Transaction Details - Vornado Realty Trust's 52% owned street retail joint venture completed the sale of a portion of its U S flagship store at 666 Fifth Avenue to UNIQLO for $350 million [1] - The joint venture retains ownership of 23 832 square feet of retail space at 666 Fifth Avenue including the Abercrombie & Fitch and Tissot stores [1] Financial Impact - Net proceeds from the sale amounted to $342 million which were used to partially redeem Vornado's $390 million of preferred equity on the asset [2] Company Overview - Vornado Realty Trust is a fully-integrated equity real estate investment trust [2]

Core Points - Vornado Realty Trust has declared a dividend of $0.74 per common share, payable on December 27, 2024, to shareholders of record on December 16, 2024 [1] - For 2025, Vornado plans to maintain its common share dividend policy by paying one common share dividend in the fourth quarter [1] Company Overview - Vornado Realty Trust is identified as a fully-integrated equity real estate investment trust [2]

Core Viewpoint - Vornado's recent earnings report shows mixed results, with FFO and revenues beating estimates but a decline in same-store NOI, raising questions about future performance leading up to the next earnings release [2][3][4]. Financial Performance - Vornado's Q3 2024 FFO was 52 cents per share, exceeding the Zacks Consensus Estimate of 51 cents, but down 21.2% year over year [2]. - Total revenues for the quarter were $443.3 million, surpassing the Zacks Consensus Estimate of $440.7 million, yet reflecting a year-over-year decline of nearly 1.7% [3]. - Same-store NOI was reported at $247.8 million, an 8.4% decrease from the prior year, with specific portfolio declines of 9% in New York, 2.8% at THE MART, and 4.7% at 555 California Street [4]. Leasing Activity - In the New York office portfolio, 454,000 square feet were leased at an initial rent of $92.32 per square foot, with a weighted average lease term of 9.7 years [5]. - The New York retail portfolio saw 97,000 square feet leased at an initial rent of $66.26 per square foot, with a lease term of 10.8 years [6]. - At THE MART, 239,000 square feet were leased at an initial rent of $50.18 per square foot, with a lease term of 8.4 years [7]. - In 555 California Street, 46,000 square feet were leased at an initial rent of $98.75 per square foot, with a lease term of 11.6 years [8]. Occupancy Rates - The occupancy rate in the New York portfolio decreased to 86.7%, down 320 basis points year over year, while THE MART's occupancy increased to 79.7%, up 290 basis points [9]. Balance Sheet - Vornado ended Q3 2024 with cash and cash equivalents of $783.6 million, a decrease of 10.2% from $872.6 million as of June 30, 2024 [10]. Industry Comparison - Vornado is part of the Zacks REIT and Equity Trust - Other industry, where Digital Realty Trust has gained 5.6% over the past month, reporting revenues of $1.43 billion, a year-over-year increase of 2.1% [14].

Core Viewpoint - Vornado Realty Trust is positioned to benefit from the increasing demand for high-quality office spaces with premium amenities, although challenges in the office real estate market and geographic concentration raise concerns [1][9]. Group 1: Financial Performance - In Q3 2024, Vornado reported adjusted funds from operations (FFO) of 52 cents per share, surpassing the Zacks Consensus Estimate of 51 cents, but reflecting a 21.2% decline year-over-year [2]. - The company had $2.6 billion in liquidity as of September 30, 2024, including $1 billion in cash and cash equivalents, and $1.6 billion available under its revolving credit facilities [7]. - A projected year-over-year decrease of 2.5% in total revenues is expected for 2024, alongside a 17.9% decline in adjusted FFO [9][12]. Group 2: Market Position and Strategy - Vornado Realty owns a portfolio of high-quality office properties in high-rent markets such as New York, Chicago, and San Francisco, focusing on expanding its market share in New York City [3][4]. - The company is enhancing its core business through opportunistic developments, divestitures, and strategic sell-outs, which provide capital for reinvestment [6]. - Vornado's focus on premier office spaces in transit-centric locations is expected to capitalize on the trend of office-using job growth [5]. Group 3: Risks and Challenges - The company faces ongoing uncertainty in the macroeconomic environment and a hybrid working model, which may lead to fluctuating demand for office spaces [9]. - Vornado's significant exposure to the New York City office market, which accounts for 86.5% of its net operating income, makes its cash flows vulnerable to regional economic conditions [10]. - Competition from other developers and the availability of sublease space may hinder Vornado's ability to attract and retain tenants at competitive rents [11].

