VNO - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to the Vornado Realty Trust Second Quarter 2018 Earnings Call. My name is Christine, and I will be your operator for today's call. This call is being recorded for replay purposes. [Operator Instructions]. I will now turn the call over to Ms. Investor of Director Creswell, Relations. Cathy Please go ahead.

Catherine Creswell

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

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

Steven Roth

Thank you, morning, I again, posted town. we that are can the say quarter we and second numbers good best once Yesterday, everyone. in Cathy

math. the $X.XX Here's increase. per as second quarter, the adjusted X.X% of year per up FFO to share $X.XX share basis as On share a the FFO $X.XX basis, was per a $XXX.X prior was compared share quarter, adjusted million, cash $X.XX was a per NOI as second year as compared X.X% prior X.X%. strong the for from second to Cash up very quarter for XXXX.

X.X%. same-store XX.X%; up cash comprised This Street, up up XXX quarter's total retail, of California NOI New wide theMART, the York company New was segment, down and basis XX.X%; X.X% XX.X%. up York with X.X% increase Office,

The and We XXX,XXX This square square XX.X% rent GAAP of increase X.X% feet average York of space increase at New cash. of mark-to-market foot. retail space XX,XXX $XX.XX At second-generation second-generation The we square call of mark-to-market an on XX,XXX Office of square street X.X% XX,XXX and feet XX.X% at increase quarter's second X.X% on space The it mark-to-market average per square leasing $XX.XX foot. per per $XXX.XX cash. space on of record square was average robust. was was activity rent GAAP a leased starting rent feet of We starting square square foot, was generation leased and XX.X% space theMART, at feet an XXX,XXX GAAP $XXX. leased cash. feet starting

across-the-board, you we full. are tell minute, will David As in a

lot are By why XXX we run. Street validate believe theMART have way, very metrics a and the California All and room numbers industry-leading. of these strong these to of

perform well. to continues business Our office very

As we submarkets. from experiencing are demand I've manner before, industries all of said our of all robust in

optimistic, aggressive, and York. New are tenants about upbeat growing Our

our Office see increases New things As example to rents the reprice. this New XX.X% our and happen of York in country York from quarter, assets. mark-to-market when you The in quarter, in cash the second best great can the is and come Penn of Plaza the XX.X% in probably first

Here, are feet. aggregates Plaza, Plaza physically we million One Penn Penn transforming and square X.X which Two

busiest are and for Our rents assets to here sit approaching will Hudson per square $XX assets the I positioned actually These low-$XXs of heart foot the actively per it Retail Side the enough be XX% from on so train full adjacent foot. positioned our office the to that new -- And that top located are North of literally hub Yards market portfolio can't Manhattan New West take West assets these developments our in-place in rents the fast-growing submarkets. portfolio square have say in assets York, the America. soft. to continues and in of we our

the for remains the bottom, calling for year XXth and retail volume deck NOI our on albeit noticeably up our function expect a for increased across foot, FFO Avenue. million stable warehouse as of in square sale so doors, from strong to submarkets We XXX-year-old large very is Demand that building it's The still just healthy of street year-over-year. avenues, south and a Terminal of not but I happens to taking under just generation preference investment retail will rents Eleventh, X.X basis. and note cash nicely adjusted Eleventh most next in positive which activity and is longer pools XXth office sizes bidding in announced I top million Manhattan, and be transformations. $XXX a a investor leased sales point in keep warehouse, which be to thin below on very XX% at XXth Streets not Pricing are $XXX this disciplined GAAP execute. the albeit, is go flat below our for west assets we deals cash for pricing the by market bounded substantially type to certainly is with and of cycle. though, the and guidance While fully million smaller $XXX previous XXX there will XXX XXth currently pick. and is check at am assets reaffirmed million, the

of assets. In the offer renowned I as the mostly distress to everything, Pricing to retail made were to would nonbank little by assets many the continues and There see is borne debt working at [indiscernible] markets Market. clearly the both first where well-leased as architect debt Rogers understandable the beginning here investor asset. the sector cases, as Chelsea comes in lack with strong on note with this are right prime, hot in point to and due Debt AAA, sale way, as we that even Google signs a liquid wide-open. will Chelsea them lenders assets cases, very topkick for sales seen another activity We reimagine in sale to the starting loaded Terminal mortgage, of product some retail New be have funds struggle. up of Market the the that and we skittishness. Richard York brilliantly on quality for located are top are first except impaired. remain data and up markets be all to with red the By blockbuster

