VNO - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the Vornado Realty Trust’s Second Quarter 2022 Earnings Call. My name is Daryl, and I will be the operator for today’s call. This call is being recorded for replay purposes. [Operator Instructions] I will now turn the call over to Steven Borenstein, Senior Vice President and Corporation Counsel. Please go ahead.

Steven Borenstein

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

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

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

Steven Roth

Thank you, everyone. morning, Steve, good and

XX% As last Michael in we up moment, another year’s good will quarter FFO comparable second a very quarter. with had cover from

we less are way, X reaffirm than the half not the forecasted, lease. are efforts housing first what couple and seems of signals very be or to a a all perform to market is and confidence, given from There headline a year. the incremental this the cash curve back PENN year-over-year. predicts was have that layoffs. now expected half around yield of inverted to our slowdown ground market, right well, desired interest up a their Fed’s of beginning million NOI retail recession non-cash and inflation Well, projecting we for companies on the participants charge accounting the the effect. had falling to and curve rapidly still high. $XXX Overall, guidance the consumer of even While of are below slowing By signs forward year rates come be we The our remain year years. expect It announcing rates numbers yield expectations business within continued the second will hiring pauses like down

do are While in manner last are long-term prepared leases or we region. Station through protected speaking, at choppy the piece our infrastructure transportation PENN, I by about started expect important might early of ended conditions. for either In XXX we at years with far the tenants, transportation X,XXX by is PENN. in a most say Pennsylvania PENN of project that gone that has

District seen, involved part entrances, a new of All realm modern Last the and have improvements Adams a general many project The district affordable finally improvements maximizes holdings Out of for and overcrowding transit-oriented including XX and mixed-use is PENN four Hochul plan benefits, Station. zoning piece to as of create public housing. PENN for fix accessibility, robust we important, the and Governor and course, State overlay addresses that surrounding Corporation essentially and the week, this, station GPP a of critically large here. a public plan PENN development and GPP Empire is own sites important subway the Mayor in unique fifth. an in makes District. have to This may you of Development we the the approved

have public-private Street, XXth and Train two advancing the plan, project including XXrd now PENN District, the and And Station will and meaningful Long also Island our Moynihan is a in We remainder deliver billion MTA and in have Station. led of of delivered Farley, design which X general was long for PENN properties for realm XXXX. beginning concourse, successful another the the partnerships ESD-led station the of Hall, Yorkers, in new New around the PENN $X in work new which Railroad improvements We’ve at transit invested and reconstruction entrances PENN the including public in that X. multiple

In addition including to overwhelming the substantially year enthusiasm. accomplishments finalizing PENN largest has package to a best-in-class PENN the us of – of the been one significant X, GPP, we this for At the in amenity and completed been District. renovation,

shape. more It’s taking estate PENN of to is transformative will Our generally and total the and exciting current District and two us X X of structure [ph] PENN be renovation reimagining complete. market for block-wide the for bustle and our see than centerpiece our real PENN X half deal development. this the

in which Park XXth certainly our you tell at Call a to Brazil, square on imported Michael team me much for as and Fasano [ph]and Michael As an living up as are tell to Jan about being spot town. We on new best get million you that, completing our XXX term. Kudos and and campus Avenue through will shortly. restaurant income This Street. in by the foot refinancing, I leasing with the their of new they as reservation. will I you, we incremental be short can’t X.X NOI one are producing underwriting. a million if of $X.X mean for end their will And from of stabilization. notices completed plug billion $XXX interconnected Michael additional Fasano restaurants

Now to Michael.

Michael Franco

good morning, Steve, and everyone. you, Thank

Steve strong had another we As quarter. mentioned,

rent driven leases was $X.XX as FFO ground an new the businesses, XX%. primarily expense. estimated our of by straight-line the the on continued to and X share second year’s adjusted per comparable quarter, increase quarter recovery Second by and increase variable or XXXX compared offset of last impact of retail $X.XX commencement for $X.XX partially PENN office rent This was

is growth the It earnings X. repeating XXXX said financial provided share our platforms the and growth, core our in by single-digits. rising earnings from continued Page this our retail, per impact our both for recovery that our on have rate primarily operating be on on in expected driven comparable of quarter-over-quarter FFO We signed in Farley factored that release last which previously X in call, Page in debt. bears leases at the strength a including our variable of rates supplement expected bridge businesses On to office and and business, we we favorable metal mid-to-high

anticipating. our the FFO will rates interest pace lower we faster-than-expected earnings to now, see a have With next we costs recovery as the However, and expense currently than continue in than Pennsy. year of rate affect our and of result variable from we the Fed businesses, XX% been rates in rising hikes development rise variable XXXX additional greater have full greater magnitude closed higher anticipated. in The impact a to in debt impact year. the were second four EBITDA of strong quarter rates levels excluding Hotel for is Further, the pre-COVID around growth total a respect will the

largest in Our with and strong. Times another bookings and which is dominant Square city very business, District, signage strong in the the had quarter best the the location PENN signs in forward remain

continuing is during commercial the industries, to show. took due trade hosting trade Our trade to business our last is which typically pandemic. place show of at the rebound shows No nicely, largest NeoCon, furniture second design our year’s including quarter theMART

year variable businesses the the with a continues income Company-wide second track X.X% expect from prior full year. return cash our quarter quarter. same-store to to by the levels. of We perform garages fully near over on business Our still BMS be pre-pandemic NOI our XXXX. the recover second most this cover in are And to increased this for finally, to continuing healthy year

second year Our business the York while was X.X%. New overall was office up compared up prior business quarter, to Office our X.X%

our Avenue. Our Fendi commencement and XXX at Goose really Avenue, important retail blend primarily but XXX New due not Sephora Fifth Christophe XX.X%, leases, at have X Square, including was and NOI analysts York strong story. same-store very is at up XXX that’s retail. cash Canada the new at Union the to a rent Wegmans Several XX.X%, of on a Madison office that occupancy Broadway and That’s reported

first at New still Our New ended XXXX the our in industry quarter of quarter up quarter York of flat second from the basis in but highest office XXXX, XXX of trough against and the XX.X%, points is York. the which peers occupancy the

