Vornado(US:VNO)2025-11-04 16:02Financial 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]