VNO - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Vornado Realty Trust First Quarter 2018 Earnings Call. My name is Adrianne and I'll be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen-only mode. Speakers will address your questions at the end of the presentation during the question-and-answer session. turn over now Ms. I'll Instructions] the to call [Operator Investor Cathy of Creswell, Director Relations. go Please ahead.

Cathy Creswell

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

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

Steven Roth

everyone. morning, Good Cathy. you, Thank

quarter, financial first leading industry very strong. results Our were

since Vornado’s fact, many all business as $X.XX by York year’s prior share first a of for outperforming adjusted first compared was and in by X.X% brethren share a $X.XX definitively reported, to FFO share of New quarter that have results increase. first best our increase. were $X.XX margin. already per was year’s with On per the basis, say with per for to FFO with $X.XX cash metrics the the In share financial as quarter X.X% quarter adjusted town compared our prior even I can at wide farther greater per

up This NOI quarter's first XXX NOI basis increases same-store of was Cash whereas million, cash quarter follows. X.X% XXXX. from the basis

X.X% retail of up mark office essentially up XX.X up to XX.X%. X.X%, Street segment with York and flat the X.X% California XXX New and

retail that well see office. fact, -- continues perform the while business Street York. down Our New on very Wall in soft. we just to know I office is continues to We don’t see

in We experiencing submarkets. robust of matter our all demand all industries are of from

year up Our Notwithstanding financial to this cash. still be about performance, we York. are growing the superior gap our aggressive, positive quarter and expect optimistic, tenants nicely flat although keyed New

our reaffirm NOI below cash guidance previous also We million. $XXX that will not go retail

perform JBG of with Urban a Properties Properties. spin-offs performance We better Smith companies These are basis. the pleased Edge and standalone will our on

command of are over which a today. recent price asset $X billion We pleased sold with also likely if sales, lower our would

quality in fairly continue sales demand Overall, Manhattan strong. and the at highest pricing with to although investment domestic of retail seen all markets quality for continues particularly investment sector The sales and Pricing sales smartly Debt prime a well scanned markets assets product and strong on assets. investor is still are leased is remain strong capital. clearly New understandable to be picked market. the assets we between except for foreign market turning not in activity up well wide to office and everything have level. to South trade open. up is investor offer Investor pools asset York There lack as interest due pricing Now as bidding the skittishness. and for balanced both has liquid West

Although rates remain are up, coupons tight, keeping levels. in all attractive spreads at

$X We reasonable have and fortress sheet staggered billion well liquid balance highly debt a liquidity, leverage maturities. with of

Dave. to Now

David Greenbaum

everyone. Steve, Good morning you. thank

continue and York a by the growth services during transactions broad economy. performance cash. the York reflection substantially diversity expansion of feet The it quarter XXXX GAAP of year At positive. X.X% in XX,XXX which for a to XXXX of But mark-to-markets tenants total a sectors the and appear sunny our still by the The square continued office very XXX,XXX adding $XX.XX XX two block activity amenities health on the only jobs company Broadway our at The in X.X% a of GAAP portfolio renewal that the New was Google XX.X% for a Labor a year, portfolio. J.P. efforts, were X,XXX of with the New at multiples sector of our these year. to X.X%. a remain square complex the was unmatched in feet, of to apparel office million be and New services our our XX,XXX by of X.X of XX,XXX continues and XX% of lease The Park, X.X office balance was growth which New a our The expansion stunning strength employment some been warm for X,XXX foot combined where currently feet, growth. trends positive at XX% feet even square old in positive York. multiple very of spring office you quarter can focus by of square in square starting if in the average absorption has transportation. exclude XX.X% square of the space continues of XXX in for as we revised of strong and cash. looks York single tenants available on and square rents is the square portfolio our of Penn Kmart a spot sector largest Finally, our Employment for XXX announcements a business rates very feet quarter's as larger sweet quarter, The XX,XXX XXX,XXX turned day Manhattan concentrated of will the remain a office advancing to Bureau our reflect XXXX rent midsized the basis now healthy exploration XX.X% for office and million in first now over healthcare occupancy, feet solid exploration Two, is strong GAAP Even of and the the lease significantly serving along another most remaining foot. good Statistics, York The feet, tenants per access in XXX,XXX mark-to-markets leasing represent jobs, vacancy our The positive and city square of on positive was fire diverse XX.X% square offered be buildings square by redevelopment Of all One lease the New single with overall is financial $XX.XX. market aggressively of Broadway, Street. Manhattan best-in-class two number own feet was was be Turing release Morgan to brining Job XX,XXX upward The XXX leases a better. a the full. to commence renewal that of the into cylinders One engines for within Company quarter Penn West tenant to cash. we later Same-store Park, XXXX our at this to XXX XXrd tech feet. XX,XXX portfolio jobs important expansion XX.X% technology. overall quarter. engines, financial down

million feet an very feet additional X.X over negotiation in Our leasing square machine and and remains XXX,XXX the leases active of with pipeline. square active

