Vornado Announces First Quarter 2025 Financial Results

Core Insights - Vornado Realty Trust reported a net income of $86.84 million, or $0.43 per diluted share, for the quarter ended March 31, 2025, a significant recovery from a net loss of $9.03 million, or $0.05 per diluted share, in the same quarter of the previous year [1][38] - The increase in net income is attributed to a $76.16 million net gain from the sale of a portion of the 666 Fifth condominium to UNIQLO and a $17.24 million reversal of previously accrued rent expense related to PENN 1 [1][12] Financial Performance - Funds from Operations (FFO) attributable to common shareholders for the quarter was $135.04 million, or $0.67 per diluted share, compared to $104.13 million, or $0.53 per diluted share, in the prior year [2][38] - Adjusted FFO for the quarter was $126.25 million, or $0.63 per diluted share, up from $108.85 million, or $0.55 per diluted share, year-over-year [2][3] Leasing and Occupancy - Total square feet leased during the quarter was 709,000, with an initial rent of $95.53 per square foot for office space in New York [18] - Occupancy as of March 31, 2025, was 83.5%, with an expected increase to 87.4% after accounting for the master lease with New York University [21] Dispositions and Acquisitions - The company completed the sale of a portion of its U.S. flagship store at 666 Fifth Avenue for $350 million, realizing net proceeds of $342 million [12] - A master lease with NYU for 1,076,000 square feet at 770 Broadway was finalized, including a prepaid lease payment of $935 million and annual payments of approximately $9.3 million [6][7] Ground Rent and Legal Matters - An arbitration panel determined the annual ground rent for the PENN 1 land parcel at $15 million, leading to a reversal of $17.24 million in previously accrued rent expense [8][10] - Ongoing litigation may affect the ground rent, with potential increases to $20.22 million if the fee owner prevails [9] Financing Activities - The company repaid $450 million in senior unsecured notes due January 2025 and completed a $450 million financing for 1535 Broadway, with a fixed interest rate of 6.90% [14][15] - A sustainability margin adjustment was achieved, reducing interest rates on unsecured loans by 0.05% and 0.04% [16] Development Projects - Active development projects include PENN 2, with a rentable area of 1,815,000 square feet and a projected cash yield of 10.2% [27] - Total active development projects have a budget of $975 million, with $850 million expended to date [27]