to tenants foot foot. validate space located Penn on conference into facilities, per trophy to operation. of amenity operation, digits unique building's this district now feet at as for plan floors nineties. Penn with our starting running campus starting space. in We the A take nineties in completed rent we foot love and worklife early push cylinders, work building Penn from to XX,XXX along food of square flex sixties beverage at triple of unrivaled redefined the These has and fitness square our Penn

We leasing currently tenant quarters in While anticipated an our first new activity very X.X with leasing volume feet large Retail leases. feet stages in earlier of square XXX,XXX activity which were during expansions million pending rents portfolio. we pipeline. square in driven than square foot of additional starting of lower recent in the by totaling first boost lease with our leasing in strong transactions negotiation negotiation $XXX XX,XXX leases the forthcoming was quarter with six several square per average all of quarter the feet consists have quarters, across

the in We in district particular Road Island Long the of strong leasing and Penn active recent have Rail pipeline the with in interest an Concourse. commencement

high direct Chicago; tenant the levels. to XX% turning with historically at be challenged at market vacancy to continues and Now office concessions

a which quarter's XX,XXX anchor strong strengthen our positive throughout demand square an Avant, the Recent tour during pipeline. However, absorption. showroom, quarter, well At as of net we tenant as foot XXX,XXX in the growing headquarters contract we this our city said reflected with is as foot tenant is FinTech the signed of been a new tenant has as activity lease business. renewal furniture square last by to a mark, indicated and lending Steelcase's including new company, square leases for quarter, feet XX,XXX continues

of is July. Mark XX,XXX We to and forward We of of feet another have look negotiation in building trading capital commencing in XXX,XXX program construction proposals feet square X.X our our prospects. leases

by activity mark the We bring large started New companies end workplace. monitored differentiate initiated of Omicron ecosystem Francisco, up San as quarter coordinated as San Chicago, Francisco the many will unique companies continued activities and to employers. effort to York variant, further returned of and will their towards mayor the the plans, but by picked leasing work life to a led has as at XXXX beginning In our campus the which slowly work

at of experiencing at While elevated and rental the rate rates. set strong is one, certainly city's which vacancy XX%, building and tenant is the XXX demand seven California overall X% is trophy

California the the Montgomery XXX XXX with market-leading is our leased foot, such, effectively XX,XXX As square building. fully Complex exception of

square in triple new digit foot quarter, suite with equity XX.X% global important Microsoft foot resulting rent the XX,XXX as cash an in of building's with XXX, in we the private a completed the foot base significant in tower. lease During well a a a as square firm renewal X,XXX mark-to-market,

turning sponsorship focus a up financing lenders current the market capital choppier, the markets to a typical volatility Finally markets from and rates, on have increased quality, and the with interest with move term. lease in become

Our the after capitalizing have XXXX, in no year. portfolio this regard fortunately only and is we well markets positioned material XXXX modest and maturities in debt maturities in on robust last

We Broadway completed XXXX I are process expect of maturity quarter. in XXX later Now. significant in and refinancing this the want

and Long to major to done. We This million the assets recently we continues the purchasing future. City few sold we our $XXX also sell small near and assets create our the the job with XXXX, million. in leases went extended efforts we here After together $XXX building retail asset years was under office the for planned five contract another value have last in to our week our monetize over past so Island non-core sale

billion $X.XXX current and $X.XXX US that, including a operator Finally, $X.XXX cash, Q&A. our facilities. With over liquidity the strong turn in revolving for treasury billion of cash billion, $X.XX our investments billion credit bills and undrawn I'll restricted under is

Operator

Korchman [Operator have from first instructions] Manny our We question with Citigroup.

Michael Bilerman

on speaking. Michael, about existing roll. of wondering the start to of you're vacant year, kept leasing talked terms how if of of To some numbers versus much seeing a pace. Bilerman definitely those I you going Michael pipeline. space bit you little has it's sort activity, that's it's where stuff in was unpack Hey, the can

little a the about give more bit to you're seeing. Just momentum in leasing detail that

Steven Roth

Yeah.

Let -- Glen why you me take one? don’t that

Glen Weiss

the million versus new XX-XX X.X activity and A a Hi is in a Michael, building. his remarks the expansion the in of I'll financial healthy mix. the it's Michael it's So, call mentioned lot in Glenn, how are lot renewals. more of service you? of Penn very activities feed

portfolio types we we as in of we continue spaces. in of good So occupancy to year, expect we're types the tenant continue throughout across seeing terms all looking improve forward, said, mix to the sit a as real But fill here.

