VNO - Earnings call transcript Q4 2021

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Operator

Good morning. And welcome to the Vornado Realty Trust Fourth Quarter 2021 Earnings Call. My name is Richard, and I will be your operator for today’s call. This call is being recorded for replay purposes. All lines are in a listen-only mode.

your question-and-answer the session. address presentation of will the during speakers questions end at the Our [Operator call over I to Instructions] will Mr. now turn the Senior Borenstein, Vice and Counsel. Steve President Corporation Please go ahead.

Steve Borenstein

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

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

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

Steven Roth

NOI for head at industry of same-store fourth from Thanks, year’s Vornado largest from from quarter measure, increased landed of for our which feet industry quarter XX.X% last X.X year’s just Company-wide, for fourth Steve, we lease. cash fourth the Same-store that -- business quarter of everyone. X.X increased square and the York, morning, good of third feet leading second year, leasing the cash reported largest fourth for New the peers. Retail year’s teams in increased our for Office York was second XX.X% FFO the fourth Company-wide where our leases, last NOI quarter. and leased New outstanding fourth the million square class XX.X% quarter the million from quarter the quarter. quarter. Comparable By any last the and

square the X,XXX,XXX leased feet XXXX,XXX York. square For we feet company-wide, quarter, which was in New of

You Franco’s shortly. will our Michael about comments in activity more leasing hear

and rents starting for cash Office the the for York New quarter. year $XX $XX were

Office year XX.X% a York for positive mark-to-markets the positive New cash and were XX.X% for quarter. the

leasing Madison Importantly, our anchor program. lease current Garden our validate triple-digit District Penn PENN and at successes our PENN X at X Square

public. Penn on is the Here’s District. a Train The Moynihan open update Hall the acclaimed to short

space sorry, the in and construction. by year with, accommodate height of Concourse own on LIRR in Island was be of with Long leasing nearly doubling in The Rail to scheduled the retail is to retail Train -- all the both vacated is with XX width Concourse -- leasing Road completed sides doubling pardon the end. Our which I’m Hall We the of complete executed. leases XX me,

Open. offerings square of for lobby our them space, amenity that to we over new many We terms are have feet are than now for XX At largely fit all Facebook’s grand and X, turned Penn at retailers completed of better at that out. finally, them finalizing pre-COVID levels. multi-floor food-oriented tenant with XXX,XXX And over are

is the here amenities hospitality unique, them in pleasing of that package reviews all, we tailored pleasing business workforce extensive. and be the to brokers. their in far are means and and our After tenants by are wave demographic believe and tenants our largest to the the We receiving city amenity from Our and employees.

of our complete open center multiple become. and floor ceiling seventh wall experience and to the PENN wall vividly models videos scale On leasing XX,XXX-square This X foot busy. that to and facility illustrates is with floor lifestyle life vision have or X we retail, restaurants, work for Penn in amenities, brings District plans our that construction. the and XX% the give buildings, take will to At the style and PENN

XXth will the to and short quarter-by-quarter. Nonetheless, or Our that giving months In allow will PENN Penn to grows Street, excitement the three, Manhattan XXst continues the and announce Office purely the terrific high as our market retail in to our District word pretty our decided tracker. their is pause four other by bustle business, Retail bottom everything no Office Pennsylvania be assets New believe along modern traditional Square our and transaction shiny and right conviction activity strategy the substance Madison construction wall and wall about or and Penn there to our and still daylighting X the I and we is definitely Yorkers separation erected architectural about begins side of between until unique both. has winning blocks, COVID have a appropriate across investors execution warranted. and This curtain the A steel accelerated. in Penn or come own Class span two to is to Seventh to be internal West Penn delay is unmasked will is core life, come in and deadline building. block -- believe with District a the I is the a Street on sight. My return erected of Avenue. choose is as A development-oriented entrance to operations growth District the Hotel that few to counterparty resolved a that will a [inaudible] shape to Station, And massive Garden down Penn scale the statement District street

of was are increasing million, million away blowing $XXX Retail NOI our NOI million. we guidance $XXX.X For cash guidance to XXXX, $XXX from Further Retail $XXX our million our XXXX million. $XX by cash

While very Egypt, trophy quality Francisco asset and large important primarily very we and Chicago, in own a centric was San company. Manhattan a Vornado

down of pre-COVID COVID, standing XX% back residential leading same value. inflation, grow conviction been replacement stronger giants, I As become to increasing Manhattan rising pre-COVID specifically Manhattan occupancy tenants, the tech always New New now vein, -- Office full with the second even is higher all believe, With point, other height here. our ever. that adjure, our the I is to leading the participants, should In returned, leading than a Yorkers is, and stock way, Office in buildings from the also and indicator that we at foretelling to interact is aggressively. for remotely. in West and that and they replacement our of continue occupiers has market York indicating rents, out cost to home have restaurants that went submit performance, dominance pretty Manhattan’s Case XXX% importance topic indicator, of a and future cost the existing I at side as than will the XXX% point be New by building has market of about which

think. So so you and come That be and work will districts when domino submit the activity, employees That is that my now teeming with hybrid are buildings city to much. the than not sooner resolve Office remarks, last schedules but Office will full, I again employers and concludes Michael.