On the very have front, busy. we development been

We XXnd complete quarter, will will building effort High Line. The as soon advance. we deliver In West the sublease also Ninth along Aetna great. its XX Street XXX looks the second

across see we You robust and go triple-digit have it at floors rents. interest all leasing should

the We in being escalators and Moynihan is space And is rent. advanced expect installation Broadway quarter to of and lease complete skylights. in are our a again the dramatic which monumental fourth two office includes new we for working at work XXX on Train where Farley made progress on Building course, a boutique the SOHO development new on the of at the extraordinary there Hall, of the all triple-digit building

will be include by which private We Train square and feet rentable feet moving forward the rentable are XXX,XXX with delivered office development of XXX,XXX work, retail, space Hall also -- all to a XXX of XXXX. square

seeing science space in We have Many of are are interest our and major great in of the is read part Street Wall sciences companies directed Office if industry. another effort Journal, the in Suburban you Park. the leasing this life at at pharmaceutical may life New headquartered Jersey

Boston are for thinking expanded compete Station, and Northeast employees, Manhattan also accessible from directly do post-millennial be and companies the expanding to Washington and how they Amtrak the directly where on better about Penn Cambridge. these think hard to and top millennial corridor about which of As will to that to and in

confident side. the the sciences on that industry We’re west future life in is New of the York

dovetails state programs tuned. this leasing industry, life city with also effort Our stay and grow science to

corner quarter X.X% the X.X% retailers Times on market and now business with but Penn visibility Street, choosing Those overall now have block is witnessed at our for our west and half to relocating of of along relocate street best-in-class moves accrued Plaza. Square from in me our XXXX where that turn submarkets Macy's retailers Street retail Let greatest briefly remains the Penn and to Broadway number portfolio, build Forever greatest down Sephora performance the successful a the strategically the retail which and weak, a of GAAP Time was highest a our Avenue cash. stores. includes same-store The basis and Square Station. XX to are XX, interest both for generate The on benefit new to and across relatively footfall continue Levi’s and Seventh and up and

totaling feet, in were XX,XXX retail signed we Penn square quarter, leases all the the which of Plaza seven district. For

with foot and lease, relative in lease negative H&M GAAP mark-to-market the While cash. XX.X% retail as the we square resulted in space that rents former XX,XXX for the business Forever XX our reduction XX.X% expected we’re of to pleased in

portfolio, GAAP our Penn the thanks rent of XXX,XXX in now to the Chicago, Again, Plaza cash. take year if signed our you retail XX.X% square with resilience growth We've XX.X%. However, Forever that for At five shows eliminated maintaining remaining transformation our an XX as to isolate literally foot tech positive This produced theMART leases expansion unmatched proceeds tenant, a million all X.X feet. lease district. occupancy lease retail mark-to-market the of growth square asset were as XX,XXX a traffic. to the the square full those leases district Penn well term, us with the the foot X.X% our advantage and in out, of at of foot site. Plaza which rent development positioning as occupies is options We this at lease just now

GAAP former cash. block of and Publicis below XXX,XXX XX% a market growth market. on Same-store bring space our of was average this GAAP X.X% of this activity at continue to XX% quarter, were leasing should theMART summer, XX.X% positive, feet total $XX.XX, at is a growth expires we the the XXX,XXX foot later which mark-to-markets that well rents cash. as and starting For And square square strong

the building. Finally, Montgomery XXX historic Street, leasing completed feet adjacent up first California square the turning lease and the activity of finalized we XX,XXX to redeveloped in of quarter XXX

San foot a store, redevelopment is at old entire cube, of iconic BoA the Banking lease XX,XXX a are the underway trading corner. Francisco this iconic building paper and square we Hall triple-net Next on the for

cash. was XX.X% the X.X our quarter, complex and three XX.X% square for growth GAAP same-store million building the For foot

Let the to full. economy with and grow its continues just conclude for York me space. We demand by office New remain saying,

submarket. We pipeline, robust have development which and all perfect a redevelopment in the of is

me Steve. to Let the call turn back

Steven Roth

Thank you, David.

are to take happy We questions.

