VNO - Earnings call transcript Q4 2017

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Operator

Good morning, and welcome to the Vornado Realty Trust Fourth Quarter 2017 Earnings Call. My name is Nicole and I'll be your operator for today's call. [Operator Instructions] I'll now turn the call over to Ms. Cathy Creswell, Director of Investor Relations. Please go ahead.

Cathy Creswell

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

On comments today Officer Macnow, and President Administrative opening Also and York management are the and Officer. for Executive Division; Steven of Officer; the our Board from Chief Financial of Greenbaum, Vice President, David New Chief Chairman call Chief our the Executive Roth, Joseph Franco, and are I now Chief Markets; the Roth. Steven Head turn Matt call Capital Investment Vice Vice President Executive Hudspeth, Officer. Michael Vice and of President room and Executive over to Iocco, Officer; Chief in Accounting Mark President and Executive the will

Steven Roth

better prices. are our from than money a back Good the and high, stock away Thank sell prices two assets, has spin-off. at now volatility cash. been big and and time I've for a new to in is time this be buy, that pushed build company's it taking to for everyone. the way [top-tech] of you, in cycle, down important the and cash, when the most did this to been cycle guys years easy the did acquisitions We morning, especially we space. Cathy. birth we seems past at sell, did it's We saying is give focused stocks meaningfully, Well, asset made build and importantly, books smart through to couple

dollars identified further We Central closings billion XXXX. increase in XXX be beginning another Park sold, have cash assets South of meaningfully will and from to

whatever it'd or are come, in is be the defense for opportunity. whether shape great We

Our performing soft accordingly be while continues to retail office flattish business we and is year. XXXX well, be a to expect

for Here the complete will highlights fourth course David are of few a do in quarter. operational a moment. review a

We are full.

are We're was XX.X% from at which the full New lease full basis up San at working on at quarter. us third bring at the occupancy York and Q, will theMART office also California points Francisco. a we XX the Street XXX the

year. at and quarter, rents square New the York per they foot near square starting $XX foot average for $XX for were were per the record a record fourth

square users mark-to-market and of New in through way office and was for coming and a from New don't manner hottest we the Chelsea Meatpacking. in XXX,XXX York on on runs office markets. submarkets New space to I you X.X% down right of X.X% of life leasing cash quarter. feet market for the to GAAP, tell be are seems can York. now town be York Yards to from all Plaza in see robust it. continues all south extent Penn sub and Demand The Hudson Cycles

Avenue Avenue. Fifth look I and no you Fifth suggest will those York, be always at For growth New submarkets there a who is these say in close take rent very

Valley. only and of and the tech world York and legal advertising capital New accounting the the And is media get highest in financial the the and message. Silicon to second you capital, has concentration capital, capital, employees the New the marketing York and

remaining last further week million reinforces New as New the square Kmart job growth office I who Google's same that feet That completed What made X.X with them we right total is purchase X the square lease I market bought York XXX,XXX their great per Last feet it. in lease mention would validates the in unique with has center to of done of across brings and of comment we in help absorb be new the third XXX XXX floor. this low additional still Broadway York own where Facebook talent an the XXX,XXX we be but important which activity, will we announced brings to floor further ownership the to feet can't first a quarter from feet presence the $XX.XX the and As two the York. XXXX Kmart at supply, Westside. Kmart have importance deal leasing that the million a at believe at and and Broadway deal foot. their that foot over Google. had sufficient is New we've back building. square feet All And One square entire recorded square on a square companies at rents. in major years our first buildings XX,XXX to square Penn XX,XXX must street XX week This Plaza at from Chelsea

and points GAAP, were Now feet due numbers. leasing. assets of we X.X% total quarter XX.X% the to cash from the retail valued, fourth all In XX.X% of up total accounting, was cash and bought a last recap. occupancy NOI mark-to-markets million the of cash respect on basis up fourth quarter quarter. XX.X% run basis GAAP and sold XXXX. on With square from on was XX,XXX $XXX.X XXX the Fourth numbers business quarter are cash Retail

same-store theMart XX.X%. up cash was NOI same-store XXX and was basis cash cash XX.X% up New was York California NOI X.X%. up same-store Street NOI basis segment basis

provided cash will As below letter guidance that not my a NOI the Joe will reaffirm we discuss few go XXX to in million. XXXX April shareholders annual retail minutes, basis I in first

NOI our supplement. no is of per Washington, Please As we XX yet the see in July quarter estimate a from from fourth publish a longer spot capitalizing This management's is NAV ago. share, a per our for are $X spin-off year first, not reasons custom, down updated share incremental from Adjusting commenced. the for NAV year primary signed Page resulted XXXX once a The we our leases XX. $XX we reduction $XXX of in reduction. this;

So to substantial the amount incremental cash without all leases do signed recognizing has of the the and think we GAAP appropriate changed, pluses minuses. not NOI it's from not add

recognizing retail resulting $X Park third, conditions. adjusting we XX dividends value a expense, XX, dividend Washington the January a market our capitalizing management per market on at believe And reduction three the the increased from two points XX%. adjusted X.X%. more to South and an XXXX the on current Second, from PREIT price, and cap our note closing we last XXX reduction share marking to by resulting from quarterly this Based annual rate basis for X.XX%] market Urban we from of Edge [X.XX% is rate $X stock X.XX% Please yesterday's $X.XX times increase. from On dividend Central spit. accurately is reflects X.X% RemainCo's Street increasing for which dividend and $X.XX, primarily prices. dividend Alexander's, years a raised In have yield paid,

AI held there bidding up sales the or investment towards product XXXX the as and solid turning assets with should to for well. pools with average sales as few that coupons we to in are price liquid operating slowed Now up activity and of and remain our that, rate market skittishness about be continues keeping Office pound, investor face the maybe had Pricing market. average due York In activity remains thin order. for meaningfully little have have financial had to and Overall, assets strong all per be sector, investment the cap quality and at pricing is markets demand sales In seen reverse and strong retail Debt consistent was demand. rising cycle. the To where spreads with the market and markets to rates, attractive. lack I’m very come pleased for are West and in performance. strong remained discipline South and very - to performance the of giving Manhattan those in open. both record-setting in New tighten tenant our all wide continued buyers sum we

up. over back David, two media Before opposed based speculated weeks on I I that incorrectly might outlets Elaine Tunnel that to emails] in turn the clear ago, Chao Two of to be sent couple I a Secretary, something to [sent want project to it I the Gateway Transportation order.