Michael Franco

everyone. you, good Thank and morning, Steve,

or an had increase share, to of quarter, year. for was share share, And quarter year XX%. $X.XX we mentioned, in X% outstanding XXXX. up comparable FFO per last year’s for FFO a strong as per compared share an Fourth per $X.XX comparable the quarter Steve As was $X.XX and adjusted fourth per or $X.XX $X.XX

a our four quarter-over-quarter release earnings in in We eight. page have provided supplement on our bridge financial on page and

several gain, the tax reduced which non-cash $X.XX and have by costs primarily a share. by defeasance total offset XXX partially Avenue Central FFO We Americas, of XXXX the items non-comparable South Park TRS quarter, deferred liability, per in

look leases our by FFO to driven double-digit Facebook businesses, expecting the continued we and we particularly the Retail, As with recovery in growth, percentage our XXXX, respect With continue signed Office share see variable and primarily year businesses. recovery of in we both are Farley another ahead, in variable at previously a strong quarter. per to fourth

most perform Square number And near fourth of in increased with the a Our the pre-pandemic income in same-store over prior successfully in healthy in to expect Penn’s travel back fully A Penn XXXX. dominant bookings. taken in year’s due to demand have income, and still District our albeit signage we disproportionate levels. expect recover return shows signs finally, Hotel quarter variable our Other XXXX, to attendance, continue XX.X% place, than be NOI quarter. still to strong BMS the cash lower from fourth primarily restrictions. have XXXX. we attract with for trade the of garages Times full Company-wide by to businesses the continue

XXX business our XXX on Avenue. the leases Broadway Retail Square XX.X%, rent and primarily X Madison to York New Our cash commencement due Fifth up at same-store was core Office X.X% new NOI South, up and was Avenue, XXX Union

Our occupancies also nicely. recover to continue New York

ended points trough quarter and occupancy in second the third quarter. quarter the ended the Retail third occupancy XX.X%, the XX.X%, the basis basis the XXX quarter at up points at Our upXX quarter. Office points basis from XXX from in

on in improvement Office end exploration and by modest both schedule. based further our year occupancies XXXX XXXX pipeline expect We deal

clearly out And pre-pandemic New futures continues York surge, improvement the as and forecasting experts XXXX private leases, volume million-square-feet, leasing occupancy and to rents. period Most starting as this sidelines and are more along companies level show and demand to beverage all-time and the an in importantly, to high winning. strongly programming, health in long-term industry supported are offerings. into Office works. building technology growth. since that Tenant from start the off activity Now has value, sustained and features, than leasing market. in recent up on users. for economic were of leasing resilience in outdoor transit-oriented $XXX highest in completely important Quarter-over-quarter levels, rent XXX to engaging rich XXXX, to markets appealing quality strong And Tenants centered attracted deals CEOs markets. job they get map with employers pay ever turning state-of-the-art amenity are is food total the they market more their the properties returned quality are wellness of pent space, The workspaces systems, with with happy the market employees. the these performance million-square-feet sector XX strengthen continues far properties flight to lead JLL attract services to highest the importantly, by they’d to Tour and with their to as signed momentum of financial The X.X change, of pandemic. at to leases and of plus XXXX, the Office and is committing are retain quality lots especially an demand that be reports and as by comprised

led deals, here Our including the for in deal the or largest leasing row. the these market of XXX,XXX-square-feet XX% class a team with second this year in

MSG lease Our of falls with footsteps largest PENN transaction within with Farley. trophy XXXX’s X Facebook at at the

well number pandemic past worth XX.X%, respectively. our Apple an XX foot important Secure of for assets. average mark-to-markets XX accomplishments activity We and cash Clear nearly were total, continue leased, Interpublic months, this of XXX,XXX-feet, XX years. leasing feet. the the per our strong Office evident this think continue XXXX transactions are years. rents. XXX,XXX is bodes our than X.X expect X.X XXX,XXX-feet, execute XXX,XXX-feet, outperform GAAP underscoring with XX.X% Square of million of rental of X.XX XXX,XXX-feet Garden and per We leasing foot, high performance square In XX% was NYU for quality $XX Facebook term lease triple-digit large GAAP more over is statistics Moreover, to timeframe, it during to during square XXX,XXX-feet, rents of of and at Madison from comprised and leases cash of $XX and term this and growth feet average as which lease rents of trophy transactions a and were starting at our starting initial XX.X% market mark-to-markets we Overall, square on the trend XX million-square-feet

During completed totaling leases the we fourth quarter XX XXX,XXX-square-feet.

