VNO - Earnings call transcript Q3 2024

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Operator

Good day, and welcome to the Vornado Realty Trust Third Quarter 2024 Earnings Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the over to Stephen Borenstein, Senior Vice President and Corporate Counsel. Please go ahead.

Steven Borenstein

Trust earnings Realty Vornado to third call. quarter Welcome third release XX-Q and afternoon, the we our earnings our issued Commission. on Yesterday filed quarter quarterly and Exchange Securities with report financial documents information website, These under Relations Investor the as well our www.vno.com, packages available on as are our section. supplemental

financial Exchange discuss Form are measures deemed results materially Please report these on most to including call supplement. will XX-K differ call, directly Please documents and XX-Q included a measures. other information statements our for financial due comparable to Form this factors. December risks actual ended today's during non-GAAP these the more variety uncertainties. In and of measures in forward-looking the refer for earnings our to may Reconciliations and and GAAP that with XX, Commission, during these uncertainties regarding filings XXXX, and aware we certain from of and annual risks, be our year statements statements, Securities these made be may the

include call statements. as The date. today's any undertake accurate to does information not The of company a forward-looking only duty time-sensitive may update

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

is team for questions. and senior also Our available present

will now I turn the Steven Roth. call to over

Steven Roth

and indicate is great. year's once most in America participation the will Day single to that since a in of everyone. and Election arguably is -- presidential record, and turnout X-year Early Thank calendar Today you, election. morning, this voting day be and Steve, importance this Today seems that's important good democracy. the extra is

the and now quarters business. in think the past recovery, that's said at more of in the that saying I've I apparent. I've more been looking the is Manhattan market becoming and few foothills to office And

Class square million feet where A space, foot market XXX over we vacancies strong the XXX and rapidly safe of of square a demand are much is While smaller, Manhattan water better has million evaporated. competed buildings,

the X% vacancy, very Avenue the Sixth on landlord's there Looking at cake A market. with Avenue of is additional and the now market. sign the on a start the supply no History the build. a X% that to Class because of is building major -- Park is definition been no of And a which horizon. we to There X uneconomic capital guide, hasn't years office the it in always new the new and land totally of get supply, make cost is

rents going As optimistic Michael and our are Glen extremely seems be up. to and moment, the I'm stock will a market comment in great.

Year-to-date, we million feet feet including million X.X leased X.X square -- square square of million company-wide, Manhattan. have in feet X.X

square excludes which I the Broadway. lease As component, And I'm would and Glen to -- and and NYU X.X would which have option a master call, Broadway. the the -- with million with XXth Michael we last made we purchase for will XXX that #X lines an rank X.X year. higher million confident cover feet robust, the square agreed to while year second am activity X.X year, of between million XXX sign will and the our deal this leases in we is on mention -- transaction in the pleased lease report you office

in final to on will over annual off would the pay payment detailed signed lease Lease an term. of letter $XXX commencement expect parties I expect have shortly. rent as sufficient upfront figures January. our rent Master and execute for to as the provide a rent intent prepaid the well of closing binding occur an Both property loan and million

with our expand We are NYU. to relationship delighted

strong billion sheet. cash $X.X a with of Our balance $X liquidity is billion, on

cash NYU between preferred. million in-process XXXX, of of prepaid by Note shortly street will sale, retail that redemption for Broadway the unit augmented close XXXX we is and close over over billion of of half preferred proceeds redeemed be from about the unit $XXX financing. and -- from bill $X our the Our rent have

January million $XXX in bonds our pay 'XX January. will We

on And sheet We well and for program PENNX. cash our to have complete PENNX enough we debt and PENNX remember, Farley, lead balance have on no PENNX.

site, Regarding very our arguably Park XXX Park best Avenue site on the Avenue.

major We build across this the and with Griffin X.X PENNX Ken design to tenant million profit. site District connected Forster as our with grade and architectural be tower. will booming XX% are Citadel, best down at development. with single the ] At the in ready right the well Street It's PENNXX, Xth Avenue along we who firm And site, Penn the former at [ ] normal completing to [ foot square will for is of our the and Hotel directly in and available website station. now [ best Hoboken Penn Manhattan. directly believe XXrd I and ]

million we vision. format of the and we tech XX.X%, in at single with XXX,XXX Its In is foot all of California declining square city We tenant tower and in lost large Street. haven't dominant year, which building. feet the This vacancy San XX% services of in X.X roughly financial Occupancy This released are square buildings, own XXX the $XXX. at X quite remarkable. of a -- rents. asset rents average struggling city-wide Francisco, starting

Times very REIT deal Penn important of in best have their America. XXth Fifth to XXX and retail flagship announced Square be store Street. quarter with retailers We history H&M. Avenue in an District on owning exciting Montgomery sites, will the in bringing This this We down a

engineered simply not borrowing good other a loans and remain accretive to through At con and down not high to that's occupiers available Having a and But our asset -- stubbornly rates soft And are real that, the capital from estate all, maturing values. and said a landing. now the very is are lender. growing the refinance is overlevered incumbent than who thing. the it expanding, Federal Reserve to seems inflation

on loan AAA X/X first the credit LTV quarter, the Bloomberg $XXX maturing owned led Tower, we Inc., the to the The all a sheet. the Renee's external extended Xx $XX is X% million of $XXX This Headquarters AAAs, far the And rated loan in year. enabling Bloomberg the being owner. million offering will to low Avenue, interest us was by a million to oversubscribed. quality manager [ we the quality by us The by million the achieve save Bloomberg which from [ heard have the detroit lowest with of Lexington HX this quarter, of the third building, loan paid its building. balance In cash on cycle. of rating, and Alexander financed together rate has down we refinancing ] $XXX in XXX and the ]

hunt buy are distressed their as interesting be overleveraged working out the existing for loan that, to assets We prices. few high-quality open No selective business on good very acquisitions assets midtown with site. we a here. market the with at seem usual In quarter, the distressed $XX this borrowers coming in troubled cycle, to Having the fall, million problems market. that with said very in to did lenders acquire