to New quarter space XX.X% the was development since under second at previously being occupancy decreased quarter. last retail due Farley placed York the during entirely to that retail Our service into

to relocating markets. using below tenants to large-scale many office city. redevelopments leasing Orix. end market sublease builds in financial office leasing availability million, the across top remains of with is demand sector but level highest employment Now landscape the activity New the jobs Tech commodity up transactions while the feed. and in has most with expansion are York, in and February continues of in In the pricing X,XXX almost has dominate strong, now Leasing vacancy best-in-class to some is ground-up half only accounting increase. its has higher turning continues tenant to product both well-located buildings sector tenant new experiencing Overall, X.X jobs velocity reached space higher-quality for its less March slack, slowed, rates differentiated demand and and the large XXXX rental total XXXX the which near market-wide buildings older in picked since

reflect and our leasing onset benefiting these pandemic how results portfolio the of since it’s office resiliency best-in-class the Our of the trends.

XXXX office years. leases in resulted rents average XX.X the signed deal-making average of at per foot feet Our quarter more team’s since square million skills and first of have term of lease strong an five of $XX than

a feet completed During quarter, the XX we second square of leased. XXX,XXX transactions total comprising

We the continue market. outperform to

and have impact foreshadows of we’re leasing quarter-to-quarter going portfolio program success Our PENN also. the X at X. consistently of healthy immediate PENN high our to our the the quality metrics redevelopment reflect This at

square our and was redeveloped which validates square increase per significantly our starting deals square exceeds foot feet of our amenitized and square transaction rents Seventh $XX a in deals $XX at XXth this of transaction further for our strong highly program with XX,XXX Our a highlights feet foot, PENN underwriting headquarters at this portfolio-wide include XX,XXX to rent at per Other Street. Madison, average new XXX including expansion square PENN square foot a XXX XX,XXX East a quarter at relocation private nonprofit various XXX assets. with foot firm lease equity quarter Avenue XX,XXX at X,

our the XXX,XXX X.X% remains than XX.X with feet of proposal was while quarter’s Overall, square activity pipeline XXX,XXX deals in was GAAP active average additional deals more X.X% negotiations positive these of and and lease square cash. mark-to-market lease lease in this on term an years, stages. Importantly, feet our

on where concessions longer active York’s more theMART, pipeline Chicago, leasing feet discussion, impact recently be and behind with to amenities, positive other summer turning is it We Now and our our office fitness conversions conferencing market already are taking New efforts. will than elevated. world-class while is to leasing and XXXX, in which our add the by commenced having lagging remain is capital program completed recovery. square XXX,XXX a At

During vacancy showroom the a expansions Francisco, of XXX California our square the XX,XXX line market and leasing our building XX,XXX overall while return to Street average In campus our foot an which quarter, majority other at industries we experiencing of starting feet San is low per Montgomery than square numbers, level vacant rates Street. leased record $XX at full work foot. square XXX and were renewals within remains

new concourse, in city are We results Station’s positive highlight XXX square Avenue. to at be fairly Seventh with along Tower, quarter, square for a continue very PENN to were rents is concentrated new Retail within set deal deal mark-to-market. at locations. true our X,XXX triple-digit a XXX,XXX in for continues Retail highest of expansion in tenants leasing a modest retail more currently feet XXX for existing with of watermark Chase retail mark-to-market. feet high dialogue PENN being see PENN the leasing the and with spaces Island X the footfall the busiest market-leading fair. Railroad Long activity healthy significant with renewal rents newly long-term we the Trophy tour renovated a in District in This proving This the for typically than

retail commitments the previous belief for XX in in spaces public These the reach Station. in More to XXXX. for demonstrate and specifically out and visitors city watermark York our of half XXXX in million for rents retailers’ transportation signature return leases Station. tourism PENN in bustling rents is with to high broadly, and pre-pandemic PENN New have exceeding concourse levels XX the almost the We to City projected fronting

retailers momentum and positive are this concerns by more about about making retailer being inflation conscious and is many However, offset commitments. recession becoming

last and sponsors capital asset markets are selective, now. significantly balance year. sales rates in to with to Turning The which volatility debt benefit sheet is increased and the properties. both and of much the high-quality accrues Overall, the the of impacting the CMBS stronger volume capital markets down interest market from financing markets being more spike and

As with out such, spreads available. have lower generally widened leverage

which two in we XXX $X.X of as our facilities well previously credit As consisted $X.XX $XXX refinancing XXXX Street. one June, and announced as and loan unsecured in unsecured billion refinancings, million extending completed billion XXrd revolving to West of our XXX Broadway December

operations. more XXX, while which over-predicted the rates, We’re to quite sponsorship quality historical XXX these a with had financing of improving these completed on with And challenging. that and executions were more And fixed reflection floating is the curve we line to pleased at historically XX-XX, they fixed Broadway, refinance focus loans becoming early. properties. we is markets ratio our heightened spreads, attractive our anticipated forward as lenders We with all in

all mid-XXXX. significant with Importantly, dealt with we have our of through these maturities refinancings,

the the monetize challenging our during continuing our at sale announced of are market, quarter, go. building asset sales Island we other for of the non-core million assets. on to We efforts to our Long non-core also $XXX hard office the completion Despite City our work

billion facilities. billion undrawn Q&A. the it cash Finally, a credit U.S. liquidity to billion, our our I’ll current $X.X and $X.X cash, treasury of strong and turn in under investments bills billion restricted including over for operator $X.X $X.X is With that, revolving

Operator

our of And [Bank question [Operator from first Instructions] ahead Jamie Jamie. America]. comes Feldman Go

Jamie Feldman

rates, the from model and year it the talk where – And was as where the drag to about magnitude change and XXXX? starting both on how it, year. maybe your morning. assumption your about what we’re just good you outlook – – Thank of next higher just XXXX where thinking you Maybe just earnings your is with for more Can for this and and in now?

