2025-11-04 16:00Financial Data and Key Metrics Changes - The third-quarter comparable FFO was $0.57 per share, up from $0.52 per share in the same quarter last year, beating analyst consensus by $0.02 [20] - Same-store GAAP NOI for the New York business overall increased by 9.1% for the quarter, while same-store cash NOI decreased by 7.4% [21] - The net debt-to-EBITDA ratio improved to 7.3 times from 8.6 times at the start of the year, with immediate liquidity at $2.6 billion [24] Business Line Data and Key Metrics Changes - Vornado leased 3.7 million sq ft overall in the first nine months of 2025, with 2.8 million sq ft in Manhattan office space [9] - Average starting rents for Manhattan office leasing during the first nine months were $99 per sq ft, with mark-to-markets of +11.9% GAAP and +8.3% cash [10] - In the third quarter, 21 New York office deals were executed totaling 594,000 sq ft at starting rents of $103 per sq ft, with mark-to-markets of +15.7% GAAP and +10.4% cash [11] Market Data and Key Metrics Changes - Manhattan office leasing activity is on pace to exceed 40 million sq ft for the year, the highest since 2019 [8] - The vacancy rate for Midtown core better buildings is now down to 6.2% [7] - New York office occupancy increased to 88.4% from 86.7% last quarter, primarily due to leasing activity at Penn 2 [22] 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 [12][14] - The acquisition of 623 Fifth Avenue is aimed at transforming it into a high-end boutique office building, with redevelopment expected to deliver space by year-end 2027 [15][16] - The Manhattan retail market is showing strength, with tenants approaching landlords for early renewals to lock in spaces [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for office space in New York City, noting that tenant demand is robust and broad-based across industries [6] - The company expects 2025 comparable FFO to be slightly higher than 2024, with significant earnings growth anticipated in 2027 as the full impact of Penn 1 and Penn 2 leases takes effect [21] - Management highlighted the strong leasing fundamentals and liquidity in the capital markets for New York City assets [23][24] Other Important Information - The company is the largest owner of signage in New York City, with signage revenue for 2025 projected to be the highest year ever [17][18] - A recent court ruling vacated the arbitration panel's Penn 1 ground lease rent reset, but management remains optimistic about a reversal on appeal [19] Q&A Session Summary Question: How is the leasing strategy changing at Penn 2 with only 20% of the building left? - Rents have increased, with average rent at $112/sq ft at Penn 2, and the company is confident in their approach with many deals in the works [26] Question: How will the leasing of 623 Fifth Avenue be approached? - The company plans to market the building similarly to 220 Central Park South, with high aspirations once designs are completed [28] Question: What is the current signed-not-open pipeline in terms of dollar value? - The company indicated a projection of over $200 million in revenue from signed leases over the next two years, with the bulk coming in 2027 [29][30] Question: What is the expected trajectory of occupancy next year? - Management anticipates occupancy could reach the low 90s over the next year, with a reasonable probability of reaching 90% in the next quarter or two [34][36] Question: What are the plans for proceeds from non-core asset sales? - Proceeds could be used for strengthening the balance sheet or for compelling external opportunities, with a focus on internal development projects [41] Question: How does the company view the signage business in the Penn District? - The company owns 100% of the signs in the Penn District, allowing for optimized income and steady growth in signage revenue [33][32]