We will on keep it.

management. be improving, better we business is cash with rigorous to substantially While and tend our

] last We paid will In year, $X.XX. than the approximately likely [ single dividend same in pay December. a

our a dividend dividend year so policy conditions We main at been I will same expect of our year-end. to normalize, payable as over carry the shareholders. single to endorsed dividend. has understood This next expect by and

must investor, Penn do are tour, an just do Lastly, individual if drive District, you must, mean our you mean and I not tour and by. I

building of quickly. it's and you and The the leaders, and get that quality Langer, occupiers. universal ago, a you gold visited deserved was ], Glen X amenities plazas If changed Weiss, much the by Barry claim spaces last months who and the PENNX must the brokers a architecture extent that PENNX into data [ senior have This effort ]. [ common visit of team all our led public awards received from and size,

higher are so rents on at achieving returns shown statement projected, financial budget and to We group. expect the than on will a our we here

financials to Now cover our in Michael the market. to over

Michael Franco

good and everyone. Steve, morning, you, Thank

to for we were last As expected, results due the financial year that quarter previously the items forecasted. down

lower was per Americas share compared $X.XX net higher we Park of interest at and XXX adjusted $X.XX both XXX expense, This year's per as the largely Broadway, to share last and Avenue from move-outs third which FFO comparable attributable to Avenue NOI XXXX quarter quarter. speaks of primarily have Third discussed. for known previously

release We earnings have our quarter-to-quarter financial and bridge our in provided in supplement. a

XX% outlook XXXX at of That space for pending approximately FFO quarters. aforementioned the hasn't we move-out couple Our for comparable changed the spoken. of vacant the the in from being have XXX already Broadway, with past lease said,

clearly million years. will large totaled XXXX XX.X are the space. York the leasing. full in leasing X and activity office declining, feet and of gaining turning square the A shifted volume looks tide for activity strong Now square market. to Class of XX Manhattan's The blocks it Leasing year momentum, like and availabilities has first time is particularly first quarters during in X million feet, for surpass New

transit, beginning concessions down. limited Class to is demand tick space for Strong and with quality in blocks rising of resulting coped rents A space near

with by year is deals down also to XXXX. For Midtown The Sixth square more feet since vacancy CBRE Avenue any XX%, than Park signed with headquarter building X%. back the XXX,XXX this and transactions around for as are at defined Avenue year around than mega greater X%

keenly the is Grand Central product, what on focused PENNX new to XXX,XXX of remains have availability in third redeveloped large tenant leases been [ the XX positioned little demand. quarter, recently of During buildings, perfectly square transformations. have extent feet in undergone with which this Trophy available tenants ],

we space per New XX [ now X X during average we the line foot. X our starting of leased office now our feet have Turning across leased XXX,XXX In first square -- quarter, to in the In months than million feet partners square third York XXXX of business, ]. $XXX transactions portfolio. square of approximately more our

on renewal campus we the XX $X in Google Midtown in as XX New foot at feet Avenue, at leasing square commitments foot. important closed book, square Google of during starting of square Bank completed rents and the across District York reaffirm office transactions of and property And an XXX,XXX piece our this a solidifying long-term -- quarter Tenth per XX,XXX We third of South York. one with New Meatpacking

on many works We position last New in demand the X York indicated big in technology window have more to our sector our in as is And call, the the as particularly in as as well leading tech portfolio, and our activity coming companies landlords York New unique Penn. we strong back in given a in others. sector

leased we building original At and redevelopment starting for new at district thesis. are These rent PENNX, foot an square rents square this historic headquarters Sciences. XX,XXX square XX,XXX per Roivant our our average validate leased $XXX with led by foot, and feet of

$XX ] the than PENNX, square a X As we feet completed leasing foot, of [ with commenced per more increase. transformation have now at mark-to-market million of significant we

way bring city the We recent aspiration achieving well campus original new attract on at are to continues across -- our rents. tenants ever our to as the Penn from District

offerings coupled properties Our space. market tenants neighborhood with our seeking lead in eye of complete our quality amenity-rich bulls the leasing put the transformation a for has entire

York New for mark-to-market leases used the cash But negative months reported for that's baked second-generation real office not our of for space, is several reported has more and than signed quarter, story. but relet at calculate that the therefore, This both PENNX X Our to considered the mark-to-market were a statistics. not space because been quarter X%. the during

in quarter rent. share, where exchanged improvement XXX,XXX foot square XXX,XXX lease, feet of reduction for Additionally, allowance a we the a included

square deals negotiation. We square our multiple PENNX. various then supplement, highest leasing highest mentioned, across with the negative and volume Broadway, portfolio, indicated since Page robust would stages tenant feet at be of finish our transformed average is feet of leases Steve you XXXX these our of X.X be Including mark-to-market in positive a pipeline York statistics, cash almost consists were million XX.X%. our and would As rents our XXX currently which financial our lease at and which X.X X% on to New headquarter starting XX XXXX our million of leased transactions This the includes if include ever.

