VNO - Earnings call transcript Q3 2018

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Operator

Welcome to the Vornado Realty Trust Third Quarter 2018 Earnings Call. My name is Paulette, and I will be your Operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

During the question-and-answer session [Operator Instructions] Please note that this conference is being recorded. the to turn of Creswell, now Relations. Investor will call Cathy over Director I

begin. may You

Catherine Creswell

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

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

Steven Roth

by Cathy. I bit. Thanks, little me start If everyone. a may, breaking let Good morning,

the third three continue across be the the business. X the best York Thanks feet Year-to-date cash. XXX leasing square our our outstanding of XXX and to team. GAAP million New Our best leasing Retail, and business with and business, in activity leases mark-to-markets including numbers over quarter Glen in numbers. theMART, we posted to quarters leasing totals XX.X% California for entire Office, Street, Yesterday, and XX.X%

as Here's third share $X.XX even the year's quarter. math. prior with FFO the per adjusted was

accounting by financial our affected rent Our cash, the on did GAAP this cash business GAAP numbers. non-cash, basis for cash based results items $X.X write-offs. quarter as our These negatively million, largely straight-line receivable Remember, affect not results. from were run we

Our strong was quarter with per the X.X%. third $X.XX share, to third quarter per cash FFO year's prior as compared for up adjusted $X.XX share a basis

with of quarter real XX.X%. was Street same-store segment basis was theMART more X.X%; quarter's X.X%. York catch even NOI up the of benefiting X.X% increased XXX half New in $X.X X.X% an up, the our was This a by increase about office X.X%, $XXX.X the Avenue minute. in interest by basis greater abatement X.X%, up third Fifth X.X% the the Adjusting and XXXX. up estate was cash million, NOI condominium, companywide for retail New was tax comprised total York one-time XXX Cash office of up was from sale up million California up XXX

in was David will robust, a which cover activity minute. This quarter's leasing

of industries experiencing continues to perform are robust last what of all several submarkets. all I've again say said Our for in quarters, the manner our we very office business I'll demand well. from

and here of will scale create design biggest best best-in-class Plaza, are amenity front at of creative Station. Our main and XX well Penn will Images provide It Manhattan. on the Two I a underway our The Even giant package. stand transformation will our even the the serve that of giant above the theMART. we Penn three a tenants into will high include assets space. X.X main I a feet think XXXX tenants growing, Penn best Two, Seventh top One the in XXX www.vno.com/portfolio/development. Penn plaza -- site to called feet Station, Web will are Two. with same have leap the our are foot forward right begin will about of And street. XXX,XXX in it block, plaza space and purpose. bustle and aggressive, this striking, create huge will covered Penn a with to Grant we Penn by Plaza out be knows frontage on have the creating Our neighborhood along at done "Promised age. Farley time, a we allows feet upbeat foot events. Plaza at here new our Land." sign Also Everybody where covered and from new be of Penn in the in of across XXX This a million and York. tomorrow very best us a two bring will our valuable foot seen what deliver unparalleled building Penn of will our be entrance campus New you posted from Avenue the under dual to campus creative Penn the It It with optimistic, building modern call Plaza many the XX the square square entire

to will adjacent top the York forget the Macy's, North in the don't that Madison Square And store the and and to the Farley, biggest hub are Manhattan district. and department assets more adjacencies West of on Yards We in These in ownership come busiest be the to the Hudson heart today in Garden. sit and new America. literally is transportation are announcing country we increasing there developments, later the the much our Penn of at New

Speaking tell the a rotating facade of a stuff, last in David will design over is about will we Chicago. projection images launched you projected and of A the building. group month. exciting huge of theMART, entire innovative art artists really This Musti

as the not we the would site on is and below guided become York. retail obviously XXXX value condominium beginning tours. cash transaction very acquisition arrangement. host X.X XXX% be and original At a first that NOI completed a not is already to Elsewhere, increased year go our soft arrangement as yield [indiscernible] has in retail XX% XXXX square this here activity the and of year, largest of the retail accretive We which the is the objective digital own lease now of owner million Manhattan. X.X%, creative. as in This Broadway performing Square cash Our New the on provided $XXX cash XXth The interest our submarket formula. albeit a retail, A XXX% best hotels T-Mobile of well in the we quarter value highlight XXX% This acquisition to from the that project own. now retailer building. retail renounce increase of to franchise foot put/call is there September would Time and million. continues of iconic a a pre-negotiated satisfied put/call we through that did based was

are $XXX We a NOI million. recurring retail cash be at now comfortable least that on basis will

the South Central Supertower XXX have Park closings XXXX throughout building. will continue XXX climb that begun up are we We projects. Closings million as

are approaching We sold. XX%

large factoid Avenue is for the tower, news floor and it record may York on only of now and didn't market XXX of even one interest Park it left. four South a this telling cover has quarter's call point well than out Fifth that office XX the contract. that, on in us that well is we I contract you. leaving XX condo apartments that sale we into all in Here of which for XXX press went here New the setting X,XXX are apartments two out soft will territory. last exceeded but but is In XX Central a The our under expectations foot some, Its we to is be old large goes. or built worse full just full month

decision a made in a we preferred to of XXX eating announced ago that out sell than rather and capital renovation. Sometime we five participate office year

deal sales billion to but loan $XXX $XXX market the stable volume disciplined with for the healthy, completed received size, bidding of smaller is As investment remained same the the office, financial Manhattan is the XX% asset thin, from continued unchanged in repayments. was former in core statement easier million of August [technical year their markets execute. large tax was stable, We sale and last assets up Phasing pools gain south is particular Capital the year strong plus - demand proceeds previously new difficulty] the in the it's execute all these and are is announced million $XX X. taking continuously on there success. partners longer sales. There and are and $XXX and Manhattan. gain for our to pricing west year-over-year; with the much We wish was over the The partners pretty million.

