ALX - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the Vornado Realty Trust Fourth Quarter 2024 Earnings Conference Call. My name is Betsy, and I will be your operator for today's call. The call is being recorded for replay purposes. [Operator Instructions] I will now turn the call over to Mr. Steve Borenstein, Executive Vice President and Corporate Counsel. Please go ahead.

Steven Borenstein

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

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

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

Steven Roth

Steve, and you, everyone. good morning, Thank

is good business good, Our Vornado and getting really better.

home, our head real estate and that and markets is York the New are nation. the shoulders agrees everyone New York strongest in

that XX.X% years. has is not in of million square is Availability building space cost the XXX hasn't that's feet evaporating is is started, versus X cost to and in years, tower we compete new space. the Add quickly. Park New debt, a start feet over of the a million once only availability York market and a better over X X Avenue narrower has a space under X As of already that build been York the supply delivery very frozen. X%, just to I of while last the market There better market, said years, in X%. with doubled X have office, really takes about about XX.X% and XX.X% new that the before, major in better to New square of XXX of new

a this together, all market. creates landlord's Taken

to fact, rise spike. have to say rise. already We even rents expect to One And aggressively. might rents rents in started

So New is all world very good, good. Why New York York? America's city.

York's human capital physical irreplaceable. is New and

largest, workforce, transit best the vast system have our We from the for most educated suburbs. commuting

is You X restaurants the the of The may it read would from beat focus professional and and points Brooklyn and at would the is. Dodgers. I few office. can't predicted, Penn as not on number a this I seem teams, was and last for recent largest Most a museums tables our even are have sports left best But handful the to lasting. home like Plug the headquarters, their kitchen a at guess accomplishments. Yankees it though of to and we Work and The scare. district, not corporate damn back

of overall, we cash increased feet $XXX at price XXXX. York XX.X% office X.XX with XX% which million in Our and in stock GAAP. increasing square X.X% X.X XX% of New In after rents XXXX, leased was mark-to-markets million feet XXXX starting square market-leading

our cash the rents, million record UNIQLO deals sheet Fifth the completed sale We repaid feet, our and on in second maturity off foot. Last top retail the square $XXX per completed out premium month, and Avenue the leases We feet, $XX,XXX a in $XX XXX,XXX totaling in a of exceeding completed XXX York. year New we by million line. of at XXX,XXX XX highlighted X.XX of of feet $XXX our at completed square Penn deals most we transactions X office X.X% Penn starting in District. XX For the York Manhattan's square largest row, square at first $XXX-plus underwriting. We for credit XX at New balance price Primark at we deals million unsecured completed bonds in X

portfolio first certified, milestone. the in and is to are achieve this LEED nation XXX% entire the we Our

a We are on of deals. handful the important X-yard line with

world-class We way, will X.X sheet our make the of square great science Broadway greater, I finally deal NYU New will higher that's million for the feet the of NYU XXX,XXX on the and York. the vacancy. By and foot even master be will elite will debt have edge complete square center. education $XXX education the eliminate a campus building to XXX asset impressive will NYU, at lease NYU million great this their which this an and facility, relieve That's by It be This large of for of on end the balance seen our month. plans. of institution.

in will We will million several $XXX And the Broadway, over retail cash of preferreds. shortly redeem refinance for us sales we have XXXX which allow works. to JV asset our

anywhere. by has the the ever commentary $X and is an these additional of X, redevelopment by signing together and and we tenants shortly best away very with received only foot billion square being seen, Penn Penn together, transactions anyone biggest with incremental has lease. cash. At will X Penn Taken XXX,XXX far brokers well that is are generate best amenity from weeks new a X it package

X, headquarters including We major engaged a Penn year-end. at that LOI predicting negotiating will proposals lease. I'm for an also XX% multiple be likely are by leased Penn in tenant X

on achieving our we our to of have underwriting, incremental here increased and yield supplement accordingly, XX.X%. are the rents above Page XX We

and in first ever We will film Manhattan's website XX deliver on XXXX, PIER soundstages Manhattan. year-end by television the purpose-built

Now this the XXXX. Avenue, Long worth early building. is Alexander's located and about out Bloomberg owned Obviously, now at lease the land XXX,XXX we for and wonderfully office more X-acre second affiliate, renewed and XX.X% whose XXX Alexander, undervalues square stock XXXX, unique I interested in now is Lexington Boulevard of that. XXX as foot of something At believe best-in-class. pushed parcel will is our will schedule. land believe the blank Expressway moving our sale Rego quarter expiry building filling vacant or we the of canvas at development fully Island XX-year-old X Park in is it than those intersection tenants designed at shopping Rego to truly bordering Queens and being on last X and have Rego Junction X Boulevard development. fully either creating Burlington at the up we Marshall, Park Avenue and X assets, we center, to stand its in new are substantially a truly, The as do for Queens, Rego adjacent out the remaining to thereby Rego

to the formal at and District. XXrd at major our Concourse, can East and Ken tenant the excited look Meta city. early Take noting shortly of Hall, zoning Penn and are even year. I partner, Island under how Penn Train about in begin Rail Moynihan end date so accomplishments will are we into Midtown demolition begin Penn out Street Griffin, Road Penn the within Park of a a X, our of the city future We Farley, swing are X, in the Citadel, our Plaza space, all by XX, XXX the how and Vornado proud our the Long approval the our all next process teams moving

the to now Hotel ground go. Penn ready is and down the to site, up Next

District Penn be clearly Our is a to seen. site

call a tour. it, already haven't to seen If arrange me please you

Now to Michael.