us Gap] quarter in is XX Garden [Audio program was the lease Madison mark-to-market mark-to-market for and Our milestone rent average Cash $XX,XXX XX%. during validates foot. figures. starting lease per XX% from the the take and average major another GAAP years, very, Richard? square was Square our very term $XX rents Penn all strong was to The was District

Operator

Yes.

backup you line. unmute If could the

Michael Franco

for year XXX,XXX-square-feet For XX leases mark-to-markets positive GAAP XX% we and executed of XX%, the at respectively. and cash

pipeline the in active in strong Long we in over District of leasing the XXX,XXX-square-feet expect We in and grow have is to particular it Island commencement an with works. Concourse. Railroad Interest with Penn the

Chicago to San and now Turning Francisco.

the signs leasing tenants continues to with by confidence absorption While to are entering elevated the activity continues vacancy, be there Chicago market growing high quarter-over-quarter. concessions, by tenant market challenged as suggest a increase negative

conferencing will on We River facilities, from and building new in and first approximately starting North in theMART, Grand anticipate XXXX. tenant food create drive fronting completion the plan what differentiate have first Program neighborhood PENN our the landscaping new life year a further first embarked south this Chicago we million hall. include booking on with entrance to main a work XXXX focused second on accomplished We bringing half Stair during recently outdoor $XX restaurant on along New construction ecosystem and class York and spend plaza the of outdoor X spaces and and theMART our a to with River, and floors. new to amenity second fitness new the

introduce to marketplace We uptick in tour have proposals. and begun experiencing are real to the project volume the a

the volume last beginning XX,XXX-square-feet a In Office lease of the recovery market advanced putting shape. out be with city’s Francisco, for fintech great XXXX We San the quarters. campus averaged thaw potential are new have company over and leasing dialogue We XX,XXX-square-feet million-square-feet with underway. XXXX, a and long-term Office XXX,XXX-square-feet here leasing an tenants. during two renewed seems to X.X total in and to in is

expirations at a and XX,XXX-square-feet We to mark-to-market week have in for tenant positive are with where a with XXXX last in and the expiring renewal also a we in XXXX, modest the renew. XXXX lease finalize zero XXX,XXX-square-feet one just tenants discussions significant remaining and

that see XX,XXX-square-foot of quarter, cube, the full. our this campus You is declined function back service. a which XX% will occupancy campus the into The of XX% back is to balance the is solely from which in bringing vacant

markets. the at for pick investment return relative Investor such Lastly, New deals with clearly continue city sales large to turning capital -- the interest X and as pricing, markets they York West $X XXXX up of as to strong XXX such The XXX Office billion, and for for the see Avenue as bottomed value Fifth Manhattan $X.XX million $XXX the billion. is compelling. is in rebounding that find

loan and side, in rates, over debt tight up spreads coupons November $XXX move the XXXX, refinance very On markets the of despite early million in the Avenue to rates, refinancing in advantage including Americas. financing of billion favorable We remain in lock XXXX low of taking $X attractive. all-in on of the the debt our

process the in We in we essentially the largest have currently refinancing maturities modest debt XXXX. XXXX, and maturities no in of are of which

of it and With $X.XXX undrawn and including is cash I’ll liquidity Operator facilities. over $X.XXX restricted current Q&A. $X.XX revolving for our that, $X.XX billion billion under billion credit turn billion, our Finally, the strong cash,

Operator

Instructions] Citi. first you. go comes from Our Thank Mr. Emmanuel Please from question ahead. online [Operator Korchman

is open. line Your

Micheal Bilerman

Good morning. last your announcement want were here been your April been Bilerman go had Manny. the you you’ve It’s through Micheal maybe put years lines. comments that pause. made of multiple those in COVID. us throes to the walk Steve, It thinking on when to pause. you And on tracker along the and can I decision that and Obviously, Board’s we multiple, with just putting around the it to

stocks rebounded, in there to good vibrance And actually something on lot would excitement, put coming when would of the it a so have obviously, put the city, seem it time a why be lot Office of a now, is out. pause

walk just whether would transaction or maybe path? So tracker the us on is to putting other on pause and still it at you through XXX% decision alternatives of that look

Steven Roth

Good are you? How morning, Michael.

Micheal Bilerman

Fantastic. I’m the calling you Office. from

Steven Roth

So…

Micheal Bilerman

So…

Steven Roth

Yes, I little a up dust here. hey, I had yeah, yesterday? So, did

and with I So, CEOs I The themselves. getting in back in cetera. yet coming their Office the our think schedules, into are our for come that is COVID that We the not they tenant’s back mean, not city. yet. we remarks the -- not the have employees or my customers have -- to talk portfolio think speak work, et look, that resolved back and we Note resolved and that, -- to

still So uncertain is we’re an our uncertainty. to is, that foot have still in period. There our And is we thinking forward. want put best

we We And don’t don’t are we recovery. -- think still timing at the of the is foothills right. just

stand District have there’s moment, to transactions still having be in And the able respect no And -- other whether the do or other of are although assets. invest about our that conviction so With that’s to I being our either and it. our the Penn we cover concept to there’s pretty what your, responsibility I and have the a judgment investors all terrific other at contemplated transactions, for bases.