remain U.S. sources. is being continues for Debt of capital this active, York be year strong assets While markets foreign have we liquid as as seen. and more capital New to activity by the driven based

for to funds competing loan-to-value While a and XX up count third beginning points the positions. as basis this since as been whole cycle, treasury XX, of all base year, increase. aggressively debt basis both about maybe loan double loans of at have who much formed that and about this a tightening this rate value rate at number on LIBOR mezzanine least We of for have XX the and is can that offset year spreads are

couple fortress with and maturities. immediate We have doesn't this of liquidity, measured from XXX in balance and asset liquid highly come well-staggered a $X.X dollars sales. leveraged a closings And count to billion non-core million sheet,

partner, Now, to David. my

David Greenbaum

morning, extraordinary of on consecutive City period private City September longest X.X%, the run. remained remains that New consecutive Steve, truly had such thank everyone. New sector record. you. below now York The the We've XXth at economy unemployment mark month an Good growth, York XX job strong. quarters

captured our XX,XXX employment which in not University Columbia One feet, using positions, Americans the flat NYU have with Madison this at are at at has than XXX,XXX XXX city we office the this been employment. square a line going and office XXXX which seen Avenue are with XXX,XXX total growth Memorial loan the feet, Kettering using While with feet In healthcare year, portfolio, more new XXX,XXX Park XXX,XXX Avenue with Sloan year. of has

on firm at feet; in quarters, year-over-year $XX activity reached midtown total rents million the sectors XX.X market co-working to services the fire earnings fact in growth remain themes now of quarter With leasing growth $XX leasing asking quarter foot. financial Manhattan at the in in foot. third almost Over and products. on a of flight two fire two Manhattan's XX% with activity. tenancies new Overall, sector robust the The in last strongest XX%, square the renovated Manhattan two a held dominant and record. New in rents remain of Class-A the a is

to own now XX.X%. third points quarter, turn occupancy in up square feet, XXX,XXX our Let totaling executed where office the XX XX performance we basis driving leases me to

for a rent just foot. over average the starting $XX quarter Our was

and strong, based our GAAP rents very key starting mix the course, XX.X% Of The fluctuate space of statistics increase leased. the of buildings quarter-to-quarter XX.X% and cash. and increase the is mark-to-markets an remain on mark-to-market obviously

York, office and Avenue quarter growth XXXXX with feet. a X.X% [indiscernible] significant NOI in business that of most sort deal same head large took and important in lease X.X% of quarter's at New A strategic firm communications GAAP the a store Our cash. XX,XXX

at IAC XXth HomeAdvisor important feet. took Another where place XXX owned transaction XX,XXX Street West

from Street expanded we've with transaction activity completing XXX% feet of Penn where At redevelopment bringing used square the XXX doubling of its XX,XXX occupancy movement that to square Penn HomeAdvisor XXX important took place footprint Another Two. XXth of West XX,XXX One, to the representing West tenants feet owned and to XX% asset. IAC this

prior Penn that transform of X.X now facilities One entire end, with asset renovation commence third of an are As and X.X and offerings a at co-working double the dramatic second spanning acre year significant foot foot Plaza's expanded a At package existing asset program upgraded you Two, robust conferencing we renovation top million Penn height services floors. know, on the directly and for and we food and our of with our will million amenity Penn will lobby and finalizing square plans expansion square Station. its tenant located

Penn and integrated a foot will all the One mechanical this and physical Penn Two relocating of redevelopment, vacating area two include Two last Two that made around fully will into the first Penn entry Penn mentioned, sequence Penn the realm. announcements. X.X the on Penn of Governor and One. we We included work XXXX. in amenity be buildings full from it. XX number focus to building Plaza Penn anticipate with a the four-storey new floor in up Steve new into several The quarter will [indiscernible] public begun the month, significant Turning have square continues transformation tenant a starting to striking Two Since million what Station the government Penn as systems, Basel that we XXth Two the a a to and Cuomo the addition adjacent speech tenants will package project be a with and and In both connection of existing campus. transform

construction in to With Train the Island congested on-time Hall delivered reiterated the governor width station. concourse of in doubling corridor XXXX, new be the Railroad XXrd Long and most of Street, the upgrade the his the Moynihan to the intent beneath

to increase the as retail including into this we the I've that entrance City recent a the framework a these other Street momentum Penn planning plan completed in Penn we One are entire announcing local as We all the the XXX all In new the is district, of concourse, have In district governor speaker, in reminder, state Plaza XXrd accelerating. negotiations both in transform effort, Council to well spaces district with activity, perspective XXX Johnson, change applaud Broadway which for transform completed As undertake the and a whose as It development and also and the have in announced includes that doing for on course in retail a Plaza, station. improve XXnd Plaza. The endorsed clear space planning north to active a we of Street and on is where strongly temporary the Plaza, Corey same. permanent new collaborative where a tenants the out West substantially own major area's density is we public address, neighborhood. are representatives the initiatives station a substantially the side a also office leases the would importantly building.

