Q1 2024 Vornado Realty Trust Earnings Call

Operator: Good morning, and welcome to the Vornado Realty Trust first quarter 2024 earnings call. My name is MJ, and I will be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen-only mode.

Good morning, and welcome to the Vornado Realty Trust first quarter 'twenty 'twenty four earnings call. My name is M. Jay and I will be your operator for today's call. This call is being recorded for replay purposes.

Operator: All lines are in a listen only mode.

Operator: Speakers will address your questions at the end of the presentation during the question and answer session.

Operator: At that time. Please press Star then one on your Touchtone phone.

Operator: Our speakers will address your questions at the end of the presentation during the question and answer session. At that time, please press star, then 1 on your touchtone phone. I would now like to turn the call over to Stephen Borenstein, Executive Vice President and Corporation Counsel. Please go ahead. Welcome to Vornado Realty Trust's first quarter earnings call. Yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission.

Operator: I would now like to turn the call over to even Bornstein Executive Vice President and Corporation Counsel. Please go ahead.

Operator: Welcome to Vornado Realty Trust's first quarter earnings call yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q, with the Securities and Exchange Commission. These documents as well as our supplemental financial information packages are available on our website www dot dot.

Operator: These documents, as well as our supplemental financial information packages, are available on our website www.bno.com under the investor relations section. In these documents, and during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q, and financial supplement.

Operator: Com under the Investor Relations section in these documents and during today's call. We will discuss certain non-GAAP financial measures reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release Form 10-Q and financial supplement.

Steven J. Borenstein: Please be aware that statements made during this call may be deemed forward-looking statements, and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2023, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date. The company does not undertake the duty to update any forward-looking statement.

Operator: Please be aware that statements made during this call maybe deemed forward looking statements and actual results may differ materially from these statements due to a variety of risks uncertainties and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31 2012.

Steven J. Borenstein: Three for more information regarding these risks and uncertainties. The call may include time sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward looking statements on the call today from management for our opening comments are Steven Roth, Chairman and Chief Executive Officer, and Michael Franco.

Operator: On the call today from management for our opening comments are Stephen Roth, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions. I will now turn the call over to Stephen Roth. Thank you, Steve, and good morning, everyone.

Operator: President and Chief Financial Officer, our senior team is also present and available for questions I will now turn the call over to Steven Roth.

Steven Roth: Thank you, Steve and good morning, everyone.

Steven Roth: We've been busy. Let's start with Bloomberg. As a reminder, 731 Lexington Avenue, the mixed-use tower whose 950,000 square foot office condo is Bloomberg's global headquarters, is owned by Alexander's separately traded public REITs. Renato owns 32.4% of Alexander.

Steven Roth: We've been busy.

Steven Roth: The background facts are that Bloomberg's lease expires in February 2029, 500 million, and 500 million of debt on the office. Condo is due next month, June 2024. Yesterday, we announced that we renewed and extended the Bloomberg lease for an 11-year term to begin in February 2029 and take us through to February 2040. So 16 years of term from now, as you can imagine, every developer in town tried to poach Bloomberg, and, of course, they looked at every opportunity as they must. We are delighted that they chose to stay with 731 Lexington. By the way, the Bloomberg building is as much Mike's creation as mine. He had significant input into the design of the original building.

Operator: Let's start with Bloomberg as a reminder, 730, what lessons do they have to do the mixed use tower, who is 950000 square foot office condo is bloomberg's global headquarters is old, but it's owned by Alexander as a separately traded public REIT.

Steven Roth: It was 32, 4% of Alexander's backgrounds backs or Bloomberg lease expires in February 2029.

Steven Roth: 500, 500 man a bit on the office condo is due next month June 2024.

Steven Roth: Yesterday, we announced that we renewed and extended the Bloomberg lease for an 11 year term to begin in February 2029.

Steven Roth: And take us through February 2040, So 16 years of term from now as you can imagine every developer in town tried to poach boot work and of course, they looked at every opportunity as they as they bust. We are delighted that they chose to stay with 731 Lexington by the way the Bloomberg.

Steven Roth: The building is as much Mike's creation his mind he had significant input into the design of the original building.

Steven Roth: The design of the building and bloomberg's internal fit out on a par with what we would have built today, but of course now they don't need to.

Steven Roth: The design of the building and Bloomberg's internal fit-out are on a par with what we would have built today, but of course, now they don't need them. The terms of the lease are spelled out in yesterday's SEC filings, tenant concessions in the form of TIs and free rent have been established, and the net rent will be the subject of an appraisal in 2029, with the then rent adjusted up or down no more than 10% either way, based on the then market conditions.