Micheal Bilerman

just I’m driven to your a financial transaction, this what thinking, wasn’t really really Yeah. right. in because changed understand trying

have didn’t You about. which This talked a counterparty you really… was

Steven Roth

Michael couldn’t still something to was done This okay. time we with COVID, This right clearer. I I contemplated couldn’t still are I Michael, XX% be like not buildings for is be success, couldn’t okay. launch the clearer, -- not occupied.

Micheal Bilerman

you’re not this is COVID, during something years. And path this number But I of this along clear. you announced you’ve right. No. for No. been know a progressing

just So that’s during all doing pause to information that’s surprising had now thing... COVID. on been the put -- That when we’ve this -- this you’ve it it’s and

Steven Roth

you’re to that not further I’m surprised. happy nothing say. I have

Micheal Bilerman

you. Thank Okay.

Operator

Thank you.

Sakwa question Evercore Mr. Steve from comes online ISI. Our next from

Steve Sakwa

Michael, or Good out maybe cut for the Thanks. Yeah. line unfortunately two. morning. minute a

the don’t information, pipeline, leasing little talk about And bit the maybe would of and bit lease fourth helped if a get figure. the at we But you perhaps, I I talk mark-to-market could to the about I was you pipeline. a think the that bit a realized a and lease you it so just least little very quarter. I in that know little impacted leasing how MSG probably lost there did. big XX% towards stats directly on up

you just could if pipeline else wondering and I unpack So from talk in was the then MSG maybe quarter general? about everything the in

Michael Franco

if on the I MSG balance But the said, a of did where out being was that’s make I out. similarly cut That guess, comment you MSG was deal. MSG, I the mark-to-markets, on tremendous quarter a Steve, the take outstanding.

you If GAAP. X.X% the XX.X% the mark-to-markets and MSG the take out for were cash quarter lease

starting mark-to-markets Board, of across and reflective rents think outstanding the So I our really portfolio. which is

Steven Roth

give me look in you okay. let were MSG three the own it. components Steve, and One market was this building lease, leasing City, is color, in a XXX,XXX at -- square Island way there I rents. the little obviously, the was second the lease a the we of mid-XXs quarter, foot that in There the Long in

then The most and the the think because the So was of balance the to the number is of relevant there’s speaks into averaging think quality that the lumped that I that is I the rents, assets. portfolio. that starting

about, Island a $XX, City By Square remainder Island feet by Square rents prouder a and and in quarter, the of okay, always Garden of subtraction, lease in the The The this not our way, the Garden, Glen Madison ex last we $XX, the component do. of and a Island they quarter’s rent know leasing, foot. the -- and City Long ex the bang his XXX,XXX So XXs. we the his team. our City, $XX okay. is City did year, and not And portfolio job Long Long Island be Madison $XX Long was Glen of in foot, were couldn’t starting that team up year lease square and

is measure. you So I that that, on focus a if think that

buildings the It Now, by of mix this depends and of quarter-by-quarter is the course, of tenants. idiosyncratic. mix

what I’m ex the and to get fact $XX to but Garden assets saying our Island So ex of extremely rent, into of telling me assets Square our balance the our Madison marketplace. quality reception the the that starting Long City is that, the portfolio, is and commanded

Steve Sakwa

pipeline… And Okay.

Glen Weiss

Hey. Glen. Steve, it’s

leases the have deals notably we with pipeline more feet, at it, about the most from a strong throughout at portfolio the negotiation X XXX. On things. new of here expansion XX% that and X tenants I final is activity tenants. Again, with we we those PENN call very in in today, as very XXX,XXX industry the maybe feet, straight good cut real across Furthermore, said square expanding two negotiations more here, renewals remarks, of new of $XX which of rents. all balance than starting One, foot out, buildings is the of on out over million sit a in out per we’re Michael’s than another, portfolio sectors, and XXX,XXX-square-feet

Steven Roth

question, line statistics on just continue it’s an and important question this the Steve. are So, and to down the important,

District the two buildings, when the our what’s going we of the for District, said which million-square-feet plans that we X take thanks Penn basically So existing part combined. in question. Penn Basically, announced were the happening to in and better we the are

big take were digits. assets. we program. So into quarter a up $XXs these to the to and our into foot X announced important as assets. They to performance this the spend going average from $XX validates that that triple And were rents We are were we the believe and going

not anomaly. It’s the lease timer. is MSG not So an one a

the District, buildings that lots Penn buildings, do in we doing. even We leasing not existing not will the the getting in be of to new have into

announcing, $XX almost be the the know, or as will we be can a don’t triple-digit going the see. better rents, far whatever part rents number of so maybe And is quarter at eye as XXX,XXX-square-feet I to

that will be foretelling and will commanded So future that that accretion are and this earnings the the of the number going coming But from numbers will happiest what balance the quarter. is about portfolio Penn what what I’m our be the District. the -- I’m growth the be be to number $XX the what

those and that assets they assets, and result an that’s give nurturing to perform those years. also shout the that -- a because they repositioning is the and Greenbaum number are of assets extraordinary over improving and and daylight quarter. those about number, of most level that Glen, assets they this able we’re David I so out I’ll to were redeveloping the happy those we did proud of very of years that think the work years and that at last

Steve Sakwa

follow that specifically. commentary. Governor Steve, as Mayor, a Great. am Thanks that guess, officials up, I new for I and with just for government curious… both thanks in maybe

Steven Roth

a not That’s new a follow That’s up. whole topic.