including an active over active Looking at ahead, our leasing feet pipeline square of remains and negotiation. leases feet, XXX,XXX out square XXX,XXX

Our XXXX XXX,XXX total and remaining $XXX,XXX X,XXX just over expirations feet square feet. our modest explorations are a

Let retail turn now me to street business. our

site. we This eliminated including elected at quarter, five Similar signed and assign leases the Fast to tenant at Street, of With retail with XXX,XXX Street. neighborhood Navy We shoe the extraordinary with Street, square at XXX this XX Casual strategy totaling For Old Seventh as year, for to advantage the traffic, Penn forever our take our Navy Purveyor for the us also maintaining options dig XXX growth in earlier Old new to Avenue. renewal drawn as years XX XXX XX,XXX rent at naturalizer store XX retailers XX we're leases any we XXth as transformation short-term foot our Seven a further West West well district feet of options. Food renew development renewal Plaza. Starbucks proceeds feet and positions to

a XX% negative GAAP the GAAP GAAP for cash. a to and and mark-to-markets It quarter cash were retail large XX.X% is counter-intuitive positive. Our large have positive negative

Let me explain.

now to Old rent required negative mark-to-market. the this purchase proved of which the up strong at market rent, significantly high asset too at to cash us to higher mark drove Faz XXX was producing Navy While be then is GAAP the price the which number. cash accounting a renewal the acquisition

the Navy out on and cash back lease, up you basis were on If our Old a mark-to-markets XX.X% XX% GAAP a basis.

X.X% X.X% XX.X%, at the Our growth our stands positive business Thanks retail our a was occupancy GAAP basis for to a NOI second up, and XX points for up retail cash. quarter.

Turning the XXX,XXX back This the space, $XX across fifth tenants We're [indiscernible] just below as block have tenant on a foot. where proposal [indiscernible] our to opportunity significantly space. also we fourth to the good space quarter. in New portion Chicago, square as seeking an square than we in market the on former per in existing discussions portfolio a that in third spread rent foot portions was Mark theMART expand at a the well growth and got submitted with floors, is former less as of activity the TAMI in for a York has of and

square an XX,XXX average of foot. For GAAP the retail $XX.XX nine showroom mark-to-market was an increase square three starting and for cash. Go, totaling quarter X.X% leases the The all Amazon quarter and per including and XX.X% feet we store gauche leases rent saw positive

the mentioned our With Ultra Mayor HD Steve more is project" called of that of architecture see digital months Wacker Art of As Chicago's that a of extraordinary. week bring displayed X.X TV Emanuel permanent into the than art XX,XXX artists continue simply brings legacy the a for Rahm twice theMART, the work on future. exhibition public Chicagoans the campus display and will two visionary XX "a to on five year. launched we September iconic project on clarity nights which of descended XX, four hours XK of Chicago's inaugural Drive acre this the to

perspective Center than to States, at theMART of the and important the Chicago. less position most office its franchise cements building Daley the of art as Plaza. value the nothing our at in From Picasso the XX:XX:XX strengthens display permanent much largest Park art in the as to expect and the city Chicago As display officials being installation as the become United staple Millennium

was theMART dropped while publicist primarily up same store For X.X%. July X.X% NOI cash departure to due the the XX performance third GAAP quarter store same our at

Street with our California office the San Francisco remains complex conclude location XXX city. where me in the most iconic Let

Cube We're hall old banking a $XX As will of that lease spaces we foot former deliver I IWG early transforming progress of next into million in concept summer. environment this co-working in quarter XXX banking the the with told the on Montgomery. good XX,XXX you the of signed Regus making redevelopment entirety it days from we the the this last call at square hall XX-year of a the modern

the tower next additional $XX progressing XXX REIT. foot, completed XXXX, the expanded Grez. rents estate Vornado's and and we've positive, In we global States, leases sustainability Vornado evening. three highest strong cash. quarter, very largely abatement the on XX:XX:XX to XXXX are Light that feet in average that UBS NOI XXX,XXX a Vornado demolition have mark-to-markets in join activities diversified square of as at NOI also the to to is Across three full In in X% over off benchmark strong including were also feet occupancy XX,XXX Contributing the cash. cash. of success XXX,XXX ninth was in GAAP XX.X% consecutive XX% and week as plaza renewal us during floors. in very highest was Leader scoring starting in the third all now quarter the quarter cash. our referred Award the was XX.X% standing over year the remain main new the respondents its tenure with a flagship We We festivities the Tuesday to top Same-store of asset X.X% two-floored forward structural whole you'll bringing This our number and and hope the and in worldwide. in with we .X.X% America Light support XXX, business our feet. the as the GAAP to United signed the leave is and elements been expansion Award. portfolio, placed XX.X% almost totaling and real for and growth With the GAAP estate with pleased showing floor at companies the earning our these announce California among in at real recognized listed The Bank XX.X% mark-to-markets growth complex of the in at week, look same-store this XXX I'm GAAP gross XX.X% third on a Leader and

in significant assets and markets right have embedded opportunities. the developments sub with We well-positioned redevelopment or right and the value

Now back to Steve.