Steven Roth: The terms of the Liza spilled out in yesterday's SEC filings tenant concessions in the form of Tis and free rent have been established and the net rent will be the subject of an appraisal in 2020 with Zen rent adjusted up or down no more than 10% either way based on the then market conditions.

Steven Roth: We're in the process of refinancing this asset, but I must say I am not excited about paying today's market rate of 7% or even 8% for debt, with all the trappings of leasing reserves, cash suites, and such, which are admittedly protective of the lender but don't do much for our equity value. As we speak, my personal favorite is to pay the debt down and maybe even pay the debt off. We shall see. Now, let's focus on our credit lines. Traditionally, we've had two separate but similar credit lines with staggered maturities.

Steven Roth: We're in the process of refinancing this asset, but I must say I am not excited about paying today's market rate or seven or even 8% for that with all the trappings of leasing reserves cash suites.

Steven Roth: As such which are admittedly protective of the lender, but don't do much for our equity value as we speak my personal favorite is to pay the debt down and maybe even pay the debt off we shall see.

Steven Roth: Yes.

Steven Roth: One credit line for $1.25 billion has been renewed through 2027, and the renewal of the second credit line was finalized last Friday at a reduced amount of $915 million, with a term extended to April 2029. As expected, at these times, several banks dropped out.

Steven Roth: Now lets focus on our credit lines traditionally we've had two separate but similar credit lines with staggered maturities. One credit line for 125 billion has been renewed through 2027 and the renewal of the second credit line was finalized last Friday at a reduced amount of 915 million with a term.

Steven Roth: Extended to April 2029.

Steven Roth: As expected in these times several banks dropped out.

Steven Roth: We use our credit lines very sparingly, generally for short-term requirements with a known source of repayment, and rarely have we exceeded 25% of the drawdown. Now to 280 Park Avenue. We own 50% of 280 Park Avenue. Since our joint venture partner has already reported, I'm guessing you are pretty much up to date on the details. What we did here was extend the maturity of the senior loan for four years, keeping the rate constant with no pay down, but posting significant cash reserves for future leases. Several analysts have commented that the loan and the equity value pretty much cancel out.

Steven Roth: We use our credit lines very sparingly generally for short term requirements with a known source of repayment and really rarely have we exceeded 25% drawdowns.

Steven Roth: Now the 280 Park Avenue, we own 50% of 280 Park Avenue since our joint venture partner has already reported I'm guessing you are all pretty much up to date on the details. What we did here was extend the maturity of the senior loan for four years, keeping the rate constant with no pay down with posting.

Steven Roth: Significant cash reserves for future leasing.

Steven Roth: Several analysts have commented that the loan and the equity value pretty much cancel out.

Steven Roth: And that fact allowed us to DPO the MES loan at 50 cents on the dollar, realizing a thirty-one point three million dollar gain on the share, which we will recognize in the second quarter. This is not yet a big win, but it does create a cheap warrant on a wonderful asset located on Prime Park Avenue, where there is already a very low 7% vacancy and a shortage of space. We think it's a first-class bet.

Steven Roth: And Thats fact allowed us to <unk> the Mezz loan at 50 cents on the dollar realizing a 31 $3 million gain share, which we will recognize in the second quarter.

Steven Roth: This is not yet a big win but it does create a cheap warrants on a wonderful asset located in Prime Park Avenue, where there is already a very low 7% vacancy and a shortage of space. We think it's a first class a bit.

Steven Roth: By the way, we are leasing very well here. We continue to protect our balance sheet with interest rate caps and swaps. But when a 3% loan matures into a 7% market, there really is no place to hide.

Steven Roth: By the way, we are leasing very well here.

Steven Roth: We continue to protect our balance sheet with interest rate caps and swaps, but when a 3% loan matures into a 7% market. There really is no place to hide.

Steven Roth: We continue to prospect for good real estate in distress where our best-in-class operating platform can be helpful to the lender. We expect these opportunities to accelerate. The gold rush on the part of the luxury brands to own, control, and dominate the very best locations is accelerating, and the knock-on effect on prime New York City retail space is palpable.

Steven Roth: We continue to prospect for good real estate in distress, where our best in class operating platform can be helpful to the lender.

Steven Roth: We expect these operate opportunities to accelerate.