Okay.

Steve Sakwa

Just issue crime, you of just priorities talk briefly, the and you whether how of can some in months? are the how homelessness and maybe that fit Station and here kind focal Mayor New the it’s and do they just York into you the months sort Penn about, to points of thinking the the what six are for key next about XX think and

Steven Roth

across the densely go populated Francisco Chicago, the much similar across and country then York, from to that New the belt Well, which Washington, similar, San northern D.C. urban of to across are northern goes all obviously, pretty and cities, politics, similar demographics.

what So has homelessness rate, and the have all about increased those of you. in same at cities crime

-- is political a in has situation it’s York believe better. is It’s the disturbing. New which we distressing. climate that So And getting

Mayor and to improve in that it. what has the their improve San has is the they If the York of the is about read you said, situation in similar what Mayor Francisco sort what has to that said, are Chicago all said, in has New the headlines job and Mayor

very optimistic. in Governor climate the political level, the about and optimistic extremely we’re and are level at Mayor York at and the very we’re we New supportive So

Operator

you. Thank

Mr. online BMO question from Capital Kim from comes Markets. next John Our

John Kim

couple questions I had on guidance. you. Thank a

Can to impact you takes million. the talk about initially does how $XXX increasing that some this that, puts was XXXX Retail and assets of put guidance, tenant you’ve level? because guidance at XXXX mentioned And your million original out? was which know I since your $XXX sold some the on You

Steven Roth

but And guidance. change in precipitous guidance give we did give Retail, dynamics. the of because don’t We on market

it help And did me that do Retail valuing of and your start I of your so in terms our we be the XXXX. would modeling assets. XX to for y’all don’t into -- in that getting productive terms to think

better will it, XXXX. about are optimistic than we XXXX think be Although, we

of So anymore? Michael we’re I to a you on think, do progression or recovery. And that Tom, pursue want

Michael Franco

like, Yeah. I about, I laid would first John, and just we two all, out. we year, if a think this first were ago where say, you think, years of

You’ve was been on whatnot. some this, skepticism, there

need continued And or was hiatus. I in tourism, at no on the think with we’ve period least the we of city Retail obviously, a COVID, we It’s in best the there went workers, outset say, assets there. say, at picked But We retailers are consistent pretty now and fact up. in active come still so And tourism significantly we own to the return that XXXX you’re started fall the city. think where, see seeing to got… to the no the again. was in what I back now

Steven Roth

We Fuller. won the

Michael Franco

you got we our assets. you own that benefit when Again, a Square, We the of assets lot when of own, et the saw Union great Fullers, own cetera, we leasing there.

in that in we think terms the going line. So we’re a going guidance the that’s of XXXX of fact what’s sign leases and at come through quite and on did raising seeing of assets to few our I of that continuation lot a is

there. you’re need just up that come about to we to the good we the go XXXX, to call continues in building feel hopefully consistent a workers we return there. bottom earlier start of rents I seeing and think, Steve out So, And put to forth number significantly. so said, from tourism But we back had see through and and as

Steven Roth

view, we predict point guide of We what from exceeded million. $XX would that a did by be. technical and Just XXXX

we for for XXXX the and in act now -- us responsible it what my still we expect we We update remarks. the to -- number now is that let known. did So

so, trying think And we’re to it. tell you think we we as what

John Kim

XXXX expected the is is that Moynihan or still retail, clarify want being to pulled to just that Yeah. XXXX I be delivery? that forward to a

Steven Roth

The latter.

John Kim

on… My Okay. question follow is up

Steven Roth

--hang include the number the retail. XXXX so on, does Moynihan The XXXX not

John Kim

Got it.

