Vornado(US:VNO)2024-11-05 21:10Financial 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]