Michael Franco

the Jamie, last single Look, double-digits where still you and we it’s digits year, look mid-to-high said it’s Good in projecting we to Michael. if were at time up. now morning, early be

told the points of impact you and with And of LIBOR first billion, rest we’ve at what be. take out floating $X.XX in be. impact a have tell And change in you about at forward higher rates you where thought looking XXXX, debt done would if thought already from come share ago I’ve And than around you’re today. looking we obviously, basis just $X.XX But we every where would it two rate seen been you’re We’ve the year, the so model XXX two quarters you the could day. on curve would it down. roughly weeks from I

our Obviously, we predict. on really of rate reflects can’t where we that So, two quarters versus impact expected. debt variable

a Next on year, that. we’ll have full year impact

relative going want sit XXX Again, the basis today driven overall it’s and you curve points I be, probably It’s the by give a what potentially. so be to to another will expectations, here don’t the divisional And ballpark. number. in

Steven Roth

the Jamie, a little on more debt. bit floating rate

it pay a First of it well some billion. little we may $X.X of We of fix bit the reduce down. very to did all, more

or Second, floating debt. interest a loan have were time years, enormously took we rate and benefited low XX wrong. period, rates rate over wrong, fix that XX-year we the we or and last from XX the wrong during Every fixed years

So that’s but going next that many all in matter assets our doesn’t interesting, thing are forward. it very The of transition. is

rate fixed rate of involves that on asset facilitates which are in sale extremely our because getting have cases, a data, be out list. digital you assets debt the And floating – as of seasons, expensive. many of transitional course, could Some for the when

example, executed about of Michael? it half perfectly and rate and we what – XXX floating ago, right, the got we a year activities California, debt for Some fixing was

Michael Franco

Yes.

Steven Roth

spread ago, our it. About a floating on year half fixed and basis, of rate a share we very a attractive loan attractive at very a and

good, real X,XXX that no increases. guess So that think blame that benefit didn’t debt the next expiry, really very get The I years, it We the piece which it. to rates retrospect and for go fairly you of fixed was debt when I refinancing, rate by and protection up, outcome long the is is course, whatever whatever as take go very that, the protection was a rates, the market to rate four current which against rate interest good years the thing rate mean about a as When And a cap of fix a it, is, asset. team was I’ll a is we years, floating interest in did similar five three about On mistake. to reflect there is. And have it you environment. small of lasts. or of rate for

So there have it. you

in year some give this it will We next and year. back of

the quite slowdown there expect business substantially what but have perhaps upon – of depending you We to down it. come the And depth is. rates

Operator

And question Michael. Michael comes [Citi]. from Bilerman our next ahead Go

Michael Bilerman

in Steve, you. comments… opening Thank your

Steven Roth

welcome. Bilerman, Mr.

Michael Bilerman

you. Thank

So forward you path Steve, side that that’s sort little on going go where so sort you a thinking does stupid, you many it’s And cheap, going not about how outlook stupids the how you’re been many about, I have if want recognize for of affecting choppy Obviously, happy stupid of sort of to don’t your in forward the with still But asset there’s are conditions, Vornado. Is was about things everything tracker the marketplace. given this? stupid, of of put. price to know to is that it getting direction? you strategic talked stock how today. you’ve now on. sales, bit going stupid, sort I And change the other the And it

Steven Roth

Good morning.

this, six so. last through over or or don’t I five know, times or business been five cycles the we’ve years at all, XX of First six times

through is, fairly for to and PENN things, example, sanctity example, balance preserving we the So focus And our certain have which protecting the in is our X. X for our our that end. always that, two, the do Number an PENN respect market of job plans the with have to rigorously that District, and safety do, buildings keep the important sheet. sheet balance missions liquidity, there serving our on we is the specifically us extent permits grand leased to PENN and to to

York-centric. a will we’re spectacular have And value we are and all outcome so the surrounding those And District. the upon based New buildings basically – PENN increased those of

We set continue that comes skill our aspirations. buy in off to of to if have around, acquisitions, something an we is think hits terms and price open

more rigorous usual things So a balance basically, with important the it’s business focus on and sheet. as the

– get G&A very, cut of capital on in nonessential tough to very beginning We cetera. our and have et COVID, the began expenditures, we We expenditures. reduced

So those do are of has business a going slowdown. things. said a the to one kinds of things that couple And into I’ve

like think on I to of we’re the recession. a it me foothills looks

in are I the We Fed bet think is. a everybody don’t which against probably mode,

their said, foothills correction. of the I possible. and Fed the As be we’re objectives accomplish that their we’ll in we And keep business foot as are hopeful a quickly disciplined. to will the We’ll as peddle

Michael Bilerman

So progression you differently of headed? is you’re I this the bats And District? does of activist – that the Alexander’s there. for knowing the with to trying have Like happy it’s stock we’re the valuing of mindset where that of a sense sort your is PENN asset – But alter whether at and Vornado. about sales stock sort at where market today out all obviously, thinking doing or get where don’t there’s tracking

to the potentially even and we’re decade could this I’m trying understand so last change that the just the what you’ve value-creating better And understand, given many doing I’m into spent in? future, and environment continued so simplifying activities to trying just year.

Steven Roth

me of places. that couple a in Let unpack

PENN be tracker for I separately that is technique strategy all, absolutely other whether believe security, First right it to the a continue the some of separating tradable our District shareholders. a still or to

our a should PENN be to think isolated grower, that the that is and in expect We have to ability the as an investment. pure-play District shareholders we

believe to. we that party, can want in occur we’re of So still sides time so that’s lots the in subject between. that we no a up whenever different That’s we continue to it And could air. things one. is to The I both – that have timing counter I that mean to we in strategy. speak, of deal, will, of totally on

And non-core more whole year in reasonable, as if once in as basket, we more our the to one that million we better a have to out if sell group of $XXX can something good it think execute. our we ago, but are are we’re and we We all will have be we the asset. would the Secondly, think the are somewhere time. get executed incomings we There of so. don’t improve know, we a execute sheet, value shareholders do been good which you pricing, where non-core or is a and for selling, other happy very [ph], of the get between, Long quality. on buildings $XXX that enough – those Island sensitive create balance buildings [ph] not portfolio that’s price two because although process would we that. And like Nonetheless, which to get our that already I price assets will on could we buildings City at to important can is million we

your think hold my I I’ll for was to last I part with the Alex. activist going that, Alex. continue going the investor statement to I Alexander’s, answer And I to was at was which – hold to respect to think of