Steven Roth

pretty can just how is back just XXXX number look profile -- think you growth our retail the So will and improve so forward. you going the substantial, can Moynihan and that

John Kim

Okay. is And question the follow up income. on variable

year, variable So $XX fourth at looks quarter guidance, income fourth $XX of the million. in Penn income However, Hotel less prior on XXXX? fourth I the returned indication had in which Hotel not quarter will It versus in that is quite the the lost loss, fully XXXX. gained XXXX, really be back your was you’ve your quarter if your about that that variable already that million loss like look all but $XX.X you million Penn, the was indication, gain you

components wondering just variable this I’m changed? So of have if income

Steven Roth

feel to on it you call. you if handle detail to that handle off this Do No. you call, supplementally want want the

Glen Weiss

trade is BMS, going the it’s signage to mean, to pretty I way. pre-pandemic. and and were be shows come primarily are they much back, where to garages Either back that going

Michael Franco

would I Well, what standing we as the and that’s significant the having having offline. my dividends signs comments, mentioned is, don’t on signage paid a signage I taken in couple sign, like, have quarter side, dominance the fourth it’s say,

while back goes signage that levels on to pre-pandemic So, quote we those bring up number not that’s further. same-store. the We signage, we’re back, think

Steven Roth

the our BMS way. business, business And and the growing our businesses, by signage

times, to hit normal we normal is expect In we’re we times, be doing going are recovering forward, COVID. doing and now what from grown. in those So the is what businesses now -- of we’re

this color all Now help you John.

Steve Borenstein

please. Next question,

Operator

you. Thank

go Jamie question ahead. America. online next Bank from Please Feldman comes of from Our

Jamie Feldman

decent exposure earnings to you. your a you sheet, your the what terms Thank risk versus sheet rising Good expect we’re of in a look just you get on us rate philosophy kind terms fixed? floating or from balance going rate you if debt, Great. I balance Clearly, the you expect either could tell just environment, run to have at rate of morning. forward thoughts do maybe to in and floating wanted and floating back how amount. should in we debt percentage step of

Michael Franco

morning. A Jamie, comments. good few

sheet from mix. I think predict But wrong where any our years. are swapping reality the exactly fixed answer rates environment. going balance fixed going. last have the rates when generally terms And going we’re XX-XX baseline you’d would several at our obviously standpoint, do floating, would several looked sheet run And are borrowed to a in we in for I is of more those, pay say, even okay. a where balance floating, have anybody if is, can we with for So, been years, don’t you the is,

Now natural debt. just a net let’s rate is hedge against when cash, out, of billion $X.X say, sort which a floating you of

So earn as we’re go to up, rates more then net income. going

two-thirds one-third one from that’s entirely radically that fixed. probably, others, probably not is, about fixed, different We’re which company floating, most

borrow we So that that we fix, the that, guessed of buyer would proportion, costs debt recapitalizing time, doesn’t be I more it and redevelopments, want you what that plan almost So right? up if leverage We’re be it, if fixed, to executing ends right, why business having right? you’re asset, the having of opportunity, a borrow there’s going have a debt higher or selling levels sale, do along be number warrants costly, to assets is that on the right? we whatever because floating you maybe reason, think fix for you think, XXX% You’ve low than put what costing an asset, the wrong, and way. recapitalization

borrowed a we now, at Jamie, may here fix where rates in going we rates general inflation, rate look So if a but levels up, would still several down the enough low. and up go hopefully be ultimately, clearly even that for on cheaper have basis, than are stabilize recession, But it to up that’s rates philosophy. that’s push is push think, our us they fed view may short-term still fairly And entirely And tamp to some in years, floating go they’re risk. right?

that let general sits important I’ll So in he’s on if tack commentary. that think anything, that’s hedge I got natural portion. our also to but Steve understand cash

Steven Roth

have the and of totally bond on and is part in thinking debt the debt the not what safe, you is and philosophy, rate opinion. my safe is rate incorrect, macro analysts fixed floating So that

last So tune were borrower of wrong, amounts huge wrong, you of fixed were the years, and wrong you XX dead to over money. the a if rate

sell is, thing if it it a point has or then want that, for the it first the at locked in high. risk very are whatever And you So, your fixed redevelop years, is or if been if you of have asset view, loan you seven -- which year, defeasance, if a whatever or pay you -- that borrower, XX to historically very, to cost look have is. you you might be, if income rate a from refinance

risk that folks rate recognize, many okay. there is really debt don’t fixed So in

wrong historically. have you and Now been

-- speaking, And basis generally to speaking, anywhere it’s there basis a rate. rate points. -- generally basis points So to X XXX to premium fixed XXX to is from floating percent X

basis beginning. you giving points So, with to you the certainty XXX if XXX in are more borrow up fixed, maybe basis points

And example, down Now, rates guess, attractive bought California in fluctuate and was and fed floating we on unbelievably I and big said, XXX we the loan we three as in for are unbelievably inflation for years a it floating we -- swapped the loan and rate we tightening cycle, fixed low rate and But, is year. rate Michael for, it appears we attractive -- as basically, a if a that. so an did whatever. a loan, now for to the at was period last it a tamp where

loan yet on that. a our floating the -- high, the answer. So did the the recently I the swap feeling of difference for we floating of current that’s We our of was basically a risk XXXX that we that cost did debt the rate bets a was hedged the with -- big debt rate tolerance float in fixing floating Americas not between so Avenue And our bid on rate outweigh and that way philosophical the So, debt? that mean, versus increases fixed rate in.