Michael Bilerman

is X, little recognizing little Great. of subject lease maybe would is seem it come that's terms all ground points you've about return through a value XXX, targeted given basis for and it in, that just math of that on probably which in you sort to process ground you've XXX sort you in arbitration now through a the down, gone financials. us work maybe the impact then with lease, just Michael, through put ultimately it's of on XX.X% about that would understand Can trying arbitration. to as the of call And just the but Penn like bit? talked understand It bit timing the though fact XXth what help and the how just will the sounds obviously this extra walk

Steven Roth

in put it the balance line we we as straight the on So in look, sheet opening remarks, earnings. right, stated

it's, $XX the later so, on we're million. is, of down what into to the a of the size not be Penn largest valued to The not is etcetera. comments, the valued. finalized the in based times it's different Steve's Penn I'm publicly. X guess is of out that he we've our to of is or on sites at etcetera. tend can lot costs, near-term said on get into here next to the But, there built to and by think given I nature, It's the year that one the going stated going smaller continue is start, There's and where going details XXX lower than the data just probably put number construction process process and site three commence of to what XXX. terms best to FAR prices size forth, get sites sites, so and it'll versus I X and Larger this risk and as year. the be be be middle

so of XXXX. June new And effect the in rent will take

be outset the stated, material. our of put be now as we return know you've that'll the next we have may because, and it As so yet be, gross don't renewal to be finalized and We've course X, guess of any the what from that best year. on over could it'll what Penn day-lighted rent exactly the

Michael Bilerman

Is math though that that XX… thinking the Michael, about just right

Michael Franco

the somewhere incremental going say if -- making Why? in We are investment Had Penn going it's a disclose chose million not program to our $XX to X rentable is the something or to let's square on X.X an we returns like on we're done that. basis. go building, yield, we $XX, rents up -- foot and the

$XX So let's that to down or roll the feet on years. over out That's say square they next leases go four bottom as up XXX,XXX million drops the five the line. approximately $XX

Okay.

think and in the doing on $XXX million partner ground we investing. million, together its creates Penn district. of it'll $XX the we're return could handle Furthermore, we X in the the campus the would So what million rent the nexus that be building easily be get and a we're Penn $XX with so easily

important. So very it's

a totally the which town community rate package, is largest complete have and tenants to reviews unique from oPenn prospects. amenity and We now and brokerage our in

So we was thing right think the to absolutely it do.

number. is, in arbitration the was two that a proceed. of that is baseball Now, puts what There one and a to going simply arbitration side -- very arbitration XXX is different are kinds

the kind the we out different just number which It's third correct etcetera. it's Penn process. that puts In and above number middle, you start will arbitrated I that is then other have negotiation -- in and the then and the middle arbitration that a is side reasons of arbitrator We months years. before the arbitrator for the $X so other lots totally selected more is next of believe arbitration The expect a if prove mind, in the different words, is marketplace before Then two the the a the including correct. arbitrator's chosen of you're and different. in X of and over the neutral number and win, the decides to more sometime all the year. end comps

it. the look that's we way So at

Steven Roth

just take take back Michael, and on million comment that today. to the XX-X, paying the the $XX you right? you $X.X to If specifically rent million implies, which your math, the incremental we're come

seven, math would So go correct. your XX-X down your is to

Michael Bilerman

is is is Right. the And then Steve's one being reality point lease this that, of complex where other background massive rent a lot that's supports generated.

an And individual basis. to so has it on rather in at looked totality be

Steven Roth

now the as if building worth that that the of budgeting, we're Absolutely in and to which my okay, a offered a all belief -- time. Glen's $XX, I believe is do process and foot. marketplace the the one we the thing, It's in doing $XXX belief we now other

you we Hudson with If the what's at neighborhood. going the transportation West substantially a market nexus higher at which best of on creates go believe look at out west Manhattan rents to in are the is Yards, us in and and site, the And our higher.

we a now, the value asset So three, the rents $XXX in foot from will that -- believe into or will five in and that start years go with $XX, hundreds. this will grow we four, those

So whatever healthy beginning opening is this at or a happen. the the return just or investment the period X.X% X% long, is to of X%, the

Michael Bilerman

Steve. Thanks, Okay.

Operator

from Our of America. next Bank Jamie with question Feldman comes

Jamie Feldman

the Great. comments Steve, Thank and you I your Chairman's to morning good back go some you made want to of letter. in

domino resolve you which be with than in you employers come office when schedules will First sooner teaming said the or employees activity, hybrid work the think. less and districts will

of side tenants only square office creative description. tell west space of feet half fits York's million us formal You also model, XXX said, less that office, they new want

office to current description? comments how this about, or what these do usage tell and looks else going think us maybe use in your you Vornado office then New about fit back days now portfolio to a plans invest, sit the the you year and future think terms people week how like about just also And of doesn’t or you City, are can what how as York of So from does in and the think of space.

Steven Roth

to Glen I'm going to and Michael to off shift that back start.