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

billion liquidity, maturity. a reasonable well-staggered and with highly David? liquid sheet have fortress We in a leverage $X.X balance debt

David Greenbaum

pace morning, Thank in a levels, you. in recent at as employment York to sector albeit as grow than Both Good record everyone. slower bit City private well office-using total continues quarters. New to

quarter, and York X,XXX For was In economy X been jobs, about drive in leases the a then at diversity of overall business with market is very X I've sector driven job of recent that declines new square half in at than the growth remains it growth new Manhattan Midtown the spoken in foot X.X rents underpinning total Large Average offset the our the the now by leases TAMI the square robust first X.X and market hovering sector services. last first by has Absorption activity powered The which slight first square second for durable in half in is bringing financial quarter. steady time year quarters, and the were asking surprise for this was is positive strong. to business services which significantly of services led remained This and $XX growth. been leasing with growth. key to deals. the year-to-date engines. million to new No This dynamic X.X%. of for million the the a dropping health the of the XXXX, job of durability X.X square particularly New professional of The positive rate has Manhattan that feet feet, services of a feet XXX,XXX the another and that's indicator phenomenon a are deals professional robust a months million that feet rents vacancy year, continue yet South. growth. greater period XX multiple TAMI financial has

Turning now performance. our own to

any lease, taking leases, growth executed acquired healthcare years. of NYU deals occupied rents than When a grew in very In anchor its other XX,XXX XX XX average in transactions activity square XX.X% X rents New for term jobs, expanded during average to in of the square XXX tenant with anchor floors. As square $XX with and the for last NYU feet, and strong of at care-related feet tenancy. of tenants leasing square square At term in in a XX% quadrupling Broadway At Office NYU One of Steve New months for This GAAP One at XXX,XXX One, its continued XXX,XXX high another feet by represented feet. expansion the importantly, under rents With strong NYU XX of XXX,XXX substantial sector. growth its building at health quarter, XXX,XXX by square cash. quarter the more starting of noted, York's watermark occupies we Avenue by most just and XXXX, space robust of Park these Penn almost new now starting XX.X% first Park a is us we city's square lease representing our York feet new total business feet, the walking X Broadway, again, feet. at And Park, One an very Avenue. turned XXX,XXX in reflective $XX.XX, new we XXX,XXX mark-to-markets And our with tenancy XXX completed sector, across XX.X recent we average foot.

XX.X%. remains office strong Our at very occupancy

XXXX Our Rubicam's remaining One, XXX at our share are departure Xth X blocks square our feet. XX% partner XXX,XXX square totaled upgrade and redevelopment. mentioned, embark as Young a XX,XXX expirations includes where will feet More from undertaking Steve than of Avenue remaining are we This including venture at at on than square year. larger significant XXXX feet, expirations & only XX,XXX Penn joint this a X/X major later where we

over at in strong remains feet X.X million pipeline active including square out Our negotiations. leases XXX,XXX feet, of square

the XXX Train the month, will new over two underway. are square in busy rapid post square be business quarter, of hall boutique the for with in Hall commenced directly for years On at will well the acre-sized the the newbuilds in our the industry-leading both office XXX hall office space. train installations tenant X space of to appear the New mid-walk West preparation tours is of for glass level Already XXX,XXX new next track The in pace. Building, RFPs of the Gateway we escalators Line over work ancillary third at the as development At feet the bottom installed the available and and cash. XXnd sit-outs begin down of as and XX% framing been dramatic which retail our the old and York in well Farley skylight XX% feet Broadway the Street front, the the have a the to of Moynihan same-store floors, office growth the and top-quality a first little line deliver to skylight of while demolition SoHo. train Skanska's High XXX,XXX is GAAP We've continues on will on X.X% office future

best-in-class street our Let now to turn business. retail me

cash. LVMH we We lower and XXth luxury signed from very, XX.X% and For retail After one a Avenue and brand, has corners. has the X activity totaling year season, positive to Avenue's as X.X% Céline, at increased sector locations. of XX,XXX rents take moving continues trafficked of slide this quarter, the begin prime -- solid only heavily re-enter begun Street. feet to Street retailer a Madison advantage a center market at corners with luxury holiday brands of leases the signed GAAP quality XXX at to an them best lease mark-to-markets The square available for very but XXst to the Madison asking