fixed -- looking rate philosophically wrong. been has For very, been backwards, debt very has

We most stay our sheet, balance very simple. with We our on of forward, do said, liquid of times, going that of couple is So do swaps. a now debt, dollars hedge. Michael balance billion that is as cash of pretty of a sheet most and course,

when of we we rate we great deal caution do it and a use thought. debt, floating do with And think so care,

Jamie Feldman

appreciate response. and Hi. the Thank you. I thoughtful detailed

to through guys process Retail they’re the types right terms color now they the cycle? the the for? Any looking tenants you kind of tenants spaces right in for of now, would You this read good Office about where in to of is at of the How they be use. characterize thought of kind gave want of where thought on back getting point process we should space the office and terms thinking be in

Steven Roth

are on the call? Haim, you

Haim Chera

Yeah. Steve. am I

high back sign streets where those need those the I the Union the going the predict We high New basic of streets Squares, retail, to are in needs tourists as our the and The first back. come and City behind major back fill the Broadway, street take and Avenue XXX Square, Fifth York Times the our little a in have those of So that’s little resiliency Wegmans, back workers neighborhoods will just curve our well. to need a and office longer, and the robustly be we international robustly.

Steven Roth

almost I brick-and-mortar. well. are stock, just It’s the performing. was There around booming and mean brick-and-mortar for feelings Retail country. a interesting. basically brick-and-mortar startling brands but doing are centers example, And open entirely mainly they and And in and been them, brick-and-mortar recovery Retail has brick-and-mortar there are like target it’s freestanding are and of a are luxury look, How well about there’s in shocking. the retailers the negative is doing The that’s air shopping in they combination that probably e-commerce ether. still well. very The others

cities to a that And York and the York those So the There’s We and includes a New of Retail of and are country, the Haim surprisingly will air catch will country begin as and think locations. period The lots why over said we long folks. rest New way, centers to cities, nibble take that time up in have reasons recover of with deals time, in I are we those multiple that marketplace by and kinds aggressively. York, is doing in aggressively. capitalized, is, mean, understand the retailers the open lagger. new around not New are America managed, reasons. big you. well, what believe malls, New -- well that are street I retail high well is shopping that the with done recovering lagging that York and and have the are of will well aggressive are The that starting

years highs street expect years recover. or five ago, We it six not rents four the it will over of to today’s unbelievable expect aggressively. that, time, four the three top recover We will do very retail will levels recover or from but -- the years and

Jamie Feldman

anything the changes of Is Retail? assets in to or you appetite that you’re your positioned there seeing be certain for how want within market types

Steven Roth

We We have how are see, several do answer let’s -- that question? I offloaded well, assets.

lots on into of Avenue We’re reasons Madison I for not very that different high went call. on last extensively the

by about -- non And or think mega in we’re rest happy best important Downtown. blocks assets Fifth two the but on irreplaceable is Avenue And on with our Time I small the will the pretty Avenue mean, very We some struggling, assets. traffic less Square. and noted Fifth we it the you have the Fifth recover. with. own of happy assets fact Avenue, have They’re was, assets it is not it. way, on what that We

reaffirm so our we’re unhappy our right frequently -- we now -- periodically, that we the as with So, and not we of what portfolio. have reanalyze hand with

Operator

Thank you.

Sandler. Piper question next Goldfarb comes ahead. from Please Alex online from Our go

Alex Goldfarb

Hey. Good stock on billables as morning. Good the the bankers morning, Steve. paused And tracking hopefully have well. lawyers and your

the look to speaking terms, has you? California, in because get quarter changed do a to you then engaging but are lease percentage economics, may tenants? or other you, cutting tenants of that’s How the this York? lower do you also you to lot for trying the if presumably much, think inflation changed have of the to have are it’s the rents it as that, package to you that brokers as hearing San Madison far as they when some have you’re XXX How well. much New subside? look a TIs TIs XX, tenants for as in question -- are TI that tenants the to the the Francisco, at you’re Just are And lease when than So, lease rents, way TIs escalating given and in get as and the how the purely the about function what economics that of leasing length Square, is a higher

Michael Franco

our many buildings. a of but going strengthening It’s in tell those in are even I of have neutralized. did will numbers. course, TIs seen They, certainly we’ve Rents escalate you, out. stabilization post-COVID,

certainly a quarter which This weighted TI. the deal, market to was was MSG

making speak years, five I we’ve have been leases. years. are two tenants think numbers Francisco, that your years themselves. the a six for done the answer long-term committing would the call is, terms tell to question you, last have and But of the it, bigger So, lot to been, deal renewals the I San

alone. If in big a you XX-year, of all are over CEOs think, our term, that throughout space our way, signal listen portfolio the in and terms is city remarks, huge terms, to I to committing a XX-year average

the thing think huge about to employees signals to that’s in bringing and commitments I the So space. think their of making big starting the future, back terms of everyone

term you’re the the on answer biggest So I focus terms asking. what of in think to is