Steven Roth

David. Thanks,

your take to delighted questions. are We

Operator

Thank you.

We begin Thank will Instructions] now [Operator question-and-answer session. you. the

Instructions] will Bank America. our from And We Jamie question-and-answer Feldman ahead. first from now the comes question Please begin session. go of [Operator

Jamie Feldman

do which across good I industries there. Great. across of morning. Steve, and submarkets, real get was your thoughts things -- concerns to comments feels cycle wanted be your to estate Thank the on you concerns want you back how demand where where you just go we flowing in we it know of one to kind clearly might your you I any out you is and are there many robust initial where in think many of about and cycle? know the have

Steven Roth

hi, morning. Jamie, good

is live it by being the First of submarkets, demand, What the is for all, turn quick in more rents. robust even fact seeing life we're in better concerned. We a always job. I'll overview and we're our and there concerned. increasing better buildings the of in you over give to That's part that detail. David

the operate robust not in think? to are us. you If you if we New that have looks do buildings, York, you but you tired in totally very York David, seeing a right New are submarkets, or different what the

David Greenbaum

interesting, plus Jamie, is it's Facebook, in thousand XXX I I'll HomeAdvisor, million. NYU square New growth one have Of year-to-date feet, was by and find million less existing it's leased X.X you X.XXX Langone, that than tenants; we little that it's give that, all feet York statistic AlixPartners. it's square

tenants increasing more looking their still So for we space. footprints, are seeing

about the we're I that As in coming this our guys, proposals his that terms call, Glen heard actions one of on working was and got for for upstairs they've talking leasing I of building.

we've for buildings, and mentioned, got themes you will buildings of of I So action. a is well-located, lot the the renovated environment generally one as good tell right buildings the districts, I well-located major in

Steven Roth

attentive to demographic a York the and New that great. very that very, Jamie, have this, trends change we are say I'll so in made add to

an So business. to And in mention be continues I be the restaurants New if talent watch right People family remiss, we it of enormous in York the it's New inflow they of York, my carefully. headquarters, cetera. and of want very to is New into that's be unabated the York talent, infrastructure because essential business, spot. et theater would part arts, I don't want

And New continues watch so, enormous we think that York an we very it And future. to carefully. have

Jamie Feldman

tenants follow-up Okay. Thank being the just about ownership you they about a you. you Penn, in submarkets, And think Two me, about and interest what for? right Penn, can with One then then terms might the at the just of the in as any be for space, Farley you talk I talked looking decision conversations Two And early guess Penn to increase your in of renovated especially building?

Steven Roth

Farley boys. valley Last Googles the We and We the summer, an we the Farley. think Facebooks they and horizontal, about have love is on vertical. talking not a property. to the Silicon we're which lesson. and customers, we Valley in campuses their big went extraordinary They Yes, out call are preferences; learned to out our have

very, later is horizontal to we very you very, a the largest It's that it's block. eye that It's station. what the announcing are our saw we be creating naturally and with our want know as it We so, right will our much so in double-wide project. We we partners we of and a in Farley campus. exciting to on related have friends today on it. and -- as love eye train to we ownership. So It's footprint And midst town. adjacent own that increasing in the we're we can, think a we

half What question, second that. of sir? the there's your was So

Jamie Feldman

to the for that or discussions Penn building kind of the Farley lay demand you with interested I'm that space? for Just the tenant Two plans you're having space going what -- some renovation, might of be -- in out just talked you're tenants

Steven Roth

We excited. perpetuating us in have those tenants in occupancy, are properties. interested their are It's outsiders. have we're Everybody in the we want in what a and are who bit. is to about a exciting very off to that buildings now the the brokerage of little neighborhood, who Quite shown tenants The our have who tenants beyond frankly, transformative. doing. we prospect we plan marketplace very the are talk to -- It's holding

the this Because not Okay? we're right -- to for lease. to time is us go

and what gotten do the is anything have to are about from confident have couldn't we're in be community, real we more answer we add? doing. optimistic David, enormous you support the estate So demand, we

David Greenbaum

this Jamie, thought the just we're marketplace. is and I, I'd is leasing to -- the and what beginning quick is one Tom doing just district Penn introduce other are in Glen, guys to that

brokerage the We that with. are houses, having meetings with with the brokers all key we do business

New Steve out an of York at is It from XX epicenter be begin of they the said, brokers transformation look we're will to what five as doing when the scale doing. the brokers everything years enormous of that doing the to North the As of we the now. busiest that new we to transformative, Everybody will truly what on 'wow' District Seventh we're we that the doing, something for on will Penn focus be recognizes and that And the transportation Avenue, the terms building we we hub America. and deliver understand the tell say I be in packages you are tenants, of will we the packages amenity we're think going really do. the in

any space. talk very really about days or early to tenants it's specific So

Steven Roth

get feel at a look enthusiastic on also can for that our those, when We're so of, you why excited about doing. take site we we're you are handful a so about Web images for Thanks. our level doing, of a what of we're posting what