Steven Roth: The gold rush on the part of the luxury brands to own control and dominate the very best locations is accelerating and the knock on effect on Prime New York City retail space is palpable.

Steven Roth: It should be noted that in New York, we have much more prime retail space than anyone else by a wide margin. Some commentators have noted that the values of Fifth Avenue and Times Square seem to have recovered to the price of our retail JV sale five years ago. It would seem so. However, I continue to strongly believe the contrarian bull case I made in my annual shareholders letter that, basically, with frozen supply, i.e. No new developer office starts, and none on the horizon.

Steven Roth: It should be noted that in New York, we have much more prime retail space than anyone else by a wide margin.

Steven Roth: Some commentators have noted that the fifth Avenue and times square values seem to have weakened recovered to the price of a retail JV sales five years ago.

Steven Roth: It would seem so.

Steven Roth: I continue to strongly believe the contrarian Bull case I've made in my annual shareholders letter that basically with frozen supply I E. No new developer office starts in London on the horizon tenant requirements picking up in vacancy shrinking I couldnt be more optimistic about the future.

Michael J. Franco: With tenant requirements picking up and vacancies shrinking, I couldn't be more optimistic about the future. And also note that while the New York market has a huge 422 million square feet, when you cancel out the non-prime space, we really only compete in a much smaller 177 million square foot market. Great things are happening in our Penn District. Come by and take a look. Our team here at Renato couldn't be more optimistic. Now, over to Michael.

Michael: And also note that while the New York market has a huge 422 million square feet. When you cancel out the non prime.

Michael: Space, we really only competing in a much smaller 177 million square foot market.

Michael J. Franco: Great things are happening in our Penn district come by and take a look.

Michael: Our team here at Vornado Couldnt be more optimistic now over to Michel.

Michael J. Franco: Thank you, Steve, and good morning, everyone. As expected, the financial results for the quarter were down from last year due to items that we previously forecasted. First quarter comparable FFO as adjusted was $0.55 per share compared to $0.60 per share for last year's first quarter, a decrease of $0.05. This decrease is primarily driven by lower NOI from higher net interest expense and no move-outs, partially offset by lower G&A expenses.

Michael: Thank you, Steve and good morning, everyone as expected the financial results for the quarter were down from last year due to items that we previously forecasted.

Michael J. Franco: First quarter comparable <unk> as adjusted was <unk> 55 per share compared to <unk> 60 per share for last year's first quarter a decrease of <unk>.

Michael J. Franco: This decrease is primarily driven by lower NOI from higher net interest expense and no move outs, partially offset by lower G&A expense, we have provided a quarter over quarter bridge in our earnings release and our financial supplement.

Michael J. Franco: We have provided a quarter over quarter bridge in our earnings release in our financial section. Overall, New York business same store cash NOI was down 5.1% primarily due to the aforementioned expiration. As we indicated in our last earnings call, we expect our 2024 comparable FFO to be down from 2023 comparable FFO of $2.61 per share, primarily due to higher projected net interest expense of about $0.30 per share due to the impact of known vacancies at certain of our properties, primarily at 1290 Avenue of the Americas, 770 Broadway, and 280 Park Avenue. We anticipate the impact of these expirations in 2024 to be roughly 25 to 30 cents per share.

Michael J. Franco: Our overall, New York business same store cash NOI was down five 1% primarily due to the aforementioned explorations.

Michael J. Franco: As we indicated on our last earnings call. We expect our 2024 comparable <unk> to be down from 2023 comparable <unk> of $2 61 per share.

Michael J. Franco: Primarily due to higher projected net interest expense of about 30 per share and the impact of known vacancies at certain of our properties primarily at 12 90 Avenue. The Americas 770, Broadway and 280 Park Avenue we.

Michael J. Franco: We anticipate the impact of these explorations in 2024 to be roughly 25% to 30 per share.

Michael J. Franco: We expect this impact to be temporary, as we have already leased up a good chunk of this space, but the gap earnings from these leases won't begin until sometime in 2025. We then expect earnings to increase as income from the lease-up of Penn and other vacancies comes online and as rates trend down. Now turning to the leasing markets, the New York office market continues to show signs of strength.

Michael J. Franco: We expect this impact to be temporary as we have already leased up a good chunk of this space, but the GAAP earnings from these leases won't begin until sometime in 2025. We then expect earnings to increase as income from the lease up of 10 and other vacancies comes online and as rates trend down.

Michael J. Franco: Now turning to the leasing markets.

Michael J. Franco: The New York Office market continues to show signs of strengthening.