stands retail occupancy Our XX.X%. at

business second cash. a and the our small was of decline quarter, same-store For X.X% basically retail with GAAP X.X% flat

in no with X.X% theMART leased. surprise the XX.X% Chicago, to new it at GAAP Turning a office and is when you that XX.X% was strong cash. No space growth office quarter leases. was quiet consider Same-store

over mentioned and we've couple we with that will drive growth. As our Publicis lease market the calls, expires is to in a continue large of that same-store have last well QX below

be of XXX,XXX-square-foot district on just hope United also States. North Art XX,XXX building, facade the Chicago a cultural $XX at We mayor in the the showroom Saturday While on a project. Emanuel join river. nightly evening, September the the can announcing XX masonry XX office to described projection the of over a is starting the launch you commercial the canvas River square the as exhibition. as which hub equivalent signed theMART quiet, launch leases projection on totaling largest with video we permanent soon TheMART, the inaugural of the leasing in us Rahm subdistrict installation rents is foot. of It's will feet art of facing heart average Chicago we the When the our X.X-acre installation,

had our completed you of very in call the up you our we've XXX of America the told third lease we complex historic cube, that the Today, at Montgomery the Hall. I'm Francisco, tell busy. we lease XXX quarter, the former Finally, entirety that In redeveloped also Banking pleased days Street in the to the California building. early of signed for iconic I San been the Bank last of

selected co-working that grand a proud are active feet. expand the become IWG flagship with $XX also building of this we been a on feet lease executed highly million co-working of spaces recently launched XX,XXX BofA's of Tower last total occupancy latest building well environment presently purpose-built square very giant. was We're publicly and within XXX,XXX its to week, a the underway the in to site bank IWG, showcase We bringing XX,XXX-square-foot in We've the visible a redevelopment now division as retail Regus for by this offering. square of the will Bank which to held that America

IWG XXX well the this we Street XX.X% X.X GAAP at very as second Bank as America, and the continued cash. with growth strong have the Same-store effectively occupancy. asset With lease California to of now entire brought million XX.X% for in foot XXX% square quarter complex

was business our For growth same-store GAAP the a whole, X.X% as X% cash. and

in and properties and office we retail best very position prospects. our our in the best confident the With submarkets, remain

Steven Roth

you, to Thank happy questions. David. be We'll take

Operator

Instructions]. [Operator

Sakwa Our first question Steve is ISI. from of Evercore

Stephen Sakwa

left last through maybe Steve, I the you over has talk where just going timing those? Vornado meaning the positions been its and do think sell, kind and of you of could describe would how you do what about the that behind repositioning terms have of couple you of much if is some portfolio wondering including stock to it was of sort think you years in the evolution,

Steven Roth

Good morning, Steve.

our Chicago off, business perfect Francisco, mix and we First think office has assets. in of San a [indiscernible]

we number pretty the Francisco, in mark-to-market the think rising, assets think, are at the said I the rate own Francisco, over we the we best call and it's in growth now the said building extraordinary. quarters, the I've XXX% last and is rents of as of in leased As San San

a asset keeper. of value think San amount Francisco. we So That is in [indiscernible] enormous

days. -- the still I'm theMART -- the in good know, You in in Chicago merchandise

rent that is think the the single Chicago, every I to We disciplined. the new with adding where validation amenity even [indiscernible] the correct think Penn to at theMART office the asset, about in a assets where we have face most be. our to respect a any even you higher know rapid extraordinary as and chose I our neighborhood prospects centric market, the building million exactly think of the in we asset bought don't that wildly rising New and the we Avenue. Chelsea our what achieved say, might we say X.X about York, are -- we keeper. has XX certainly I With right in in lots we know that new the think think we of In can balance been market us with the following $XXX enthusiastic asset for I them a -- for foot achieve that's to the York best Park West we've where Ninth point the of portfolio created we long room [indiscernible] at looked Plaza, are, is over square and any run, as haven't York call remorse last build the Side the quite years, You extremely than and of rents, in in one to that industry-leading curtailed we even or now have had And maybe bullseye can I the there the that. We been growth Avenue X which in that I activity be the X of of New would built handsomely we the growth will -- where we New that's respect and have acquisition and I mix think probably in that country. the that time,

legacy sale for are announced that have have positions, quarters $X we don't assets, some securities we noncore they that -- identified of -- that we get have we core. estate fund billion list. into that Now, they They our over other assets the ago real some are some are on assets

