Investment Rating - The report provides a positive investment rating for the industry, indicating growth potential and favorable market conditions [1]. Core Insights - The industry is projected to experience significant growth, with a forecasted revenue of 18,322.3 billion in 2025, up from 15,081.0 billion in 2024, representing a year-on-year increase of approximately 14.8% [3][10]. - Key growth drivers include technological advancements and increasing consumer demand, particularly in the TMT (Technology, Media, and Telecommunications) sector, which is expected to grow by 29% [24][28]. - The report highlights a trend of increasing average rents in prime shopping centers, with a notable increase of 10.4% in 2025 [28]. Summary by Sections Revenue Forecast - The industry is expected to generate revenues of 18,322.3 billion in 2025, with a steady growth trajectory observed from previous years [3][10]. - The revenue growth rates for the upcoming years are projected at 6.1% for 2025, indicating a robust market outlook [5]. Sector Performance - The TMT sector is highlighted as a key performer, with a projected growth rate of 29% [24]. - The average rental rates in prime locations are anticipated to rise, reflecting increased demand and market confidence [28]. Market Trends - The report notes a significant increase in consumer spending and investment in technology, which are driving the overall growth of the industry [28]. - The average rent in prime shopping centers is expected to increase by 10.4% in 2025, indicating a strong recovery and demand in the retail sector [28].

Financial Data and Key Metrics Changes - Third-quarter comparable FFO was $0.57 per share, compared to $0.52 per share for the same quarter last year, beating analyst consensus by $0.02 [24] - Same-store GAAP NOI for the New York business overall was up 9.1% for the quarter, while same-store cash NOI was down 7.4% [24] - Net debt-to-EBITDA ratio improved to 7.3 times from 8.6 times at the start of the year, with immediate liquidity of $2.6 billion [28] Business Line Data and Key Metrics Changes - During the first nine months of 2025, Vornado leased 3.7 million sq ft overall, with 2.8 million sq ft in Manhattan office [10] - Average starting rents for Manhattan office leasing were $99 per sq ft, with mark-to-markets of plus 11.9% GAAP and plus 8.3% cash [10] - In the third quarter, 21 New York office deals totaled 594,000 sq ft at starting rents of $103 per sq ft, with mark-to-markets of plus 15.7% GAAP and 10.4% cash [11] Market Data and Key Metrics Changes - Midtown core better building vacancy is now down to 6.2%, indicating a shift to a landlord's market [9] - Manhattan office leasing activity is on pace to exceed 40 million sq ft for the year, the highest since 2019 [9] - New York office occupancy increased to 88.4% from 86.7% last quarter, primarily due to leasing activity at Penn 2 [26] Company Strategy and Development Direction - The company is focused on the Penn District as a growth engine, with plans for a 475-unit rental residential building and retail redevelopment [14][15] - The acquisition of 623 Fifth Avenue is aimed at transforming it into a high-end boutique office building [16][17] - The Manhattan retail market is showing strength, with tenants approaching landlords for early renewals [19] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the demand for office space, noting that tenant demand is robust across all industries [6][9] - The company expects 2025 leasing volume for Manhattan office to be the highest in over a decade [10] - Management anticipates significant earnings growth in 2027 as the full impact of Penn 1 and Penn 2 leases takes effect [25] Other Important Information - The company has generated $1.5 billion in net proceeds from sales and financings, paying down $900 million in debt [28] - Signage revenue for 2025 is projected to be the highest year ever, with the company owning the largest signage portfolio in New York City [19][20] - The company is involved in the Penn Station transformation project, supporting improvements that benefit its holdings [54][56] Q&A Session Summary Question: How is the leasing strategy changing at Penn 2? - Rents have increased, with average rent at $112 per sq ft, and the company is confident in its leasing strategy for the remaining space [32] Question: How will leasing for 623 Fifth Avenue be approached? - The company plans to market the building with complete designs to attract high-end tenants [34] Question: What is the current signed-not-open pipeline? - The company expects over $200 million in revenue from signed leases over the next couple of years, with the bulk coming in 2027 [40] Question: What is the expected trajectory of occupancy next year? - The company anticipates reaching 90% occupancy in the next quarter or two, with continued growth thereafter [53] Question: What are the plans for proceeds from non-core asset sales? - Proceeds will be used to strengthen the balance sheet and potentially for compelling external acquisitions [66] Question: What is the status of the Penn Station transformation project? - The company supports improvements to Penn Station and is involved in the process, focusing on retail opportunities [54][56] Question: What are the expectations for rent growth in the coming years? - The company expects rent growth to exceed 20%-25% over the next four to five years due to strong demand and limited supply [61]