Operator

our Go [Evercore Steve. ISI]. And ahead next from question Sakwa comes Steve

Steve Sakwa

if that four you? Steve, sort of PENN new Thanks, just evolving was And you I could a of sites, wondering office owned the give the little good by how maybe residential? flavor spend those that more Station versus see And would much on little be for are morning. proposal, over time the us just a you time? how XX

Steven Roth

the PENN was say... – since do over over years I said District multiple times what recent – I the our that

Michael Franco

Our kahuna... big

Steven Roth

was – eye, cetera. was kahuna the big et bull’s ground Our

believe very for Yards projects, by of large map. of is years the they – property that PENN sort the XX and most that us PENN the now. district have believe We Station which a were piece important been entire We really in a benefited adjacencies has where District region. infrastructure successful, the We the on Manhattan the West, put transportation of accumulating actually very Hudson been in

enormous appreciative very There our time. the amount we’re district. get incomings we neighbors. demand the an of for So, of is I the mean, of efforts all

existing become And a the option FARs each It’s things overlay party. of And for are it. so will increase is at is matter. state site city that zoning that where basically, have there dominant zoning an GPP the the footage involved buying at to by multiple basically the One has is we the the square allocable in market value.

So, I larger we say can we be million square obviously paying remember, is FARs. numbers, value fair X for allocated of avail ourselves But can build – over. So, we’re might market can – in round intend think those you X we that the build additional in there’s district, that buildings, which to million okay? feet FARs right,

The and state state cetera. our respect becomes zoning, is EDC to second et our overseer the of regulator with the the that the thing basically and –

the actual that is and basically revenues the builds come to the Station, the to reconstruction agreement basically into payable will pup allocated state, And the city been to where towards that taxes subject to is had that the what PENN then of between that be historically. of off first a an city okay. allocated is third were most the the that city new The this

anything? and the I forward allow small what an have basis. relatively to And a Some go the was construction to scale of forgot, incentivize the access to vetting will Hudson of be economic what Yards on it, developer on allocated amount

Michael Franco

of About park so... the XXX units

Steven Roth

a Yes. determine might intention been principally requires might – development, we long or park, The change, this time How that mix XXX over zoning for about of has office a be of not okay? will will units the time. the

our long-term right a the X, and PENN remember, ankle of But which piece at it X to huge part Farley, the is in as they redeveloping. irreplaceable are is Now of we are – And this whether our underwriting. deep first PENN are eyeballs up we in before, – have location. buildings, on I said or involving a project existing

those this new meaning million expect and $XXX be term, to additional generate short NOI. from to we three, incremental And years buildings We now four, of an relatively between stabilization. expect five to now

Steve Sakwa

or Steve, $XXX and leads that know Well, on the you’ve hurdles return and that are because into I is the think in to the leases. maybe as much spent Great. in you’re million, I income guess, marking PENN to trying these is market into say, where of how a some others understand laid statement follow-up already flowing X of we dollars income, out struggling I supplemental. my that

so give you sure credit, counting want not we And want to we or we’re make to double overstating. but

So think us from from contribute? there PENN of help X about you contributing sort way a start Farley can to is And PENN what’s actually X would when today? then

Steven Roth

XXs. over online know the or has so. X, average this, they’re XX% I’m care going online from to to because say let going begun just approximately an I my in which to is it that Nonetheless, $XX will something quibble like that. rent million finance off-line, like exact occupied, take Farley, PENN and team maybe the number, of whatever but with don’t slap me. the next the at come are high come year I numbers XXs,

We that $XXX for to be market building rent a foot. expect the

and – Michael we have said, as XX... We signed

Michael Franco

XX,XXX.

Steven Roth

already. square feet at a average, See XX,XXX quarter we underwriting. feet. four handful think PENN of $XX slapping our a they’re of XX,XXX leases leases, validates or justifies and foot me X, five which in this

expect same PENN for X. We the

foot XXX,XXX-odd a that’s what you over X.X I’m time, to million it a $XXX over, producing a one $XX leases will feet, that’s square feet, the So, period or number, for the times two PENN will pick building has time a will new, X, X million, pick from, not over and time, completed turn saying will go the fresh is foot tenant less over as than has building which come of – million turn And leases okay? That’s today. which a and that PENN basically say, X.X $XXX $XX foot, years. the as be is, means in coming feet, be income

and what and have lease-up with you. So stabilization

that’s think years, a will will to years two of with even X.X feet the produce space vacant out five okay we so be that now foot. turn So $XXX maybe me million – four,

– the model very conversion your And the like. give there’s you I I with will more way can you math. is help you to very, So math, expert do very, which as it, that but my will said, if and this, you team, finance detail, that’s hope I

Operator

next comes from Alexander... our question And

Steven Roth

Sakwa of obviously, this reflect. And development Steve that want to public a minute. that company think I doesn’t this back prospects a the and go stock I know – any I okay? magnitude don’t company to there, so other a has for out has unique

think the and reflect for way sorry, to have doesn’t opportunities I is stock we what go I’m we than ahead. less selling here. the have begin now

Operator

Okay.

question next comes Alexander from Go Goldfarb ahead Sandler]. Our Alexander. [Piper

Alexander Goldfarb

for thank Steve Alexander’s me Morning up and question. you holding

think that we two Is correct? get I questions.

Michael Franco

Yes.

Alexander Goldfarb

Okay.

So Steve...

Steven Roth

serve here to I’m you.

Alexander Goldfarb

– serve I’m all serve to And I’m don’t just kids, my so and someone wife we. here we

So.

Steven Roth

Get back to business.