Operator

Bilerman now from session. We'll question next Michael go you. Please Our the Citi. Thank is begin [Operator Instructions] ahead. from question-and-answer

Michael Bilerman

being talk capital people developed, talk you potential of your promise that the of realty How of markets of the I if you a later, within overtime Penn develop wondering see but the a backdrop the and from challenged to land noted redevelopment your relative and could Steve, lot fund a public market hasn’t as to Plaza, perspective against in that was development public. you grown to invest public the from about comments more and to churns Vornado? want about redevelopment, has private perspective able been do sort in the

Steven Roth

rewarded So, in has Vornado all, early investment for first of its and been Penn enormously. contrary Plaza

the assets millions for say number, hours what about most Penn in can Plaza foot, $XXX foot, sell enormous when would $XXX know times about feet today, XXX millions the is a and am a thing. all the all is Our first value of basis you of buildings that the foot multiplication, footage pick don't a and creation. talking I That's I and square a do an

of after before. Plaza its it's tenant and right for timing demand going years Penn submarket right ago that was is change of the town. the right The not day going cheapest I is Penn but for was right and to It's now And yesterday, really it' Plaza monumentally, and the different That's mean, second rent that always today. the for change lots by to not tenant plaza in had now. demand, Penn ways, day been growth,

will to that a Plaza, Penn million believe We one spend on drive already which we announced. already $XX have we've plans up have foot. market announced rents XXX We

five $XX that's -- it Plaza a over now years X.X $XX square look a the million of value. $XX you turnover X.X the is just at David foot take if million to One, in foot a so and foot million roughly $XX Penn overtime, one So math or kind Penn million building leases the but as you can calls cycle

okay. capital million Two invest Plan different no $XXX is easily a handle that the very, investment On of to going and Let net raise, no can go to the Vornado a On a but accomplish building the Penn, Obviously shares, value, increase dilution we’re $X have $XXX to the we transformation at that's $XXX in an no increment. with share it like selling no partners. various plans, very looks B. million

that about a talk for let’s Now second.

you I talking could the am now think characterize, I underground Penn about now. Station,

the the obviously. on over underground not but ground are We

Penn is That's probably the Joe, So, good too word, reviled? about. what’s tough, the underground of -- Station you told

Okay.

transportation Penn the one of in most that is the North hub So, is probably the and for of infrastructure, pieces America. something disrespected Station important busiest most

that you proud view something of it's are not point of, the -- is operational okay, aesthetic from point okay. and So proud view community that but of what have something not we of,

related together signed So as got XX at years ago you all might remember, Garden Madison actually we agreement. the companies and Vornado, Square

was So this reality. dream, was potential not a a this a reality,

Madison transformation a a move wouldn't responsibility. -- with daylight top and the have in be building the would which for the Farley Building of allow allow been every Station which it the to of that Square remove total was that station -- Garden of government's total Penn that would for transformation way So on the

became be it sector, to not obvious -- get able act was plan was to that that to get together going it not in when that Now, their or dissolved. years plan going we pretty public do invested a

fair okay. the When and on were of proposal not the we the while community community, remorse into, wouldn’t were Building landmark things astonishing, lots entire and of it other New plan, small Farley cetera Times of on Now subject amount penny, working was the part the it amount go was happen, is of of government that et that a we of I a building, was very might all say landmark officials, York necessarily criticism, that a okay. were the even which withdrawn was the

good. and significant which buildings. ambitious of of X interested et Train has I Two the increment is estate on billions to very is Now today, government to which okay. real station, money, at some I Two, very feasible to it’s fast-forward Garden, amount a down enormous the Vornado reasons was be Penn pirate and although not that ready that that financing to the tick created, scheme, cetera my a are it the It to incremental in forward because this feet would Madison imagine allowed the an build you're appear said a substantial Penn the maybe if, have which square is a could assume letter would that even of large unlike things public or and does given undertaking of that daylight was and down That trapped different a a we transform to we looks for basically, rights taxes, as Square have one and is you very as which of million station the of massive it. of willing involve would plan two plan one dollars going air granted Plaza Penn help a initiated needed to -- raise lots tick things that of It now taxes, we are top build go in, needed do fairly

case forward, the Plan it, building, foot going go glass, to So B on land go to taking cetera. new are et X.X which is Plan quickly that skin B. if floor ceiling which if putting is basically Penn will square Two, to and to that’s allow skinning for is not million a a going we

many entirely lobbies, systems, arrival, feet, new David? mechanical New et new plus how cetera, adding

David Greenbaum

of part Better square feet. XXX,XXX

Steven Roth

sort that much than feet doughnut adding building, of even they of ability to a certainly will better the or And well returns balance Plus today encompassed plans involve we we're no we're -- go it for the about. to of proposal bustle, modest That the -- it's lower a like sum that that going -- more within the investors, okay. finance, which cetera. talked in is that the the would announced going a just I part That Vornado a had our XXX,XXX of haven’t quickly. are floors to to square we spend on et yet dilution, off totally but with, no it sheet go to capital money and of

of I more a also that that guess, a so start couple will years, And finish plan will of in a years. be and in couple