Jamie Feldman

you. Okay. right. All Thank

Operator

from Please Evercore ISI. Steve from ahead. comes question go next Our Sakwa

Steve Sakwa

sort of you how just XXX to plan you about comments, currently really plus coming and try of talk didn't next got Thanks. your help how the growing may that or you the use that you've close use capital and kind morning. sort Good Steve, that money in can balance speak in over cash opening year, return from of to discount? the of the NAV you and

Steven Roth

business. well-financed We are estate real liquid, an extremely

and have that the that of money very that's growing every so make by we've can't shareholders. we look make We marketplace the along resources have selective, of We are great our financial money most for the in deals deal we been and resources. at our offering prices decided Those to business comes in single intent. we're at

-- So, let's best the well, best not don't at just work. follow look marketplace available rather the just the and may available that's policy, that's deal the than take deal because we

is to opportunities part answer will of to in away dry The There opportunities. the powder those take current have will the cycle. we the So opportunities. that pushed be you be have and have of advantage extraordinary

So, what we used not yet. be cash have pay I'm saying really the interim, cetera. down the In is et to debt will that

an $XXX we I cash no half it asset didn't Marriott, think billion bought of own clear, the for host from $XX dollars value the a of block Broadway as that know. We that has that a million whatsoever. We financing million, a was to So that bought an dollars well we over a on example, we XX:XX now and free it have

it's but is because accretive press it's the used of we the remember rents but it. you when out put if months buy X% earnings ago even of a more doubly it's to even accretive, cash more couple accretive it's -- because transaction even of we release that So that because

is down when it's you the it. and of acquisition question pay your our is also in liquidity and to selective liquidity to This selectively build will to the good, answer right the increases have the yet, so cycle time liquidity. is there So not time be which we debt

Steve Sakwa

sort are point? to part kind follow up of of And not at or that equation just this buybacks

Steven Roth

that we I it. know If it my increase that answer shareholder buybacks very that buybacks my would do about you The to I would we annual about letter. clear value is was thought think in feeling

in long to buybacks Okay. long-term recurring company –tempting flow done your than doesn't of sign unless put they and a done a other continuously our that dike they're shareholder periods There's no cash creates profile. long, That fit putting over time. has your finger by value the that are

So we'll see.

On the other hand…

Steve Sakwa

Street quickly a I on certainly Can you I ask just positive… more had retail, the mean

Steven Roth

a on Steve, hang for Steve, Steve, minute.

We think discuss closed it we street so practical. We think is practical. every we are your cover -- about you and that at we we thing other just not it, know We about re-discuss Is retail? it just are The should cavalier not meeting. buybacks. We are that minded. are board question we that are

Steve Sakwa

last more Sorry, navy sort guess bit was three just number temperature know trying ago? wanted from commentary today XXX on to kind this off I or largely find to you deal quarter just the just certainly to of trying and I'm say old retail XXX, your I your a quarter, a the that circle than raising was positive up, I'm that risk gauge the out of is months taken to getting versus completed table where being street due to

Steven Roth

that I'd The call not maybe love but retail street to soft. business or I'm that not a maybe stupid. to I'm smart bottom continues be

the strong million think your $XXX of the as we in it are I the is be that continues all to that leases that I $XXX colleagues to And of business. we're number because strong of and cautious all and that business going a was that that best very soon we sure number just to reclassification reduced wanted place we That XXX see knew Our of to did. make put numbers and as properties million Broadway saying you that because retail. out

to okay. think retail bit continues will and So, even and be the tone number caution. fishing bottom in the be XXXX a we little But in better,

Steve Sakwa

much. very Thanks Okay.

Steven Roth

Thanks, Steve.

Operator

comes Korchman Our from next Emmanuel Citi. Please question go ahead. from

Michael Bilerman

here Hey, Bilerman it's Michael Manny. with

prospects Steve, how the given about your Just a Hudson related couple Yards questions, the I of has enthusiasm and successful assume quick shares demand been.

and what was called whether bit math about to the little it was surrounding a or you an them want maybe to interest So you I option that talk if a your purchase, desire the negotiation? don't just it know to additional gives sell

Steven Roth

Yada, Yada, So, called Mr. lovingly I this Yada, you morning.

You get it.

You name. get my

Michael Bilerman

I it. got

Steven Roth

Okay.

did basically was So they're look a capital they -- in we a a related sold love neighborhood business for they the do, we party we and have as they're it us the the profit. but and in business, invest, in different well they What for okay, asset money. as where third they're

our them sell make happy make very we them an to appropriate buy. what uptick So from to thought bases paid and we was and happy to us

create They're much value. then and a very than they in than create to but a business business value, the different we're harvest We're model longer we the it's assets, in They're business So in that simple. term same are. are.

the the go, we close to out love off they a the release of asset, put we love at asset, press -- and So today. we and business

Michael Bilerman

current comes the we taking the it's non-core be cash had about initially just secondly to against the if think is think next the in? paid for sales for about thinking the should on then going construction in couple costs. place sales, we of that cash cash versus And know the the from the cash? be what both it and I XXX. starting closing how coming dollars XXX the about that in official over to the should how coming we that has process you think loan about How that's there don't congratulations And years and then should on down billion of process,