] $X.XXX Broadway. XXX easiest at primarily down the is Medline Our up XX.X% expiration due last occupancies. current quarter previously filling our announced office we can from [ occupancy is to make money The

the office We full pending occupancy occupancy in will XXXX at With will to of Depending space our PENNX to of XXX, into as is on points anticipate vacant by timing basis XX.X%. master our XX office ]. transactions, these stabilizes, As rises, maturities go XX service. as lease the and be our occupancy earnings up. the we quarter likely increases first get building [ PENNX decrease at decrease this placed grades temporary,

XX,XXX have a XXX,XXX closed during out we the for California, XXX currently square feet. with Wells foot at square renewals Francisco renewal San to Turning another and deal Fargo quarter, expansion we

entire leading premier our by similar financial in at be outpacing Our what can work done services market the is XXX companies quality amenity property's to program far leasing we XXX into have program life New the to attracted as York. new

every While tenant office, -- of positive been mark-to-market in weak too, here, San one trophy up unique are an property. our cash concessions room the demonstrating or renewal Francisco otherwise flat has this

health sponsorship noteworthy have top-tier attract we debt-free the is which totaling Mart the XXX,XXX recent during driven and in market. major XX marketplace. At its the particularly worldwide an the and transaction in of position square and quarter, is us amenity for The industry enormous closed the on our and a headlined important by leading XXX,XXX overall Medline's care leader continues reaffirmed spot Chicago, square leases feet outperform strong to Medline, expansion and the for Chicago mark additions, in the by market tenants, renewal both right feet. a in growth

capital Turning now. the to markets

While encouraging the signs. financing for markets see we office, remain are some beginning changing to

in out financing lowest on billion and office the city on can on [ A Class banks Center are buildings by post-COVID again size, financings assets Avenue. recent Ross Lexington office and for The for several metrics pipeline. get and investors remain has million financing in reopened dollars office of show for CMBS for albeit financing billion more evidenced XXX XXX the financed structures. the and CMBS million our And ] at $XXX financing $X.X While there the market loan as conservative are X.XX%. constructive rate These once $XXX office achieved Park market,

value also up. was down the the SOFR-curve of With and which and conversion, obsolete out buildings the foot, next short and this follow. sales $XXX to for to of Broadway significantly projected borrowing have buildings the should perk to dates sold beginning come put square improve, contract older is or continue finally down per A Both should been market. The under investment strong [ recently coming rates year. first markets ] the number over There financing a rate pricing. which sold supply residential the And will million a X% XXX take $X,XXX is Class at cap cycle, market

$X.X including $X with of cash $X.XX Our strong liquidity credit $X.X of in billion our balance revolving cash is condition sheet and excellent billion billion billion, and undrawn and facilities.

of significant XXXX making our maturities XXXX are have care progress good We taken and on maturities. our

equity the success now contribute with the loans lenders, Despite we've and had little loans recently in a are more while of do existing in no FFO XX-year these that right do our credits Most to of We challenging overlevered. of have handful not have assets this midst environment. a value. refinancing still our

retail, St. the footing, will are us we and these Park unless We at similar nature down in the restructured our sells, discipline will to these maintain to nonrecourse terms any more Regis -- Bay this these of for we assets and option. capital on negotiated loans invest previously that are loans allow on what put not

With over it operator for that, turn Q&A. to the I'll

Operator

[Operator Instructions].

Markets. first BMO Kim Our question John with from comes Capital

John Kim

or Steve, is X.X $X.X you the that And include that that square NYU year-to-date, of done to mentioned sort what year, million million anticipate $X activity the which the for million. imply you've the lease leasing other remainder you Does of separate? feet.

Steven Roth

does. it Yes,

John Kim

the $XXX does rents Okay. purchase XXX lease I But Broadway? in place any or on compare upfront and it's occupancy a structured Can option. provide the more to payments with the that's today? know that And at you overall details deal how the when starts the

Steven Roth

rent rent tail of therefore, will small is prepaid there's cover. a upfront significant. the that And value Well,

it's you your lower. not rent But So you $XXX take the account number foot. a a capitalize and into that when in as prepaid approximately It's is value the rent substantially mind. have the

John Kim

when And occupancy start? does

Steven Roth

again? that Say

John Kim

The occupancy that to when contribute [ does of ]. the building, FFO

Steven Roth

funds in will will will to January. expected commence January. be The closing The -- in rent January. The transfer in is

action The signed January. the be be will imminently. will The closing will in that's completed. papers So be

John Kim

the I And is my in asked first I Great. But question on question, second time. know the March. second questions multiple

and kind was your to reduced increased occupancy Is had up. down quarter. strategy rents? last forward You leasing is of up build that The have compared it to with occupancy where rents come going went

Steven Roth

is, all, to The bar an it's extraordinary key the first of building.

the Second to is in Chicago The is very free soft now of market important soft. all, point unencumbered strategic mark and clear. most the and

that of in Chicago is strongest well It's of the one it's So building in strategic financial Chicago few very, very enormous buildings us and area, that the flexibility. the an gives amount capitalized.

attractive in along. rent we opportunistically will we come deals as are that think So

the other improves will, We are we in will leasing. the building better any as than it performing wrap market as up market the struggled

Operator

Sakwa next question The with Evercore comes from Steve ISI.