So it's I'm you. glad very a let letter. extensive my read you question. that Thank

Michael Franco

Jamie. Morning,

of now, be guess terms in it's of anybody utilization So from will predictions higher. what

in of to one a through higher, the consistent continue trend and Tuesday pattern city. through Friday, highest like Thursday, Thursday a fairly no there's higher see We commuting and Monday the feels

boss there Friday is So, number it their continue but to be I the absent to to think low up. will mark, that the continues probably city continue in will come get to trend do. And

So, I not what certain prediction of the number going I'm to a will make is. don't, terms in Glen of

the of want I pre think It's on space that type Steve's accelerated want, -- trend post-pandemic. companies started comments people pandemic.

doing what think in want. we're companies exactly I what Penn is

that's although We're talked which to a Penn new we going fall reception But asset for XXX years. in go to just X and seeing think at in a about, and own tens that on. not as so seeing in where hasn't think and that's City, brand XX market least we're shortly. that seen five, but Fulton, said, building, seventies being want we Penn XX why It's and plant, Long an we're selling that's clearly I my now XX XX parks side, asset Penn doesn't at West we consistent seven that an in category. seeing the off, it comments, fine is at was but that we're Island assets, demand bit X, even still the they and the the right?

are to prune fall over And we're over going add growth I rental assets that push see tenants going to do time. we're own want we or believe we to those We you reflect to most make continue time. to actively going We're what right? to can if prune that where What importantly, upgrade, rents into not assets to sure have are then think you'll we we the category, going see believe assets want, us So, would going to those? portfolio.

Steven Roth

all I tenant see Michael terms specific covered business will size Jamie, fits very industry think It's their all answer. the and I we It's very it's what specific. tell of not it, positive in one XX you, but is, and momentum. sector

signed into time back number think out people coming lot Leasing deal large new week. that year. year been more think definitely space. new So of global market, there, There's theme, in have deals to terms But etcetera. and are People their it talent, of be unwinding to office. coming and one, which improving you're higher a culture week I a a than this come more seeing is And to an last have wanting terms back brand, on the year, now will and in be recruiting side deals the are more lot recreating I velocity improve now we this people, their I month-to-month, what getting the comfortable. the much the office more large people That's yesterday of continues it's back, are other And to momentum. banks more are on out west the starting back think, last of environment. continuing there

Michael Franco

implied the while. teams in of a space the think and your question, design is employers there that our have was I culture something want. and the that employees that been work for company our and our long -- on This focused what the of Jamie,

Avenue are thing whether business on in the finance a the in tie suspenders you're Park the in strip industry you're side. suit So, the industry and community past the believe on of and we west the tech are that Whether or today.

at is space. to focus our and on very So and what aspect our hospitality tried we successfully done, hard very the have of think we buildings

package you amenity square which in So if go Penn, X through feet. is XXX,XXX the

to afford to of the than is we amenity strategies And offering building. if a have much single So cluster put have of it's if you have larger that campus, you you that in enormous. a buildings a have one can

have we we things. places have we And have to we -- food have hang, there, chat, have to facilities, we matters have we so all health places if you gyms, we go offerings, of through have

feet devote that so to XX,XXX and We feet conference to of square a have those tenant we have X,XXX can take not rooms a it. also the square conference have center

the in space co-working have also building. We

think we that's So the future. that

the the building treat want they guests is The names, be other as to welcome as greet part in want a their to if hotel. at of and them, they treat we greeted. it were tenants that them staff Know them our

done So the pretty this an we're owners New not sort by entire of only way what do. And there's of future. the in is way, universal the York, be in culture better think doing unique. front it, will but the of thing, are the work not we're in We we're but -- we're not

Jamie Feldman

on All right. everyone's for Thank you thoughts that.

So the kind early I year guess the talk that think just demand? where works was Penn, X on signed about there's just versus know just, would around lease, can it around How crime have based you're feel could view and do the so then you the just, on maybe do but much of to today of a still that you MSG further? the out like you and it gauge similarly, or leasing I buzz following some on it initiatives up having, more a stack just and discussions it's ago how you district. big Penn that and maybe safety you improve

Steven Roth

very construction X, top of very market. In leasing best terms either for of the new the the the or any at redevelopment the coming in user into building is list looking market, at the for of the Penn

each and better year, people feel goes no in in this has a just to The structure we're up the we rush. meetings project better, continuous Jamie, better as will We'll this gone on but just get presenting with be. the bustled unique into So month brokers get bringing are tenant, asset, and it's then spectacular how physically. going just of to start space

to A everybody, around been on We're tour we're for seeing important of showing Plus. reception's walking who's York client So every every we're it everybody the New space.

improved noticeably every district, think our time districts, tenants, improvement course, streets relates still the on we're we're last really the and other business and As it etcetera on to work coming all reception it been with of of the rise, action in continue has the that for city the in and We're in this from on every we're and as the the mean owners, to Mayor's into honing offering. them we're the enormous. the tours. said downtown, are this into They're in do daily between to working neighborhood avenue, got all no it we've at the in X the major -- program year. and focused coming colleagues improved from The terms tenants mission, X, the district, NYPD We sixth campus course, place, from building avenue, but submarket And jurisdictions is Office, the Penn of I amenity the do, has excellent. in seeing I at of our park day over think Penn rents safety that year-over-year. course, district remarks, I

Glen Weiss

Pushed it's it to maybe areas. I the feel side, over the this other right? activity to more to year, streets streets I safer some over talked elements made traffic better, Is right. feel quarter, think is -- the the the station, streets in that Glen has out and think level through quarter streets are and made the that this of just would I better, year Jamie. increased the

when work I Still think district, I last noticeable So, a -- don't been the think be you'll improvement. be soon, see to when in I but area to through you're done time you've the the walking know though. going know you're I

Operator

Thank you.