an business Gateway at is I for want I our New far state the infrastructure know everyone New civic record. important most So the in and in of devise this that which communities and York Like away leaders Jersey, that to the and equitable project believe following and I our region the just to nation. involve for participation. agreement both states sharing the will I'm David? of confident project one government substantial political will most the also federal core built, undoubtedly federal get critical

David Greenbaum

you, services and by morning York was a Employment thank decade. in will thoughts do year as over begin real all. market I Steve, good with months. a sector. over annual I XXXX the estate New past the XX,XXX my increase breakthrough on usually XX largest the for to financial jobs, grew a

year financial ended result, employment seen XX the a in at XXXX. services last As back

services of we and this early deregulation sector employment. took bill in are in progress, place still of prior the and tax much growth work growth recent significant the with financial believe passage we Importantly, innings the to the and in

look traditional feet Five And is for decrease feet controller XXX,XXX banking in XXX,XXX traditional last why in This potential all in the so-called and non-tech XXXX in sectors. jobs to in using and committing York employment grew X,XXX retail at square that not is jobs and the recent estimates took healthcare Overall now in in JPMorgan reached remains significant XXX reached insurance employment now The services reported the the from square quarter Avenue state tech Much XXX,XXX and in numbers, City the reported of New way last of XX Chase's MasterCard XXX,XXX story by that strong decline important at feet. entirety of XXX you jobs much Madison of over West. Fifth XXXX. year, convergence than sectors five but attributable highest I If of the employment XX of our there large square in financial employment stock the I level are of believe TAMI America traditional leasing this last in XX and is Avenue strong strong banking. of years. in that jobs the velocity deals jobs leasing fintech. tech do rather not Bank in With after by of to XX% noted of reports XX,XXX from office announcements, Manhattan XX put at office the is to high earlier months. by roles to Americas found the almost TAMI year tech expansion leases are nearly XXXX Avenue. technology growth million of up market insurance also all time a years. for XXXX, was past by offset We continuing Manhattan Total experienced feet XXXX square the an greater and

leases product were than which XXXX. product of of addition, Penn and new than In largest preference redevelopment. relocation more captured side high a XX% West feet A were XXX,XXX Class since total larger demonstrate continue the leasing quality for share there square particular to Tenant volume new large XX% Plaza in and XX tenants in the for submarket. more than

markets in is With particularly the collaboration points Manhattan the continue and Overall retention. trend as year. absorb prior job able as the should observers as and growth, XXXX we, X.X%, to invest employees improvement year-end new our the many where toward employee slowing was intensification vacancy foster XX larger basis coming spaces be an the amenitized continuing to true that is of online at supply over strong shared office believe to

asking to Our overall the as rents Manhattan to South West. were and Manhattan tilt island the continues to generally flat of

in with We on above Chelsea have now seen significant rents rents well growing neighborhood Avenue. Park new in West the rent growth

starting to performance In of Vornado's office X.X the represented XXXX our square activity of Almost average square per watermark leasing the over million Guggenheim across IAC, both Facebook, and let square such strong New XXX expanding, Wakefield. with Partners of companies industries a XXXX total. into XX% from of now our as an space portfolio. tenants in cash. office Talent and we our market, robust leased moving York HomeAdvisor of achieved Financial $XX the Star, well our activity, This diversity for the X.X XX.X% leasing by tenants GAAP than With tenants New hedge past XX leases XX me growth leasing all XXX,XXX to Hudson Google, equity in of of insurers banks X.X% share funds owner. as other team backdrop Advisors, Facebook another $XXX as that separate high Fidelity, strong worth above in foot investors the XXXX our more place XXX first XXX completed entire extraordinary United nearly and whereas tenants Park, headquarters transactions Steve that We Behind of square Cushman to deals totaled city of year. with about Agency, mark-to-market services and York Ninth of Bertelsmann, Morgan square Lone is Fargo, activity in Advisors. rent million Wells foot this in and yet Glencore, newbuildings, real private XXX buildings foot XX% previously a feet largest rent substantially with than turn It's included Principal noting as in automotiveMastermind XXX at trophy by number time. fire represented our the Park, and And from names Whitebox took feet, & largest XXX wise, third total all any and Madison, trophy XX% second share XX assets, of mentioned, activity had represented seven in Kmart. XX Global average the our our and tenants week EMC, as leased floor XX,XXX redeveloped tenants Broadway Stanley, other XXX assets Seventh activity. including foot We just TAMI of our market year of a XX% our transaction Google. Park, at again Avenue. These of at or $XXX at last Investors leasing an about per starting were our Broadway expanded time the including

with XX to proven a rent compete our a including lease nearly best feet buildings The average Penn XX,XXX with XXX,XXX lobby feet. the average headquarters year social new for One to starting At Station. new the before major and first storefronts redevelopment on later dispatch ever and second this achieved construction. with separate a a ability leased One square we class a the new plazas, double We addition during to of have and is the across kickoff highest we floors, elevators, destination reposition and foot, upgrades new Penn Penn existing was spaces new XXXX, Mobility Siemens $XX the transactions that in square public high amenity and at entrance

now sector X Penn and is One and goal engage at quarter district. his building rest Our public to remain Two our to heart, will the transform rebranded have team One and the actively Plaza fleet center was as top-level we focused as X. the last duo square is our to intention commensurate Cuomo that Station Penn to generate on surrounding has as in million Penn rents. as reiterated senior I with The front foot focused and which and We the transform continues also the the on neighborhood, city's Penn be partners government. mentioned to Amazon. Governor the proposal his district sits of

turn rollover. me which given the as will had stated modest in briefly quiet Let and to vacancy quarter now large our be I only little relatively last that fourth we call

mark-to-markets feet square with average leases X.X% of we and XXX,XXX the X.X% $XX totaling and XX During cash. was quarter rents a foot executed positive GAAP starting

