Vornado(US:VNO)2025-11-04 16:02Financial 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 [24] - Same-store GAAP NOI for the New York business increased by 9.1% for the quarter, while same-store cash NOI decreased by 7.4% [24][25] - The net debt-to-EBITDA ratio improved to 7.3x from 8.6x at the start of the year, with immediate liquidity of $2.6 billion [28] 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 [10] - Average starting rents for Manhattan office leasing were $99 per sq ft, with mark-to-markets of +11.9% GAAP and +8.3% cash [10] - During 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 - Midtown core better building vacancy is now down to 6.2%, indicating a shift to a landlord's market [8][9] - Manhattan office leasing activity is on pace to exceed 40 million sq ft for the year, the highest since 2019 [9] - The retail market in Manhattan is showing strength, with tenants approaching landlords for early renewals [19] 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with plans for a 475-unit rental residential building and retail redevelopment [14][15] - Vornado aims to transform outdated retail spaces into modern offerings, enhancing the Penn District's appeal [15] - The company is actively involved in the Penn Station transformation project, supporting improvements that benefit its holdings [54][56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for office space, noting robust tenant demand across industries [6][9] - The company anticipates significant earnings growth in 2027 as the full impact of Penn 1 and Penn 2 leases takes effect [25] - Management expects occupancy rates to increase into the low 90s over the next year [26] Other Important Information - The company acquired 623 Fifth Avenue for $218 million, with plans to redevelop it into a high-end boutique office building [16][18] - The signage business is projected to have its highest revenue year in 2025, benefiting from the company's unique control over signage in key locations [19][20] 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 securing tenants for the remaining space [32] Question: How will leasing for 623 Fifth Avenue be approached? - The company plans to market the building with high-end designs, similar to its approach with 220 Central Park South [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 further increases expected [53] Question: What are the plans for proceeds from non-core asset sales? - Proceeds may be used for strengthening the balance sheet or for compelling external acquisitions, depending on opportunities [67] Question: What is the outlook for rent growth in the coming years? - The company expects rent increases to exceed 20%-25% over the next four to five years due to strong demand and limited supply [61]