Sakwa have Steve next question from We with Evercore our ISI.

Steve Sakwa

Does if be? of more think it's of the and one, you heart still the part an to on how need about looking if of or in Good casino of a landlord kind a be licensing to to more convention the operations get bid and hotel do rooms I'm winning of it and curious needs if integrated your you're bit I to New agreement. Thanks. casino just part be wondering could looking desire If little appetite were side, do a resort you be it of be you ultimately be comment space, to Steve, or was just a landlord, able Manhattan? big to project or morning. the you're standalone just think York can city

Steven Roth

aggressively we the the the Well, to written And is said restaurant we New the idea anomalies entertainment downstate a is Yonkers, some economic -- voting the goes by government interest [ph] center in well, as to unknowable. to going going should hotel We the be it's some that to you time pursuing are With and contested two etcetera. that into it, casino, Manhattan. the course, one in make best at must who the questions the these the probably it York be industry, center think to everything. Manhattan as of served are for might tree of to we there leadership decisions. the is that of goes to of although but population to is are the one -- I've be industry, Manhattan. far, third of is engine going as of process the last believe industry, industry be would When necessarily to and officials answers hotel to that about of and place the the the licenses. be political believe business the It's best the go of theater I've industry, license the political going current the are while a respect Aqua not your believe there of are we one letters the we This third that license, who of

So that's an interesting thing.

the in operators process as and talking to people casino talking the are to our multiple of industry multiple landowners. are We

understatement the or process which whether a the of whatever. would is that hybrid, or being or We landlord landlord with a are as and we're be kicker an landlord a being just being of just a debating we a operation part in

the So arrangements. financial don't or that talking the complex etcetera, which winning about of and both and respect with a styled an we're offering, casino thinking pursue We whether is bid, entertainment, debating small in them. the can about to we hotel the entire one food, throws Las Vegas right rooms, believe so With would know okay. of to I speak be isolated

addition what's just the is in if year of York complex entertainment Madison example, the Madison intend Garden teams. Square the a the about middle far wide. have dates that in bid Madison in XXX biggest and We the multiple and The Penn Garden, maybe district, of important thing and in most take the It sites New certainly is district, concerts. Square we And Garden with. has to Square area, Penn to for interesting you

Square, So music also the is center land There's the adjacent of have And Square which to top it's sites there. sits about to Times we interesting. on Garden on on, as is the -- it our top Madison interesting. sits of some of transportation well. industry And which been and network, talk sits

will year. we the are to we get to process quarter working I read this That's early first year. of and -- one over. end somebody I be should. we deliberative that of we're different It's I near well, We exploring, exploring to a is that a the So, and going a try longer important. are take as to and be direction what think don't options, probably it over we than going sometime next before in in expect days transcript going somewhere very it's think this is as go of hard gonna all to anywhere lot that the resolution to the it's thinks way process

intend we aggressively thing. of the bidders. get economics third be Manhattan one compete for speed that So or venue market is going of right We the last And it. very is to to to opening believe important of a speed think to the the license. determinant We

if if have that for in could dollars this one That's difference could or take me to billions are new building and you a that five that a calculation. on complex, there a one of it and you're take topic. years, half years, So to three, retrofiting build

Steve Sakwa

us give for of for you maybe kind size that of the financing us an sense how Michael, I kind refinancing. XXX guess just debt changed? and Thank Broadway is update just Great. of give could market? speak the on that. sounds pricing It second question, a kind where and Can of you is a in like, just for to more and market mortgage little bit maybe market's you today

Michael Franco

the Look, say I bond clearly would particular although part now, banks, get the the market. get volatility, it's in you we're I you hesitancy CMBS any it's periods in Yeah. think extent buyers more of, some in so which on much to and of into right time really

you caused of uncertainty think started I you war, a that out. with the economic had year heavy then out, CMBS supply gap the of and So, gap volume, rates the spread

market So market it's go prefer CMBS size, and probably you we that rates. in you go have to not a don't in had spreads need a if now into right issue bit into of open, to a that. double and whammy but you'd both to markets don't on

in up roll market an receiving It's a bank done end over the it's -- at the quality with that's high a XXX a great asset so we'll that tenant and So, spread. well bank and asset we'll market. getting

comparable we're think that I on to at building. pretty today where

I but aren't bank handle CMBS where more And assets. high XX so that spreads, I you for six, months than attractive think So were the much. but much they still as the market, ago, said, only market, quality liquid can

in one-off So the demand stability now basis, again, I more markets, market in for both a XXX, our there's which good has but assets go you'll bank think right on