X.X% X.X% were our year-end year. up Our GAAP and the X.X% basis quarter a points growth numbers in and the the Same-store for cash. office an on a even year XX.X% same-store GAAP better at was which which up caps basis XX.X% XXXX stood occupancies over excellent cash, during XX fourth robust past

since the Over office the mark-to-markets and and cash. starting five have past our XX.X% XXXX, XX.X% GAAP years portfolio averaged

of levels have We X.X% XXXX, performance same-store the period. industry-leading as Since of same-store GAAP growth is average cash. we same have X.X% our and

new expansion more quarter XXX,XXX a either negotiation XXXX of and an than year-to-date square the Our of in the leasing first in or number deals. been including team with square of feet in feet and XX,XXX active sizable signed pipeline has additional leases

experiential a last room, like roastery future space. Avenue its changed it XX,XXX reserve this of square the which of with you Now the XX giant let which wake CVS. me redevelopment At Aetna and second the foot retail In looks leasing. quarter billion in the of red-hot plan development spend merger Meatpacking square October remainder East building year, deliver of to will commenced Starbucks the Coast we Ninth about and a efforts pending drive $XX XXX,XXX district, its has feet at buildout and the will our minute the updating first tasting

Our binding understanding we XXX Also Street to our best-in-class is it will and intends Aetna blocks XX-year another north, boutique complete few currently obligation in directly sublease office lease that the quarter second a is and a XXnd at the fully on ground-up space. just the highline. building West

building has a expected we the completion, nearing multitenant building have increased a XX tenant is be With building. dramatically. XXX will always West interest

as fact, where see In terraces Ninth expected outdoor on spaces to building to with tenants prior XX we completed had coming need a fully at each Aetna appreciated along will the to floor. unique

as historic of peaking historic we acquired roofs feet. and just the To column with building XXX we XX begin West year Soho. design of property boutique up spring. the but can contiguous Elevator on and leasing at least, redevelopment certainly the And Hall new begin existing skylights week growing well free building Otis square activity this and effort feet for Broadway where Station's half repositioning XXXX. the grand roster delivery we half third Last office is complete so this The our Penn Hall In Building. XXth construction not are the of first far retail moving deliveries remember, taking on we behind XX this in heart Street, Farley on the for of landmark of space to employees XXX the growing of in to and schedule. month. East next the And the XXX full of fastest. transformation that Our the One XXth quarter, will in this Train the track development is of have Avenue, is redevelopment, Boulevard the in track Avenue neighborhood, properties complete not the last demolished our new the second Rogers Moynihan the Train spaces is beginning employers with will steel Penn XXX,XXX prefer swiftly future Richard been the plus will with a Building process underway, The rents are where construction be all of XXX skylights is large of augment and place of

Turning me portfolio, retail now market. our say a to about words let few the

city, Our the New grow e-commerce to as in beneficiary New every we continues penetration million of in annual tourists. York York XX in are

outlets here, encountering As this likely to they increasingly Bonobos. multichannel leading as grow. experiments and shop Amazon, is online In of are Parker the they approach Warby strong early brands these successful such wake of brick-and-mortar

XXnd JPMorgan Levi's creditworthy this As continue Street. Jessica store XX.X% we see run GAAP of before tenants early at very continue feet XX Fifth In November, are of Amazon, Avenue environment, to are Parker our that square Fifth submarkets test our for on XX.X% to this Chase, Sarah Fidelity the another pop-up we the spring. strong short-term With shoe becoming to a prevalent. and of Investments, leases XXX,XXX This Upper opportunities and store store performance the retail with another Avenue. to market highest launch team Sephora. across with Christmas, In the leasing transactions before successful refresh such and with mark-to-markets working XXX strong retail XXXX, Times making SJP's long-term leased more as tenants slight Citibank, we cash. deals Square commitments, we challenging and are a In in included markets launched quality

year retail strength in the Square at Broadway of ended our heart exemplifies XX.X%. XXXX occupancy portfolio. the the Our of Times very

is will Retailers of this from visibility presence watch first stores workspace, leased also saw the on of square and Hutong the on ball drop this XK of Group end flagship later with fund now we XXX U.S. Restaurant at is year USA. T-Mobile award-winning year totaling the the recognized this four spectacular top-notch transactions and dominating Eve introduce you unique block which also of restaurant feet opened Year's LED Group. we as our the If emporium a cash. we XXX Over Dyson new Levi's the fully Avenue to GAAP screen, Fifth Sephora roster one the fourth-quarter have from Swatch and welcome new mark-to-markets world's U.K.-based at that New includes property and both at in Lexington and the the Fifth a former XX.X% Aqua Avenue That of XX,XXX of lease will last XX.X% largest. the

at X.X% For and GAAP the cash. same-store flattish negative our quarter, retail performance a was positive X.X% a

theMART. showroom For flattish were a I back of space. to rent theMART In floor and office of mark-to-markets to negative GAAP year, XX.X% that square in of with XX,XXX we again cash. to an now of XX.X% feet, quarter starting at same-store create the additional leases X.X% space average a ninth turn XX% taking XX I’m cash. feet of an XXXX on mentioned process strong a the signed Last for square the best-in-class total XXXX XXX,XXX and retail positive going were more we GAAP positive numbers

existing for this at will theMART represents for Publicis floors are expires it's the We of July. current the square asset. have in its summer, and lease on iconic an XXX,XXX all documentation. well with when tenant us signed This the vacate opportunity an lease lease below for and tenant market the fifth feet now a fourth now LOI Publicis, This with space on and an

GAAP for XX.X% cash. the was GAAP year X.X% and growth the and quarter was and cash X.X% Our same-store full fourth at theMART X.X% for

X.X that basis X.X% same-store by averaged theMART Looking positive iconic time cash building Street five-year as the square well our numbers. back Francisco and staggering of Montgomery. annual mark-to-markets Hall and California a In cash a over San XXXX period remarkable last Montgomery as complex foot America on and X-building we the Banking a at XXX GAAP five XX.X% includes Bank XX.X% at X.X% XXX during of GAAP Tower, and years, at million former the our the XXX since historic

and a cash we've on lighting been for a project July out last a XXX where escalated exterior what average portal, of on fully an BofA modern Montgomery leased a of at new entire building Street, $XX signature, on fully the building a last today lease the and lobby We released is XX% foot for moment have we features with elements lease accomplished just spend foot. first to building's redesigned a year. installing at the redesigned update is programming, embark second week, originally XXX,XXX a appeal such nearly preserve basis. to destination glass and the as rents with square Fast-forward the me that Let We entire building elevators entry TAMI cabs. increase tenants. The signed dispatch an of rent at completed will $XX, in starting historic

a corners of cube. with distinct what tenant a SOM and Montgomery, space call secured of kickoff designed Francisco's atrium a offer we creative center the most XXX is in will San up iconic the Next approval branding government opportunity redevelopment of has we have District. San that Francisco's to the Financial large one office where

net San square renewal their XX,XXX fourth of a a XXXX. XX,XXX total bringing Ellis in The for square We foot feet tendency XXX,XXX the Kirkland with of is Francisco while entire foot quarter have our of the square lease expansion intent extending to a lease to building. in letter highlights signed