Michael Franco

the Comparable FFO everyone. morning, was year. $X.XX good share and per Steve, you, Thank for

in lower Street, where from is ended earlier was This this of with we interest discussed due Street XXXX. XXXX move-outs, higher than forecasted, the from income leasing throughout interest to for to primarily termination short-term rates lower XXX lower share was have partially income NOI versus interest expense expense. primarily in previously we overall, per per the from up XXth recognized the West and to the down. at FFO we the better lower compared spoken square lease move-outs As the XX% lease were termination acceleration by known and connection due coming anticipated comparable had move-outs expense. executing known was of way, the due XXX,XXX offset quarter that almost West fourth higher for. Fourth share our to net from already quarter projection expense But the with results space foot decrease our attributable down lease G&A $X.XX NOI year Amazon. Also, we By net $X.XX the original XXX our vacant activity being a and This on behalf of net XXth known WeWork at to year.

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

the Street than X is won't GAAP due comparable in from turning mentioned current to similar last we and can words until West slightly XXXX. to practice Penn of on backfilling quarter's income earnings impact full vacancies expect of resulting to significant in be lease is that tell XXth FFO. And lease-up earnings previously call, occupancy. positively you as XXXX. A the during our XXXX. we termination positive XXXX XXXX guidance, Though XXX at This and not growth of to indicated earnings Penn Now impacted end to that consensus, XXXX, few partly the the X impact lower by XXXX the with towards occur give

XX.X%, was up quarter. last XX.X% office year-ended Our from occupancy

building XXX by full points office With basis lease Broadway, the master XX.X%. XXX increases occupancy at pending to our

as that next the our low Penn be into the mentioned, this occupancy year and we to previously being XXs. we with over anticipate X the will decrease We quarter will Penn occupancy XXXX placed As temporary stabilizes first X service. decrease get

XXXX. Our New robust as York we leasing pipeline remains enter

being portfolio feet in X million lease master top We at of across finalized square Broadway. XXX,XXX with our have XXX foot with NYU activity the square on significant negotiation

million of feet we square X.X have and in stages Additionally, negotiation. another various proposals

levels encouraging overall open appropriate structures. Both ours the on such markets and to with large XXX and Spiral have AAA months high-quality The and Avenue sales over market significant showing investment recent and the CMBS financing over is months. markets. loan X as past shown past signs spreads assets pre-COVID. wide Turning few with the capital the for for Park consistent the to metrics financings tightening are

on trading office to recently, future, banks over the XXXX at basis around and banks continue. The to and also look foreseeable a Avenue beginning high. The last borrowing expect to high-quality sign While after market I'll are that the that, one including investment remain negative XXX by interest turn office look Park is operator down several by deals, for keeping hopeful it year assets coming rates a smaller costs likely we remain we pick Re continues short-term Americas Munich this points to the year, to first in the sidelines some up of sales XXX expect Q&A. Blackstone. With largely trend will Avenue for with levels current financing

Operator

on from Steve Evercore Instructions] with the Sakwa ISI is question. line [Operator a

Steve Sakwa

you maybe activity. about just some and the for for things But few like for leasing those little confidence comments or close of more you're yield guess, into provide just could you're commentary It Penn Penn I to the dynamic Glen that zone maybe great bit the on a Steve, the had end around timing the a and level X? space punching raise you seeing sounds the to thanks X, competitive that particular, in here.

Glen Weiss

Steve, it's Glen.

more is buildings it in market available X large with Manhattan Penn to blocks tenant XXX,XXX of the list their are X what in and So in or running. of X than see. more. has There top feet off Every only

We have best block. the

XXX,XXX So that's heard order a have with get for remarks, short in done we to one in you going lease as the out tenant feet.

XX,XXX for in space have all ages serious headquarter LOI behind XXX,XXX for from tenant. another that, battling between And We very large have we feet. anywhere an tenants and very

So the gear many on for in Penn our and eye fifth we're complete is leasing. searches, now people's X bull's

Steve Sakwa

any pushed of seeing? sort kind of guess the that rents, just XX guess, that I to being on basis up just I the of And comments at by that Okay. you're yield kind speaks points.

Glen Weiss

our building to rents across from raised entire the the top. bottom We've

Operator

Kim is line BMO John with the from question. a on

John Kim

billion commentary $X Steve's I expect. proceeds you new cash of to on up wanted follow on the

You debt well. XXX Broadway at have million that, XXXX dispositions. $XXX up Broadway, freed And of million as new paydown then at $XXX top on

anticipate? much wondering in you that was dispositions how I new So

Steven Roth

there a There's a $XXX-odd Well, you to just enough what going that will pay $X on more is -- short-term be off million to building. And couple more coming $XXX dollars little than math round coming of in up debt. the billion. it from refinancing dispositions hundred million in the that said, million to in of XXXX. It's

John Kim

focused or be retail on you looking for? noncore Or color provide can those will you're what any office? And on

Steven Roth

I'm about not specific to John. going that, get

Operator

the on Spector Jeff question. with a of is America Bank line with

Jeffrey Spector

comments Congratulations on XXXX. great Steve's tie a the spike? on Can you

Steven Roth

I without thank let go can't that by saying you.