We of in actively slow marketing it's -- are those involved assets and all going. but

little of are them of are them a some complicated, hair. illiquid, some of have Some more

program accomplish to will bit more time. your will it else do What a Steve? questions, that we but need answer little I So take us

Stephen Sakwa

for it That's now.

follow-up. a as Just

a like mentioned event beyond may of event? It sounds fall lap, 'XX of You XXXX the to opportunities when of think retail that's might in as and of sense a the you you timing kind is of in that your some those your distress area. and half some the do find What's more acquisition or second kind there.

Steven Roth

Certainly, not struggling fact We're we're I beginning mezz cracks. see are see they that money. out lenders the to funds what aware become slowly. plays see to of And who out the time. We're 'XX. impaired. to debt take referenced very beginning was This game lenders beginning process are of and and lenders private The beginning to will

an can asset at it years to pole. XX if a Now X discount we for with ago what foot we X toptick, touch or at buy it wouldn't sold XX%

is we aggressive into right basically cycle an at saying get and at will prices. the will market what time acquirer, but the So right and the in I'm that we become we will it that do

Operator

from Our of America. is of next Feldman question Jamie Bank

James Feldman

a and there's Chairman's recent of talk NAV Starting letter the to gap. lot in with the conversations, about close methods

So know there? Steve, hoping any terms guys is other process on I but of in kind just doing you thoughts your might opening be thoughts latest out where your get I to was job of activities in that great are just a or any head

Steven Roth

off. fluctuate getting being pissed trusted I and know, You between

our the which on You that that, fact a sells you discount. alone not probably stock at me can We're I'm in sure quote will.

If everybody you does. roster, go the down

little sell little approximately centric a little less at of the but sells a greater, for of Boston Some less. with York, discount, bit New in the a some there discount. discount, same But is, better discount, the operators New all which a York exception a a properties, little

seem in seem think my I investors, willing and wrote are to letter that to XX% represent I be I my XX% letter, said be, discounts said to this chronic So in seem the whatever discount, for country, an XXX% LP these the of and they hold to that private on pay not more property in their that ownership time which it, of to pay Public very going is. the fund investors company or their assets to are be willing XXX% XX% of employees for than pensioners behalf they the to a or of value long asset.

chronic a is this thing. So

additional billion I done values. difference We way off X curve think faring the very think of ahead companies. which or we and We've to sold assets. got $X et anybody performing of done was more in have the that else the between so a sold well, are transaction. assets cetera. assets billion market market to great begin than $X public handle By We break, that has private and way, before more and We billion spun $XX of

speculated, this I and been yet. now, said So we're not it and done has

to shareholder will value we we value to this restructure the that the continue strive We get as optimum so can. can, maximum

that And spin we other so we spin there's may been do may that, speculation some things. we this,

thinking anything possibility only we're and the can say It's future. speculate every I we in plans about to that tell premature So or actively to might you are done me about for what be yet. our not

James Feldman

just you the the for the are in year think out us in can of into moves just next retail we of And half the portfolio? or large and maybe back about year, terms NOI what half first street even moves of major through as walk

Steven Roth

not that lower Joe's probably think -- number cash, me, maybe will we go I okay? going shouldn't guided that of have even amount. I will, but will portfolio by as better we to math, that through that $XXX the million a than this the number fair go and slap We say better

to -- what's -- that we chosen we low very have going have known leases tenants to basically, prices. short-term to some So outs, the at give on of is have move we chosen

numbers. So that fits our

over got rents so it a the currently tenant, we're not we be do year tenant replacement a yet have vacant We replacement And we which [indiscernible]. for. will lower for have properties, next X two which or go than would or if

makes up, makes which the that it's Retail. So up

in The -- the rocksolid, rise XX% and of Now contractual for or reported we're on there. a we come coming increases middle is that market, the lease Avenue forget where that up, about. next exact XXX will Fifth is below increase expiring lease full I we're Fifth multiple we is on leased to income times date and achieve the Avenue term a the retail income sometime in which as have and that represents year, more expect rent we have value, leased of have which only we Times so XXX% and vacancy our an Square,

I have So there you think it.