Francisco, XX.X% quarter were the our San GAAP and cash. XX.X% positive For mark-to-markets in fourth

and signed leased XXXX for north we feet In these the of leading million as work mark-to-markets total square our classes $XX.XX our of portfolio starting across of numbers San over of X.X properties square an across feet For numbers We foot all of year and and enormously starting New York, the and a all XX% rent to and average XX.X% hard Francisco, GAAP proud in year total Chicago of average of the office cash. XXX,XXX credit a X.X% before quality per in XX.X% positive of Joe? strong blended retail at were the our said at industry at Francisco leases we remain $XX San and rent mark-to-markets GAAP our had for office professionals. cash. I've and talented in both XX to of asset

Joseph Macnow

David. was everyone. Good the to or fourth quarter. in compared total prior see the of supplement morning, Form release year's $X.XX you, quarter Thank our was Fourth details for XX-K FFO earnings financial $X.XX $X.XX $X.X affect comparability. per $X.X a that items our share per fourth in year's comparability the for the following. Please FFO Fourth to quarter, $X.XX due million quarter compared adjusted with share to of prior a primarily decline or

mezzanine equity million and interest we loans a interest FFO $X.X from First, the as received repayment Avenue, Tenth equity FFO also mezzanine on loan. XX.X% a the less property the XX.X% for our created $X. of quarter was in fourth XX previously million our of quarter from XXXX, in December disclosed XXXXs than in $XXX Fourth received

in floating-rates, increase of million expense share additional $X.X our debt our partially a balances, inclusive offset owned from a comprised lease treated entities $XXX debt. rent from lower which expense partially of as interest XXXX the $X.X savings of million capital $X.X $X.X of Broadway average on interest rate average higher $XXX,XXX rate of fixed interest by is of million million Second, accounting, from million higher on

which increase expense Partially million was TRS $X.X by state's in XXXX taxes XXXX. of to New strong into the I due store million fourth a filing York a higher of was tax as offsetting refunds non-same expense in in change therefore a reoccur $X.X and straight-line will returns next of which primarily methodology reduced Third, from same permitted discuss net from and TRS, performance result operating XXXX XXXX in not combined tax that income income which write-off $XX.X previously store in course tax million do of this quarter. resulted

GAAP Street XX.X% the a NOI in same-store by a quarter average fourth the an X.X% increased same-store or of on York's GAAP XXX a theMART basis. increased on on and basis, X.X% California by $XX.X $X.X million cash weighted NOI New produced or increase basis basis. on X% by million increase cash

Now to $X.XX XXXX, XXXX results an share XXXX, increase On X.X%. of $X.XX year XX.X%. the share strong per the was per basis, adjusted a FFO's an share a cash share was per strong $X.XX was for of adjusted $X.XX or per increase for for a to compared $X.XX our year. $X.XX to compared for very FFO full or

NOI same York's increased on a increase XXXX a GAAP store extraordinary an full or XX.X% by X.X% $XXX.X or cash basis. $XX.X year on New an by million basis million

other increase increase a by of X.X% Our on cash a million or produced or same-store on basis. $XX.X segment an the XX.X% million $X.X NOI GAAP,

Now let on a XXXX. minute spend focusing me

in in at or Fifth new contractual Avenue XXXX the none X properties or other leases that a XXXX from step rent expect reduction million Ninth Avenue million temporary September and including guidance be Roastery million will commences due $XX to Avenue We following. cash versus Fifth year which commencing and ups, Starbucks at June of XXXX mentioned, by in A retail retail full year basis, end million in we a a at of Square XXX $X H&M low Dyson XXXX. from tenant of Steve the commence million XX rent to partially are close which $XXX reduction Seventh expires the in on XXXX extended the partial Times X NOI the in from which XXXX, offset to where XXX Upper at Avenue XXXX in

we it's leasing a the purposes assume what and a new you, of I just retail scenario portfolio. any For don't given and worst-case

share higher expense interest primarily XXXX of estimated higher a million partially to approximately share be due increase floating-rate. from per or our $X.XX XXXX than $XX million projecting are in $XX owned We to including average entities

a flattish. these FFO items, result basis As expect comparable a XXXX to therefore on of NOI we and be

cost our Series X very XX, extension as from and percent] LIBOR notes one cost of the funded plus billion Series billion and two preferred extended million Interest options. with G treated million. revolving XX, debt redemptions redeemed LIBOR X.XXX%. markets X.X% preferred and million fees of a The debt $XX.X the million January from of XX, [days redemption a extended extension X.XX% February the and On and new therewith, perpetual with This refinanced equity. million net $XXX shares we fourth to be as $XXX.X XXX to XXXX, $XXX XXXX The which called December supplemented other In unsecured balance XXXX. credit these we XXXX. We active called item. and of redemption options. were our and on treated of XX.XXX% shares the I senior rate Now yield million subscribe with the shares included of to deferred were in in January notes XXX cash. financial facility We Series I ended included was Upon in are our total the six-month sheet, costs notes being percent and plus facilities to X in XX, XXXX classified lowered in they XXXX $XXX.X two capital our December, November with a facility M facility Since $X.X the will December shareholders' quarter. financing with of preferred as to the a connection million, now same produce due XXXX and XXX. we March XXXX December days senior of the from shares, quarter results XX, which activity. million with Series we seven-year matures is unsecured executed. that XXXX the six-month revolving very we for non-comparable we $X.XX a expensed redemption million, of our over these with X.X% a our January of amount On notes issue through liability interest proceeds we Also as retired October our on two XXX X of were which $X.XX first preferred credit for sold in rate as opposed unamortized at was a expensed million, We XXX XXXX, X face item. prepayment issuance unsecured non-comparable XXX well G

the unit of interest. tower we Plaza debt largest XXXX share consolidated own As $XXX million, have which entities and three partially our million maturities in which of we XXXX XX.X% is no XXXX rental today $XXX residential maturity for Tribeca the owned Independence share complex a is in at