Michael Bilerman

you. Great. Thank

Steven Roth

a actually Hang on. heavy on we Obviously, that's yet. done not implemented leasehold basically create long-term and creative believe yet, -- developers believe but done Building okay. will the feet and in a train apologize, office pursuit, that Plan after bought I’m what I I'm the we XXX,XXX designated not under XXX,XXX best be the will and square square but XXX,XXX of in odd we now I plus construction, space their feet, we odd retail. town long a

across I wrote about Plaza, Penn Going excited on was think it. thinking other and the I numerous so what we had sites, about very Street, our we're

results, impossible I development think and and Penn by Hotel returns to Now, relation project. One to and it that the the a Two, there Penn in development -- pretty is the rest decent that's the it’s not Pennsylvania mean down spending tear extremely way but we and big the if modest go going is of is the I --

impossible know And company not well, make developing. markets an it's we split that a we I also income into might and about like impossible premature. not might don't very that what that, public company. development see, it's So don't the it's just something that up do

I one about out answer thing apologize me a prepared Let is than remarks to and This that. our be development. say for turning longer

over Smith. children the Urban of that of we couple last two JBG the proud Edge and very born we're So, years,

because knows turnout now. I that's how is situation. Smith the one attracting amount for Nobody to man, good except JBG those attention recently of over guess that's it's going interesting fair a the how Now HQX

this exciting best a times, and markets it that I've HQX the it their leading certainly in the public and rights investment. million doing size Smith inside already to, development contender the The JBG square best highlighting is on has investing is couple HQX key the of that's that thing for validation. for their is development one scale, Now about and it thing feet paintwork because has the the quality land XX real-estate I that opportunities of that think said inside is of public the the

through XX located perfectly to going know square of build we going the feet amenity company did development that at JBG So brokerage product, we Smith sort And and Station, they Penn of one is are when million backward rich this designed perfectly day, learn old brand-new, we that there what's the trumps every on down Michael. as product going so thing new pattern.

Operator

comes Bank ahead. question Feldman go next America. from the Jamie of And Please from

Jamie Feldman

I with talks Chairman's guess a of of questions here a of with about Joe fund And regarding more lot which speaking the Vornado's kind retail you starts but entity. a the seeding your could I answer, potentially on funds on into highly that then get assets. separate We after X sought core know two touched provide letter. on ideas? thoughts maybe you separate that should color in you last those footnote

Steven Roth

opinion So a with complaining the office at selling and know are very CEO the that is I all that that it. is the obvious, let's about Everybody I to it. Every start is our room NAV. the of talked about of companies brethren complaining substantial discount

about complaining are is Everybody it. complaining shareholders Our about it.

comment my to my that. in about letter I thoughts tried Now about

So I with out this let's REIT just is second. is, about a model think for that what started the

share have assets. like from Well, $X equity, industry, that's and a the and to market something of commercial years. big XX% that it probably an and years trillion years we in REIT properties that owe that's and So but to industry of market for XX% has of only trillion enormous a Kimco's years share IPO and very that the it could dollars has model, and a has grown grown growth today not

is, office hotels the own that non-REIT shopping building, commercial So of that is etcetera in investors obvious centers, them format. real-estate XX% to a own one

very point, a starting that's okay. So interesting

right it's okay. stock now to public, at the quite -- that Believe a going discount very right are as doesn’t floods and starting a sure, now me, the cycle recycle large over and are there change that’s feel prices which now time. second and to NAV, The discount going is but but we away, is for point good,

pension on are par LPs to yield. is points asset, the the XX to and shareholders pay happy are $X.XX have they or estate world in XX% of year long the a of funds, or $X.XX XX, willing investors, of a even etcetera, XXX% observation par, the value XXX% or So, of public real investors that pay

and I not happy. talked are So I the side obviously that to management things everybody in else of

we first doing four when thing three it, what others that about guy well or our are or are is in or back businesses, two, one okay. will two -- running one So basically day or find their industry three four stock, --

Now we are I mixing think neither of we that we’re those without But think getting traded later. estate into the only stock been buyback, has have or public maybe we'll real do that assets. I -- mix Company up of been

return, over sold last so had double-digit the so the making sold making out business are because real - numbers business business, XX got medical years, we out of the the that’s Chicago a that’s of theMart best single we mark building extraordinary. the in of the misnomer double-digit a mark probably but estate, best So the out return years we and