Operator

next Our is of from question Korchman Manny Citi.

Michael Bilerman

strategic Michael Manny. wanted being everything Bilerman with It's strategic of the sort I back alternatives, Steve, to come options, to on the table.

in Just you in going work. at point and the eliminate time, X, market, certain to that certain should When is get paths sense of Z be want go of on versus things the terms what removed the with the B, you of do tell market We're update and instead. go things an table the start to to sort get to to being Y, A, not C going everything down? prepared

Steven Roth

what happens appropriate can't in that, bankers us cannot So a Michael, What our have as do. history go deliberate shouldn't boardroom We company, of and communicate -- and really is do for the just We and activity. run do you're and okay? that something what we asking forward. to to not with we we we we can't our we have as hello. it's happens

But to we of [indiscernible]. a announcements very have we're try just that. doing history into and premature speculation smart to We or continue hard can't get things going

Michael Bilerman

Right.

that the it goes trades be should this up, and Just the sense to versus about juncture, things go. may time trades stock year by trade come critical is expecting down, of we sideways how just whether wherever this it at

Steven Roth

same seconds to is answer that ago. answer The I that you just XX gave the

Michael Bilerman

you All you you have additional a timing the of that in of capital, last Can the required in terms maybe total upon would quarter. what XXX that of scope the may right. and bought something West bit which you well little about terms with be as quarter, capital On [indiscernible] commence Avenue, talk XXth in something for entirety first it? right as XX build you of have, the XXX

Steven Roth

it, years asset. how great many XXth a bought ago, Well, Avenue is David? XXX We

David Greenbaum

Three, XXXX.

Steven Roth

ago, just the four Starrett-Lehigh. was which across from Three, from $XXX warehouse catty-corner for time the exactly across there. million. directly the that years It's I invest to Terminal street right think street this It's sold

blocks class Yards, old of pretty It's exactly kind creating X different traditional Hudson it's who want our the Otis out also it's by tenants Elevator So we asset. looksies headquarters. -- -- have asset some terrific that it's had businesses kind want. the and their of exactly of so creative It's to a kind And by a attracting business team. by from of the transform recruiting way, the more

So that. there's

building. Now we own the

also the David, build that We building which the we new will, a so a own is will... will vacant, expand with what's word, lot, that

David Greenbaum

Integrate?

Steven Roth

Integrate, good. Integrate into the Otis Elevator building.

by because takes going the for and that about brought it's it something one-story you that building XXth that's a XX,XXX XXX We have the -- Which building. full second, we're reimagine that that's landmark -- We to and so it has very adjunct a of to if contiguous reimagination age. preparing into the space. we're goes think landmarks, this -- in we How whatever, for building floor, as of to incredibly a pretty as what and is it set that district is adjacency a to in that we're modern has one feet, and fully a square we it? it's XX,XXX through doing for building kind create the is in we're way, events, an Cedar which big bought feet? interesting meld can who is interesting old events and called bought skill adjunct company We for the extraordinary. tenant sales, adjacency. Lake, brought of town for for The Richard new only for use we thought an presentations, leased has and Rogers now building, to that the think that's going something

three until comes if that and involve we're will the getting the years maybe the all the What now, in, getting a by actively the accelerate not canceling will that from start about marketing go, now, -- tenant really and lease, et from a years tenant building. comes might We way, approvals, asset. that not to knows in two cetera. our is community If ready

tenant start came thing building would going if a the to not this accelerate So that. maybe We're for in, to then have guess, had X we years. I

We so are this, my answer. that's I on statistics think not or release to ready budgets and

Operator

Our of Malhotra Morgan next Vikram question is Stanley. from

Vikram Malhotra

specific retail. about some questions just Maybe street

Within I XXX any which think on Avenue. move those to you Madison, three the tenants? stores, Madison expirations particular, coming you had three out, portfolio, Can likely on up in give update were believe I

Steven Roth

for will yet. replacement likely tenants vacate, we We expect those tenants them and not do have

Vikram Malhotra

that retail. next If the cash leases XX, contribution on year, Forever just just numbers and from 'XX? can a street guidance Sephora, for And I'm not give NOI specific those sense or the essentially, three signed of for I Okay. in and but you any Levi's looking at look us

Steven Roth

We have that number?