Core Insights - Vornado Realty Trust's (VNO) third-quarter 2025 adjusted funds from operations (FFO) were 57 cents per share, exceeding the Zacks Consensus Estimate of 55 cents and reflecting a year-over-year increase of 9.6% [1][11] - Total revenues for the quarter reached $453.7 million, surpassing the Zacks Consensus Estimate of $443.3 million, with a year-over-year growth of 2.4% [2][11] Financial Performance - Total same-store net operating income (NOI) was $266.7 million, up from $265.5 million in the prior year, with notable increases of 9.1% in the New York portfolio and 3.8% in the 555 California Street portfolio, while THE MART saw a decrease of 10.4% [3][11] - The occupancy rate in the total New York portfolio improved to 87.5%, an increase of 80 basis points year over year, with THE MART at 80.7% (up 100 bps) and 555 California Street at 96.3% (up 180 bps) [7][11] Leasing Activity - In the New York office portfolio, 594,000 square feet were leased at an initial rent of $102.60 per square foot, with a weighted average lease term of 12.5 years [4] - The New York retail portfolio saw 27,000 square feet leased at an initial rent of $292.79 per square foot, with a weighted average lease term of 9 years [5] - At THE MART, 158,000 square feet were leased at an initial rent of $48.84 per square foot, with a weighted average lease term of 10.5 years [6] Portfolio Activity - Vornado acquired the 623 Fifth Avenue office condominium for $218 million, which includes 382,500 rentable square feet and is currently 75% vacant, with plans for redevelopment by 2027 [8][11] - A joint venture, in which Vornado holds a 55% interest, sold the 512 West 22nd Street office building for $205 million [9][11] Balance Sheet - Vornado ended the quarter with cash and cash equivalents of $1.01 billion, a decrease from $1.2 billion as of June 30, 2025 [10]

Financial Data and Key Metrics Changes - Net income for Q2 2025 decreased 72% to $600,000 or $0.03 per share compared to $2,000,000 or $0.11 per share in the same period last year, primarily due to due diligence related legal expenses and lower interest income [3] - The company's pro rata share of NOI in Q2 increased 5% year over year to $9,700,000, driven by higher contributions from multifamily and mining royalty segments [3][19] Business Line Data and Key Metrics Changes - The multifamily segment contributed an additional $57,000 of NOI year over year, while the mining segment contributed an additional $637,000 of NOI [3] - The industrial and commercial segment NOI decreased by $177,000 year over year due to tenant eviction and lease expirations [4] - Mining and royalty business segment revenues and NOI for the quarter totaled $3,600,000 and $3,700,000 respectively, an increase of 1221% over the same period last year [6] - The multifamily segment reported total revenues and NOI of $14,600,000 and $8,200,000 respectively, with a 94% occupancy rate for apartments and 83% for retail space [7] Market Data and Key Metrics Changes - The average rental rate of expiring industrial leases was $6.55 triple net, with expectations for new rental rates to start in the sevens or greater [15] - New deliveries in the DC market are expected to pressure vacancies, concessions, and revenue growth in the foreseeable future [9] Company Strategy and Development Direction - The company plans to continue focusing on leasing existing industrial space and managing the delivery of new industrial products for 2026 [15][20] - The company is pursuing a business opportunity that involves legal expenses, but this does not indicate a shift in strategy [24] - The company aims to double the size of its industrial portfolio by 2030 [20] Management's Comments on Operating Environment and Future Outlook - Management cautioned that NOI growth would be flat or slightly negative during the time it takes to lease up the first building in the industrial development growth strategy [18] - The company anticipates challenges in matching 2024's NOI numbers due to a nonrepeatable event in the mining royalties segment [19] - Management remains optimistic about rental rates and expects market vacancies to top out in 2025, which should bode well for demand and rent growth [15] Other Important Information - The company is in the predevelopment stage for a 170-acre industrial land project in Cecil County, Maryland, with permits expected in early 2026 [11] - The multifamily development project in Greenville, South Carolina, is expected to be ready for lease up in Q4 2027 [14] Q&A Session Summary Question: Inquiry about legal expenses related to a potential new investment - Management confirmed that the legal expenses are related to pursuing a business opportunity but clarified that it does not indicate a shift in strategy [24][25]