Steve Sakwa

up maybe just it a John's speak your following that question that just the other hundred the the just pipeline couple the on some NYU XXX,XXX strip maybe the signed lease, leasing. on of leasing. PENNX of out sounds If confidence like at of we Has pipeline there's you Can to leases Maybe all? to you're thousand today? year? what's level to of changed seeing And at and end activity before getting in feet

Glen Weiss

Glen. it's Steve,

XXX,XXX while a there's of have feet lot leases paper, So deal, over XXX,XXX, in out X leases negotiation. billion actually we more you

during important transactions. which it fourth as two, relates Number is very of I quarter, pipeline, the number to many, one. it -- All robust the closed with PENNX many

X those or We expect of during go to XQ. lease X to

quality together. with particularly less program the this in We swing market, blocks and fifth put in type amenity full are less available come. year we in more are of now location at in We're the as of the -- to this

Michael Franco

more think doing Steve your guys both why math in in to $X.X year-to-date comments million, what ] implied and you through in are done -- as I when comments think to right? that's is year-to-date signed I the I X signed add -- [ that John's New to about X which there's we commented, and much I right? as add X we've expect you just you York, want and inaccurate, leasing both not much We've quarters.

Glen another So if XXX,XXX there's said, beyond papers the you as and that. take NYU, that deeper in pipelines plus

as think time activity So it's sort a is from the a us I that of and as level of long we have. been enthusiasm given hear you confidence high

Steve Sakwa

street quarter some Steve, question. retail second you may sale, after you think I test other sales. the Maybe mentioned Uniqlo explore

you on thinking where kind the has some retailers has are Just front? And appetite at from of the luxury at of all? that changed your And changed all?

Steven Roth

to appetite continues The be spun.

in no have $X.X report the script, But -- end the that think and at that it by half of in preferred news have to We into thing January, retail that the interesting par. regard. year or this the will monetized of I we I is said billion

So so ago, if back live were that predicting was year preferred a substantially par. -- or you analysts on remember were the

quarter is this So the the balance sheet. big story

sheet. So monetizing we're the balance

Our cash balances very shortly. billion more by than $X

up, our million. off million by we the pay $XXX our debt And NYU example, will of bonds. deal $XXX We will reduces for end

you what's math? Michael, when put it So all the together,

Michael Franco

think over little a $X.X increased and billion cash of balance $XXX off debt of I sheet, paying million. end we'll up north our on

Steven Roth

substantial. that's So very

along. question, With multiple of retail we're mode. activity. finding The was, the as think, times, will they your we main retail, been respect which opportunities have to more in and validated opportunistically there values come So react I definitely selling is to

Operator

Compass next Dijkum And with Floris from Point. Van the comes question

Floris Gerbrand van Dijkum

the was question more in on the detail. executed you to third big Following stores. for project? up long-term space? Or your a a District. for the in -- near term retail lease a little retail? plans know the don't there you coming is I about coming about quarter demand was anything Also, Macy's portion. think Steve's Can that talked on are that that talk your what Is I on bit Penn there Primark

Michael Franco

which this Floris, to the from the up across heard I retailers portfolio. see tell good few you, the would significantly We see the from I from pretty demand to quarters, other the bringing demand work. We're into Primark last think you've big district a discussions We're hard us continue lows. right, in district. is I to bring excited. on retailers excited. think will Obviously, at to They're Penn, enhance win. We're leasing the district, the is

pleased about very we're So that.

Times of pickup We activity. Square the there's a there has we to And going pipeline, lot at board. respect activity seen discussions in pretty with as good our across asset. had look XXXX a the big

should say, them up, give dialogue the activity up vacancies, We Fifth rollover, the that's there interest rents sales confidence there's Avenue would as next up, to again, in firmed are of couple doing the is is years, have retailers say, coming and some But imminent. on I importantly, transact. not too, that and but I

deals should So Square, continues on a these or while in Times say take main to blocks the particularly be big I interest fifth submarkets, X the commitments, -- there. the but level

Steven Roth

flagship. deal the that that coming think District. is published are retail is big up? Penn do actually what's into store. numbers favorable Primark -- It's occupancy deal. add I the it's a would we that is, It published It's a a business. our we deal the It's occupancy for great -- story I big that behind a will The

Unknown Executive

XX%, XX%. It's

Steven Roth

that includes XX%. But if take you out, close more to vacancies. those get the Okay. then you very to And

actually, not it, XX%. leased So -- well in retail, XX% the above I way market look occupancies. And the we're at pretty comparison really in leased the we're

at that's the retail. way So I look the

there said, of a Michael ago. years it shape in certainly is strong much retail As better than was demand in couple retailers

Michael Franco

respect a ago, let me believe, clarify. I As to year

Macy's. You have... don't mentioned We

Floris Gerbrand van Dijkum

I Manhattan I the meant Mall, of course, apologize.