Core Viewpoint - Vornado Realty Trust (VNO) has experienced an 81% increase in stock price over the past six months, significantly outperforming its industry's growth of 17.3% [1] Group 1: Financial Performance - In Q3 2024, Vornado reported funds from operations (FFO) of 52 cents per share, surpassing the Zacks Consensus Estimate of 51 cents, although this represents a 21.2% decline year-over-year [2] - The company achieved better-than-expected top-line growth during the same quarter [2] Group 2: Market Position and Strategy - Vornado focuses on high-rent, high-barrier-to-entry markets, which, along with a diversified tenant base, is expected to drive steady cash flows and long-term growth [3] - The demand for office spaces in New York remains strong, with Vornado leasing 454,000 square feet across 18 transactions at an initial rent of $92 per square foot in Q3 2024 [4] - The company is well-positioned to benefit from rising rents in newly constructed or redeveloped assets that offer ample amenities [5] Group 3: Development and Financial Strength - Vornado is engaging in opportunistic developments and divestitures, with strategic sellouts providing capital for reinvestment in developments and redevelopments [6] - The company sold a 49.9% interest in a property for net proceeds of $2 million and two condominium units for approximately $31.6 million in the first nine months of 2024 [6] - As of September 30, 2024, Vornado had $2.6 billion in liquidity, including $1 billion in cash and cash equivalents, and $1.6 billion available under its revolving credit facilities [7]

Group 1 - Manhattan's office vacancy rate decreased by 90 basis points year-over-year to 16.8% in October 2024 [1] - The asking rents in Manhattan reached the highest in the US at $67.93 per square foot [1] - There has been a slowdown in new office construction in Manhattan [1] Group 2 - Pacifica Yield focuses on long-term wealth creation through investments in undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Core Viewpoint - Vornado Realty Trust (NYSE: VNO) was downgraded at the beginning of the year after a strong rally at the end of the previous year, indicating a cautious outlook on the stock's future performance [1]. Group 1 - The stock had previously rallied back significantly, prompting the downgrade [1].

Financial Data and Key Metrics Changes - Third quarter comparable FFO as adjusted was $0.52 per share, down from $0.66 per share in the same quarter last year, primarily due to lower NOI from known move-outs and higher net interest expense [24] - Liquidity stands at $2.6 billion, including $1 billion in cash, with additional cash expected from the Uniqlo sale and NYU prepaid rent [12][43] Business Line Data and Key Metrics Changes - Year-to-date leasing activity reached 2.5 million square feet company-wide, with 2.1 million square feet in Manhattan [9] - In the third quarter, approximately 740,000 square feet of office space was leased across three markets, with an average starting rent of $92 per square foot in New York [28][29] - The New York office cash mark-to-market for the quarter was reported at a negative 7%, but if certain leases were included, it would be a positive 17.9% [33] Market Data and Key Metrics Changes - Manhattan's leasing volume for the first three quarters of 2024 totaled 23.1 million square feet, with full-year activity expected to surpass 30 million square feet for the first time in five years [25] - Midtown vacancy for Class A buildings is around 10%, with Park Avenue at 7% and Sixth Avenue at 9% [26] - The occupancy rate for the company's office portfolio is currently at 87.5%, down from 89.3% last quarter [36] Company Strategy and Development Direction - The company is focused on leasing up PENN 1 and PENN 2, with significant growth expected from these properties [88] - There is a strong emphasis on cash management and maintaining a disciplined approach to capital allocation, with plans to pay approximately the same dividend as last year [21] - The company is open to acquisitions but remains selective, focusing on good assets at distressed prices [20] Management's Comments on Operating Environment and Future Outlook - The office leasing market in Manhattan is showing signs of recovery, with strong demand for Class A space and declining vacancies [7] - Management expressed optimism about the future, noting that the lack of new office supply is conducive to a landlord's market [8] - The company anticipates completing 2024 with almost 3.8 million square feet leased across its portfolio, which would be the highest volume since 2014 [35] Other Important Information - A master lease agreement with NYU for 770 Broadway is expected to close in January, providing significant upfront payment and annual net rent [10][11] - The company has successfully extended the Bloomberg lease to 2040 and financed the maturing loan on the Bloomberg H2 building [18] Q&A Session Summary Question: Does the anticipated leasing activity include the NYU lease? - Yes, it does [46] Question: When does the occupancy at 770 Broadway start contributing to FFO? - The closing and rent commencement are expected in January [50] Question: Is the strategy for theMART to build occupancy with reduced rents? - The strategy is to rent opportunistically as attractive deals arise, given the current soft market in Chicago [51] Question: What is the current pipeline and activity at PENN 2? - There are 600,000 to 700,000 square feet of leases in negotiation, with expectations to close several during Q4 [53] Question: What is the demand for retail and plans for the Macy's store? - Demand for retail is up significantly, with ongoing discussions for new retailers, including Primark [59][61] Question: How does the company view raising equity given the current cap rate? - The company is well-capitalized and does not currently plan to issue equity, focusing instead on internal opportunities [66][68]