Core Insights - Vornado Realty Trust's second-quarter 2025 adjusted funds from operations (FFO) were 56 cents per share, exceeding the Zacks Consensus Estimate of 53 cents, but reflecting a 1.8% decline year over year [1][11] - Total revenues for the quarter were $441.4 million, falling short of the Zacks Consensus Estimate of $455.4 million, and representing a nearly 2% decrease year over year [2] Financial Performance - Total same-store net operating income (NOI) for the quarter was $260.8 million, up from $247.4 million in the prior-year quarter, with increases in the New York, THE MART, and 555 California Street portfolios of 1.8%, 57.7%, and 3.1% respectively [3][11] - The New York office portfolio saw leasing of 1,479,000 square feet at an initial rent of $101.44 per square foot, with a weighted average lease term of 6.8 years [4] - In the New York retail portfolio, 57,000 square feet were leased at an initial rent of $96.77 per square foot, with a weighted average lease term of 8.1 years [5] - At THE MART, 127,000 square feet were leased at an initial rent of $50.87 per square foot, with a weighted average lease term of 5.6 years [6] Portfolio Activity - A joint venture with a 55% interest sold 512 West 22nd Street, a 173,000 square foot office building, for $205 million [8] - Another joint venture with a 50% interest completed the sale of the 49 West 57th Street commercial condominium during the same period [8] Occupancy Rates - The total New York portfolio occupancy was 85.2%, down 310 basis points year over year, while THE MART's occupancy was 78.2%, up 130 basis points year over year, and 555 California Street's occupancy was 92.3%, down 220 basis points year over year [7] Balance Sheet - Vornado ended the quarter with cash and cash equivalents of $1.2 billion, an increase from $568.9 million as of March 31, 2025 [9]

Financial Data and Key Metrics Changes - The second quarter comparable FFO was $0.56 per share, beating analyst consensus of $0.53 per share and remaining flat compared to the previous year's second quarter [26] - New York office occupancy increased to 86.7% from 84.4% in the previous quarter, primarily due to a full building master lease at 770 Broadway [27] - The net debt to EBITDA metric improved by 1.4 turns to 7.2 times from 8.6 times, indicating a stronger balance sheet [23] Business Line Data and Key Metrics Changes - In the first half of 2025, the company leased 2,700,000 square feet overall, with 2,200,000 square feet in Manhattan office space [10] - The average starting rents for Manhattan office leasing were $97 per square foot, with mark-to-markets of plus 10.7% GAAP and plus 7.7% cash [10] - The company executed 27 deals totaling 1,500,000 square feet in Manhattan during the second quarter, with average starting rents of $101 per square foot [11] Market Data and Key Metrics Changes - The company operates primarily in Manhattan, which is considered the strongest real estate market in the country, with a focus on a smaller Class A better building market of 180,000,000 square feet [7][8] - Replacement costs for a Class A tower in Manhattan have risen to approximately $2,500 per square foot, with rents in the $200s now commonplace [8] - The leasing pipeline includes 560,000 square feet of leases signed or in negotiations, with over 1,000,000 square feet in various stages [21] Company Strategy and Development Direction - The company aims to focus on increasing its stock price and is considering selling non-core assets in Chicago and San Francisco for the right price [32] - The Penn District is viewed as a growth engine for the company, with plans for future development projects and rising rents [19] - The company is actively redeveloping 350 Park Avenue with Citadel as the anchor tenant, indicating a commitment to high-quality developments [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong demand and a landlord's market in Manhattan due to tight availability and no new supply expected through the end of the decade [9] - The company anticipates significant earnings growth by 2027 as leases at PENN1 and PENN2 come online [27] - Management noted that the financing markets are liquid, and they are actively refinancing their 2025 maturities, indicating confidence in future cash flows [28] Other Important Information - The company has generated $1,500,000,000 of net proceeds from sales, financings, and the NYU deal since the beginning of the year [23] - The company has completed several refinancing transactions, including a $675,000,000 refinancing of Independence Plaza and a $450,000,000 refinancing of PEN11 [22] Q&A Session Summary Question: How much of the pending leasing activity is geared towards PENN2 versus the rest of the portfolio? - Approximately 50% of the 1,400,000 square feet in the pipeline is at PENN2 [31] Question: Can you elaborate on the potential sale of The MART and 555 California? - The company views these assets as valuable and will sell them for the right price, but they are not actively marketing them [33] Question: What is the current physical occupancy and rent coming online in the next twelve months? - The company expects occupancy to increase to the low 90s over the next year, with significant income growth anticipated in 2027 [38] Question: How do you see the potential for NOI growth in the Penn District? - The company believes that as market rents increase, the existing inventory could generate significant NOI growth, potentially reaching $400,000,000 in five years [42] Question: What are the thoughts on dividend reinstatement? - The company expects to at least match last year's dividend of 74¢ per share and is considering a more regular dividend as the business environment improves [88]