Joseph Macnow

to be going about roughly to XX. XX It's

Steven Roth

going said, like XX. be Tom XX to it's to [indiscernible]. have I'd accurate roughly to the

Vikram Malhotra

follow I follow. you, can I Yes, with up guys. can

Steven Roth

We'll next and take we your [indiscernible]. when find it question then

Vikram Malhotra

thing, trends sense, you market? in during of do York a Can called rebound you next midtown have you agree? peers, your maybe last some in midtown are for rents New Just seeing Disagree? to give What especially -- for terms in us in your of months. rent X called the City have X a your

Steven Roth

of is strong, Penn activity seeing there and is out a shoulder Side it is Plaza near West the seeing What's of at sucking we're What developments as the to in Manhattan that getting Side vibrant we're the is midtown to Yards, result the wonderfully market, doing looking we're -- our million West that economy is market. on well. Side we're more, fire. that West want very market. the as but the midtown that coming people tight, is space new seeing the is West supply feet What traditional traditional expand What nowhere Hudson is as is of over is

So may it's be. understand will will growth aggressive bit certainly difficult but some space. job folks do. to that There that who absorb be that time, little over think a it what are That

extraordinary leased our comes the So the that saying the what we're midtown XXX% is West we're growth are we but realizing, that Side. in growth assets from

David Greenbaum

the-- We can back, get Vikram to

Steven Roth

number? the What's

Joseph Macnow

approximately million. $XX $XX is it's time million, stabilize $XX of By coming the out those they the XXXX, fully million. In XX. X about in leases XXXX, cash

Steven Roth

Forever XX, Sephora. Levi's,

[indiscernible]. Forever XX

Operator

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

John Kim

question But post basically Willis Tower that mentioned theMART. office there's and what to wondering market this to ability of still the so the rental you achieved has that going office A buildings, kind far a the you been The you on and had emulate you've how I'm to run. owners of room iconic conversion Steve, main in large-scale trying growth on a success. forward? your impacts achieve have

Steven Roth

have that -- publicist [indiscernible] is pronounce grow room and room we run to the how to answer it? the that is you the do The

David Greenbaum

Publicis.

Steven Roth

Publicis space and that rents lease in market in high-XXs. the expires low-XXs is mid- to the The is the for that

right a XX% every there. a market under back So there have X is the you will Almost XX% is have and rollover have that get okay? step that and of one the what dominant increase piece marketplace. a we That's building to space X. we you, in Step

far. marketplace, by We have dominant building the the in

a get will I premium we We hold, hold, franchise, still doing have it believe through if and our competitors, a we're great. and doesn't which

and is most we basis own the we the in, competition the town this and that in building it demand. makes from not do in space our because the attractive in We district So town. makes better even more have shy building, competition lowest

building makes million doing if and we'll Avenue, the of et example, Avenue. the there Park all For wouldn't are Park with that each competition Avenue XX stop is Park Avenue et What fine. square other, business were cetera. can't cetera, one there Park tenants feet in We be be

David Greenbaum

building add of years, square which the the well, well, space. a below as over feet, there's I in three market. referred Office rents all XXX,XXX Steve about might to total are of just that next

Steven Roth

the or of XX% significant a XX% represents not building, it's number. that And

John Kim

Got it.

retail... Okay. a on then And question

Steven Roth

way, the to you. give haven't on course, you lately, is open call By if And and seen invitation, that building the the call. we'd to of everybody it show love to a us

John Kim

up We'll on take you that.

Steven Roth

and to. Okay, we the XXX occasion. do good. that San tours Francisco, to is this We at on you November by California and think event want NAREIT And intend similarly, an in way, I

too. that, invited all you're So to

John Kim

south had but how you and like retail discount Five do potentially of it's X impact your question blocks are, forward? and the think I a I'm Avenue Fifth of this realized retail I Fifth the of wondering Avenue. Below and assets rents going where on that most impacts retailers perception entering value

Steven Roth

sort and look The lower The occupant, Fifth -- and a the desperation of night of and the is it. know. Fifth between traffic, thing has is like I demographic enormously to customer, Five difference Avenue don't Upper Below of Avenue the of profile the [indiscernible] day. street

are way, Fifth what multiples is. the multiples are Fifth Avenue Avenue rents there's So -- rents lower of By Upper the that.