Core Viewpoint - Vornado Realty Trust reported a decline in funds from operations (FFO) for Q3 2024, despite beating consensus estimates, indicating challenges in the current market environment [1][2]. Financial Performance - Adjusted FFO was 52 cents per share, surpassing the Zacks Consensus Estimate of 51 cents, but down 21.2% year-over-year [1] - Total revenues for the quarter were $443.3 million, exceeding the Zacks Consensus Estimate of $440.7 million, but reflecting a year-over-year decline of nearly 1.7% [2] Same-Store Net Operating Income (NOI) - Total same-store NOI was $247.8 million, down from $270.6 million in the prior-year quarter, with declines in key portfolios: New York (-9%), THE MART (-2.8%), and 555 California Street (-4.7%) [3] Leasing Activity - In the New York office portfolio, 454,000 square feet were leased at an initial rent of $92.32 per square foot, with a weighted average lease term of 9.7 years [4] - The New York retail portfolio saw 97,000 square feet leased at an initial rent of $66.26 per square foot, with a weighted average lease term of 10.8 years [5] - At THE MART, 239,000 square feet were leased at an initial rent of $50.18 per square foot, with a weighted average lease term of 8.4 years [6] - 46,000 square feet were leased at 555 California Street for an initial rent of $98.75 per square foot, with a weighted average lease term of 11.6 years [7] Occupancy Rates - Occupancy in the New York portfolio decreased to 86.7%, down 320 basis points year-over-year; THE MART's occupancy increased to 79.7%, up 290 basis points; 555 California Street remained stable at 94.5% [8] Balance Sheet - Vornado ended Q3 2024 with cash and cash equivalents of $783.6 million, a decrease of 10.2% from $872.6 million as of June 30, 2024 [9]

Core Insights - Vornado reported $443.26 million in revenue for Q3 2024, a year-over-year decline of 1.7%, with an EPS of $0.52 compared to $0.28 a year ago, indicating a positive EPS surprise of +1.96% over the consensus estimate [1] Financial Performance - Revenue of $443.26 million exceeded the Zacks Consensus Estimate of $440.72 million by +0.58% [1] - Occupancy in New York was reported at 86.7%, slightly below the average estimate of 87.2% [3] - New York Retail occupancy was 79%, surpassing the two-analyst average estimate of 77.2% [3] - Total revenues from New York were $362.48 million, a decrease of -0.6% year-over-year, compared to the average estimate of $357.27 million [3] - Total rental revenues were $387.47 million, slightly below the average estimate of $389.40 million, reflecting a -3.2% year-over-year change [3] - Fee and other income revenue was $55.79 million, exceeding the average estimate of $51.76 million, with a year-over-year increase of +10.2% [3] - Total revenues from management and leasing fees were $2.84 million, significantly lower than the average estimate of $4.37 million, representing a -12.9% year-over-year change [3] - Total revenues from property rentals were $342.71 million, above the average estimate of $336.25 million, with a year-over-year change of +0.3% [3] Stock Performance - Vornado shares have returned +4.8% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]