Vornado Realty Trust Q3 FY2025 earnings call

• New York office market in boom, Midtown core better building vacancy down to 6.2%. Vornado's leasing, mark-to-market, and balance sheet stats lead industry. Net debt-to-EBITDA 7.3x, liquidity $2.6B. - PENN District transformation with leasing success, plans for residential building and retail transformation. - 623 Fifth Avenue acquisition to be redeveloped into elite boutique office. - 350 Park Avenue new build on schedule. - Signage business growing with highest year projected. - San Francisco 555 California complex leasing strong.

New York office performance leads national and peers. Third quarter comparable FFO was $0.57 per share. Same-store GAAP NOI for New York business up 9.1% quarter over quarter, cash NOI down 7.4%. PENN District leasing strong: PENN 2 leased over 1.3 million sq ft since inception, on track to hit 80% occupancy; PENN 1 leased 1.6 million sq ft. Signage revenue projected highest ever. 623 Fifth Avenue acquisition with 75% vacancy to be redeveloped. 350 Park Avenue new build on schedule. San Francisco 555 California complex leasing strong with 224,000 sq ft leases at triple-digit rents.

2025 comparable FFO slightly higher than 2024. 2026 comparable FFO flattish due to noncore asset sales and retail redevelopment. 2027 expected to be inflection year with significant earnings growth from PENN 1 and PENN 2 lease-up. PENN 2 on track to hit 80% occupancy by year-end. Projected incremental cash yield at PENN 2 to increase.

Litigation regarding 650 Madison Avenue loan, court ruling vacating arbitration panel's rent reset, with uncertainty on appeal. Potential delays in PENN Station transformation projects due to coordination issues between Amtrak and MTA.

Q: How is leasing strategy changing with 20% of PENN 2 left?

A: Rents keep moving up, repricing space daily, with deals in works and excellent tenant credit profile.

Q: How to approach leasing 623 Fifth Avenue?

A: Similar to 220 Central Park South, design and pre-lease with high aspirations.

Q: Timing and dollar amount of noncore asset dispositions?

A: Can't be specific yet, but at least $250 - $300 million, likely middle of 2026.

Q: Trajectory of occupancy?

A: Likely to reach mid-90% range.

Q: Involvement in PENN Station transformation?

A: In favor, involved with bidding groups for retail.

Q: Rent growth expectations?

A: Higher than 20% - 25% over 4-5 years due to tight supply and strong demand.

Q: Plans for proceeds from noncore asset sales?

A: Could go into balance sheet strengthening or attractive acquisitions.

Q: Tenant willingness to pay rents for PENN 15?

A: Serious business with tenants understanding math.

Q: Litigation impact on PENN?

A: Booked realistic number, uncertainty but parameters around it.

Q: Interest in 555 California and San Francisco assets?

A: Great assets, delighted to own, willing to sell for right price.

Q: For-sale vs for-rent residential?

A: Focus on 475-unit rental project at 34th Street and eighth Avenue.

Q: Leasing pipeline split?

A: 50-50 between PENN District and others.

Q: MSG relocation?

A: Highly unlikely, government running process for PENN Station redevelopment.

Q: New York portfolio occupancy and leased space?

A: Occupancy figure is leased space.

Q: Free rent and concessions?

A: Downtime lower, free rent declining.

Q: FFO adjustments?

A: 6.7 million of other items deducted, made up of several items.

Q: Capitalized interest and interest expense?

A: Capitalized interest from PENN 2 burning off, interest expense affected by 623 and debt rollover.

Q: Farley building disposition?

A: Not considering selling or taking apart, financing possible.

Q: Same-store NOI in 2026 and 2027?

A: Cash same-store NOI towards positive end of 2026 and significantly positive in 2027.

Q: Retail monetization and Hotel PENN site?

A: Good retail interest, Hotel PENN site long-term hold.

Q: PENN Station axis project and Metro North?

A: Intimately involved with MTA, service expected in 2027 using existing tracks.