X.XX% last a debt value Central average financing rate average the rate weighted times. debt, stock Toys metrics fixed debt debt account Avenue of year. share on is our to a XXX to X.X Park floating like X.X price. years. net response statements debt, XXX excluding financial Us Consolidated supplement net as and of liquidate times. to also of signed night's X.X fourth the XX XX.X% XX. Pages weighted financial Fifth cash XX% our with X.X self debt debt are average would weighted nonrecourse Including on partially account entities the through debt Excluding of debt, contain XX% of a interest South EBITDA to of our net which I enterprise of average stakeholders closing additional which "R" is project our request, with will close, that quarter of and EBITDA out rate on consolidated net in cash contracts to and are our X.XX% of weighted based NOI in point And Debt of term owned for rate is disclosures term

to NAV component is XX on our One supplement South Pages XX. NAV, say that annual Central updated our word mentioned, the a XXX on contains Park Steve needless also As of NAV. and

That has changed. coming We not have job. from estimated for that after-tax used million profit the $XXX

XX/XX/XX to year. million, $XXX Central correct should We dividend, $XXX in pricing year's last is same that fees the the regular and Vornado's South. go year's for that of our Park Last to year, transfer cash $XXX the If you dividend that's was million. In based represented interest million number update be this charge portion million. this shareholders which to by upon XXX NAV that NAV, $XXX

in transfer million. we pricing $XX had when press we in included of release XXXX dividend our As announced dividend is was approximately $X.XX

$XX million of started used increased we that The gain million. $XXX and was basis determine the to other tax our with after-tax

correct to Vornado staggered balance we’re reasonable leverage, sheet the with maintain maturity. that. a well continues going debt closing fortress In to On website

and have $X.X We billion turn revolving a comprised undrawn of restricted now $X.X credit I’ll cash marketable liquidity the securities in facility. Steven. of billion $X.X and call billion our cash back to

Steven Roth

Joe. you, Thank you David, thank

your We’re questions. take happy to

Operator

[Operator from comes Instructions] question Vikram Our Morgan Stanley. first Malhotra from

Your line open. is

Vikram Malhotra

Want Penn timing? just on provide other incremental to return of just you check details can potential One, any any other spend, on

David Greenbaum

we're with which budgets with our to One. That of capital is stages. be final six we work the We time fully in available next months do projects. we'll at should point that said connection Penn it drawings are major to those budget doing in finalizing work in the disclose our in I as as The three all the

Vikram Malhotra

then comment. you I drop XXX. mentioned And just NOI will think below the Steve clarification one think on not retail the I

just sort sense your XXXX of and XXXX So point? low on XXX be get could of, wanted the is to this that comment meaning year

Steven Roth

is answer yes. The

Vikram Malhotra

Okay, thanks.

Steven Roth

huge rent couldn’t David - growth it in It's asset direct about which X.X Plaza. the call have in Penn has modernize is X.X sits maybe adjacent in we that has we pretty when Two One rents views. million redevelop that plan minute. One very $XX want building I - formidable place and The has rents? the a It square believe it. that Penn be back million go into It duo, say the We is for think it for right as is Penn place of Penn and we $XX enthusiastic a spectacular spectacular. Penn Penn action to we Vikram opportunity as more access foot there Station. a in did to is heart upgrade, I combine and to to One

David Greenbaum

$XX. said You

Steven Roth

Penn a there. bit, foot in-place correcting the me is leaves slapping which in One a room are rent for and me $XX enormous David uptick little

of So complex, we afford extraordinarily it and be food million connection we’re the into more can similarly significant operations enthusiastic Penn foot we when Two do enthusiastic couldn't square we very odd and and accomplish about about packages a Penn amenity One this. where to four

Vikram Malhotra

high the sort it just how when - just we to about of give year think details to And project, project this? we should six picture big just a you’ll so next clarify - over think should and as two months us one about level to of sort this three potentially

Steven Roth

we're bids of information the completing taking Yes, and available. the teams course as it’s the that soon as have cost a process year we of project we design with, are in the comfortable will that our group make and couple estimates and of drawings

Operator

question Feldman from next our America/Merrill Lynch. of comes And from Bank Jamie

open. Your line is

Jamie Feldman

Station to Two and know, you there clarity you to you are I with whether be what guess thinking How if place for about Plaza we some long sticking and a needs should it’s leases know there? about or think what happens there kind with up leases Penn plans you until with or Penn expiring in any some be Penn Gateway can redevelopment. get come you thinking

Steven Roth

huge Step and talk about Two of that is, first bearing to step Penn one. or lot no has Two is enormously of sits think which we our Jamie point with the top premature and Penn for our station alternatives right a long-term Penn a project, different they Two so two in Penn come plans there's on Plaza Gateway which project the is district the project but going incredibly that they’re way is train the whatsoever is actually whichever a that planning now, so important but that out exciting. stuff very

Jamie Feldman

the back And portfolio. XXXX, said no in then comments in additional on leasing you the I guess I retail think to outlook you Joe's assume for

probably opposed So done outcome you - you there from to the renewals? to which leasing get a is more I if like what's know leasing some were like no reasonable additional mean drag handicap some just as a

Joseph Macnow

mean but incurred. there haven't we is is typically I not dollars of in only that a multimillion credit non-leasing and Which the built loss

end we’re X up could what is So telling million. it low XX XXX, is XXX go million, you

Operator

And Lewis SunTrust. our with next Michael question from comes

is open. line Your

Michael Lewis

to be to help is they’re about went everything? on your I to - the of going think end you for South, million. the XXX that about sellout I'm make budget just still slow you It I $XXX up at those it's if I’m Joe detail some know after billion. gave still and the $X.X looks Central maybe they’re sure comments this. how like want clear Could bridge still assume the with on that safe taxes numbers and you Park project million don't