Edge. Urban We off also spun

JBG We also spun okay. off Smith,

So doing things, businesses. we are we mixing up our are

opinion, appointed right the softness a or what Now the it's I is the -- tell credit maybe the a yet, is what issue should problem retail you Well success board That that in I a pretty me, that books, is be now. may hurting lot is in you at people lot appointed will hasn’t haven’t say my what Vornado that for obvious I people biggest stock of is take full retail that think and our softness okay. success in okay. believe it's I why can of

think was with stock world-class and we idea that not I much if standalone it and Washington, was we separated of first for suggesting, made second team it out I sort as years ago thought perform strip the we was two is trading we that separated he management our a So Washington a as well it the Joe hung would and company. an retail and better reasons which there the performing down is separated

point same as you, to what will do a don’t tell isolated out we with business. at would an we I trade I the view dying transparency retail. am why So retail from find of

and said value done create So the value, okay, done most thought it, letter, yet are considering at. will are and anyway, be that on we not so I that's the shareholder we in churn we

the to what go seeding will respect through a fund, assets you hands with a obviously I our about, that We’ll a the math they you the see. industry you be what loop the for more say know core fund would core are worth and a Thanks and investment with different comment Now if just for lot of go in today. given than questions.

Jamie Feldman

there's mean, follow-up, And office I quick scale do retail York? of a having just think New you economies in of and together

Steven Roth

on I of economies scale having the we're of same think there's management team it.

Operator

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

Steve Sakwa

questions of asked guess answered. my of Couple were and I But just a couple quick Steve. things,

on know that I Just of getting asset. they completion to Central South, closer kind Park to XXX were

spreads And was help should back kind of rest in the think Now closings coming then could of us spend and then capital start capital the you we to think when your if just and kind the kind touch about maybe in in wondering, are Vornado? little of what just secondly, if I you and XXXX? expectations through maybe the to year on leasing this trends bit for could of over a more of just the retail balance

Steven Roth

are one? a only Steve, I We left, you few apartments how sell can you? have

Steve Sakwa

later. you come Sure. to talk I’ll to

Steven Roth

and -- what a have a right, call The All terrific the and you I'll somebody in have one looks and probably New and in South financially are that Central New is ever none terrific, take numbers -- the in like country. York therefore now XXX apace, Okay, and whole York good. give done it nothing you through. been after to is do it Park aesthetically so best project proceeding

begin will the fourth We end this year. in the of of quarter closings

to releasing thing The are think have We released for that's and pieces. reasons two right we competitive is that information not absolutely do. I the information only

first said I sales excess repeatedly in costs. are -- is have well our of The our that will be

fourth -- other into you So that materials quarter that second the profit build in the XXX What number we is, to we the be. if at well was already. And cash your Steve, the expect from we’re NAV about retails? what we’re projects a look published is into question,

Steve Sakwa

wanted of without obviously getting downside you the this to just some you but maybe thinking sort rollovers of one would How downs positive, get, XX balance had we're of and XXXX rollover this lease. just over like be back were about of say, out or I look marginally closer Yes. They What next here? giving of and should think people year sort roll specifics. sort through you months? that in do the the the I to we quarter, on if maybe lease mean the you maybe just think to how income sort those bottom said

Steven Roth

matters locations that always of There The best world. quality and will Number only a the retail Time the There is be Steve. always will one, thing we this be have in the things, Avenue. is okay. Square, that three a the Fifth

is the that $XXX we The our by second property long-term million third said income And leases we our will show thing that, income high Fifth are below from quality is is protected retail. not our go from that and and that Time projections repeatedly on have cash our Square Avenue our guiding tenants.

the position and that. be people in details that's that to a it, I'm give coming So, there's bottom people see, to going you respect I okay. going With the of not out, to

Operator

from next ahead your Vikram -- Stanley. Morgan from comes go And Malhotra. question Please

Vikram Malhotra

Two quick questions.

retail. one first Just

cash pump the million floor. into next if of should the this did you X Am I lease, correct Sephora, a leasing look understand in is this or expect given year, So million of in year. some Levi's assuming quarter. number I that we We sort next nice X of

Steven Roth

help? Joe,

Joseph Macnow

but to we asking be are it yet. we think I expect about positive, to just not he that XX, guiding is

Vikram Malhotra

Okay, a outlined maybe you you dollars. sales the just and quarters Can there of would and excess non-core assets would ago generate update then timing? that two to maybe on just of start give bunch billion plans and to sort on of you an us non-core look sell, an

Steven Roth

loans that of by security we chosen on half The are public way. Generally not of speaking, The doesn’t assets execute in are public the we securities that of of active those and the is remainder to it okay. public some securities either have markets which include remainder the delays any the about Lexington, that, of time year of on end or -- assets, have protection something the probably all know. such maturity you the at have as which this like next or have or at as NAREIT, tax data we Lexington or year that as such which not whatever, end

are be slower we to going. trade. market half So, in going the not of This a and single those just is it's and

or that we next the come two. So, in expect to over year cash

Operator

And question the ahead. from Daniel Santos O'Neill. Please from Sandler next comes go

Alexander Goldfarb

Alex on It's Dan. actually for

comments earlier. and two are discussed been the success So, there around Penn one, appreciate I or project political certainly, My governor the development mayor. the the questions has that shortage you from side, between on Station noise your of no

own can to doing pretty You've bold for outlined undertaking having much of and more undertake sort to that Or that mayor for without reconcile your the you two of differences your part you options in play their a redevelopment the on governor outlined of with there? plan chairman's How letter those the is talent. everything needs ball?