Steven Roth

million used very development loan the that's question. [ph] Budian beginning see to term the partially a is of finance of million XXX a good respect term the I deal. Michael, as you is which $XXX everybody we With $XXX hell use South think, to one Central loan and to Park we

close apartments, will As building loan. we as and that -- that or the the liquidate that of up the investment climb closings liquidate that will we

the gives roll loan of will cost LIBOR, us We as universe. to over it basis in which financing capital XXX into can is term you proceeds is the Moynihan, okay? it lowest use So, see us that the gives the lowest, points

which of that ago. to seconds, Steve half other would -- Sakwa what minutes cost to the capital Moynihan. your I be of of couple we exactly question, benefit so, respect you said into to benefit difficulty] refer a And I couple will now a With of our rolled [technical

Michael Bilerman

Yada, street And table in anything that anything Yada, is a on Yada, contributing front? of on new and strategic the terms update retail, of then terms fund, any the in on alternatives everything to Okay. sort of there spinning is assets on off there being

Steven Roth

years a spin so of done ours. think JBG of create our as "Spin Michael, and the we're company. the we've very Washington's would we is I attention off it's what we recent which more to we than continue excited call our - -- value anybody to call them I into Washington, else that over focus just our the done. Smith, which take child we actually well, So is think pretty have to Child." performing

on other We structuring create will - table, shareholder they are still kinds still the which restructuring value, of okay. are

have will more We about that. say to

say today. nothing about have We to it

Michael Bilerman

for your Thanks Great. time. Okay.

Steven Roth

Michael. Thanks,

Operator

ahead. John Please Capital Our BMO from Kim next from Markets. question go comes

John Kim

South, been And NAVs On dollars realize if year-and-a-half the you capital FFO. on our drag think. time to of Central Park of at you. few perspective, the basically zero, about cash a way Thank and is potentially from given earn it's profit in questioning spent I correct lot NAVs XXX and But to earnings reported fact, it's going I building, a last years. in the actually over I in earnings earnings billion cash all even am that's it but effort an a figure your it's profit? which a shelf is

Steven Roth

startled. a think I little I am

turn dollars. your have that respect to I done that want your of XXX maybe it question think I with details we implies billion question, over But Joe. the sacrificed accounting to to that shouldn't and

Joseph Macnow

XXX not FFO through of to but of developed, going sale billion FFO estate income be accordingly Hey, fall gains We're parcel in but and there that John, will John, as will a a FFO, are Joe. you? on the is will flowing not recurring and of statement only it billion under definition recurring land now it's it's NARIET treat real the of it's of adjusted through on fully dollars generated. profit the non-depreciable as of part as cash up How show on dollars part income FFO. the because the FFO

was off after $XXX mortgage. the debt. a said that the million Steve paying It of also $X.X of million. billion $XXX As paying first after was That's

You do the to the are. can proceeds gross what math understand

Steven Roth

having this I that possible - one a it that of If this in benefit doubt. one-timer, is our it case, in one-timer, a trading significant at a by no increase is, price credit of there the cash think our even there's John, your this project. at of even question end that's likely we is stock. will like maybe the and so massive no very gets our But implies it. And end - fact a be one-timer say, it's I'll in the at

John Kim

it's do figure it it a FFO of normalized will clarify, you included will when be more CPS? to wanted be just as in adjusted, I but NAREIT therefore you so without FFO, taking out,

Steven Roth

which part, of will FFO part mind in NAREIT type exactly recurring we'll No, said, FFO number the is of what you it. adjusted yes, as exclude as be our opposite it's but a

John Kim

Okay.

So there's in reported so is I'm as the on it just your saying, adjusted earnings like number, I investors no will think hugely it coming a to of which lot is when profitable? fact, focus look from

Joseph Macnow

bottom but of Well, on number rather. I The that's the the on include as gets because think number will that well call this focus it, which it won't include as the reported both. people number it a recurring line that as adjusted

Steven Roth

a and of recognized. smashingly bit creates enormous is think project value little investors credit successful, Yes. John, give amount that I it more will I I be the than that. mean, an

giving smarter investors I maybe credit are we're them think than for.

Joseph Macnow

from in The asset. our creation rich to $X the is value a we have billion, been think have way right that for billion NAV, a bottom it, $X a of shareholders line $X share. That's

Steven Roth

Okay.

John Kim

Okay. recorded On your gain I'm dispositions the million a wondering is which on of cash was that. if $XXX you disclose a GAAP net could gain your commercial what you assets, figure.

Steven Roth

Joe, that's yours.

Joseph Macnow

sorry understand question. it Can [Technical once? the I'm Difficulty] repeat I didn't you

John Kim

The which GAAP a had recorded asset sales a quarter is the of figure. you gain that during million had you $XXX

figure the but have. disclosed was you cash I just I that what what figure wondering you taxable was think also the

Joseph Macnow

mortgage. the million the $XXX collection of share was the $X on building, figure in of from cash basis of the The mortgage the our million coming sale of on excess our

John Kim

in Was that? lasted there XX:XX:XX

Joseph Macnow

gains. tiny. really tiny but of was there the Yes, the lion That's share

John Kim

is answer as directionally is the the cash So that same the the GAAP.

Joseph Macnow

Right. Exactly right.

John Kim

it. Got

Okay. Thank you.