Jeffrey Spector

Absolutely. Okay.

growth spike please comment on 'XX. in for could the you tie, opening If comments Steve, your on a expectation to Michael's rent

in tie at I Can 'XX. those comments, all 'XX we all to understand you think of please? any

Steven Roth

was I don't I or X lots these in New was is the a we What better I below of York, said, compete space I know. through X which there's in XXX cycles space, pretty times. feet. god, of clear Oh, subset smaller We've which been but million thought kinds that somewhat of square much

first point. that's the So

is of subset point going there's that second space the The availability is of down very because space. and shortage a that XX% current in quickly

a in businesses aggressively are are expanding had haven't We York. good. is expanding, recession our all Their stock clients of good. New The market and

business is robust terrific. New in So for and pretty healthy demand is and space actually York

actually, all. rates availabilities at for costs of with critical shrinking and long-term historically on the interest supply no reasons not fallen coming -- construction are no -- new have -- market and fallen supply So have that's high, new not limited rates lots different

ability very, all that's frozen. I together, a market. limited, create so landlord's supply is very the use And that word and to the new Take

rents spike. used And go significantly to there, word expect the We year. next up I

Now Michael's about to XXXX, with do you respect comments want chime please? to in

Michael Franco

Jeff, is what I would got as our that portfolio, we've right, look drivers. a at of number we say

significant we the some know We a and we come to from that that is empties, Penn X going -- of have to X. part have filling and up Penn extent, so

the now landlord's as of we side we're positive as have on other -- roll the that move over, a market have into we where mark-to-market. We leases

takes be think for to improvement it that flow in So will significant improvement, through. XXXX. but time we 'XX comes an very some

Steven Roth

maybe okay? foot. and X Manhattan Penn the Penn to Hudson and Now something nothing our than go is range, There's are a albeit in rents leasing that newer you but actually, about, in if you else now X, buildings, we $XXX to higher monumentally are $XXX to pinch those buildings, for give neighbors, West -- Yards, substantially just new think says go higher. the to they're a you they if I'll you buildings, market go

of As this there's in side, nothing accepted in Penn be market Penn rents says and location as market best matures and and to values tightens a Penn X District gets West That and cause the $XXX go to single as from a income that $XXX kind the appreciation the that maybe substantially increase higher. to foot then even can't X in foot monumentally. will

worth is to value a million a million So foot for a times accretion without example -- capital okay? $X.X Tom; this, X billion help $X of expense. million any feet year, me $XX on $XXX $XXX billion year is

about So tightening about we're unbelievably that the enthusiastic about the market, inventory own. the of the market and we

Jeffrey Spector

is that don't working particular anchor Not broad-based? on but I helpful. industry, you course, of who, on Is a Very question a talk you anchor. financials? Is about you're site. demand follow-up Penn the just more the space? comment large Hotel it could And specifics, with can for the know it for if My tie technology, that looking to

Glen Weiss

just the in entire portfolio. seeing, That's Glen. speaking, it's legal Jeff, are demand but Generally Penn, tech. not big we're and financial, the what drivers across

Operator

question. Dylan line on the from a with Burzinski Street Green is

Floris Gerbrand van Dijkum

to your guys and not -- comments public in you to comments not kind talk go can Can about expect? that? it. about what Alexander's market we your back the in mean Anything something or guys' Steve, doing just your opinion, you the seeing on of wanted by about you value

Steven Roth

Well, thanks.

number that to the a parts than assets stock. at of take the you price and do substantially analysis, higher by of the sum very be has construct the Alexander's you If any trading

the the a if very by piece, calculate value based it just NAV. if asset greatly you piece concept, the price. it's it's simple So upon exceeds stock -- and you of And

it for a Now second. think about

IKEA I shopping center, say move failed guess so down. which is out, a shrinking X, you Rego had it's might we So

XX-year-old with capital re-tenanting not and we up end building. that building So is The huge of cost a obviously economic.

Burlington So anyway. we great years, very took actually for time years, Marshalls, has tenants. simply X we did is of been the what -- long very X there period remaining and Marshall XX XX

or have we're -- them way. by documents, the the -- moved of we process So into signed in we

shopping better built fill we We into Rego center, the X, XX are is ago. X, the moving of them it relatively which years a up new process which in of part Rego will

And land, Rego X-acre piece makes developed. So it a out sold grand which success. which that or X is X, of be will empties Rego either a

value. creates that So

income it have Now doesn't today.

So incorrect and from at substantially are. somebody the be is we of of Main, think Main, income-only to going as intersection land Alexander's is and of who's Main what the looking is the the values the in extraordinarily piece approach valuable. at to But Queens Main, middle

So we'll see.