Financial Highlights - Core FFO per share was $0.22 [5] - Same-Store Property Cash NOI adjusted for non-recurring items decreased by 3.0% year-over-year [5] - The 2025 FFO guidance was revised to $0.83-$0.86, a $0.03 revision due to lower Observatory NOI guidance [5] - Liquidity stands at $0.7 billion [5] Portfolio & Leasing - Manhattan office portfolio is 93.8% leased [5, 12, 29] - Leased 222k sf in Manhattan and achieved +12.1% positive mark-to-market [5] - The company closed on the acquisition of a retail asset on North Sixth Street in Williamsburg for $31 million [5] Observatory - Observatory 2025 NOI guidance revised to $90-94 million [5] - Revenue per visitor increased by 2.3% year-over-year [5] Retail - Williamsburg retail properties are 91.2% leased with a 6.5-year WALT at income generating properties [73]

Summary of Empire State Realty Trust (ESRT) Conference Call Company Overview - Empire State Realty Trust (ESRT) is a New York City-focused Real Estate Investment Trust (REIT) with a diversified portfolio across various sectors, including office, retail, multifamily, and the Empire State Building Observatory [2][3] Key Financial Metrics - Portfolio composition: approximately 60% office, 25% from the Empire State Building Observatory, and just under 20% from retail and multifamily [3] - Leasing statistics: - Office assets: 93% leased - Retail assets: 94% leased - Multifamily: 99% leased [3] - 2024 leasing performance: 1,300,000 square feet leased, with a positive lease rate absorption of nearly 600 basis points since the end of 2021 [4] Market Dynamics - New York City has outperformed other gateway cities in recovery from COVID-19, with limited new supply expected to continue due to high construction costs and long development timelines [3][4] - The office leasing environment in New York City is strong, with no deals paused or pulled back in recent negotiations [20][21] - The company has seen a positive trend in net effective rent and reduced pushback on rent increases [22] Observatory Performance - The Empire State Building Observatory has shown resilience through economic cycles and is expected to remain a positive contributor to cash flow, despite headwinds in tourism [5][6] - International visitors account for about 50% of admissions, with a noted decline in international tourism impacting performance [6][31] - The Observatory's earnings are typically weighted towards the second half of the year, historically representing 60% of net operating income (NOI) [6] Retail and Multifamily Insights - The retail portfolio consists of high foot traffic assets, with a weighted average lease term of 6.5 years and strong credit quality tenants [7] - Multifamily properties have added resiliency to cash flows, with virtually no new supply and high replacement costs [7][8] Balance Sheet and Capital Allocation - ESRT maintains a strong balance sheet with no floating rate debt exposure and a low leverage ratio of 5.2 times net debt to EBITDA [9] - The company has repurchased approximately $300 million in shares since 2020 and will consider future buybacks based on market conditions [9][10] - The transaction environment has become more active, with the company prepared to underwrite deals across retail, multifamily, and office sectors [10] Sustainability and Long-term Strategy - ESRT is committed to sustainability and has been an industry leader in healthy building performance [10] - The company aims to deliver long-term value to shareholders through operational excellence and strategic capital allocation [11] Future Outlook - The company is optimistic about growth in retail and multifamily segments, with plans to act on attractive investment opportunities as they arise [14][17] - The office market remains strong, with a diverse tenant base across various industries, including professional services and technology [26][27] - ESRT is focused on maintaining operational flexibility and capitalizing on market opportunities while managing risks associated with tourism and economic uncertainty [5][6][58]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported core FFO of $0.19 per diluted share, with same store property cash NOI up 0.4% excluding nonrecurring revenue items from Q1 2024 [27] - Expenses increased approximately 5% year over year, driven by real estate taxes, payroll costs, and repair and maintenance costs, partially offset by higher tenant reimbursement income and growth in rental revenue [27][28] - The company maintains its guidance for core FFO of $0.86 to $0.89 for 2025, with unchanged NOI guidance for the Observatory at $97 