Alexander Goldfarb

Okay.

going Steve’s So first, on the District. PENN from off are question two questions

it one, guess few importantly, like guys or will I So outlined. sounds of with a the four not second more New XX only York buildings have are entered guys you that you But all like Mendik. five, and

office online, you’ll of but in about you, it talking or Hard the years XX next and to takes just XX not to that five five how You’ve PENN years. build stabilize four to or long for been buildings up get believe even that lease. because

more question there’s rising spoke are earnings, as So dividends, of paying as you’re guys you because yet sales, the rates. you far asset of earnings

longer, investment about that time investors already you’ve in but years, of construction understand where vehicle stuff lines How waiting deliver. this near-term are that’s things vehicle put where much think under and be How – in you a public the I versus this earnings seems been existing are still in stuff us other private expect a to to for is lot We’re out a something to the growth, near have that we waiting all for because from term? more tangible this that guys. nothing multiple are

Steven Roth

don’t I do real market. stock estate. I do

time market the the only and that no saying and you earnings, multiple values I you’re value can I the that and the on even that the the by and that on I the will do and as can prospects be IRRs You you’re billions of news – be only in of you on believe market. focused we the the and impatient. way, is over X deliver adjustment work I too future And tell focused risk stock stock over IRRs creating. and no business I’m are billions I’m speaks will what future you that almost out X itself. the tell for my certainty. what business, inherent model period think market the that be unique, created kids. time values if a would can bad billions knowing and of investors the investment. to PENN, short-minded an that well once buildings. the So I PENN, begin a market no put to sales model and to know I we with takes and investor stock for chooses justify will the their time, Farley make focused being on very – that give and if to I can these time you And is that, stock are each all imagination to full decision. which be do because be want as It own companies worth and you – remind is that, extraordinary high okay?

Alexander Goldfarb

of have we tough basically look either Alexander’s. Okay. two-thirds next and as And doesn’t one, is two, for just pretty question given forecast an far your years. that interstate around you it’s the the dividend be – the covered next the the Vornado. it second few as to as or Michael goes seems although activist, And Alexander’s, On said, thoughts then company do uncovered to given

thoughts your around Alexander’s So and dividend. offing VNO something thoughts some around up maybe the just the in tie Alexander’s [ph] is

Steven Roth

minute the spend Activist. a on Let’s

point entities your the aligned that – whatever two-thirds be them you. But has pretty think is it’s that with other see a call affiliated is has they which what about have letter, company either to it, is, shareholder very that I that large, closely they – small are a list the said I the So a business. could Activist very or shares, of way company we in some XX,XXX are that target have shareholders. significant. two courageous names The significant There wouldn’t that their or have control own they on that

We notified that would the from [indiscernible] the very same share, we you letter If for that a what they I act quickly, shareholders with way. think we folks or simply have still and came letter take very notwithstanding we what. got the We treated in one the got an the So in invited us and shareholdings and will. April. incoming respect of from it them highest

status and of deliberated We they and management very them was Alexander’s amount, a the listened by exchanged present saying expenses respect. We presented in them later. as by Board treated we Vornado, preferred did a to highest basically of cons We which and we over not meeting, of Alexander’s letter the quo. huge we invited seriously about – raise the the internalize carefully in we the then the we them suggested which their next with was proposal suggestions. sent at a them. Alexander’s Board amount, May, stiff What had carefully, sent would think Board the them – managed to then that externally We which very would debated a had I which on which – they pros the very full very We them we views. Alexander’s significant to of cause Basically, Basically, which small response more, choosing activist Alexander’s They we suggested the to which set sits company, that techniques the leverage stock. up dividend big cash; traditional company They recap because years. a special X company number shares. million take of – million, that the a a pay the with suggested Alexander for a the to we $XXX has out. $XXX about on is million. has one believe stock not I to that Alexander’s was thing, And into There think are having expiries projects the Board are of business. pursue of Alexander’s that the reasons, that uncertain PR, different or the the other the and of and potential the be in uncertain, because many lease market. conservative times idea. that because I go that chose IR more to that was

were of which is stock they to view that’s the their made they just without a were think I of Apparently, tell point have going fine. knows let unsatisfied going – public, having on. everything man market and what’s They finish. me pitch on

be So, Alexander’s. or basically, I management overlapping. two half and public. I going their minute call, I’m The my of say one-third speak sort speak owns externally and last Vornado to of my teams and and and on Vornado are formal this now a or Vornado of Alexander’s will going remarks behalf half. response that manages Alexander’s to three, This is

is the significant a investment very for Vornado. investment so And

million, made give Let math it so it $XX curious, Alexander’s me time $XX $XX which Vornado investment. years an just XX I which received is million bit so total Over about $XXX you shares. a was receiving looked was is of price Over basis, $XX up share, the a annual in little ago, is Vornado’s which of was because – recently. I million on share. the on return has from Alexander’s XX% Vornado a a time, the was purchase dividends constitutes investment of Alexander’s.

very compounding. Flatt, Bruce friend the definition my of This about it’s talks who think is compounding. I So

dividend. you talked Now the about

cover Alexander’s don’t would or where the what know option dividend has I but you. your doing of So multiple get things, which have the you math,

saying which result I but covered. have dividend shot. the some the income which what part decline. caused are of give I don’t is not it let’s retail to guess – or know Alexander’s of may as just your is, There So is be the dividend a is math – conditions, a market you’re what vacancies,

dividend $XXX to a is million, go. second little go And and bit very and debt, not raising of comes don’t rate come Alexander’s floating think million that goes, cycles the permanent try that’s has, some more. Alexander’s thing Tenant which obviously I is in regularity tenants the kind get interested lowering a the come cycles Board out, $XXX and tenant of as thing. to Now costing and And smoothness it. I think, is

at So that $XXX of million because if earning To million floating to I rate my reiterate $XXX it, to that covered. you And the these you recent friends interest, think put we’re we debt their remarks that this. to about that Thanks, we most extent I Alex. sort think I the that’s work say is cash to have cash. that will want my think letter. just of of over-traunched all find to will on that Lionbridge dividend have response formal constitute about I

Alexander Goldfarb

Thank you, Steve.

Operator

John Kim [BMO question Markets]. Capital next comes Go our And from ahead John.