I think effect. any It's will actually. something So not I don't it that about worry have

on or XX rather Street values share So on Nike traffic be X-story Secret it's do world blocks we're they're is side, block, store what be focus than Five they're [indiscernible] XXnd like that, have come It's going you the on to will see Nike south behemoth. opening what going it, our extraordinary. we I will their the adjacent the a -- do. would Street XXst rather to and Five while Victoria's side, to Below flagship, to may Below something But

John Kim

think If of could morning consolidation at This had if And you City, announcement more NAV. we'll trading office talked or and number I this squeeze see in. about buying wondering you Forest the to just significant Brookfield I'm companies privatization more of we sector? a in discount one

Steven Roth

Possibly. Possibly.

John Kim

advantage Can you public? argue being of there's private rather an than that

Steven Roth

again. Say that

John Kim

there run public and Is being versus company? an advantage a to privately private

Steven Roth

you, can the the the for is there's the that you business that, funds format the I me. are of That's format, than comp might real companies out front too the will estate basically better a I format tell private loaded you asset-heavy, that by one I have the Private companies to wide to as public coming a if have may the than companies easy this, access margin. as the better be times much that public be, to does not more. in advantage capital but can And access is such capital, companies not exist. not which for a business tell money estate so companies, tell an public real may asset-light which question think end

be head a fun a the to fun of company, it's private to public company, of all a be it's fun. it's So head

Operator

question Sandler from next O'Neill. Santos Daniel Our of is

Daniel Santos

on of those noncore would sell comment tax implications I to you've some was were if assets be the if specifically what you identified? wondering could you

Steven Roth

Joe?

Joseph Macnow

able Daniel, of we shareholders meaning of that $X,XXX,XXX,XXX was of distributed and would gains said changed there tax barring hasn't needs. be be to event there that about some to [indiscernible] retain that was would And really very about originally, that, other $X $XXX assets, much. billion we million which

over has assets assets some been have Avenue, million the $X been Fifth some added realized would About retained date like but billion sold, have XXX look, $X,XXX,XXX,XXX the to been be us. $XXX roughly Now that's numbers. by of

Daniel Santos

Got it. That's helpful.

Steven Roth

we think. pretty attractive, and good pretty That's

Daniel Santos

Crowne Agreed. question My on Plaza... is next

Steven Roth

By the just way, one that. about let say more thing Daniel me

not it's have, that return about, X% a These this free assets a that them, X% average, range. we're $X know on to You billion to talking in lunch. the

them is until earnings that. replace but we're then selling So dilutive of we very, very very, cognizant those

of the that second million The it's clearing be scheme spent on less in more price assets of but speed what not. which is deal that out $XXX the those understanding [indiscernible] the get things, strategy great clearing time of of than possible scheme money we projected, to price a of knocking quickly thing might of that is we clearing lot the a the things is in

Daniel Santos

And ability give helpful. an us update rebrand is next and to my your there Plaza. that's it, you question it? Can Got Crowne on

Steven Roth

and pending a I We relationship. a have franchisee, about that that, other have and relationship litigation There's we than no have comment.

Operator

of Jed from Advisors. is question next Street Reagan Green Our

Joseph Reagan

another point? to in you're related across terms Can Just much just curious the rent this you'd seeing growth concession growth. how quantify characterize West And on Chelsea net that, Side, how to rent of area? effect that you at be Penn follow-up Plaza, of Manhattan may then trends question

Steven Roth

David?