Joseph Macnow

The but go the and did in go the the - up the go reduction TRS and tax budget so rate producer so went revenues the a up budget revenues project up down. did of

job numbers? know hold. into the the job By So along the pretty way very is so think that profit well have good job probably estimates made to - sold continue we originally the the visibility you and we built, is XX% that are the net-net were we XX%, far

Michael Lewis

My was asked I of how quarter there every Fifth, quarter you question, a know change you this kind that. XXX get about second categorize

create plans material is know I know you were that I there's value So give you and office if guess you interest or you you wondering like the presented was now you it sounds is component don't your in this office. equity the think really of as the think think that just maybe a where this future case - back? value

Steven Roth

that small the to saying picked and property we basically so market just okay a just one. was were in response That step First which that a Fifth call mean on where that the said be Avenue, two fact, a press I that's there and were and sellers. expect that is ago of sellers relatively it’s that may parts we said that situation is remarks that call in and lots back. of complicated financials to we this our XXX at the moving the is, question two of have or I end two true we I is in get my no we rare with or news instance as new formalized the a all investment ago up Step published,

Operator

from Our Financial. Bilerman next from Michael Citi question comes

line Your is open.

Michael Bilerman

you great defense either for shape It's I’m being in about Korchman. here a opening talked comments Emmy in opportunity. Michael Bilerman, or with your Steve

the spending you of selling and being opportunity So this should a assets advantage see as assets and looking or accelerate defense or more of of billion what in stakes are whether because what start to know you environment? at cash forward take you some $X

Steven Roth

we we a see we that every sweet has our believe Michael, is what spot which to pull any relation me deal if would saw deal trigger. the that goes down cancelled, and

I gauge So order the a one that to things how is pencil. cycle of is in use the going

a prices - offered at buyer of we not just today the are assets So assets okay.

would we our rather So keep dry. powder

in So I mean where there very, at everything very, disciplined - that's are very we and investing. we is are look we

Michael Bilerman

Emmanuel follow-up well. And a as has

Steven Roth

We the always be expect to is. them more opportunities in as future there

Emmanuel Korchman

Joe Maybe for or David. question a

or about on would in we versus stresses do come you up to expect spoke spoke offset that NOI. You previous should in retail will calls? the that bucket about there move-outs if Is office the anything contractual we and why

Joseph Macnow

We have the I'm the normal call have the turnover sorry well normal Jamie turnover, know portfolio. Michael, you we in office

move-outs. So we have do expect of we’re a couple going to

of outs. is in is be part latter out to at We Chicago. normal and also Publicis ins but tenant mentioned the which it’s year, towards Publicis Penn also a moving the One this I going

Operator

Steve our ISI. from next question from And Evercore Sakwa comes

open. is line Your

Steve Sakwa

in just identified comments quarters know $X talked or sold billion I be of companies. public assets? the different some past one of you of in have $X referenced about I'm this ago is your assets that two billion of stakes Steve to at same in you billion another including and bucket least curious, is the assets the or a you of you billion this

Steven Roth

this that quarter love - it’s there. last I same billion I think was think but and Michael it’s the it second we I’d not that get to referenced

up in hang on, So clean way a of this okay. - is

said So years way those couple to in of this that of this a I liquidate is and as clean assets. - so will take is a up

my I we cash that for So XXX South said at in augment as our Central Park as definitely. expect also closings to in remarks year addition, balances the XXXX, in begin

Steve Sakwa

advantage to XXs to opportunities you you do here in way And stock your deploy you or? down about do share price don't deals on of just at in a as I to I mean guess I NAV Michael's take and follow-up of the marketplace. offense we how guess sort question and way How a XX. about like the of repurchases think play of how as maybe sort kind know the mid kind stock with capital

Steven Roth

look We very the look time, a it management the good every look it meeting. that's at we We at level. Steve at at all question. buybacks at board

to our relatively - it fairly would, a buyback number be number. now require reducing a would a So significant basically accretive by by sheet NAV it balance would but smallish

take So or for number share gone of little $X or to know and of accretion is is example, a a you $XXX $X say that you which bit. NAV if an we billion did a a a buyback give cash get million a the

we'd by a marginal currently keep billion Increase of that board amount than rather increase amount. believes marginal that though. So that it our powder our dry $X very basically keep a NAV

they’re So we know have on not they do they’re are on – although one meeting. buyback buybacks table in every that's to off how table we fact at the the step done

The second buyback bankers this like that for a and evidence actually with billion other $X a thing a is example that stock buyback experts, discussed our and there real no smallish be we is increases for us smallish price. would

the to the right now may in future. we not is are So the in that that buyback although we answer business

Operator

And Chao from our Bank. next question Deutsche with Vincent comes

open. is Your line

Vincent Chao

return capital on for out on ones expectations just Maybe and quarter. us maybe you that deployment in remind some the sticking pipeline push of the here, current the were with sort where is thinking just developments progress your new this the specifically could

Steven Roth

tail-end… the returns development and sorry was I'm again, you on pipeline the that say Vincent, could what

Vincent Chao

quarter? Just we’re the that added pipeline in news particular the to this

Cathy Creswell

You could broke you? again up

Steven Roth

a expectations? across publish So Joe why burn way don’t you

Joseph Macnow

We have not.

Steven Roth

a always expectations subject are very side. as development, been do that the but beginning We almost side publish project a the the we And confidence much. exceed income - of side. we income have lesser on too in to a has numbers So cost expectation history the moving do the in our return because the our of policy not in around strong

it answer we like the we when we publish visibility into the published numbers and So is that the don't get numbers. that speculative

Vincent Chao

as just facing terms for you of different as the some well in a question here alluded higher new maybe increase XX cap in that is to the the point rate the And at risk challenges NAV more do retail think you cap basis portfolio about to I think as I the the today. going rate you think guess that this or there assumption, point? lower market

Steven Roth

it And for is mean number to That's are stay think reflect telling cap that we the business that's market. raise we the the absolutely we believe to I thought truth we too go rate speculation. was number it could I for in appropriate could retail right what or think up it down speculative me. go a could that that’s same today the that and

Operator

And our Guinee next question Stifel. comes from John from

open. line Your is

John Guinee

FFO year-over-year what First understanding your think four quarter that. Joe are XXXX fourth your you I you FFO I your run at in it you as as was times or number? about you is basis at then are talk looking mentioned And $X.XX what a looking had correct could flat rate

Joseph Macnow

say that to quarter give share. than John going We we all did adjusted a $X.XX we flattish but we not more did - give give our annual we’re FFO for comparability flattish. did fourth a said

John Guinee

off for… of X.XX flattish So

Joseph Macnow

Yes.