John Kim

the rate was impact But of million GAAP, the for of $XXX the talked XXXX. NOI I quarter interest Michael, is of year. if your remainder your Good run cash million you on rates morning. outlook wondering of about rest good a $XXX FFO for of the second

Michael Franco

strong answer second is, with was I half Like the to think the I some second yes. in Yes, yes. very in the that you a don’t John? NOI, first the half want specificity. the answer generally that the is Of strong see things you plays generally, half. growth give But

John Kim

Okay. income. Yes. nothing I was on your onetime just wanted variable there in to clarify; nature

a at rest fair of marks, the but but the portfolio You is pretty amount expirations do have your in... minimal, of

Michael Franco

Yes.

of negatives known. some that are So the

yes. generally, So I said

we was said growth NOI performing core as very think I is the good. in prepared remarks, well. the business

it there rising continue being that where growth of you the that flow down expect you the growth. moderated. when FFO that’s impact rates, But be We with to see

John Kim

expirations. your question And is XXXX Okay. my on second

you is on have that fair Can you in a are high immediately? XX%, You or retail today you what X%. amount now have in leases color to commentary renewing percentage known vacate a confidence backfill office, or any provide versus

Michael Franco

You want that? to take

Glen Weiss

Sure.

X.X relates program alluded lease-up Glen. that X, rolls, we As is get to, office, Steve Of to expiring. to is we which to as new XXXX, that forward look to it this feet about John, of million have that the was feet XXX,XXX rents. In PENN

it. million X remaining the all to we’re over feet, relates it As

lease of are We is who going on probably we’re lot the staying versus which paper the space, XX-XX or in leaving, for of it. of now people but in in terms paper stay it people expiring. We’re split expect a to much of

Michael Franco

Retail?

Steven Roth

matter be levels Our stay, believe rising tourism a tenants what of that expirations. XXXX year, the could timed it focused expirations, to for that City, we New And growing and on, desire to have rapidly will our reach a next York will our very rents we well the know be by we are. which and are pre-pandemic is laser

Michael Franco

XXXX, down exercised option termination those. ago know, the think, looking that about I John, I good half think list, obviously, of about But calls we And and now don’t feel building. that we St. Swatch at their three in we I’m Regis, pretty maybe of most retail own

got that. a XXXX. So that’s But one. a when termination a exercised meaningful We along move-out in a notable XXXX way payment from expiry, – known they the that’s that

see happens. The others, what discussion, in we’ll we’re and active

John Kim

would the that on what And be mark-to-market please? flat,

Michael Franco

tell early to Too you.

John Kim

thank very Okay, much. you

Operator

[Morgan Ronald Go from our ahead Stanley]. Kamdem question next comes And Ronald.

Ronald Kamdem

for Hey, some just following up of XXXX. crumbs bread on the

to think how about $XXX change trying about touched into in the asking the that’s given the in XXXX? versus the interest XXXX XXXX we Clearly, million a should next already the to part sense District term, way, different big but sense think I a we the difference. but such the XXXX makes year, Does think question just back versus potentially year-over-year contribution that PENN of sense? modeling in going expense maybe make on any long

Michael Franco

again, piece Last Ronald?

Ronald Kamdem

the contribution between that So District, for the to PENN versus XXXX the if NY, delta and makes sense? contribution XXXX

Michael Franco

when take that think going it, although, X be as to Yes. time you get to in. contributing the you to PENN over about those my going not again, We X, to In we numbers contribution PENN leases, is off-line. see have fingertips. phase yet. at you’ll roll that’s XXXX, I can don’t there,

We to So quarter are average year, roll of team five knock years. and going that space it And PENN right, just we’re Glen spend to we’re by – out every his X, quarter. an over. going

Farley, And see to in flow online. in the then more you’re to for PENNX, see time. going in. so flow you’ll that to flow comes substantially as a period And going retail of start see that not you’re

going asked until XXXX, quantification But X be as leases again, two Steve you And or that probably. to and not significant contributing the yes, XXXX, improvement year a as beyond not PENN to in along if going give we’ll roll. there’s others realistically, an offline of well. year-by-year start lines that. So really even some the is because But

Steven Roth

X we process. PENN, PENN lease in appraisal ground had repricing the Remember,

estate fall probably call million it situation rates. the And be for capital they’re are – predicted the of begin real we players macro about in quarter I at, new we a in significantly, things with other in I the markets are broker preparing. same, amounts is multiple what we side the of a – the asked begun, not an $XX the although of upon going to is debt The be the doing in no require rent the think think we accordance accounting rising the because the of appraisal has all economic would markets, so it will that out higher economy time. to not a process are convention, of And there’s now selling was in We number just This get renewal the accounting much process last I towards process – What’s Interestingly, experts where of situation, think and in appraisal that the buying significant no a actually Most about at are a the the a terms. a little involved bit believe, an the particular capital believe based there, kind is at in are particular these for markets price interest buyer old-fashioned willing appraisal it’s could ground of real old interesting assets unapproved they are estate leases in sold which lease, much markets which old-fashioned debt it. normalized – in which for with ground it’s that is a the this process. if distress, and fairly process. different baked of a we with Interestingly, lower smoothed a kinds and a and the there. is upon date market, are based – more conducive as time, use the – a highest land be one significantly most best is traditional than willing and seller, leases point certain they’re that rates land And kind oriented at turmoil. issues. not admit

up aggressively. going are costs construction addition, In

wherewithal In where large asset buyers an to addition, could tenant financial the demand is slowing. And in few extremely it. very addition, have this is do

all This plays constructive spent that a asset. something to will very asset. think capital have of we a sort live million this we improvements be is the process where a we certainly knows to can important improve that in kind Everybody $XXX-odd with. large, outcome So of very

whenever still very lease be we outcome with in might going equity reappraisal, this And We’re of our have happy forward. it. the ground lease enormous will value

Ronald Kamdem

just just if large $XXX next quarter, any this we’re second on been question the should coming you retail that could in at reiterated contribution as I than Last Thanks. of think guidance we has about my ask or anything sort Close leases up, the took – expected, retail. I better quarter. on year the rolling other Can ask into million.

Michael Franco

number of but don’t mentioning. There’s worth now leases It’s talked I leases next year, other that that that’s will No, there’s so. we just nothing are signed about a think contribute a of serial I mean contributing. magnitude leases.