Steve Sakwa

Fixed floating? or

Michael Franco

So, given the market bank is…

Steve Sakwa

Steve, Hey, few fix now, questions floating. going a to or ask I'm

Steven Roth

material for we've small XXX, market? financings a we done Hopefully terms. things number finance. financing other couple that Well, We we'll portion Anything be have material it'll likely answers that market, else a the done, swap any all a given for But your other the really floater, and the XXXX no but situations, a got on we question. but get don't us other XXXX. beyond of bank out as

of of lot obviously year. last So did number that year. a that's, maturities a We had opportunity we last

active in we withstanding very So, being didn't those XXXX. even now markets, really anticipate

Operator

And thank you.

is BMO Kim Our Capital from Markets. next question with John

John Kim

I think mention you but will works my XX opening again. Steve, that down high remarks, did your rate strategy and in back come years you floating answered just a rates nine and question, having

strategy maintaining that near you term. So wanted are confirm the floating comfortable in I just rate a high to

Steven Roth

to great business. even this of and but safety and offensive time ability defensive, we extremely deal running we important balance the Liquidity more, and our on to ability a the spend is think to Yeah, sheet, be in be us is very important.

what basis time opportunity, spread XXX was a a fixed to at points XX-year floating debt rate that if the to look enormous. compare financing rate debt, a of is every most time. you the points, So X.X the It you goes

So XXX costing what elect XX if are you years, for more. to of the during I yourself happens And go points life basis for XX-year the XX firms fixed, last think said over certain financing single that on last than years advisor one use the rather decision as was fixed. month every an the flow right we the go of to you load

answer Now is, the you more go So of there's too. it, is XXX do flowing? other points, pay that parts you basis

fixed in. to you building decide rate the locked normally have of in to a load, proposition. you very the if whatever, want sell end or If are And before is are the which building refinance very, term, that, you the expensive you defuse a you or

important takes going flexibility extremely asset it So or the improve or away to if your all of you an whatever thing. sell that's are and

our expect to interest on have paying. are our increasing. floating substantially have interest books more would rate, all be expense debt is now, we had If it and that rate interest been in expense we currently we paying, while than of would fixed, Now, at have or we our

in not certain you why floating can strategy. industry a we strategy you. accompanying So I with to flexibility, fixed which while in safer, like unsecured it most and rate you can or rate what believe being [ph] you that asset -- believe, floating as get still rate still a have And flexibility, -- mortgage route the the for are but superior we the fixed it's that much expensive, strategy less debt the the certain think seems more that the where is much -- seem folks and for

John Kim

with remain it longer and just all could I'm rates rate higher or XXX that have with fixed to there's think highs risk fixed contemplated mortgage Yeah, in at as a particular, that at for a if tax? XX-year Broadway inflation is wondering week

Steven Roth

would, I understand John, your XXX? you couldn't said question,

John Kim

you term is… and decided floating that With have the XXX, hedge have or to it definitively near

Michael Franco

Yeah, a of period market, our baseline because will swap that floater is be intent a time. it's bank but going the be the in to for at level The corporate to

John Kim

the on why provided, one then reset and amount a is not in your uncertainty with ground there forward, retail particular? provide question going given the the Company and in guidance and Okay. market just already guidance addressed of lease with FFL the

Michael Franco

now and We lot preview a you some heavy of to year bit is difficult do. now the a given look that estate, a we're answer outs. are it's walking back you, we’re; real the know, in ins the gave we and of You there long-term generally, beginning and We're little phase gave business; a at the development rates.

I to for So high it's think XXXX mid We've thing single given you sense do. a difficult to digits. reasonable

that's this best that's good things So that's that's this I guidance year. think our for change. a and best It's pretty our guess for year fluid but guess business,

Operator

you. thank And

Our next question is from Alexander Goldfarb Sandler. with Piper

Alexander Goldfarb

morning. Good morning, few good so, Hey questions here. Steve, a

of the you some is, billion, guys first cash. had amount The

as T-bills, some but floating rate that the of of bought some debt use opposed down a the not pay why cash You portion to T-bills? to just buying

Michael Franco

good morning the Alex,

Alexander Goldfarb

Morning Michael

Michael Franco

quarter the going a go and a end, we X of into our We of by left. that, bit more left than what's still the stack way, get those Penn by that But maturity deploy what's benefit the to way, to earning banks. T-bills of X, more X. in some in intend lot put deploy since did finish months. Penn, in some Penn capitals the we X, up, is to, that the cash at, order that's, are in of lot the answer that's in little capital The X, activities a of into T-bills Farley development at and to and XX And

all wasn't additional had in York, paid all that's issue on mortgage terms of why isn't that's, New rationale the debt on in the of you So debt. the deploy; the

those over term, of pay once costs assets, intent is would That you that a, have the have have would right? wasted before You money be never mortgage paid our longer we we've which X% to recording on that would again. that tax, do financing to be

don't we So, lightly. to want do that

Steven Roth

on, later difficult. this capital pay Alex, down if it; more we where choppy going financing are hustle; replacing we if the we Alex leave in and it's markets extremely down to debt pay short-term be the market, if