John Guinee

So we the at should in look X.XX FFO essentially range? XXXX

Joseph Macnow

Flattish.

John Guinee

than over unusual think highly That an year. looking Second of roll is GAAP. David to accurate which your a your Greenbaum, full course haven’t have cash I Page space be $XX Is your I are to GAAP that higher I'm cash way generation down on it? rents implies don’t about XX rent why notice $XX and second before this know relet are and the the year rents at

David Greenbaum

- scrambling to offline. and back answer what prefer is answer and get that an we're is find let them give you to the our team page I do John, scrambling contemplate to you

Operator

Nick from UBS. question comes next from Our Yulico

is open. line Your

Nick Yulico

specifically portfolio rents X.XX% are back is going Just assumption that guess give of street cap you rate portfolio rents where in-place a versus to for could us your the reflective going at back to where are market today retail feel of I market?

Steven Roth

don't and a one. by or to rate answer be below some with is, the some so net it the Number above apply precise market way are income it’s below numbers. not sure are NAV the some question there many stream. market rate that in are that city. - I first The a the in current above The there pluses rate cap the large the rents, two quarter to mean market, your number I’m It number by There doesn’t applied the some the new is leases far leases largest there what doesn’t would for market NAVs are are that portfolio the are cap the or are I - is income is rent. cap minuses apply

Nick Yulico

is I for if portfolio was that wondering where rate rents be at would just reflective of where cap guess know I values market? are you

Steven Roth

so. think Yes, I

Nick Yulico

is question and anything on just us what XXXX second about your Just new G&A? there for could talk last gives reduce you call see detail you Could you some year I where you was this would analysis on on G&A, how re-concentrating G&A that might reducing assume efforts topic. on provide that said maybe thinking and this on G&A some you didn’t about

Steven Roth

a accounting processes. about talk different because moment G&A has let’s just Nick it’s company each a for complicated analysis

there year G&A in is So transitional et of cetera. the in quarter $XX is in agreement income but million and a spins services the million fees line our a company for two the that the other $X from comes expense

push number that what really sister our company has you. line that one look the of should look into the and time published G&A by $XX million a they one operating is G&A the you G&A them them Step of step reduce all of lots one. at you when have million so So has and or that our $XX another we of of at two it capitalized

of on will the other. out very take get are we zero right that. make hopefully we similar companies to you are altogether, businesses when budgeting push are that going G&A. top based on in all some G&A in And that Notwithstanding much major each returns our the of a So that of pretty

Operator

comes from Sandler question next from Our O'Neill. Alexander Goldfarb

open. is line Your

Alexander Goldfarb

Two questions.

replacing think of basis that billion the of which to yield dispositions is about like t NAV for to you FFO it’s first you've the on the do growth XX% is it’s if on assets earnings How you So from public outline XX% if stuff a you that of left that tangible know we a one assume that the way X% done million. stock folks like those tangible for see in perspective? company the a sort versus earnings X%

Steven Roth

the to bit and number five is are is a The five or we yield is our Number really the the even to way two below number that we and retain have that focusing and dollars assets by the the we low close after maybe one. efforts yield. no little on that. the project reinvest is then the capital billion second trick And is taxes so that

which have expectations. reinvest is the capital assets core which to higher So that idea return are and into

Alexander Goldfarb

coming the what CFO? with that want at you're just CEO this there is the you there CFO before out to hear to and - then point a up on And your certain things is do talk would new before something CFO succession you. a obviously for question is looking achieve or year to the who second as is coming Are search on we perennial almost is on the out replace your view figure

Steven Roth

each I are which has those which I - think thoughts mean cogent validity. all have of

to of of back the first nine half back back So nine. I’m may be the going I not I’m clearly forever all and go the even clearly on on

So I with if to be by respect to a or succession were we our in truck me, on focuses meeting Board whatever. every that place have hit plan a

in pretty marketplace we think reception to a and great to than is that CFO a that’s that's very good a is news said great actually me had the what respect no is I be about you me. just about this really still done a there search the know so there fair With and opportunity. job that amount And people enough other interesting have

we’ve very very one some Interestingly and probably learned the capable is capable nice number in Joe is too. have a of little a people. Macnow old lot people he enough very candidate nice that and So search the we've here warrior seen we this over bit our hill accept

in staff than not and have news other that operation priority great any have what we in in that I don't we premise other report a on said. because involved it's our there to Joe a and both is things So

Operator

Our Street next Reagan question Green from comes from Jed Advisors.

Your is line open.

Jed Reagan

last flattish you would this year Joe be cash year, NOI portfolio versus expect I heard I think is growth also same-store say that you that accurate?

Joseph Macnow

did I'm you sorry portfolio Jed the cash of say?

Jed Reagan

heard versus NOI growth was right XXXX when I same-store flattish cash Yes, to that XXXX be that?

Joseph Macnow

down when you Yes, that flattish. taken retail going

Jed Reagan

And just on a clarification of to terms not XXX follow-up on the a earlier asset question Fifth office deciding to longer-term. in condominium hold

Just time what that curious a and you're for about of exiting looking at why potentially there? decision made kind position talk if you can your you little horizon

Steven Roth

exit that then is stick and it the as we the and is The rather decision out, pretty basically asset-by-asset such that complicated simple that. believe we the much returns would structure as time

Jed Reagan

Is a two XX or of type horizon years or? month that

Steven Roth

the predict the can’t is I can't outcome. like eventual would have what predict we timing to I

Jed Reagan

for you of City. I then time guess you as been just And on the more helpful. looking moment in to do all can a mean now time gap those see trading York that this discount that’s you some here kind stocks market about Are for change the so I at strategy it the respond I obviously at discounts? talk course recently. closing pretty significant a bearish New if at NAV with may your and Got bit NAV little a increased one the discount

Steven Roth

it. $XX question a isn’t That’s

other but that the segment box industry segments that the last in discount situation. – our also in is our not So observation the alone in first that over we industry have same the companies number all is are penalty the thing and