Steven Roth

hedged out. we think We that

Michael Franco

for it. Thanks

occupancy. the So Steve that, to alluded

tenants think I to big, which time. some continued actually is be Squid which we'll probably bit any continue space. put do have is for space, that I do the permanent more to to work case We that Right today. a new The to that's Games going hear math complex. On that. And doing up, popular, now, quite we Netflix in a have pop and doesn't

we're next that's atypical bit going So with done there, in more night space. I thinking to plans through wouldn't some That's months. sit be that's broader -- a the and get up assuming wait little to few going

Floris Gerbrand van Dijkum

Maybe Great. follow-up question. a

needs your How happen of implied and trading opportunities you do is equity rate to to about be potential that stock investment willing Particularly Your cap this point? think about think X%. you you at do there what out well? to for around raising as an

Steven Roth

a question. fascinating That's

of very capitalized. well all, First we are

of debt. X that bringing $X I or think ago paying new minutes in I cash we're said or our X down billion

is that of and the sheet think need the have balance we strong, firepower foreseeable we all extremely Our we for future.

Our and PENNX capital requirements and board our lease-up on PENNX are in our financing. without complete balance across doing more cash the any in sheet already

assets We have have PENNX of lion's are the met share in our and PENNX all and we Farley, where unfinanced.

So we're extremely [indiscernible]. will liquid and

that that mentioned is interesting. get the cap what rate math, look business But we the XX% have do at and when like back The XX%, the had. I you occupancy leasing, looks traditionally when we to I we

will years. X take there We year, take They for a sure. may get

business if all -- you income look look at don't equity. the So need we that in. we And any really with at of I that, don't coming really need any

issuing equity. the moment, plans of So have no we for

but sit If really on our right by We themselves, we ticket the strategically are wanted pounded won't something shareholders, But are think for and that we're for accretive will who shareholders. in moment. is us, not which the to dilutive our diluting current that. banks and of super not opportunities we're being present and business not of stock sell wait we

Operator

Burzinski Dylan question the with Capital. Street comes from Green And next

Dylan Burzinski

we is guys equity But you position the Or your I of of just feel near to over preferred half remaining other are on most the there of there monetizing the that the transactions? do like passed sort comments transaction retail fruit monetize after the low-hanging most half closes this term? the recent guys JV. preferred Or announcement? you on XXXX should in expect And any appreciate after equity of

Steven Roth

pleased preferred at that with Well, we're very of half first actually monetizing par. the

have opportunistically, no see the how We attack things second half that's plans current go. to and we'll

don't very but I extensively it, to And it ago, at we need we it. have or it although said more we need a that we we the we wanted opportunity have in position. pretty think a are want raise moment moment feel if equity, or been we we equity strong do capital think the we As

-- other So we're of the holding. the the is happy is that very preferred something preferred half

the the income markets of on the short-term exceeds could earn on interest As now turn preferred rate coming that debt. that we in

So with pretty it. okay we're

Dylan Burzinski

And if then I one more, just can. maybe

property. the currently there? B the in the note acquisition, go talk about the I default after along at talk of And And is a little $XX know about I of if there you plan the mean, million, kind so, curious, your of kind sort On it is plans more? note with A a to mean, I note can this? you guys' just can bit

Steven Roth

could, it's I really wish appropriate. but I not

all, very of first a So it's investment. small

It Second a and all, interesting at It to and of go. site, very possibly really -- about about this it a result, it's is very it's learn appropriate interesting, this interesting alternative even will it thing, not next just quarters. result that the more that in and thing different ways you'll maybe call. all multiple it's talk has likely in litigation,

Operator

next question from Goldfarb with comes Alexander Piper the And Sandler.

Alexander Goldfarb

that was the paying as questioning on preferred, those Steve, hear of par. one off at it you've analysts And made to progress good

the So X questions. kudos team. to you and

on purchase. up B note preferred on -- following the sorry, the just First,

there's potentially versus you par discount, default, at it's buying would was it can on that clearly, any a provide litigation Given a in it But position would that perspective what at seem be on discount. it rationale. a you've should based trade described

could to maybe help discuss? you what can just So you us understand

Steven Roth

and really going the thank a it We because asset. value thought to a I'm we than say for B respect Thank was more we a it. And famously Well, have. par getting the the note. Obviously, -- nice. paid not I'm you you. appreciate we were we to any With Alex. very in position getting we That's were buyer. compliment, difficult

than other to add. don't have I So anything that,

Alexander Goldfarb

Okay.

Park seems The and and how It submarkets have Avenue. coming pandemic California, XXX second leaders like the others office is, Steve, been very internal have strong. you of out on described the question based remain described the you and

like XXX if to Just the VNO yet once investment tilting their to time. the now, this traditional just more going and to on place. Can for curious, for submarkets south discuss everyone going frontier assets Park blocking mean about right new or west. will the future focus again perhaps the is frontiers markets you And to new talked and is think you that just Avenue. ago, the forward, is cycle think on have those recovers, you you years And Manhattan the that less back as

Steven Roth

wouldn't now blue a glue neighborhood. that's Manhattan demand take West of The That's established District, double chip triple validated. Hudson call new become blue I you chip, chip, side from Yards the Manhattan the frontier. Alex, established west and who's a when and and Penn very

And look the I newer West is Midtown which the I traditional market, think I market there's booming. say, there better the and then at actually is so Manhattan way Side

we side. So of have think own really lot I a don't But middle. I problem in the the I west with no stuff think

west I think the side great. is

If new you're it's don't think frontier. calling that new frontier. I

I think very established by now. it's

Alexander Goldfarb

Right more meatpacking, area? thinking like that Chelsea,

Michael Franco

the out dynamics the Alex, has I in that is market's one that broadened actually, X, happened think back last of the again. months, X

which our But excited achieving is from benefit you So look XXX to that, what's about it's come if at Avenue with we're pipeline, historically higher Park is We fantastic. Park Park. rents, broad. Avenue and there

the meaningfully. There's And it's think market. quite I in you're out broad-based seeing real there. uptick broadened that's been think I actually strength what a

So I sign think an encouraging that's marketplace. the for

across all activity assets. have We of our

those so Chelsea, all are not assets, And seeing assets top-grade Meatpacking activity.