Floris Gerbrand van Dijkum

several those know a and until guess market. in idea ultimately strategic just started New doing to it the tracking floated recover broader And the one Appreciate things comments. you I of shelved more office ago, then years guys question. stock I York

recovering that's Can where the grand of table? are I Now talk through that back strategic us that something is the things of sort quite kind seemingly of things? you on significantly, mean, in that set fits

Steven Roth

The to at easy that a think day. about least I no. answer every stock tracking But is

very, it very, support to about continue from honestly I I every very idea you and I be inside. tell think to you, a good from of idea. it guys even I continues any get any think the my from But guys day. can't can

love come as answer short-term tool do think the may is But no. never -- a in future. know, I You the being a it's the idea. sometime I useful do it up

Operator

Floris Van Dijkum on a the line with is question.

Floris Gerbrand van Dijkum

Farley. Penn on I $XXX recall your of million District underwrote. commentary NOI at higher X, your assets, Plaza Plaza Penn obviously, being or $XXX at growth and you -- District X originally estimated million what than talking probably Just Penn I about about the we've significantly rents, curious, X you guess Penn

of has growth could I this more think mean, stabilized, thing generate million on market the NOI your expectation rents, increased? than now $XXX fully NOI? you As of progression

Steven Roth

going to with you that rents interest are up, marginally. will that told prediction is that, I'm that who I up, roll that account that there by to but the go obviously, am The up off. only have finance it smarter than will my into will people capitalized go take will be And answer

incrementally $XXX help mean, guys and fill the can than completes that more leases it's there what than be X that up with count from retail part the of So is then its as is happens, Penn space I Penn complicated go and X buildings as will the But some so cluster for all you that's a up my calculation that in income offline. -- up, Farley looking of basically, all building, up. better as it And taken That that million. will doesn't going together. I'm

So it I think think, I mean, week, I put read your is that correct. last piece you absolutely directionally I and out,

Floris Gerbrand van Dijkum

Steve... So

Steven Roth

[ ]. by Floris, the buy

developing example, Pennsylvania As -- in is we remarks, the XX raised for next keep site said I It's old the down the and Penn as ground. neighborhood, site, the to Hotel and prepared the up. already

which building, that office world-class attack Penn a I've build XX land frozen, building sunk. said if as the is but we we're As to the going at is cost

So the ground. the can for as having look off a cost if X simply moment, it building land get at new we we

a be I enormous. by quite X creation will at as we look will even we office $XX anyway, X value at XX or we as if the Penn But and you inure this So continue increase the build that -- across building, as might to substantial, world-class work street foot. of and a the Penn the on as value Penn say to neighborhood, on a our least market think $XX neighborhood, we

Floris Gerbrand van Dijkum

if of hard assets. could about Yes, a start that and more going allocating further are transactions? you if you're the bit it's at you front. Francisco to question, to I And source in talk acquire the San recovery Chicago little types looking and markets outside consider know transactions on where would maybe follow-up pieces. guess, you're the you or you're to like capital adding Manhattan you where source of Maybe the acquisitions or environment likely is The think behind phase? that those to I

Steven Roth

alley. right Michael's question is at That

Michael Franco

lot to the optimistic. from to here, still the of cycle Floris, the it that's of a That sense so think as York, acquisitions, maturities our I right New has a opportunities into right, been getting next in I and of to turning sellers accurate X. in there's the But think are more being is challenging quality a target be work our in in portfolio, is fit through, year terms it's perspective. going asset said, more little to and you're present or

I believe it's to there but going more. San market. are will So in think rather some, than be the we Francisco, We be fewer on. constructive

we've on think I that. consistent been

corner. the think are there, new City a I leadership. positive turning is signs certainly

So is it's has there. anything I see open-minded we're have. Francisco. Chicago, time challenges, yes, recover. we think regarding content with what that to the to don't market we more are take and add I answer think many That San you'll us some for going

don't not on that. that beyond And we're So focused we'll either. think look I

Operator

Michael Citi a the is Griffin line with on with question.

Michael Griffin

demand. And you've are of maybe, all or try off Steve the started tenants give a to whether just given to you curious, seen? appreciate leasing all earlier I'm limited into the drop color us I result that availability? or and about not concessions to renew around see pipeline you've landlord as could insights coming some power. pricing to this Have talked demand you you at space Glen,

Glen Weiss

Glen. It's

immediate more angle. expansions, for that new robust for deals the Multiple the expiring. in seeing space the renewal tenants many from either immediately in from want market every to demand, than And is demand move it are discussions who So -- multiple I've we're of the to are seen from years. terms out or demand years

market, things have think down concessions, They concessions effectively becomes it gone down. relates that come as And the come more And better. rents As this up. a generally I have but and landlord's will market yet, not are to more they're neutralized.