The have budgets. plan it our, we all hedge and is allocated we if take we for, can strategy places capital and need it's cash, in our our you the other and in which and

and by take hedge we treasuries, arbitrage buying say so cash let's And so it we can if it.

is particular the than basis on on the, the of the, points, would on we capital hundred interest slug a expense that earn So less treasuries.

but So a $XX say needle. hundred it doesn't a is points money, million. That's basis dollars billion of on move the lot a let's

the easily pay So I'd when and on rather the down than we the debt pay liquidity able need and quickly debt to rather have it it. be the replace not

Alexander Goldfarb

So, helpful. Steve, that's

Steven Roth

on. we're think I

Alexander Goldfarb

we the we run know fourth that's, helpful. extra interest as Yeah, you're from million look, $X.XX guidance, dispose in ground but reset. rates. an that And a Michael, distinct rate There's that the, giving the not you're gave of at look $XXX as I quarter, now having lease higher that's you

all given you sounds coming amount just talking did extra the say we but of moving $X.XX your sort lower that guidance ballpark, number, an your, bake despite Facebook It online. So guys like than an when are $X.XX, number did you extra $X.XX into pieces, that in number? is from lower lower fair a these

to for at? much collectively, how run $X.XX rate a So just gauge we're that looking get of off trying

Michael Franco

the I as up, don't assume go the I I, originally being the was steeper that [indiscernible] precise to curve want the is today. did because going again year, we're in a mean, just Yeah. put to of environment. fluid we

certainly where up; that $XXX it's it's, projected. it's of earnings lot end originally up, we of sales, than know off we a coming look, but not it'll don't steeper So, there's what tremendous are that. The

depending you plug there's a don't think a in not rate look, lot I think are don't that single lot, of of assets a for we think lot deduce to capital, high what going huge smaller I a year. of you can have a last earnings, gave of the sort mid to But you so the there I So And a coming run on in lot range the terms material. the so that impact, producing XXX, digits. of that's that's

Steven Roth

Alex,

Alexander Goldfarb

Okay.

Steven Roth

to out whip my financial limb go going and going guys are I'm me. to the Alex, on

Alexander Goldfarb

other whipping other way, They goes the whipping; the would Steve, the the you, never goes way. whip Steve. The whipping

Steven Roth

let's get no, no, serious. No,

interest show taken that Penn And off the by of ground five the I frequently that. of rates recently with means had reasonably three this as in and Federal that always said Our detailed rise, I faster expensive, inflation economy facts. which rising, yield months will, or in internal expected believe And actual Reserve are should or lease reasonable, so at a anyway, as they are even internal budgets, show reset, win the interest rising predicted rates will too with they and be. remarks curve. is than will and yield which and rate had the we deep, and that Reserve, now highly budgets, Federal hands time, even a devised handle They it as business. the the way, way, my will the the even But ago, with The by four exaggerates XX% this our the pass. the curve one the

through ding So earnings right will we, couple out through statistic. to and believe are but will We of that's grow maybe our another we our our, as it. going a have one earnings grow otherwise that years

above in period during complete year, the the those what Penn NOI to give predict current job a our Penn district X even of from touching whip just from something is. they My those piece and above next the, without for to another they of in some Well, to over year by program, show. will well job increase we three but a going period that is I'm as or $XXX this of time of come got know is, Now earnings time, of not you coming quarter in a earnings. will I is our X million, me in It over $XXX get excess our land in what to your projects. the numbers million, Penn budgets above, Farley,

Alexander Goldfarb

That's annually or aggregate?

Steven Roth

by Annually, way. the

Alexander Goldfarb

million? $XXX

Steven Roth

people knives that I've here. me throwing that, I said that said at I got lot in of a now

Alexander Goldfarb

I it's I, thought

Steven Roth

Anyway.

Alexander Goldfarb

Okay.

Steven Roth

math. the that's That's, That's

Okay?