Steven Roth

As you be on must the business we our to would able function own. to plan expect

-- up we ground ground over -- ground. real-estate the own the own own we above we So,

you, We our Our what or assistance governments execute location. are from the with plans of okay. just no like that the any to don’t have need development plans

However, and view, point a the situation, a do and or since very a very Penn okay. Station are area business there is and improve community potentially could from important is other interesting of play view Penn things we Plaza the political view point unique of that situation

So a my going be while If okay. more it B also handicap Plan Plan had is Plan B, pursue actionable then guess to we A. pursue those, we is I

Alex Goldfarb

letter, doing, what is Morgan the also Park. Okay XXX of your mentioned redevelopment you and JP their in second is the

and You years future west to Company? Manhattan about talking Does how XXX affect at what for for about is tilting tilting the think the reinvestment south. doing you Jamie

Steven Roth

assets multiple all No, children and we Park et Avenue on have children, we cetera have we our love multiple equally.

volumes don’t speaks the tech build like Park bank, do and Avenue Park old did fact work that and think A, stunning Avenue. think I what high was B, Jamie courageous, okay. that for XX And still buildings is they it companies are I

the single just difference on still is The So that a the that we side. example are higher have on substantial have quite most very opportunity thing There side tear important down rents. enormous the the bit is is, there side. affect Park, think substantial at we west doesn’t best is demand what on west we amount think a is Park which XXX and rents at That’s Avenue the bid. and requires or west we the very is than

on and the of markets will York in and -- merging mid-talent submarkets and function, new side with both those what’s going each So enormously. west both I sub-market traditional will both New the mid-talent, those drive think a districts of

Operator

And question from next Nick of Yulico the UBS. comes

Nick Yulico

it was back year Forever the David, gets five go you that, term to attractive thought XX was a Penn when revitalized. that think want Just since area I Station to you said lease. and the

interest term a You longer that is able because you whether wondering go in retailers perception be had that am lease five think I in would roll there continue But lease shorter for to what deals? actually a term years. retailer there as is I to out

David Greenbaum

Nick, their do Forever two want to that who years lease. been and that’s term were them conversation XX, told We in would one we we started to the them, have with for longer reasons. eliminate to a five fact and preference the

we my to XXrd that in which the growth As I block a side. Street, one, that someday the piece through Street continued also remarks; run mentioned on as development several we others, because in piece XX we and continues see and that land another on marketplace; improve, of and District that prepared own two, see potential building

Nick Yulico

I the should the based another of on that get deal, on basis. retailers of following might years your down like lease couple XX%, just And in a was risk size of that the been on that any willing exploration alone early us looks buildings? down that cash be roll could next on roll or schedule to that how you it lease your about think mean we that there on XX% have up

David Greenbaum

space depend by going realistically space to mean it's I in the portfolio.

roll of Just Penn had see came for up the ups. the as were in We the the all you Plaza which balance of ups of the in District number roll roll past, quarter space space in the over some years told see that We coming some downs Penn on the Avenue. Fifth Madison space couple of up Plaza including are in on District, primarily including Avenue. spaces maybe where this portfolio they a we is the that next

not roll roll that of that all that the that a we ups first So time. the the projected vacancies expect, is and below out thing. expect expect the contemplates and first That's that $XXX the outs okay. the expect, we we’ve look, That going go income we downs we for million, of okay. to said move That's period

there is, are example, market for thing in under second of portfolio, our Kmart. just rents The so, take plenty

I of XXX, we happen at XXX,XXX know and a probably, what have you think in feet we foot I left $XX.XX space. So don’t can that Kmart at showed

there So outs. there will roll be will be downs, move

We’re prepared here for is million roll has a the of of business. $X.X is This billion million $X and part business them. $X NOI which or down

we fine. cycle of real that have. in the out. in going confident confident This million estate $XXX also will quality the be we're our We’re is to number Everything and

Operator

the Jed from comes Reagan And Advisors. question Street from next Green

Jed Reagan

business NOI seems kind nicely the something guess, last than growth year on would call, of upbeat changed? and same-store comments just cash I for which mentioned positive, we more put New comment that year should be this a flattish that City And think that? has the to of for past of to to Was provided the -- decelerate you kind over so rest You expect York the this X% if up I how you specifically? about wondering York X% think that quarter, then the so New

