ALEXANDERS INC Q4 FY2023 earnings call

• Leasing Success: New York City office leasing team won Gold Medal; leased 2.1 million sq ft in 2023 with average starting rent $99/sq ft, including 1.2 million sq ft at over $100/sq ft. Retail in NYC is recovering with strong leasing activity, including major luxury retailer purchases on Upper Fifth Avenue.
• PENN District Developments: Renovation of PENN 2 nearly complete, surrounding plazas almost 90% done. Hotel Penn demolition creates PENN 15 site, creating a large open public space.
• Financials: 2023 comparable FFO as adjusted was $2.61 per share, down $0.54 from 2022 due to increased interest expense. Fourth quarter comparable FFO as adjusted was $0.63 per share, down $0.09 from prior year.
• Market Conditions: Office market on recovery but capital markets challenged; retail market recovering with strong leasing pipeline and rents rebounding.

Office: In 2023, Vornado leased 2.1 million square feet of office space in New York City with an average starting rent of $99 per square foot, including 1.2 million square feet at over $100 per square foot. The fourth quarter saw 840,000 square feet leased. The New York City office leasing team won the Gold Medal. Retail: Retail in New York City has bottomed and is recovering rapidly. Major global luxury retailers like Prada and Kering bought prime Upper Fifth Avenue properties. Vornado's retail joint venture has a significant market share of high-quality Upper Fifth Avenue space.

• 2024 comparable FFO expected to be impacted by higher interest rates and lease turnovers, expected to be the trough in earnings. Earnings expected to increase as rates recede and leases from PENN and other vacancies come online.
• Leasing pipeline robust, especially near Penn Station and Grand Central Station with favorable market conditions for Class A office recovery.
• PENN 2 stabilization pushed to 2026 but leasing reaction to PENN 2 has been positive.

• Impact of higher interest rates on earnings and refinancing of office loans.
• Uncertainty in office market with potential foreclosures and givebacks.
• Challenges in refinancing office loans as some go into special servicing.

Q: Steve Sakwa asks about the composition of the 2 million square feet pipeline and upcoming expirations in 2024.

A: Glen Weiss says the pipeline includes activity at PENN 1 and PENN 2, with good progress on expirations at 1290, 280 Park, and 770 Broadway.

Q: Michael Griffin asks about stressed opportunities and capital allocation.

A: Steven Roth talks about buying back stock, deleveraging, and acquiring assets at distressed prices, noting foreclosures and givebacks create opportunities.

Q: Jing Xian Tan asks about the retail leasing pipeline.

A: Michael Franco and Steven Roth discuss strong retail leasing activity, scarce high-quality retail space, and rents rebounding.