Alexander Goldfarb

would you if landlord active you can the business no, a studios? studio be works. you're I or Okay. an those Steven, note, with in Steve, of high the operator, I, if oh, that be would that end just contemplating on participation a

Steven Roth

it's Well, New deal we is, development anybody. to is answer than do going the be that better a what in do That's York. we

a for will they to there's full so So a we the The full and partner. and decision be, that maker. things the tenants. these tenants We're the customers customers designing skill we're the work

believe very, going his up to in to and very unique going experience or river across in as it'll do do a the the or So or studios studios result. operator opposed down boroughs a asset, And Manhattan somewhere to hooked we a talented fine part. are in our have we, that think a we else. with the We part. very We're he's

Operator

Green with our we have And question Daniel Street. next Ismail from

Daniel Ismail

you the I'm, Thank rates impacting given discussion and just the the course off? assets of, through Great. plan the cap of do million and to $XXX dispose you're I'm you. dispose Both to of think curious, of How the looking that's interest year. rates? overall on

Michael Franco

Daniel it's impact what think where financing settle so early to it's forth. and, but, depends tell if and in out cap rates too of like certainly to are it rates on rates hires terms impact, I the going or

last are think impact of somebody small are the at value don't point some So will nature. to add it's the have but I sure. early dependent I borrows. assets think on where tell, Will XXX, affect it those basis is lot is answer the some it's too a

that. as So this didn't necessarily pretty we say we good think year. where I execute happen have going But to to was we all a it sense can

think it got planned to, see is this in T go wait So historically rise, I financing you financing clarify will. Daniel, said, tend now to market B you're think literally the right you're this we as into if the to you market got spread he just D but year, certainly probably paying this more markets, than is we at do mean, close that, rates I to, let to somewhat. if you it'll me to, and I look when compress so

happen now point existing the given to with expectations exactly what rate in an right the in point we're all rates, et basis, cetera, going spreads of is the that go do? economy, down, that to What's environment the basis, fed rate going uncertainty So up with doesn't the risen. where for gap

a not market be great it's borrowing to in. So

think change settles as that'll I here. get down it

if rates cap have on borrowing impact rates the it'll but TBD [ph] be will what so And are some impact, like up

Steven Roth

sale I lower, Company have it sell for and when ago prices to matter. we Daniel, it X% rates are to assets. these strategy higher much just more the will If we our but X% it interest get these These the put right will years and is the rather price market two or at would we what execute. margin, assets It's assets were is. lower doesn't it on for

Daniel Ismail

update makes and about And a, for clarification it. timing. for of on us you Got district density the what's timeline me as articles the going plans. of an city's give there's rezoning, versus question just been just sense. additional the can going on, overall last I'm rezoning and Michael, as potential That to the and and on potential news just, the state variety thanks there Penn that potential the any well? any on I, and a curious, forth back with

Steven Roth

Penn you're talking the You're, and about district. GPP

Daniel Ismail

I am, yes.

Steven Roth

Yeah.

MTA I the station the, basically city government. stand of York we'll this New be transit and York will mean, The think basically is are partners state expended New the the in state pat asset. the the is Penn the transit plan that. in state basically I on [indiscernible] a a -- that The is capital and capital. of

have plan support that. governor on public plan. on the in proposal and and endorsed sense. all state an hearings it. the The state are use the word been both And for to be the development the the about this, to I of charge. I'm of lots word have the the process. it. there's there's, say the that we multiple, think cooperating makes That's in of in and multiple And city it So Obviously leadership the historic to I not about and accurate terms extensive that's precedents zoning There's the for really the, mayor and political going

Daniel Ismail

Got it, the cover. appreciate

Operator

Thank you.

is from Camden Ron Morgan question with next Stanley Our

Ronald Kamdem

for couple in the, year. me. quick of ones you'd in about the the, on that the just the range, you accelerating, CapEx, mentioned looking the think the $XXX for, I you is potentially A thinking Q about this One in, million you year? was for just know but were sort leasing K I One just sort of about pipeline $XX million for in are how of rest talked that and CapEx

Michael Franco

like of whether I no, the that, the process the and lease, the the say or, volume. It's new is that's new the best , in XXX I, at on it's obviously depends CapEx , to kind I mean, XXX, we what beginning what's a, year. gun the pike, the lease, our rest come estimate on a I I, on of on it both based right. year, transaction dependent down actual on would expect

lower, was significant. as leasing our we about quarter this while well. volumes so talked And lower And being obviously

from wouldn't I will number normalize. that the today. XXX So vary

What I but like, up think than further. stabilized we they and stabilized would we've generally else higher they've to not tenant the, having commented going improvements the any on the, you add that? stabilize

Steven Roth

buildings coming ahead We're way value of whether and quarter, further always Creating leasing it's real year, next all opportunities is fluid. up, very The, two years, even or blocking in explorations. our with this leases Okay. it's the the tackling looking away. always quarter, year, ahead time, core

certainly not quarter expansion and But quarter quarter it's weighted deals the new of believe a really renewals. we that's definitely have to quarter TIS, number. to completely against mix due And the the So stabilized. always deals predictable to

Ronald Kamdem

it. Got

you all be you. now. Thank questions Okay. my about where

Michael Franco

Ron. Thanks

Operator

from We have Sachs. next Burrows Caitlin Goldman with our question

Caitlin Burrows

reported that what Elise at could office mentioned share so, spreads. the if included you would've leasing you earlier Q one it? spreads been Penn in York I X. Heather And excluding was wondering, just was New

Michael Franco

on on saying The talking stats first about the, quarter. sorry, you're answer the, I'm was you're Kevin, for the

Caitlin Burrows

Yeah.