Steven Roth

you. Thank

Operator

Morgan Vikram go Our comes from Stanley. Malhotra from ahead. next question Please

Vikram Malhotra

the for Thanks question. taking

you you renewal the kind originally from walk on original coming better maybe I surprised upside. anticipated. of you know the just in any in may Street bake So retail in have your numbers didn't expiration. number us than to through what Can

you see you specific renewing terms know trends there assets? is any - in or something see did of you did the of better So about

Steven Roth

geniuses one I surrounded that will you I'm of handle so have to can accounting tell you seven geniuses one. by

Joseph Macnow

individual But XXX we the basically the quarters, stronger it's of in on basis. conservative being do in past a in piece Steve's of two was that remarks -- didn't the recurring. XXX. abatement saying that a seem always that been the take first we last was very low, nonrecurring To piece the quarter. of the of discussion conservative up million. count Well, We And IMs there Steve something it project that worst a all, tax said, as are in case we've we the make $XXX and a it when even

didn't And credit and a some way. went few We that. have losses things our things anticipated other that we like

Steven Roth

The a XXX of difference percentage points. XXX it's couple and is, between

So small these are movements.

of We will a hold reconciliation, get and you. a do offline,

Vikram Malhotra

were expiring Okay. I this the expirations three Dutti any Can that specifically ask update -- Massimo quarter? at on about I believe and just three the asset Madison

Steven Roth

fill. All of those before will go we empty

vacant. period a have will be they will So they where

Vikram Malhotra

Okay.

Steven Roth

projections. that's And our in

Vikram Malhotra

the assets in they they So the Madison quarter? will quarter the expiring three three and -- stores at expire or fourth were third this with

Steven Roth

is when the expiration. expiration The of -- six

Vikram Malhotra

Westbury. The

Steven Roth

next expiration? the year. the the are short-term We at is couple of Westbury, which take of part couple doing of renewals for when the will the tenants Westbury, to expirations Oh, those a Westbury a out early

Vikram Malhotra

God, just question… last Oh, That helps. Okay. And then

Steven Roth

tenants the when the lighted to make we pretty the are going and going we to to building, asset building, when get renovate Westbury interesting clean it exciting and then remarket the move to façade, we're which landscape is a out a we're On and go out, going property. improvements the the

Vikram Malhotra

may of just model, the last of plans? okay. been, fit you any into give around bigger assets. redevelop parts just with that thoughts Would assets creating potential a of WeWork they the sort it, maybe partnership us if Got any the WeWork the at and bigger could And Steve, moving be of given question then future

Steven Roth

answer yes, The yes. is and

Vikram Malhotra

them? or good -- partnership in those on terms assets any thoughts of consider size-wise And of I just, would term types with assets or what can any you like

Steven Roth

can't into get I really detail. any

assets, business and business think - we They're I of think interesting WeWork. them. with very that they With We specific ours. friends inappropriate. a to about we to do have are model talked respect We that's to talking aspire

Vikram Malhotra

Thank Okay. you.

Operator

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

John Guinee

Great.

cool to it City a New thoughts First can't next how any California to for too, But in event. going York I still much recall? on not costs that's Jerry because bring Steve, is such Amazon to the you week ask I'm and involved Seinfeld mid-terms HQ

Steven Roth

certainly respect is think NAV by to celebrate like what it, Jerry comes in think and We own, it's we is like want We -- asset we it, paste tour has With great Seinfeld, a - best One, to feel really walk California that it California. the thus community inviting the something to that real feel around this hard. it. -- estate to just and seems

they do. the And assets way so the if that that - they we we appreciate can can can appreciate

draw. who a done things we has for we Seinfeld some would XX:XX:XX be thought So that Jerry just know

our we're is, at the doing community asset that same area what estate So the to we're to each really see comes time. come incentivizing real

we its dollar you I spent. don't And coming or valuable remember. So think, not? are

John Guinee

to the How we'd conflicted We're to. with much at you as about HQX? love Amazon midterm have

Steven Roth

else whatsoever to the nothing knowledge, the anybody between and level to than I high. know have to to anything say. the New my knowledge, I city but With activity HQX don't Well, respect HQX more Okay. my about York is midterms, not

John Guinee

concourse, the what's construction our Long the Farley just then, get we XXX% completely buttoned Plaza around? And can Penn Look that Okay. XXXX, all Two, Plaza. Penn Street be timeframe done. - David XXrd so that One, up arms just XXXX big look the should picture When complete, finished is Railroad a Plaza Island

David Greenbaum

at is a think now two-year months we that One, in we're the The you next and as that Long concourse told the of probably terms also duration. manageable could we Island you XX project that likely and project. that's is, the is in around months some told realistically, Railroad XX Penn we share we've starting that's or time at

in comes to total of said XX you're building. vacate lower in talking in floors a April Two. require redevelopment the for major the of as that I of massive the what remarks tenant, my job date where think lease XXXX. building in Penn The I about indicated the we've is as It's the that realistically outside is past up the us to going

So the XX project. XXXX. realistically somewhere part will project now the and months. XX project months that be costs in and right that that will it's really will sometime It project of in finalizing a But of XX:XX:XX we're take of realistically, commence process scope of early to timing a

Steven Roth

I John would on another give cut another, answer. that So you

construction much we there I everybody exactly be understand begin much will sure for in and the think we're will that creating. what that doing in on be so and going so to, Penn will district XXXX, the exactly are activity values

John Guinee

And kick-in how then Mall? when Hotel Manhattan and about Pennsylvania does

Steven Roth

the What of part was the question?