Tenth. XX at reviewed just Google So

stretch the I by would dead imagination. So of submarkets think I those call don't any

in a been while. they've than stronger they're think I

Steven Roth

Those markets The buildings The at But tenant than -- own rents there Park example, in smaller rents couple the of higher market. are we a own are we Chelsea a foot. buildings are $XXX smaller are Avenue. really markets. for they buildings,

submarkets go is, to all into various as broadening they're out, New and pretty want good. So tenants said, York Michael

Operator

next Bank America. Jeff the from of question Spector comes And with

Jeffrey Spector

quarter. the And for listening discussed XXXX. to growth. mean -- the a I do out laid you've about for the call, of on a see have deep Congratulations opportunities? drivers lot XXXX? know team. best where spent where priorities you you just And just you've of are thinking I I'm time

Steven Roth

want shot that? you do at Michael, take a to

Michael Franco

on front morning, lines Jeff, to back good you have Good with and the us.

And in capital continues leasing we've of know is been terms the like it's I looks but I to think transformed. if Penn. it don't be, It phenomenal. priority game. you've in So significant there now priorities, a initially, invested #X

And just PENNX. the in equity execute, to lease being have right? about heard you remarks, you the there. We to significant talk opening have heard up Glen We

we over continue I'm we us see of up to rents you're Penn. to if confident to to turn And think I growth have continue going see do PENNX. there. you're going We will, significant that, push to coming out And

easiest going growth to. So generate, that we're the is can we earnings

Manhattan. vacancies have our of the Second doing activity we're piece we is by filling which across in process piece, good elsewhere,

as there. I the Mart honestly, little market-wise, is about, really, is the is with And done think, stats. in process have you working we've talked a the on hard but team XXX breathtaking, focus challenging points I on Glen more what We in if think

to the going So to Penn sheet continued is vacancies. balance balance It's manage effectively. our

And seeds to that's I think Penn. then through over are a maturity last our our and We got job years, opportunities we've next the situations. some continue other have that. on whether internal done the X X, doing step we've very challenging that we've need that in working a including of -- good got to whole host XXX Park, of opportunities take the we plan of

that, internally potentially We that and that a redeveloped on assets right are few terms of may the beyond we be right assets repurpose working that time there. are now in have economics or when

controlling that those to is are opportunities, office And distressed have of the disappointing little but high-quality assets. market And external we're been of in the there most have getting of office opportunities. repurposed really for the there think very has other things way been one then low-quality uses, I been and lastly

it's gates. we flood think there don't I be continue will to to going a control So be but some, --

we we value like at doing to so of front. active on the next that company significantly But things that a would can be over internally execute grow several the years. have on that will And lot this we

are to their we longer realize, take they're given Some opportunities, think to but going pretty development unique.

Steven Roth

enough we'll find can pool. we Hopefully, all think and sheet out value out -- we do single the we have our and and busy in focus need to asset and creating fixing that improving can our be. happy so work focus tenant is to say want, external have asset balance calling don't creating should create is very the on we that need more significant order stock assets leasing. pool -- that but actually, to In to and you we being cash we value where getting We in financially say continue price. of value, think I'm internal where to opportunities on great be the and I I'm stock values. our very that it keep significant very price the increased disciplined up need But assets, to that about and to that, keep

Jeffrey Spector

tenant on I allowances rent market your less City there, expand say, you And for brokers that? about helpful. And second you that a rent. let's right? that guess, understand just free the demand equilibrium you're question, we others, you market, Very little more where, landlords supply on can and standpoint, expand or you'd I -- how more in fair allowances be when We comment a from free technically, office about mentioned market. can mean, right, think it's equilibrium tenant landlord, contributing I York comments, think bit? initial comment, maybe my it's do your a in between New a market in you Dave, the

Steven Roth

the X or is good A the industry over model years. X X last or retail

was, physical and back was Avenue of was or if the I it that was shopping or retail in about the all the ago, So shopping the marketplace was retailers feeling the go stocks demolish was toxic. of got attitude The got Fifth mean, whether toxic. just you X city, malls Full brick-and-mortar the X any or streets value Retail toxic, Internet crushed. years --

gone that all has same the industry going company much X is last out aggressively. over very of or from through passing it's table the the the turns Kitchen, COVID, passing Nobody office off and kitchen there. Well, get office. home. -- get The work X thing all of to years. very to of out ever

now going and X or work to to be people things coming things X So people there's the that come in back on. Number want want and are back established work cities. people big one, to to it's been

environment sort has capital down significantly The of shut building has money cost the of It's cost the that risen Money is totally risen new basically and not is like anymore. has expensive. free is uneconomic. thing of supply. second it's significantly, and -- The