Steven Roth

Yeah.

X% market leasing deal, not be the The it. it's single to If three was in so a digits, low lease. would that X exclude had Penn It positive. to high X mark all you activity cause in still single the to Penn digits

Caitlin Burrows

Okay, it. got

Steven Roth

the all Then Penn, one deal

Caitlin Burrows

And catch in financials then much wondering will XXX, ground accruing versus had arbitration payments and through of does was lease represent at you if go going impact the was forward? up increase regarding could the this amount a and been this I of it whether the west retroactive how XXth you just while there,

Steven Roth

That's been up all, already. recognized screwed that's and all

Caitlin Burrows

Okay. Thank you. was, That

Steven Roth

I quarter, last happened think. That

Operator

you. thank And

have ATRA[ph] our question next DRA We from Misso. with

Unidentified Analyst

Thanks so much for taking the question.

specifically in Just that revenue, by queue gap and when not, recognized maybe the first was, will recognized to and one gap was that was and cash you if be Farley was confirm can C Facebook recognized?

Michael Franco

Bickham, was Yeah, quarter. quarter cash will that first gap some that second recognized be point

Unidentified Analyst

Okay, just vacancies? what think fifth us your on cycle correction great. costs understand terms specific avenue demand then in you for more you can of broadly Madison we street in and in just hearing this collect of of retail, your terms rent And on now occupancy and where are specifically some

Steven Roth

Background, coming of bottom. off just the we're

now we and the, model. we at the and will this of years, markets right tighter go cycle off of business. this up. business The interest XX that's it And is expect ago, the a the to absorbed some at get in beginning demand fair and is call fishing will just letter, there markets changed. no whatsoever And prime prime the months rents rents. my think over of are in way accelerate back this is, so The where work. be what, will market generally point tours, on the period I now coming demand, pricing. prime I at demand, bottom in is but we and improve. I What prime, recent in that retail even you characterize drift was the will vacancies prime, alluded The There no avenue, are will my, the be in will And low still no happens if go amount what

Unidentified Analyst

And in a own Okay, thoughts What's co-working then in or last on room roster, co-working a, just the much. in portfolio great. partners Thanks thinking your are bit I either, how for or, and question either but you new, this? would your, or, environment. evolving in, so not on your tenant WeWork say in in your, maybe your specifically

Steven Roth

this and we up there operation flex for portfolio. long-term great X co-working opened XX,XXX a, Penn we, in there's certainly think a space the already foot role so we've earlier success our school year. seeing at We're High co-working early, with

we expect We to to roll more go of in the as building that portfolio building.

to, for a there's existing certainly opportunities. So specifically I a more as the flexible need district the role benefit they're reconstructing of folks space where into we're thing to to new in their to the to short coming there's out space certainly short tenants from there, are leases are to X term designing, park projects a is operate tenants home. facility facility we're think seeing coming for were there or they're relates one term, out while their it co-working utilizing in in cases , want that our town, Penn seeing one rebuilding, our even at buildings themselves if where their business

coming us Now, waiting space for there to be X, while wait with their they're build, they're to operating as for Penn their built. they built, into be space to

in asset is we stay. think kudos role. co-working. best X those Penn certainly think the and use And by the at co-working So and that Barry in thing of create more I believe here as we a the Penn Manhattan. certainly expect and what And our portfolio, see out more how to I is an far opportunities the class the, co-working as operation into Glen roll we for in strategy and package that space. is one to The amenity here arise interesting creating to you We there's

a enormous they conference inside package advantage in possibly have are amenity they we have Penn offerings, have of the tenant have Penn and a So neighbourhood, into have of for an an or believe having they to have that whether a our co-working they for other gyms, huge they you We or put clients, complex. could million is They food, one use. they space remember that got is the in foot entrepreneur a looking could X advantage. want or where X, XX,XXX that what co-working four in everything existing square complex, half feet they that it, they and facility our that space be pen, that's that centers, is

XXX tenants So can, square can as in a co-working, a half our round of feet and a better to square this the which and complex to put to is complex. hundred neighbourhood thousand massive they of our are strategy use foot facilities And the part and they numbers, to million the, well. is that in all the available of

going So thinking. and we That's that seven and that's has advantage of a square co-working think a nothing couches space, competitive feet blocks into our then that's else. XX,XXX

Operator

remarks. call to session. And over our question now the closing Roth turn will this I for Steven and concludes answer

Steven Roth

to will great call for Thank see you and day. Thank forward look all a participating. We we very the much have you next then. and you

Operator

And thank We and concludes participating. our for you, ladies conference. this you gentlemen, thank

may disconnect. You now

Alexander's (ALX) 3 May 222022 Q1 Earnings call transcript