Michael Franco

said. on Glen I what add to would

is or that through result space how few a pipeline that of handful much dynamics back First, for behalf back was and Glen they are level conservatism I And services didn't We're a as couple days, tenants that's with tenants would now Two, need more COVID of already firms there, last use our that And they'd right? Steve very talked because booming, there's recognize the I going and dynamics these expansions. a have right? on think couple occurred. One of think of there's think space. of about reflective did come we of a recently leases there I right? coming they of is out all they're financial how Law they it as more lease they need, know they exactly et booming, both booming, that. cetera. that of is Glen business a and tech said, booming, as fully is

businesses So growing. are all these

So very supply tenants when take market these dynamics, to those a to you level both robust where tightening on have overlaid you a very of of want be.

the think I in the terms over said for growth Steve rental So said what that's next expectation why he years. several of

Michael Griffin

appreciate open. your the around and on more obviously, additional of then CMBS prepared seems up recent. more in commentary following as availability, comments maybe financing markets we've the there. And The just come remarks seen capital market to I back the market transactions

those any insight are other be due you For you'd rate? year, debt a the coming that or well interest on the you give sense leased, properties XX, rate And have helpful. the some have XXX, be expect us to relative the would current commentary guys whether markets refinancing of on sort mortgages where to capital very this Penn it's maybe do

Michael Franco

since And really financing. we New market where we the Bloomberg about up a if ago, the I we opened side offices year and in versus day. And floodgate with where the I been then, today say, certainly were, City, a you of let's office high-quality think think York there's it's are So to with finance. respect on night think

gotten a billion, in $X So of them many you of think about transactions cases, multibillion. couple of have the in done, excess that

from is that think I for office. demand York high-quality investors fixed just income City New the So of evidence

very I encouraging. it's think

And so obviously, that. our portfolio plays in

rates terms roll cases, as low that look, look to are on we coming going rate financings that year this So in a the we're of particularly -- of off couple deals. -- of a couple fixed out in some

may time, lower. the in like Square, upticks and for we'll is Union see something think At there. demand a be very same that high-quality I strong, the retail rates well

net-net, the also some a So probably we're of it's little higher, pay-downs et I but with delevering cetera. think XXX,

I Vornado's think couple going last expense the think I interest with pretty years obviously from perspective, of significantly. we So some up took hits

done could and with in I bit this higher we're be think a by maybe. large, lower, little a that year? little it it total. Could be Maybe bit

sort we're worst I generally think And year-over-year. for of think sort us. the is over of par I

Operator

Mizuho the Malhotra with on is with a Vikram line question.

Vikram Malhotra

I guess on Penn great various on job Steve, you've done a assets. District the

sort actual development or in You asset various opportunities in an the talked NOI. you your of guess, sequence wondering you sort other what's How or stabilized about jump the I'm of next from the, standpoint, an next evolution the I have? next Penn? parcels would redevelopment or

Steven Roth

the site buildings next We're announce XX Penn the the yet. Vik. we're best in site not the but years, We there, question, for that and we for I forward Avenue. Penn Thanks sitting probably, anything studying that now. ready X Obviously, rolling Manhattan, X XX or under the to construction believe should in believe, is District ex-Park have

obviously is that So next the site.

well. the an also will building of apartments considering we're considering on We for all be front There as but that site, that options site. are office clearly

Vikram Malhotra

Got maybe then up. it. just And to follow

wondering the I'm pricing evolving Fifth Madison? costs? if you is color there can how a color what on and how and doing on on talked market into be more You give leasing pipeline. sort your about that the little tenants in and office street translates bit Any of retail may

Michael Franco

peak Vacancy to close to continue market rents in to So levels. best on market and for the I'd pipeline, just decline on certainly strengthen. are returning continues retail general, say spaces, rates to the the I think,

in blocks, in own looking same a dynamic for active submarket. very tenants lease activity Again, that off at signed rents, significant strong Avenue, we year. terms going not in and far space. of So too there. Fifth dialogue Square X some peak we Times last we have the There's best some the

think I COVID, around activity since seen most the cruising we've certainly of retailers for space. looking

far so off that going recognize tenants if I have right pick think to think peak. pay to again, up. the aren't not for the I And too they're rents And will spaces, there, the peak that

bottom the maybe driving remains the in and that And the here. in what's locations this that is the #X they the figures global sales city is are the U.S., to the retailers have that So New York doing. all line world, and have recognition

close of that as tenants are with some tenants here. sort So to lease new-to-market well we're as already some

to leases continue as District, good and activity working the some throughout we're We Penn on well. have there

focused. So we're We well. on as the those retailers the most to assets constructive and market own tend are where be pretty retail great

Steven Roth

you an give I'll anecdotal story.

tenant lot Fifth expiry them. that a come and in asset I no I'll had major we retailer in to wait a we So on particular space had have important on have knowing an that expire. Actually, that X Avenue, renewal say, to asset trying for lease But important for now would one of tenant's the option, incumbent and in that Avenue. Fifth space on sign to like actually an years we

So things markets. happen extraordinary that's that tight property in for only

was So kind of fun. that

The other on thing rent. Fifth rather would that I'll to say than prefer is buy tenants Avenue,

market buy would by the risk. reflected prices be so And higher the than are

business. assets, So that of the there for of it's is some to economic some than we're these assets more and sell arbitrage open these to rent