So very a very, new building are down. X for construction market. and our new things constructive shut supply has Those

and want feet thing million you with, You if at other XXX and market that a customers bifurcated. of of they of square The New the side you the and XXX very space a of at or even XXX is can square is million can the New is Park deal York you Avenue the the feet space. at space west and Manhattan, be at That you that better see Sixth vacancy look the Avenue, in evaporating at -- space, the in see in look supply There's -- is look million only York. in supply we quickly. space is space to that limited space

almost to a went rents foot overnight shrinks. $XX as $XXX So from for Avenue foot a supply Park example,

of demand. a and landlord market. So vacancies that's evaporating a are No supply, definition significant

there been has a a recession. going thing. in my and the is, I -- no about soft our There was has a in to thing we're landing, other where good expanding this enthusiastic remarks opening are have customers that's Fed, and The been made recession. speculation and There mention and

are and and So want space. they better enthusiastic about of space our customers market. they the more their That's space most landlords want

Operator

from comes Michael Citi. question with next Griffin The

Michael Griffin

to increasing pipeline maybe of fair back by office that more pipeline. space just in or on more services traditional historically services tech driven financial know an going given submarket has PENNX that leasing markets takers? Park seen some we've those and But Sixth. financial there focused that traditional leasing and Maybe share like availability been media that's is limited I Is the more it say to of that tenants.

Glen Weiss

Absolutely correct.

all both seeing coming firms, they're sector and tech, a PENNX a and law So equity industry changer. it's bonds. tenants hedge PENNX, from types flooding private are game consulting, everybody activity entertainment, of financial, plethora to Penn, We're in.

on what Westside, run they else. of but available and a top Penn with these this the not everybody of now more astounded buildings in like feels a Yards. I site. and of that, We're is in stay we're up part on that's what Manhattan gives doorstep and new a West of think part done, we've in we've only And done part transportation, quality to partly West, of to the Hudson lack powerful. feel by importantly like. coming which us -- generally, neighborhood leg due all They're It's market, what

about with year tenant sure. full So and it's side, point the John said you for all as in what

Michael Griffin

might be you from or go debt be and in appreciate just set, I would to color But your comments purchase return And IRR back of sense prime on great. I look what the Glen. the can Thanks, growth acquisitions outright? to to on opportunity prefer an underwriting to assets of to hurdles at more sheet balance external then, you trying perspective, kind terms you then on seems and Steve, pivot it that. want do you there. a And like offense you us have that distressed side? your of XXXX. give to to is the Would in going as

Michael Franco

Michael. It's

asset that lens whether they the a lot think to opportunity driven, I And will whether want It's debt. through get outright opportunist, the cases, to sell the position. assets in or little to sell are the to be the obviously debt it is through buy through debt. an We work both. want than short open easier a debt outright collectively having But some comes together we're purchase, asset to and that it's or

So we're looking opportunities a that. of at like number

for this to we're of the as Steve increase is enterprise over as about do the capital, that growth's growth to that going where, right, think deploying we think sake, not value I said, things Look, trying are time. a

to we in capital very And want deploy so our is the attractive and precious capital a way.

generate target, buys a So trying time. are returns We're generate going not to multiples to give but core specific I'm trying that attractive return over very that attractive can very you we're focus. to not these

get I that so as not each the some here. but We its value-added And as put we're I want opportunistic put dynamic is And own money. can serious deal deploy looking that's think specific money make probably has of so we would profit to to at to dynamics, out that play if out capital. sort

Operator

Kamdem Morgan Ronald question with Stanley. And comes the next from

Ronald Kamdem

ones. quick X Just

just of at one I potentially but ending think in XQ sort on of at end you comments the occupancy next if I about XX% correctly. So the year, made that 'XX, some dipping heard

Just of sort in would helpful. comments of just curious should same-store terms about Any on we the of what NOI. that think impact be

Michael Franco

of We're is through just on that this now. I you timing of difficult lot think you I quarter, to based quarter budgets talked we of goal think sort versus that to right our you you sort about the the hard driven. terms give end that near know in know And of that visibility can today. stuff prediction that give A going I the give are, term now. and

Ronald Kamdem

forth. Okay. second cash going the Great. from cash quarter question, just flow a back good to like so and My it statement, looks operating

flow business Thank about the the recovers. that you. guys recover? as be you're cash sort business about like mindful as thinking or that should else it's thinking anything maximizing free conversion there you are how spending Just we CapEx any as whether Is of of, cash

Michael Franco

our approach we look, to fairly invest with capital, how includes is our And mean, our I on our that rigorous base. existing be right? objective, general asset

return appropriate remarks, past. So my an is is the think not we've asset we debt I'm much deploying too to -- if that -- on don't that in an going And that an that do I don't we see And are opportunity. I referenced rework. demonstrated we see in the until where capital opportunity has see that. or we it

do higher. in to to the it is there So tightening some. start to be we're the down into was as ago we bit. submarkets will the with we to the notwithstanding best of to to sheet. we drop it's precious, think opportunity space transition is landlords because strength the market, trend start rigorous, where we inflation, I a that And will capital continue don't build-out concessions an hope cost But balance going going think see that that of years be