And are so or there a above. selling segments NAV that at few industry are

Our office retail. is not neither one of is them

so first that's Jed. observation Okay, the

to observation you in to look and we back The have earth back if shareholder far and value. that close not is second heaven moved that recognize discount and that history

We of have billion sold $X assets. over

total we Edge, so of JBG $XX Urban spun transactions in a spun have we of billion that. have Smith, simplified, have We

unhappiness course And affected we has has main heroic and it else so okay. more great job we that with anybody think a we have yet done acknowledge than done performance, admit and and not

be getting number I table. value day-to-day we're table to the said that think said ideas we having in gap closing the shares have it lots priority or everything that resourceful, as is continues all reflect our years the we our be So business. ago running of will the fair on And on of to some one and

Operator

Our next Financial. Citi question comes Bilerman from from Michael

Your open. line is

Michael Bilerman

a quick follow-ups. had of Just couple

appropriate that. terms relation two I think you have said minuses. the to in NAV recognize to and the Just in the so I it’s recognizing Steve that of pluses don't you guess things

first just XQ you about annualize in full X.X% would are be XXXX today NOI $X The year almost probably share higher places a the guys is, its calculation in thinking and in using where using almost which NAV. another

then you is you have leases, XX commence, disclosure. trailing second previous the the guess give pluses of going the so think been using And in in the in So do details I has we part terms about versus that at some signed from is that of removing schedule spot. how a what how can our mindset historical least signed to

Steven Roth

we investors NAV a their very very, is analyst precise our in do. the do, everybody do, calculation, does of NAV and you version own do,

very put we conservative it's have is which do a we that. out that very, we So NAV and believe important we think

trailing offsetting actual number. forward a not We're a is using which are We commenced making any that. yet. not the We're not number number and not income projections as

and vacancies taking in from income happens We move-out they what reductions have of any you. not are

a don't for With some thinking the other where the fee use market NAVs deal have that things in running it. So we're we time a spent we happy to of are, basically with assets. participants most respect about management great

a we little so thought in. it quirky that So was we put

X So the we we up go. stock care we’re share what if it. X,XXX is By another seem the right to is the could, NAV okay. get anyway. not surely think unhappy the But to with or now we the way of road to conservative We road think wanted X doesn’t the NAV as or

Michael Bilerman

I separate okay, but current signed didn't a trailing place question, about that’s in versus how number. was No whether thought a know it you

it so didn't I point? You course discussion a over of leasing growth lot that place just whether lot a a and was took year the had of the of of obviously as know

Steven Roth

ended a true, just our in up of right road but just and way to me the basically that's speculating without okay, it the what all hard put go. docs found using think number which just be the Michael saying, both. intellectually Michael was them leave would as we we out barren plusses we we’re trailing and that actual taking that let map, a is - okay so minuses

Michael Bilerman

signed just about at the this side incremental the And million the I lot that was on to that this leases understand retail the you quarter prior end am annualized talked NOI, NOI that to office X.XX, the I Page about of X.XX had the on put schedule interested bottom want X.XX aside. fourth the a business, flattish, $XX was for on still but the in year actually you come then of XXXX, in Joe more come. had stuff you’re of X back

I business flattish? so would And why office don’t effectively the be

Joseph Macnow

the First know, give we of guidance. all you Edge, give as we around starting don't statistics okay, but some we are guidance to link don't

office the business expect to to year perform We grow. next well and

together of retail think take the interest you the line, and when operating part so to going be put with businesses up conclusion end to two other we decline When we're that or have the flattish. our give you we year. next the expect go will business okay decent numbers those slightly, below things We

we're word that's write that are. what's - that we Now we when to to coined word had have get - copy the you flattish and a so is right, going where we word

perform well, where New we decline We well. perform to expect the little to and very we office retail a business The are. York bit business will that's expect

Michael Bilerman

expense debt, would timing, appreciate G&A, development would flattish comment and spend, not bottom sense you NOI, And then development all I you My know interest go answer, terms of line a give it’s capital just you think timing, disposition, in the be it's I and number. the equity, topline markets basically, number more guess bottom line way then or us components gave a of - all you two question? we the acquisitions, a activities,

Steven Roth

you. Thank

to do. got a lot work of You

Operator

question our go from Feldman comes from And Please ahead. Jamie of next America/Merrill Bank Lynch.

Jamie Feldman

for a Just follow-up David.

and a quarter. about the Street I and first just is more kind about just talked is the had think sense area, types pipeline, Can square of give leasing XXX,XXX it said got you think XXX,XXX XXth tenants? Midtown it XXX, more the more You done feet of talk you in that you of said the composition and I to

David Greenbaum

XXXX The fire the as of that of all with wide we're the see dispersion come to a mix we sector continuing tenant back. just having had throughout

the pipeline. for reality dispersed, the terms where institutions feet either for we've XX,XXX high actually the signed example players the And is lease XXX square weeks in what portfolio about of the we’re stages even feet. are fire seeing we're the it’s of the the on space balance you is proposals office of into discussion. New case pipelines TAMI seeing about over basically of each all the I couple the last that have square is West over we're of in that line York in tenants, about activity two been new received square or some So which feet that all XXX,XXX medical in in know Jamie is said a the build tenants Street, XXnd terms the talked we space the which in for expanding being negotiation, early lease of space XXX,XXX in And the we’re

everywhere types. Jamie again terms and really activity spectrum broad of in seeing we're So tenant the portfolio in

Jamie Feldman

to you the earnings expense volatility And will And about XXXX the can XXXX. in higher in sensitivity what what then rates just then XXXX? back look to Joe say repeat did expense interest or like just on comment, interest you and just

Joseph Macnow

I million been XX think our next of and what we've gave model. at our built conservative LIBOR took when that over year I into that's pretty that X% in estimate you end the

Operator

I time. like at would to this it final remarks. further no host have for questions We to turn over the back

Steven Roth

much. everybody very Thanks

May Our scheduled O'clock call first on is X. XXXX Tuesday, XX for quarter

will Have good everybody Thank day. you. We there. see a

Operator

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

may You now disconnect.

Vornado Realty Trust (VNO) 13 Feb 182017 Q4 Earnings call transcript