Steven Roth

Alex, this. give The you it package -- let elevated. is inducement on my take are me -- the TIs

We are the by and not we market. happy way. it’s market with the to But the have meet that,

the and of New York is TI basically the that’s So of a rule -- they’re That’s upon is term in package the thumb, lease. market for there’s of rule the a rent the -- free sort of is, how thumb, formulaic package okay. large based

new So there’s it’s where and a not lease wall, a the is it’s a jump of formula. negotiation, -- kind every formulaic market a has to gone fairly

kind So for every it’s term. of like month free year of one

will that’s that’s not elevate wise and play. who them, sort works. we the it are TI the rent, not the some There of okay, certainly guys buy up that in the game the we way of package market. So, And are one

Alex Goldfarb

comments then which saw guess, It that. may died you mentioned need That’s about reform there’s just back Albany. I because to and have headline certainly your unfortunate, yesterday, No. pursue helpful, But uncertainty yesterday, uncertain… isn’t Steve. going a we like Adams market, I with going Okay. And the that sounds to in that, is Mayor bail certainly,

Steven Roth

like over that okay. political son, head you’re Alex, predictions making your

take something says newspaper it the because don’t that whatever the to because Just and is, bank.

Alex Goldfarb

comment and and a like seems here. it I moving accepting Okay. Even get around is, the said on is uncertainty my the especially to office. to made about Governor a got to But Wall COVID are COVID that. of back that the go companies, Banks won’t everyone lot ATM. Hochul of Street has and you We sort question

the feel concern to the COVID be done comments of home? they the make may It normal in the managers, uncertainty if to back you just that when return to to a maybe the sort companies may concern have the with and like is with employees about leasing gingerly until there there a is that at subsides So or live. COVID still true labor from of everyone’s pressure get wave, that go they like the seems another wants sort there’s back market,

it still being was I a curious So comment just out about your risk there?

Steven Roth

said place I talks -- to, resolved think yet. The the a this, where a run that don’t think table. I businesses universal from where from to or run And feeling. and where Glen was they is that I office, okay. to The talks and place office, -- back that’s didn’t point is, I risk. office the I their it feeling creativity not the it’s CEO think the was is it the that’s is grow. every or talked mean, of I said businesses Michael a feel all it the are I they kitchen gatherings universal not is, business in want people are

again. my in be normal. and From up issues date that’s workers a rate partner’s and call X back have my point here, offices silly, is XX% the that and that getting to going they’re feeling. postponed of that health speculating which over and then view the postponed other will different obviously, the it’s on this affected and issues XX%, there’s And going is go occupancy on back postponed to obviously, all now announced to from that their the Now, little when people where it gets and when of

thing happen, tenants operations. But the it all know. is CEOs, months silly. now, our I think that office we be three our know from now months and to of nine basically they It’s want do centric it’s going one to don’t or whether happens from the clients, we

Alex Goldfarb

Steve. Okay. you, Thank

Steven Roth

Thank you, Alex.

Operator

ahead. go Camden Ronald from comes question Please final our from Morgan Stanley. And

Ronald Camden

ones me. Hey. Two quick for

a on been variable is -- left way? recovered, in relative to back going asking just there different way how putting sort -- all to maybe Is not of Just the a on together? there pre-COVID income, it much that’s think about

Michael Franco

cuff want to number a follow can Ronald. of don’t here, the offline. up I We give you

to by going component. go we’re So component

So cuff. let’s not do it off the

Ronald Camden

Sure. bought out. a And in then of sort so acquisition partner did small just, one my XXXX one was and last

sort that Just and you some ventures? is XXXX, the of are curious, portfolio and more opportunities joint -- XXXX in about thinking the like there you’re as of

Michael Franco

Look, that was…

Steven Roth

What was the question?

Michael Franco

that in is opportunities in like XXXX? our and XXXX answer partner a more partner… out The bought We then

Steven Roth

Alex, we will see…

Michael Franco

our happy responded But about all and fairly seem we purchase. partners we’re that, initiated other content. They the

Ronald Camden

Got it. Thank you.

Steven Roth

see. we’ll be to continues answer The

Operator

We have questions at this no further time.

Steven Roth

you and you from last from you very participating dialogue and can obviously, our published all Well, that We tell much. our and evening thank appreciate the -- remarks then, results afternoon. this we

had a think, proud of teams and we’re quality the of these and about our quarter. very bang Penn District. excited. We the delivering extremely results the and Retail at We’re bouncing think the excited up portfolio. once proud on I’m we of we we’re doubly off we again, bottom We quarter. We are our aggressively triply that reaffirm reaffirm

your -- So we’ll the we appreciate in call. next participating and next see see the you you at we’ll call

Operator

today’s gentlemen. conference. for and your you, This Thank participation. Thank ladies you concludes

disconnect. may You now

Steven Roth

Thank Richard. you,

Vornado Realty Trust (VNO) 15 Feb 222021 Q4 Earnings call transcript