Operator

question Goldman Caitlin And from next with Burrows Sachs. the comes

Caitlin Burrows

some take on policy bring a and it know the dividend Thanks for expected is I the but on quarter to the 'XX comments the the could dividend? Board decision, back guess give for what maybe earlier you dividend would 'XX. I

Steven Roth

And dividend conserving What the work our adopted, a we we was of and at end very shareholders our that about policy significant balance once the cash curve lower based upon genesis the was year. cycle the thing we do more will are changes to times, what dividend normal we and universally, by along normal being sheet with it. principal of business they The the endorsed protecting of it, the protecting policy we the in totally then likely of that dividend, the the We cash strategy. balance did past. and the capital, sheet, convert get had availability pay a canvas that to

well strategy. sheet, by So strategy the that our very protects which an interim not constituents. necessarily balance It's permanent this was a is received

Caitlin Burrows

it. Got

leasing like you've And contribute and users move the PENNX expectation to then rent your any for could in to recognizing given give PENNX, path maybe takes in just X.X% for that done and on and build yield? already time to knowing maybe detail Okay. on the you XXXX, it up

Michael Franco

the just 'XX really start occurs, in think by you're 'XX. in much really because until is Glen to on won't now, don't leases time kicking working I wonder going the build-out this income see that the

don't year. next of the of think you'll think year, I see of earnings. a remainder So lot activity the actually hitting it's this over course I But

we it's really think be as into going start I getting 'XX. to

Operator

Yulico Scotiabank. next question Nick with comes from the And

Nicholas Yulico

was to higher leases. was back feet, to PENNX. there rent done, And prior at which than square wanted that I Just leasing XX,XXX the is the guess on questions go X

some I floor rent space, about from benefit but come? higher versus of about should that can there still the think was think how rents like just additional we talk to you

Glen Weiss

It's Glen Weiss.

rents PENNX. continue increase we at So to

way. since quarter-to-quarter to If we you strong continue redevelopment, think about our started they the a rise rents in unleashed pretty on

allow increased win. we've deals made at upper And drag huge rest of So was now the building past of in yes, along quarter the one the stack that where this us will to of the a the building we rents throughout.

on quote very quotes been well. our we've our rental there PENNX, focused increasing Similarly as

when said ago, will predicted and we better few Penn So we better, whole said a as years the had gets the had and what's in, happening. strengthens tenants this the on district we District as transformation rents better it's -- move exactly rise as new as fourth

go we trend our So and holdings to 'XX, talked Penn we much that the PENNX PENNX activity District pipeline, continue of about additionally. as expect we and the into in other

about yet really excited to come it. the we is we're best So think and

Michael Franco

I a the million, still And gives we Like X we million the always magnitude think to X.X X.X another we redevelopment. leased therefore, sense million right? that So feet of said, of opportunity. go, have post have you

to unlike not This PENNX, several which at the lease-up all over years, is occur going a -- that's Now right? next execution, is once.

and so just that that's that's quarter, we factoring even And rise, continuing that think Glen a would the past in opportunity there's there, meaningful more did which start what I if on PENNX sniff. rents to continued mark-to-market this

time, for So this done we've is that given the we think is going continue to district. to deliver in us over

Nicholas Yulico

Okay.

'XX. when should is lot growth leasing the you're getting a some terms FFO talking you'd for of talk bottom see in PENNX And occupancy question start earnings the I the to of deal -- of and if point, the about growth? sort past know said year? about been the thinking of just also to burn-off next at to we a interest some feel occupancy think How on on capitalize call impact issue growth impact. with. there's more have FFO you is know based about Michael, XXXX terms to improving. then, I for you've in Second of in as you're of the there's But we're some about And

Michael Franco

so Look, Yes. last of we're benefit I activity of starting lot really the the or that 'XX. on think in in get executing said quarter the we a we're to now, going that

I bit that see of you'll we're working will now hit, and the more thereafter. the seeing kick this start impact. system year the 'XX to activity right? this So through But right and material growth that think in in a that lot and some things will little continues a on, case, sort that immediately, that running we're pipeline to be are there of really

timing a we we get try color as budget give what to going sync to when of somewhat year 'XX, up bit next doesn't well flat this closer that So year the to in said to little to was as I move-outs continue to refine we're and more terms of backfilling, doing. The sort next online. comes you year. the we've the be But think

moving that things are there's around. So

hedged, don't On But the certainly we'll starting well like though. start side, I come effectively rates down are term. positive are think to in fairly until hedged, to the that you short impact material we're see as 'XX because on

you give guidance. as through we general And But matter. precision don't still can't a because think give I know, is So you it. this I we're a working

said think think X from dissimilar 'XX. X, the year, we've this being with not to holds last comments the respect about months I I in still too

Operator

I session. Mr. question-and-answer to our like concludes to This remarks. Steven closing would back for the over conference turn Roth any

Steven Roth

election It's Thanks, everybody. day.

the seen perform and have District and better. Penn recently proud and are very And take not very assets, which through be to accomplished so we've there to well will recently of of -- we're and Those mean who very these exciting, going think we're I what going very please it's to dying you we I tonight, think. performing you expose call,

call, So want if us and very next much. Thanks see you you give the quarter. to a or we'll in

Operator

for concluded. conference Thank you The has today's now attending presentation.

disconnect. now may You

Vornado Realty Trust (VNO) 5 Nov 242024 Q3 Earnings call transcript