Steven Roth

be So you get we respectable. to strive it? Do

Jed Reagan

Not exactly. following you

Steven Roth

chuckled so the earnings earnings okay, That’s which spectacular $X.XX the our over and way you respectable. for because thought was if remarks better described we spectaculars overnight, our are your now that than of in we kind

Jed Reagan

enough. Fair

Steven Roth

have think last that whopping we that a in the word, we for I flattish, described the the took way call.

trying Now, way agreed. our was what thought to think to lot we people an was tell of to expect, investors that were and that do it we I inarticulate and

tried put around, in guidance, we the smartly, not parameters or end So, balance okay? GAAP believe be but we give little to of to up the at be a although GAAP flat, will first blow end we it we're bit expect to by but when improve defining the quarter GAAP. notwithstanding the out we’re year with we and the year of quarter, because the saying, we trying nicely flat had that to nicely up, say the So, I smartly cash don’t

Jed Reagan

applies that And business? York, New Okay. to specifically

Steven Roth

entire out entire -- the the are business, no. which that’s pluses, business one all one of That’s minuses, that there. No,

shape. roll New good continues office to York very in along

Jed Reagan

out retail at outs point? looking any this move your And to XXXX, expecting at

Steven Roth

information don’t at tips right that my have think I No, now. I finger

place, a Fifth to Fifth that in market. portfolio. moves that's We in XXX Avenue, is it's rest we than that have Plaza, over one Penn outs Avenue, out large the move am in and store the at of is small all Arab Plaza answer complex the maximum store. our in which under Penn the the there the I Time In and Penn Fifth than and in believe duties and Avenue one sorry not -- But place, as other are no Square in other small is Plaza move

Jed Reagan

on about I up bit a me. call more think little is would potentially? two how mentioned Can pure and there company splitting early the from into Steve, assets be those your company. that a just development entities? development one up there just about And income elaborate and you you putting between you mean, potentially company on

Steven Roth

public doesn’t like Jed, tell of are you guys I really make architects the but the that the and this can't though, market okay. I you do development, and I'll observations,

not right. but which of right, different of are lots are they For all reasons

nature Plaza, And believe assets. the have nature in land JBG Smith we of a they of development the more because so that's the do Penn that's we to because has have. that do development to that

that perfectly it is with developing objective can of new basically a business quarter-to-quarter, the a located but not saying up is series is building. perfectly end So what to of that I'm designed, be brand measured

So it's basically it's important.

to we do to price have if time Now because like dinged for period development we of sense. a end going development with and a doesn’t markets up that the going public make that's don’t long a intellectuals to are be stock

to have we'll out. that So just figure

close and it's for are next we all at is are that loans, hard something that something are the So the we that of on gap our what I'm counsel steps Vornado. work to saying aware

Operator

question Our the Please go comes John from from Guinee next line of ahead. Stifel.

John Guinee

be cash metric assets, real-estate cash is stock not the down flow differently? very run metric just going you and and intellectually of collection evaluation flow a that going and development, okay. way loves been to Baltimore not a to at anymore, stimulating. business has growth. and This about found one evaluation out never up there all you and would woke How tomorrow your was just be who if NAV was were you By guy Question, it

Steven Roth

don’t that You've I outsmarted with we question. differently. don't know. think it I run would any

run Another business are don’t any the words, media would of we the creation real-estate, through in it think value difficultly. I we and

Operator

next comes Bilerman Michael the of go line from Our from question Citi. Please ahead.

Michael Bilerman

it's Steve, follow-up. a

private strategic out examining? opportunities public-to-public Or REIT this a development a look you of to been of in increasing do on those splitting is a about income capital how at the options assets. there? When back, sort the variety merger does have sector, with or are at these fund given sort options late step privatization out alongside funds call that you think the As that all has sit how retails, which companies of you of of you other seeding your at core the and

Steven Roth

Michael, the have do, blackboard beyond and they are options, -- on we are that. comment course as I of we of course, no the they all consider but

Michael Bilerman

emulating core and a out derive value beyond fund NAV value that And How Vornado create shareholders prices? market the then does fund that going acquiring an guess that value for them ultimately this other on your I assets then that putting at just does shareholders? fund have for than how does into how fact view and the in assets Vornado idea,

Steven Roth

not here. of that answer -- into get to complicated prepared the to am prepared to question not I am I that Michael, an answer workings

Michael Bilerman

or your in was instead went Just public maybe of your assets of similar with to but be sure how assets, format fund coming or or you for wasn’t that out going bought sort put private idea would the whether you’ve whether created, that private of net you contemplated and out putting cash it? just a it’s equity. the else sure the I where recession it's vehicle, executed, I the whether wasn’t in that the vehicle in,

Steven Roth

all premature. a This debate These can’t detail. of get are is value creation dialogue I with you or glimmers into execution and ideas about

Operator

from And your Green Jed from Reagan question Street next Advisors.