Operator

Nick. [Scotiabank]. And our from next question comes Nick Yulico Go ahead

Nick Yulico

hoping were second increase to basis. I bit an the did was first little of quarter; Thanks. GAAP you about have on a in revenue quarter year you more just a this property

you’ve to I should we commencements just some also And lease think fees just the benefits. wanted think still you anything said the how I any incremental I were or done of in what the termination about signage guess see of as half impact? of benefit signage, about if year. from half first lease standpoint, rest from year the a the year revenue back commencements, versus think you from upside, the of the GAAP, the

Michael Franco

a say, quite well. both to online contribution that we – of – contribution related from little we’ve piece been lower leases small lease recovery York doing XX. from with Company about the also expenses I’d XXX on And as got maybe bankruptcy New quite & from but was $X.X first We’ve variable office coming We’ve like businesses of got then million this quarter, termination, piece West there good and coming a is the got our broad-based. overall, Look, half managing, retail.

wouldn’t but – characterize I as So that very significant.

of that is level again bulk just seen off things of some started second that first in in as continue. the will the the And last to the recurring year. the half of The couple quarters flow in trajectory to from in is contribution half of this overall, So going that traditional be we’ve year’s items. growth our will second expectation

we’ll not get won’t basis, as been a again, of But continue, as probably the significant of year-over-year. last we’ve couple that you an growth a much uplift rate quarters. So quarter-to-quarter as in on

So.

Nick Yulico

difficult ask Okay, you second thanks. philosophy, which guidance. for you’re to I right, out, on I’m floating there’s that I is year for impact is figure make at cetera. really the exposure retail from But standpoint FFO, But are a for willing estimates giving on in terms to which your NOI, of commencements, your FFO just of the this now that understand off-line, lot pieces GAAP year. of a some reason revisit widest office your sense look philosophy there’s providing rate the online, well, guess we for coming why you I year issue I much not have know guidance. that some to projects if there’s And basis doesn’t et of all an see, going of a an that company. if the to debt highest for company FFO cash you if next really lot NOI is on I question next – some as be we’re guess, trying wondering of think over a the

really it you as over just the particularly place guys approach are So the guidance, estimates going this feels the on next revisit to trying all all understand FFO. over like year, if are to for

Michael Franco

have don’t time, to plans this revisit. we at Nick, any

is significant do up when come Obviously, have original online. last than do you’re I it, redevelopments of we’ve think hard the right? it the particularly the the year given hard from underway more this, given back historically impact it’s to going versus as of months. we But the this given causing XX impact we’ve and over in the like half you It’s in impact an this things environment quarter, seeing guidance LIBOR last to quarter, expectations.

makes manage manage of a lot bit But business outs. wait We feel lease we to the extract quarter-to-quarter. to can that. longer don’t a do growth. space because it little better drive do it ins We to there’s like we So we’ll terms, and sense

year. too of So Obviously, mind proved current the lack the whether the the reasonable going sort think to I optimistic, in quarter-to-quarter. a And changing. environment right an view don’t our guidance of across And I as we I said, given of cetera, it’s clarity I’ve now. et this leasing, at outset environment it’s we’re artificial board, gave think rates, is given in start it’s something the

Nick Yulico

go ahead. Yes, I sorry, would I mean, say, look –

Steven Roth

I’m guess well. heavy And in as I Board the this. the

on So board, we seasoned have, people group our a companies. [indiscernible] very of very public

And are is we so not business. personal my that in a my feeling, feeling quarter-to-quarter

are business. not day-to-day We in a

over a are We cycles XX in business years. five and which

of that of and So our kind not we’ve me. short-term awfully is modeling and share objective a done $X.XX, a is for XX-year down to beat emphasis five- time. cycles. stuff an value $X.XX The over we And over periods a that to create and good raise getting think $X.XX, of on job long

my that’s Board’s about. the to in members guidance So on to that our in focuses extent the what mind some short-termism, not we’re that – mind extent of and

several issues. had had which different we were we happen, things have occasions over However, where time,

of For of our patent least off opinions example, our income view. time Crystal I in of cliff, complex We how or prudent of there this and our point years the fairly XX what I business. others PTO, investors retail out what had would our re-leasing multiple to of process it fell that move is a space. we recently, trade City own that business could and to recollect can’t And two ago, a be, give emptied the as analysts, from Similarly, feet the office in pages at was at time now. the Smith the much space millions I exactly we right multiple model a – don’t that JBG was the way at thought we be think detailed now to was how know, retail and out one when continue the documentation to downside when chose with

it’s to account in So that’s our basically, – my thinking about a short-termism business. guidance. disagreement very And strong

Nick Yulico

what number just to NOI is should number? really understand for help be think GAAP It NOI interest we points. those look, something all NOI is. what that, that rates we It actually an are I some think could it And to very right? does just is How But I doesn’t are it’s on just understand level all trade annual if gave and the quarter-to-quarter think estimates factors, year, range decide would we a It’s talking multiple. we’re other rate your versus cash would model earnings and not – can in volatile, – NAV, next just just about, this which GAAP would an I something can interest curve the about useful say GAAP where because number. NOI on earnings we wide be trade stock you is that guidance. of year? your

So. Thanks.

Steven Roth

Thank you.