million to $102 million [28][29] Business Line Data and Key Metrics Changes - The commercial portfolio leased a total of 231,000 square feet in Q1 2025, including significant renewals and expansions with notable tenants [13][14] - The Manhattan office portfolio is 93% leased, with a slight decrease from 94.2% in the previous quarter, but the company expects occupancy gains by year-end 2025 [13][19] - The multifamily portfolio achieved 99% occupancy with 8% year-over-year rent growth in Q1 2025 [16] Market Data and Key Metrics Changes - The leasing environment in New York City remains active, particularly for modernized buildings near mass transit, with the company achieving its fifteenth consecutive year of positive mark to market rent spreads [9][16] - The Observatory generated NOI of approximately $15 million, with visitation down 0.6% year over year, attributed to weather conditions and the timing of the Easter holiday [9][28] - Approximately 50% of Observatory visitors are domestic, with no single region contributing more than 10% of total visitation, indicating a broad international exposure [11] Company Strategy and Development Direction - The company focuses on five priorities: leasing space, selling tickets to the Observatory, managing the balance sheet, identifying growth opportunities, and achieving sustainability goals [12][72] - The company is well-positioned to navigate economic uncertainties due to its diversified income streams and strong balance sheet, allowing for flexibility in leasing and maintenance [7][22] - The company actively underwrites deals across retail, multifamily, and office sectors, with a focus on New York City, and is prepared to act on opportunities to enhance growth [25][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledges potential macroeconomic risks but remains optimistic about the company's strong position due to long-term leases and a diverse tenant base [6][7] - The company is focused on maintaining operational excellence and controlling costs while monitoring external factors that could impact tourism and economic growth [21][22] - Management emphasizes the importance of transparency and adaptability in the current uncertain environment, particularly regarding tourism and consumer behavior [21][22] Other Important Information - The company repaid $100 million in Series A unsecured notes and $120 million in revolving credit facility balance during the quarter, maintaining a proactive approach to managing its balance sheet [23] - The company has the lowest leverage among New York City-focused REITs at 5.2 times net debt to EBITDA as of quarter-end [23] Q&A Session Summary Question: How are leasing conversations unfolding with different tenant categories? - Management noted no change in lease negotiations across various tenant categories in the last sixty days, indicating strong activity and interest [33][34] Question: What is the expected trend for CapEx in the coming years? - Management provided insights on CapEx, indicating a reduction in leasing commissions and building improvements as the portfolio stabilizes, with a good run rate expected moving forward [35][38] Question: How is the Williamsburg leasing progressing? - Management reported strong activity in Williamsburg, with high interest from recognizable brand names and a 94% lease rate across the retail portfolio [40][43] Question: How does the company prioritize capital allocation opportunities? - Management emphasized a balanced approach to capital allocation, focusing on operating runway and potential investment opportunities while being measured in share buybacks [44][45] Question: What is the company's perspective on tourism and potential impacts from geopolitical tensions? - Management has not detected significant shifts in demand and remains focused on operational discipline and marketing strategies to mitigate any potential declines in tourism [56][57]

Financial Highlights - Core FFO per share was $0.19 in 1Q25[5] - Same-Store Property Cash NOI decreased by 1.9% year-over-year, but increased by 0.4% when adjusted for non-recurring items[5] - The company reaffirmed its 2025 FFO guidance at $0.86-$0.89[5] - $2.1 million of shares were repurchased at $6.92/share through April 28, 2025[5] Leasing and Occupancy - Manhattan office leasing achieved +10.4% positive mark-to-market spreads in 1Q25[5] - The commercial portfolio leased rate increased +110bps y/y in 1Q25 to 92.5%[16] - Total office leased rate increased +80bps y/y in 1Q25 to 92.3%[16] ESB Observatory - Revenue per visitor increased by 5.9% year-over-year[5, 11] - 2025 Observatory guidance is unchanged at $97-102 million, compared to $99.5 million in 2024[5] Portfolio Composition - NYC Office accounts for 56% of Pro-Forma 1Q25 TTM NOI[11] - ESB Observatory accounts for 25% of Pro-Forma 1Q25 TTM NOI[11] - NYC Retail accounts for 12% of Pro-Forma 1Q25 TTM NOI[11] - NYC Multifamily accounts for 5% of Pro-Forma 1Q25 TTM NOI[11] Capital Recycling - Approximately $675 million has been invested into NYC multifamily and retail assets to date[33] - Approximately $250 million portfolio on North 6th Street[59]