John Guinee

does When and Mall Manhattan Penn kick-in?

Steven Roth

holding a expansion. Manhattan Mall is for parking is action a lot,

going the to Hotel have thing happen. that's not be So which been has through opportunities different of Pennsylvania last yet The cycles panned to out.

So that is inventory. also

what's value with Pennsylvania the moving Hotel that as on expect across We land of the the street. going will get increase geometrically we on

John Guinee

very Great. Thank much. you

Steven Roth

Thanks, John.

Operator

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

Alex Goldfarb

morning. Goldfarb actually for Dan. Alex It's on Hey, good

maybe the not see recapturing don't may that that or of be burn that anything out or questions look in on at two one-timers. XXXX, know it's swap on I or by can our cetera? as things guys Kmarts that you, just So as impacting some thoughts Is provided just for one look based we as the far either as we off or there think last numbers the roll moving you some about year or looking we anything should at for we if et financials NOI you that lease XXXX? is maybe provide could first

Steven Roth

guidance appropriate anything do that to I add? Alex, not get know, Joe, have And so it's don't you as to answer we and you can't really, question.

Joseph Macnow

not No, if in be are going Alex Kmart of is the there to we're if asking like stay are they're at XXX, prepare portion or to the recapturing things XXXX.

Somehow always jewels, finds one of to these capitalize company on. hidden is

Alex Goldfarb

the it. local York, And have Council on any commercial helpful. has there some control for become for York in shape that your XX New New question ramifications conversation the key this in City views press that discussed? way view Steve, years in is in potential the that's way people enough some or therefore of and hasn't about the second has form That's then York Okay. of the debating and won't this you it or been recent understand Do rent been the is enacted it been could pass New the

Steven Roth

concept new it's unbelievably level and storefronts and that's sympathetic idea; to not blame a passed for that not has as are landlords But really, this the sensitive is I'm decades. empty and a that - Well, water. because being idea to The for rents the not I'm storefronts high. leadership that it has idea too said is the hold That very muster political you valid decades doesn't sympathetic. empty have not to you what the of it a are really know

a in real number enormous huge smaller decline and center. That's had very margins trend things pressure has going very, is the retailing the effect make a in that increase in that cost, Now the on headwinds kinds very, the can't especially of are political taxes the are cost a wage there's minimum leadership is the The the of businesses. increase local them, their to very different on. focusing estate affecting tenants of business lots on serious huge smaller Amazon an affect these retail towards profitability. of of it the that the in local a Restaurants in

Now I the say not landlords stupid. the one not rent aren't totally the that is rent one reason and because is

income Our our and business coming the spaces is in keeping keeping keeping, full.

across not misguided the space, of to will go fill happen the piece same think. price side drivers that's the of at that are we're city all to that of would So you most universally the income because the will that a what important can legislation. sure city property the be health so I properties, on clearing dynamics because individual the and market rents financial of you because so the tax, I remind taxes up

this think stores reoccupied sensitive I these And I is the think the but of city, for I'm misguided. I is important the issue. legislation getting health to for think

Alex Goldfarb

Steve. you, Thank Okay.

Steven Roth

Alex. Thanks,

Operator

Please comes next Yulico ahead. Scotiabank. Our Nick question from go from

Nicholas Yulico

Thank Okay. you.

something quarter retail, quarter, down of supplemental, which quarter, for to the in that missing like square $XXX first what's million in million NOI going kind year, is up or million fourth the how have in nine this third $XXX from of would the which of page in that of the imply expected back this $XX So down shows there with is we am fourth you the XX months do which now the I million $XX driving something? you know

Steven Roth

hope is Nick. I going Joe to that, answer

Joseph Macnow

on Nick, a part. our because reconciliation that requires little

meeting. I think prefer the that to I'd with offline do after you

Nicholas Yulico

Appreciate just second… problem. No And it. then

Joseph Macnow

I will tell you we…

Nicholas Yulico

it. Appreciate Okay.

Just are should one is, about question into You we expenses? how other year. think interest next heading

have away, are for that feel goes moving trying debt capitalized I removed you're interest Thanks. just interest probably paying assume as for from time the same of on You to and parts how, and condos next some expense in off benefit the at progress construction sold year? a get some so the

Joseph Macnow

I to Other XXXX. tail expenditures end expect along. remind for go are the XXXX. capitalizing would you at projects the not would I down further We're still in shares XXXX versus of a expense disappear was from result a interest is XXXX you Broadway, the the saw that lease acquisition. will That the as $XX capital of like which coming in year. past million the

Nicholas Yulico

everyone. Okay. you Thank

Operator

the showing to Thank questions. will call no comments. further you. now turn for We're closing Steven I Roth back

Steven Roth

earnings XXXX, with San very We're of Tuesday, Francisco look February Montgomery, at quarter to call, We we forward good fourth day. seeing which quarter. you is pleased you very Thank Have seeing this you Thank XX, and very forward much. many on next a to you for the scheduled look week. much.

Operator

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

Vornado Realty Trust (VNO) 30 Oct 182018 Q3 Earnings call transcript