Operator

Securities a Truist with the is Lewis question. line Michael with on

Michael Lewis

of probably And of the business, least space understand you the that cash a kind of a $X.XX a less XX-year cash, emphasize health the And business was share cash the of lot XX money. in in help So of you years, this Steve, on we leasing Do often we FAD York an you REITs realize costs longer. maybe down. us last are I at The cash which agree run with. like And focus trend at But kind up of per consistently before XXXX as New this levels? expect in inflection? pre-COVID money context do to the office than back FAD making yourself rapidly of to increase? kind get we and ever going of flow lowest

Steven Roth

in trend and Complicated our spaces, that turn we're trend, the capital multi-tenant you which with with fact the cost we question. with the of spaces industry familiar the familiar business. I'm mentioned. a I'm over. turning I'm the intensity the all the multi-tenant familiar where of in familiar over of business colleagues those the that I'm are our of creates all with in --

TI and a down. They this. Glen building down we're -- and to get is over sticky, and clearly market. a very a alluded inducements struggling very the will go try them only in turn to to tenant in tight floor to go So The to

our that's in our past. in future, So not

On the rents, problem. at other hand, already if the have alleviate you that sort to look of gone rents up

up we AFFO So tighter. in -- I'm cash want going term market think cycle, you of get a expecting that to actual the that the to flow or which to at going the or it, cash bottom much is go I and that's are whatever

as be that Now as to New that that something benefit is believe unique I'm they great cities Other trend. from nation. predicting I the York don't I is might New are going York. the for in believe country, around

Michael Lewis

Okay. Great. York to And I second versus then just in-place wanted about office rent. market my question, ask New rent the

the you operating So market square think the like rents around Where compared for that? it's to in-place rent $XX are portfolio foot. looks do a right

Glen Weiss

be going We ebb Glen. but terms our quarter-to-quarter few positive, not where in pegging expirations means, rents. and confident will We flat, predict the years. next spot that I'm we our it's going this flow, in that rolling cetera. positive. like et We of It's like our to mark-to-markets how we're feel say much now often, to

portfolio. across As we mentioned, we've the increased whole rents generally

we X that X, over next good feel the metric years. about So

Steven Roth

I'll not I'm and predict. bashful

So let's to a for easy. because minute just go Penn that's

the signed higher and that be and for In which that's from X, middle substantially the from albeit in rent. I've when a square that pinch X a So to X happy higher. depths now, in-place those market renewal, for Penn buildings wonderful I believe comes or now, believe X of will very be substantially very for get $XXX more said already short-term Penn the lease in years lease very, X, rents we're very future, the I market believe X, for years COVID, that the feet building. than today, that renewal the that XXX,XXX we Farley I will the

way, So that. betting that's what on I think. the By we're

Operator

question. Alexander the with Goldfarb line is from Sandler Piper a on

Alexander Goldfarb

[ positive and reception at the Michael improved ], had yields congrats, have Penn market. the you First, on from the guys

there. market a you So the for from that's quite compliment guys

Steven Roth

Alex, friend. my thank you,

Alexander Goldfarb

your evident to spent walking I and ability No, mean environment. the it's you through, time campus in us it's rethink true. at

sold paying you'd rents had on original off, comments. apartment G&A, to Vornado, appreciate now, dividend, that right moving just questions the you accrue are, see eliminate you Alexander's What much good instead would X, the cash are have into get flow and could -- would tower in given Alexander's would think I I it's and a assets of your Vornado. not a the price of way that to why good So blend first, the hoped. My the I be for in X Rego mean, how been

prevent fits You just portfolio. which Why Alexander's would into in Vornado? have What certainly incorporate that? XXX, not your

Steven Roth

and for today. pricing That to we're now. of Well, that to of for something it, my XX-odd not of that's I has I years. the tenacious. The do just said nothing have front say idea And Alexander's, melding years, continue actually, not going floated will not been XX-odd the if -- mind it the it's probably on

Alexander Goldfarb

it and has certainly, Okay. but guess fit it that's I more, and conversation would -- it's cash just wound seem to offline. you more mean needs, for as down, I a it

Steven Roth

Hang on, Alex.

you okay? give fantasy, me a Let

Alexander Goldfarb

fantasies. I love

Steven Roth

million public the how -- and left but we independent Okay. that's happy. if I'm okay? Alternatively, have to do going I a sides Very trying to what nothing we we to Vornado, merged difficult no do, would narrowed how no freestanding, to both get would Alexander's entity, it If saying be office you. Bloomberg down in $XXX was what that would that and And had income, maybe stock. than or the trading fantasy you which for submit have asset of stock what and a for market? debt to only -- sell higher of I very just for debt, That's shortly that it price that approximately in much sell much, though. the the that current that we and idea we sell to are -- would the it as low as Alexander's we building, net I'm price into could will please property

Alexander Goldfarb

Okay.