Jed Reagan

can talk But mechanism to this those little you them, Two a air could at point. Penn just scenario likely Steve go potential the maybe at if talked a guess In of rights Plaza and as guys quick transferred letter bit you that, decide the earlier about follow-up which just well. A? you the Hey about maybe the shareholder than which sounds obtain ground-up that’s the by again development air using ownership Vornado like rights, Plan with I

Steven Roth

single was are Penn reason Garden swap, rights grand original their when the Plaza Madison New instituted sort Penn in Square the manufactured and deal Square laws air which the created know so, was we’re carefully, a the and say York The were was the I in by Garden way for go this When all compadres. water the original we as chilled system, conditioning on air we Two you landmark Madison into tax in down, of torn that’s Limestone event. Station any fact

still and rights times the air and an there point, split on years agreement been a has that it the agreement couple at So that exists. of block was to modified over that

there are X the for we’re but even going totally rights not transit into from Madison addition get not far today, a -- it's feet to about air in totally together Square which But that something qualified but -- even. it's So is not we think. over not million are otherwise X.X million, consist X that a proportion owned Garden bonus air rights those little with square probably I and

David Greenbaum

Little X million. over

Steven Roth

private and then improve in bonuses, virtue that modest party by square Square money a transit Garden. Madison have are the of Lee cost X up So million come basically rights million the the feet them air would the million I which because X the of by them of to neighborhood. would of about, owned speak X And of transit puts

So the that’s math.

Jed Reagan

all guys your for internal that account you published periodically? one do the if NAV, that How at in you’ve

Steven Roth

Zero.

Jed Reagan

Okay.

Steven Roth

only Air when value a me, some people. they But value actionable. they may they’re have rights have theoretical to -- to have

Jed Reagan

And project? that could be in another talked partner? to the expect Right, necessitate it And would add life expected sense. that And the potentially makes economics? of the about impact cost in Could and other bring one one that may just how Farley you direction. that at go science

David Greenbaum

course, there It’s a are We life good bring are reason in No, into will Jed, building, science tenants industry this morning. through there no transaction. is of walking partner exploring also the in the of call -- another number those to space. this traditional companies are obviously and to understand actually I tech fact, piece May. month talking next will and unique what be David. fully that month, later of nature of We, the appreciate in this

out two importantly, of the building, part the of its acres tenant storey well Silicon space about as side lying five as indoor/outdoor of an roof XX can what better in we that building you a this effectively asset, Valley. most when think on space, is similar provide provide building were is again, on the space, the to learned can roof at building to the footprints look building. a this extraordinary mean storey idea it we As the that I

life life today of obviously But to all that's in the for sense for in the we premiums being to call. Based going and science fact seem that budgeted of get knowledge on There traditional tenants incremental be and Cambridge into systems. costs life rents to market see of some extent the tenants paying air only space. basically terms doing science, pay our some make to terms In are areas, for the we've the we're costs that in fact significant that tenants other market than venting science the this cost, of going are the space. incremental not those off to higher

Steven Roth

into one of larger product varied There that that has two in companies. specializes There's that or type are a that product REITs couple type.

math product satisfactory the type even office. even better conventional satisfactory, better is than and that it’s is on to than observation Our

to answer is the So accounted that we've that. for all that

industry. We before have that that and not before actually. even to have about excited now assets We we're were that attractive had pretty we thought

no we in interest in a In bringing terms bringing of you partner. partner, something in need nor about a said have

Jed Reagan

built to your it you if in tenant? to even Would tech you convert with go flexibility the go did lab to

Steven Roth

is, The know. I don’t answer to that

Operator

I Thank Steve over back for That final concludes the the you. session. to question-and-answer Roth call now remarks. would turn

Steven Roth

Thank you everybody.

and We we they share look with happy are pretty of and three quarter everybody. forward Thanks thoughts proud of this may months. however call to we are to in next all be our broad you,

Operator

ladies today's conference. Thank This and gentlemen. concludes for Thank you you, participating.

now may You disconnect.

Cathy Creswell	Director, IR
Steven Roth	Chairman & CEO
David Greenbaum	President, New York Division
Michael Franco	EVP & CIO
Joseph Macnow	EVP, CFO & Chief Administrative Officer
Mark Hudspeth	EVP & Head of Capital Markets
Matt Iocco	EVP & Chief Accounting Officer
Tom Sanelli	EVP, CFO New York Division
Michael Bilerman	Citi
Jamie Feldman	Bank of America
Steve Sakwa	Evercore ISI
Vikram Malhotra	Morgan Stanley
Alex Goldfarb	Sandler O'Neill
Nick Yulico	UBS
Jed Reagan	Green Street Advisors
John Guinee	Stifel

Vornado Realty Trust (VNO) 1 May 182018 Q1 Earnings call transcript