Operator

Vikram ahead, from Securities]. [Mizuho question And our comes Malhotra Vikram. next Go

Vikram Malhotra

or Broadway just kind outs? updates meta, have one, And any ins around Thanks given maybe about thoughts we the I two XXX – news that? taking on just think and questions. the for how should of

Glen Weiss

lease one expires Verizon of They’ve the quarter four for the the of with So renewed floors. XXXX. in first

there’s The terrific feet. So XXX,XXX great floors space remaining, is which and three about unique, is a location.

in the good the it that mean that’s of feel about prospects. We’re now. market status lease to We the block. I

Vikram Malhotra

in investments, your a you Is you is mind, years Okay. of, structural it and terms the hard And South. the of next years, sort your assets? own all of office value both do debt office Is create changes west want opportunity kind looking I’m at creation? you in value what in we’re the cyclically stock out I’m sort said, some as of if taking start buybacks? what picture terms and guess, were just view, shift in you the Great. to growth? just of it given you five wondering, over then Manhattan called bigger potentially perhaps side in would a external seeing many question. biggest the just longer-term to to changes ago I maybe in

Steven Roth

a Nick. the order, question of highest Well, metaphysical that’s

have we period. a over look, done XX-year investments So debt

things. of best debt so a recently for Number different debt one, I XXX% for couple is there’s going the We of and traded the get book value. debt, that for have business don’t that think with into a we’re – not that trades of lots to hoped And business reasons. its you’ve been publicly

not basically a a it’s basically, It’s a So capitalization of thing. earnings. book value kind of

we believe that, So debt gives don’t returns. equity

extent returns And it, kind but we stock uniquely little we are without in many tempted stock I’ll or can one, we quarters Bilerman’s that in stupidly, I the we in buy our sure assets buy of back that to it would we PENN to a the all that skill they of would had do tried had to I’m of our at we do think saying balance step returns actually mentioned, the our were them. and But sell we for in crazy. stock to baked handled it our the of think may The although agree to Mr. is that’s we to stock, And but stupid and that back our we in small a a that We business, have handle I way. could the now, acquiesce our stayed don’t – get the starting it our get our back our assets likely. potatoes. not some other District is rest future, about With make in to of certainly fairly investments. our with buying we it’s for alternatives respect have investing significant in some. We cheap. stock, So the assets. are We hankering want you least opportunity have going it we buying many, we by get past have we returns If we set are made. we but is and from entrepreneurial to anything, stock I think done may have that traditionally the not the away kind

Operator

our Michael a Go And ahead from is next Bilerman question [Citi]. follow-up Michael.

Michael Bilerman

Thank you. Great.

follow-ups. few a Steve, So just

much Just you capital XX conditions? greater your perhaps per that And are can of out achieve some of on proceeds, of the you what the XXX, asset loan additional have terms to know how months I draw agreement?

Steven Roth

agreement The condition. leasing conditioned million space $XXX draw. other and the additional one It’s provides an upon for Verizon

that will planning are We draw. as we not make if

Michael Bilerman

very I How in to Okay. gone later, and do. then relation you XX Alexander’s go nothing a contrast I Alexander’s the back, you’re discount corrected stepping when back year at back to was where does maybe and relates the current but compare market back letter don’t to and up variety do going Can I trying take years a to of going itself versus environment a the compared put now at was then Vornado, you Alexander’s? there stock in had sort And have and the you deep annual comments all the a to and Alexander’s to also the options. and just to as been proactively look active. XX, environment it back And something ago the know, that you of then with trading gave appreciate to just Alexander. situation stock

Steven Roth

stocks sells per at Michael, of $XXX-some-odd of for $XXXs a fluctuate. was it traded a as share. Alexander’s high X% And and now days dividend no – eight going dollars share Alexander’s ago. couple XXX guess, least – low has is I as or high different. at as as Alexander’s

the which the the So an a basically should of Alexander’s, balance business million of of the credit of it. the sheet, has for assets trade dividend. X% with cash quality not assets, Alexander’s, $XXX-some-odd on

mispriced. comparables, dividend would for that based the totally upon X% be mean would not priced fairly stupid et upon cetera, which be based the at Alexander would to that trade stock Alexander’s, alone valuation money dividend So It the double. would market a that’s

in stock the to do term. going is preserve stock of That may to So what reasons. not it’s lots billion going short the we to are going different the cash change but the for From of change, bucket point our $XXX view, market does. of

– out the Vornado make appropriate. at happy out before And determines to We’re figure going times, be almost shareholders to it’s whatever to pay would multiple same Alexander’s be time. – the we said for continue as the to would impossible are impossible shareholders and/or it’s combine happy price and I’ve to Alexander’s dividend what that Vornado

where moment, and the the enjoy Alexander it should for sits and dividend the sort sits its So of prospects. shareholders future

Michael Bilerman

response just the then And the Okay. last at opening. one, to my Steve, in question

talked structurally On I separation being don’t which. separating And thinking fine. in I that to that I to way? want that avenues of you the We other the company stock, the you tracking evaluating word. is your that about ways techniques. But District and other too other of there on just tracker committed pick PENN But you’re up know is the you’re a other much disagree, about And that’s or than but mind, can. in there the tracker,

Steven Roth

Sure. But about going them to we’re not today. talk

Operator

from Our ahead, next Feldman question of Jamie [Bank comes Go America]. Jamie.

Jamie Feldman

Thanks. Great.

the time quick may some this And you think Glenn, B, make compare XX% I a XXXX sure to you’re think And move you for prior of does years? in follow-up. had XX% that correct. known said expirations, can out. of about and Just I how move-outs? in that’s to talk discussions you the larger want A,

Glen Weiss

production quarterly, XX-XX is The et you weekly, that cetera. as today’s know, down, moves target

we’re assured I specific or Jamie, quarters specific those to the we’re it keep expirations. have want ahead of all of ahead always, it, one over as them, of larger to But particularly top So don’t on could expirations. every been get variety up of way speed. tenants or tackling the be into past you we’ll but you buildings

Jamie Feldman

typically time tougher going is you of that to next year? you about year are year? a this think Or do where is And be

Glen Weiss

the value. Every But usually change – all – year say off you far standard Things the mean, not every year-to-year, puzzles our with is we know, best day in putting this it’s buildings, that we different, I’d XX-XX, as always it’s the is, always our can I to tenants XX-XX. it’s in predicting fare. together range, create difficult.

it’s that say, exactly exactly this. hard or to So yes,

So we where are today. that’s

Jamie Feldman

you. Thank right. all Okay,

Operator

no this have time. more at questions we And

Steven Roth

this me We seeing forward to So let morning. you look joining say appreciate soon. we again everybody us all

November third again. forward look your at X, quarter be will Take participation earnings call to we XX.XX on Tuesday, and in care. the good morning, Our

Operator

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

You disconnect. may now

Vornado Realty Trust (VNO) 2 Aug 222022 Q2 Earnings call transcript