Second walk... question you is, Michael,

Steven Roth

pay we What well, Alexander's what that we're pursuing. value of might from what above for amend be a it can to view, really value to and think that's point is will I'm shareholders willing get we Alexander's be Vornado saying that

Alexander Goldfarb

asset Okay. and you sales, but remnants Michael, some 'XX, the vacating have of XXX just some perspective, Park refinancing. the you at appreciate comments on guys outlined

capitalized those addition, off interest, In have think, you I $XX the that as take would leases million at burn Penn X effect.

about from FFO Vornado Penn? FFO next we of as off think X years, how to coming coming net So relative on the is much

Michael Franco

of and roll that's said that X -- One reflected -- that year about is is couple terms in year. why this versus given going down And to this off think what as right, appropriately, of we've things. think lower look, last a interest, is I I there. we've talked capitalized consensus being Penn that's year

that So we don't on that the impact today. that. much capitalized off, an that relative will debt asset master think to XXX, the no on comes get when be There lease we're We'll at has of point. interest getting

So to numbers. really impact the that's not an on going have

That's more a XXXX. XXX, leasing next Penn. and going backfilling XXX, little So flowing year in last materially to about up the we've year this XXXX, now year, success had we've start through talked bit dramatically the

out but trajectory. on that's that model want you think of comment, sort as I that based so your And

Operator

on question. Kamdem Morgan a the Ronald Stanley line with from is

Ronald Kamdem

for ones me. quick X Just

on York ended one at office New X.X%. down just So for same-store is on the NOI

about thoughts this environment? same-store look that number in as could what X Just to thinking X sort years, the next on you're high-level of just strong any like

Michael Franco

my that don't and numbers have I want so give on. a I and to numbers guess those of too are you at fingertips, Ronald, much don't

us visibility let a get look little at try and more So that, we'll there. to

Ronald Kamdem

Sure.

of CapEx, CapEx When think had of from year, of could thoughts which this question space, CapEx on the those Going $XX sort sort numbers? Are on includes 'XX, coming place? the about we're back in the Are to same sort of of maybe we about we as 'XX model? Just what asking spend a I different about in sort like? any million sort the staying on any down look -- thinking way. I $XXX million first-generation of thinking

Michael Franco

payments, think and you leases and up the make to those mean bit when a an year, doesn't have right, terms that are it we finalize guess necessarily process, going best actually of the because the lease. line in we -- we're done when to it's I get CapEx, we timing of you raised I it little in of that. beyond what know But expectation the every

pretty the reflective And building to that's in some environment of so I leasing base strong think addition capital.

were on Most level guess. we're we're a we prediction. our high not think taking So last year, years frankly because dead I

frankly right? year, So matter spend million, the still that in to I we're capital what think same is a have how beyond that. bucket, the $XXX just you particular portfolio you directionally much leasing different, million space in $XXX It's on not a of up end

back number leases left. year, works I So portfolio that year, as I see given big will up. as But Penn a next think And into down this what's on in directionally are start the that's good just fills we'll of think for pretty some coming number that the these we get beyond. and

Operator

Anthony Paolone with JPMorgan with is on line a question. the

Anthony Paolone

Hotel you would of Can kind what it what or right has this viewing to on just build sunk cost like tell costs yield basis that go you mentioned at the Penn you point. just the then, vertical around Steve, and now and site us want? something

Steven Roth

costs? Class development What of starts a for do land my won't A $X,XXX I building foot you -- building. new development young My contest think at a ex that.

Anthony Paolone

And the yield?

Steven Roth

that XXXX so a yield or I for a you X% say, $X,XXX? like more you number a let's a on if is $X,XXX of in, don't pick don't it And put of build know. some put I get Well, X% with number get land what's foot, or a is number, know, to market debt you $X,XXX, would so X% valuable like something you X%, you debt, to need times which because now -- than equity that, what

Michael Franco

$XXX.

Steven Roth

and of net taxes Now that's number operating costs. a that's

is high answer get to a new would you to rents that the that need in So XXXs. the are the build building today,

You're shaking Why head? shaking head. your you're your

Michael Franco

you which talk frozen, is about why agree, -- being math I it's work. doesn't the

Steven Roth

about think a second. that But for

is foot that $XXX So a build pinch rest Penn maybe rising figure Penn from you something and foot less, the so enthusiastic I'm and the of that, our more. a that portfolio X because one $XXX a of have reasons new or maybe the X to at is about a like rents

valuable. buildings punch the that's for locations the That's great the So line whole line the become more in-place much better inventory and the in -- will punch today.

Anthony Paolone

mean to guess being your of thus I far because cost vantage the I that I mentioned that's understand you what wanted sort Okay. point sunk.

that. not And so it looking basis and that I so much the what a you're area, could yield do guess and incremental on whole at thinking about the for just $X,XXX

Steven Roth

of the I no bought -- time the on But matter a I debt is fact the the Yes. long land. land, have own have the land ago. that I I

get make the given the or between we'll choices. those it, leaving so empty That's paid building we on choice to what land And do.

Anthony Paolone

a Okay. follow-up. Understand. And then just quick

what's Can you us think nonperforming there? or I last give you bought deal B a update that on or plans happening any year. Midtown note a on

Steven Roth

No, sir.