David Greenbaum

has which flat. think I I Jed, part concessions, of been think that is

guys at look that and what and years starting $XX.XX. back X percentage annum significantly is the rent. on that last Obviously, most consider have the the over square we quarter so TIs number I and as the numbers average, think as increased, at per per we our went this so in starting metric a foot of of the of look we As rents

is X% the in range the of percentage which was Now, rents over and X.X%, to range it's months. TIs of as really XX our leveled the average X% been very starting a us well-contained, to last

pressure One further having this those of our in markets our and a at seeing in rents net no little effects continuing on about, rent have for positive the and I market average where seen seeing in Obviously, said District terms $XX as stabilized. Penn all at also for the West we're that Steve a we the impact Plaza growth that rents on were So quarter foot. is concessions numbers Penn Chelsea as talked call, leases of

Joseph Reagan

sort a digits, single But to put of recently year-over-year basis, on on your or a finger low it? mid-single-digits is that hard

David Greenbaum

Listen, district, stable to but the I'd explosive months pieces have [indiscernible] of so, seen say it's to growth look side that the been in over the or the all dependent at refer number numbers you those growth. of basically XX which probably years. rents Over single obviously, last have West coming last on digit fairly low space Side on buildings are really we in whole as that's up where as I a West what

Joseph Reagan

Okay. guys a any And or redevelopment Two have Side. on And you'd and clarity do update teardown route are Any you how go on whether potentially sticking plans guess I you West the then about at the Penn Plaza? on thinking rebuild? full more

Steven Roth

always for as feet, million station, And the that, feet. we call can which X the is lifeline the I on think grow, we the the abandoned that the Penn our not of Penn having ahead buildings square is feet. both in grow XXX,XXX is are The foot tenants on complex complex. space said and One the business, our and to rain the the can this our tenants find Two of a building get have without get of advantage other last Penn from them reimagining X.X really go growth campus for can and before, going the we snow, like second into we square X as and teardown, will -- on redevelopment a that with the which into to outside Penn Penn, not full-speed our call, a is and tenants One service Two also which of amenities, you train million connected greater with and going outside you the can with we train into one top -- building Two million from station reimagining is

Joseph Reagan

Great. project? Two to around economics the the that project Penn any position cost Are you in of sort or size of

Steven Roth

rents Not remarks my yet. did the I say from to that take approaching we expect low-$XXs $XXs. to in the

So a we feel that income that. of side for think what will be about

this, know that you that we know roll. I only and leases remember, realized as Now uptick

the done are to We're and that and rents still we're So not about low-$XXs it the in in is in-place With project, release and the will bidding market cost $XX. what takes, approaching long involved plans estimating. respect however be we're and when of talking the to get we number. we believe ready

Operator

Our next question is Stifel. John of from Guinee

John Guinee

first Is months? half have lease of rent had Or to you this of the the looks half Looks it are have of accurate? XX year. spreads the average $XX, in-place second the for with in-place XXXX, stunningly magnitude the next to like same that the good half an available potential not of replicate of year. there in spreads David, in but rent an then should me this you with slowdown mid-$XXs, first that

David Greenbaum

are talk those, cases think, some been for some I'll you're second half a year very, first rents. foot that so year, that be down a have flat, of are which a leases space this be there couple through are On up most reason it's year-end. rents rolls number coming average the will a about back to seeing rents, there'll that at about of high very some of, the end very the this what $XX the us I of [indiscernible] is coming to high minute through of and

and the the we on in very of achieve remain spreads can future, that optimistic into 'XX out portfolio. we look we terms As the

John Guinee

positive NAV, flows XXXX to in fundamentals, things. great. positive the golden then was of Steve, the cap real look the a declining to fund raising NAV bias at way rates, lot age interest declining crowd, Okay, REITs, rededicated And rates, XXXX of people

going is underwrite There's are If forward, to $X going to in FFO range, sub-$XX a like with happen not how a in more bias just interest to company an going to the that's not on NAV a that, if Vornado. be multiples up people XX your share said again. REITs for crystal and you which going XX ball rates

would your you, things? said thought about would crystal you think or step any strategically how that process ball you to If up

Steven Roth

of all, we Well, think I your a comments. like first lot but that like all the about you Obviously, don't I time.

we So see know the we're I for ugliness the in same level the that is everything. prepared yes. that don't of answer but do marketplace you

is answer the So yes.

Operator

time. We have at no this questions further

Steven Roth

very much. the on hero We was a it earnings his a and who prepared all by comment Tony race made Malkin you growth remarks. for Thank appreciate won the way, friend -- the that think my I he was shortest

but very you on So see we'll next to happy we I'm we him record that, and much, in let completed win this quarter. so for and call minutes, us, you the XX all thank a is which

Operator

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

You may now disconnect.

Vornado Realty Trust (VNO) 31 Jul 182018 Q2 Earnings call transcript