Operator

Nick Scotiabank the a Yulico question. is on line with with

Nicholas Yulico

Great.

actually Yards sublease In you're little that to project? space available is the talk when a bit that's terms any of the project, Penn you are can just Hudson your looking the be whether of about tenants finding if at in competitive

Glen Weiss

Glen. Nick, it's

X That's great think is is a new it, as Steve our space. Penn are their you with sublet So about pricing, which competing near Penn yes, even not pricing said, X if And the thing. the answer pricing. and

whether side Penn we West X in mix squarely or Manhattan Hudson it's every are X, that So the fact Yards or feel the that good in about or West Penn sublet tenant availability we touring day. the any

that. very it. and very We like it we So feel competitive with comfortable with

Nicholas Yulico

you cost is then just the there. TIs us, not on and yield Penn built second And I can being the to quote you leasing going question does when remind include into back the yield Okay. the think yield, just commissions that X,

$XXX we -- notes, X%? the So the on I around that one yield is was And just commission like see point in, it if that correct? I that's still saw right. cost want TI to if that inclusive closer that leasing of build X.X%, per in the Is think that project like to if ballpark around I at a there was we foot. assume

Michael Franco

those to generate is not given spend mean that right? we'll would be TI I the the quality mean anyway, answer given to of had happened, dollars, thesis the calculate. I the building. have typically, Yes. And what's think I the that old rents were that commissions is economic we'll we now spending leasing

had we and have the how to we talked incremental got we yield It was what's supplemental that that cost. That's right? spend, we in number on wouldn't So the to spent the that's cost that.

cetera, factor to TIs, that we have spent but see, we et in can the anyway. would So money

Nicholas Yulico

And $XXX? should Is around assume per foot Okay. is -- around we it leasing then the TI there, the commission that number?

Glen Weiss

It's higher about right, depending maybe touch a deal. the on

Operator

with line Lynch is a question. on with the Barclays Brendan

Brendan Lynch

about It year. XX% sounds expiring got on give Any quarter for you've and in general. XX% the like Francisco that can XXX of like looks It details third ABR at you the California you're on renewal discussions? in optimistic San

color more some there, get please. Just

Glen Weiss

one best certainly San the our of extremely bullish Francisco and probably remain country. best state the city, the building building We Glen. in the It's XXX. in in on It's the

forward, when of feet of we had from to look XXXX 'XX. load thousands So from you expiring boat a 'XX hundreds back

thus leased have that feet far period. XXX,XXX We almost during

attacking 'XX. We have now. then in coming more We're some more expirations 'XX and some in those

done. what we've Some about may not but stay, stay, of tenants we those will feel great some

that are roster our to continues even X not clearly tenant It's rents closed, market. Our leading be and star.

So as XXX we here. feel great we about sit

Brendan Lynch

tenants? third the between one that quarter, the one just different on split that Maybe in Great. Is XX% follow-up is that. Or is tenant? multiple

Glen Weiss

tenants expiring, of get quarters. 'XX, in in tenants so -- as call role. to you throughout but up, it X huge, year of the add quarter None third that or it them X The different there's multiple you

Operator

the on question. Evercore with a line Sakwa is with Steve

Steve Sakwa

different. lot realize rent, straight-line think trying is the have the it if follow-up. it Steve, of into Are is but cash because unique adjustments? there a unique Or up over like get quite out consideration to a to what isn't we to the going kind realize rent there are we'll of that figure but just straight-line this? need XXX, deal would bit any accounting, sort have guess, lease, I that this little this one to be quick lease of line I of it's On GAAP get Just of long-term taking soon. sounds I and normal that a just is adjustments front, and you typical any finished, given finish nuances nature

Steven Roth

on I'm announced, finalized not It going the comment but that is transaction. it by be of this would -- will final end hope, to will be actually, I month. it

announcements you it. press it. that get And you that you and I will so can make so we give But need we'll that have -- the understand detail release we to all the mean, guys

get So want detail I the don't now prematurely. to into

Operator

a on John line the Kim from BMO with is question.

John Kim

work and as how some office far new the how a Steve, will these in New around the you there math you out of think York lack for projects time various is several as years the of Park? it There's getting stages. been off XXX development get tough as few to sites. on the in same many do mentioned right ground But

Steven Roth

None.

John Kim

So enough not demand? there's

Steven Roth

aggressive plenty don't but of It's interest not I knows. demand. there's No, the know availability high, the going steel frozen. and and market -- fact of just who to remain of stubbornly building capital make The cost that building, the of will rates of of what's cost happen the now, the with cost lack

have isolated of we XX% a different we lease an major already already a and a is point view have Park XXX tenant, partner. because for capital Now

short building So the include the will get XXX Park for prediction by term, will other off way, very the could ground. Penn that no ground. almost well And the My get that XX. off is

John Kim

go to would have justify new development? Where rents to

Steven Roth

is already I've $XXX a answered interesting question, an bogey. that foot

John Kim

Got it.

Operator

time. at questions There are no this further

Steven Roth

participating. Thank for you all

I about enthusiastic Penn think are District. extremely about our our the tell and enthusiastic about enthusiastic management New wildly remarks extremely team the York can of business you from we and

you participating, thank next you So see we'll for and all very much quarter.

Operator

for today's Thank your participation. and this you concludes gentlemen, Ladies conference.

now disconnect. may You

Alexander's (ALX) 11 Feb 252024 Q4 Earnings call transcript