Michael J. Franco: Well, first quarter office leasing in New York took a bit of a breather from the strong year-end. However, there is a healthy backlog of activity with a number of large deals around the world. Overall, tenant space requirements continue to trend upward, sublease space continues to fall, best-in-class renovated and amenitized product located in transit Hubs continues to dominate leasing, and the new supply pipeline is close to zero. These dynamics set the table for continued improvement and conditions in the upper tier of the market, which we are already experiencing in our best-of-class portfolio. Overall, asking rents are stable, even rising in top-tier properties, but concessions remain stubbornly high across all sub-markets.

Michael J. Franco: While first quarter office leasing in New York took a bit of a breather from the strong year end. There is a healthy backlog of activity with a number of large deals in the works overall tenant space requirements continue to trend upward sublease space continues to fall best in class renovated and a monetized product located in transit hubs.

Michael J. Franco: <unk> continues to dominate the leasing and the new Sip pipeline, new supply pipeline is close to zero.

Michael J. Franco: These dynamics set the table for continued improvement in conditions in the upper tier of the market, which we are already experiencing in a best of class portfolio.

Michael J. Franco: Overall, asking rents are stable, even rising in the top tier properties, but concessions remains stubbornly high across all sub markets.

Michael J. Franco: The financial services and legal sectors are continuing to drive the leasing activity as both are in growth. We are also seeing the first signs of life in the tech sector again after a couple of years of being on pause or decline. And our experience is that when they grow, they tend to leave big chunks of space.

Michael J. Franco: The financial services and legal sectors are continuing to drive the leasing activity is both are in growth mode.

Michael J. Franco: We are also seeing the first signs of life in the tech sector again after a couple of years of being on pause or downsizing and our experiences when they grow they tend to lease big chunks of space.

Michael J. Franco: The Midtown and New West Side markets are outperforming as leasing activity in Midtown is strong, not only on Park Avenue but also on 6th Avenue and the 5th Avenue-Madison Avenue corridor. On the west side, tenant demand continues apace. If you walk from 7th Avenue to the Hudson River, you will see why.

Michael J. Franco: The Midtown the new West side markets are outperforming as leasing activity in Midtown is strong not only on park Avenue, but also on sixth Avenue in the fifth Avenue Madison Avenue corridor.

Michael J. Franco: On the West side tenant demand continues at pace. If you walk from seventh Avenue to the Hudson River, you will see why.

Michael J. Franco: Turning now to our leasing activity. After completing a slew of large leases in December 2023 and finishing last year with a market-leading 2.1 million square feet of deals, we expected a more muted first quarter of completed transactions, given where our deal pipeline stood in negotiation. In the first quarter, we leased 291,000 square feet at a healthy $89 per square foot, reflecting the overall quality and premium locations of our property.

Michael J. Franco: Turning now to our leasing activity after completing a slew of large leases in December 2023, and finishing last year with a market, leading $2 1 million square feet of deals we expected a more muted first quarter completed transactions, given where our deal pipeline stood in the negotiation process.

Michael J. Franco: In the first quarter, we leased 291000 square feet at a healthy $89 per square foot, reflecting the overall quality and premium locations of our properties.

Michael J. Franco: The highlight of the quarter was our 125,000 square foot headquarters lease with Major League Soccer at the new Penn II. MLS had been in the market for some time, looking mainly in the Midtown core until late in their process when they toured Penn and were wowed by what we've done with the building in the district. The project is now complete and really shows off well. Our new town hall event space is open. By the way, we hosted our first event just two weeks ago, attended by 300 people. And the rooftop pavilion and park are truly spectacular.

Michael J. Franco: A highlight of the quarter was our 125000 square foot headquarters lease with major League soccer at the new Penn too.

Michael J. Franco: MLS had been in the market for some time looking mainly in the Midtown core until late in their process. When they toured pin too and were wowed by what we've done with the building and the district. The project is now complete and really shows terrifically, our new town Hall event spaces open by the way we hosted our first event just two weeks ago.

Michael J. Franco: Attended by 300 people in the rooftop pavilion and park a truly spectacular tenants are responding positively to everything that we've done and what's still to come.

Michael J. Franco: Tenants are responding positively to everything that we've done and what's still to come. We have a significant pipeline at PEM2 and are busy negotiating proposals with tenants across a variety of industries. In addition to the significant Bloomberg lease renewal of almost 1 million square feet we just completed, our leasing pipeline is strong, with 370,000 feet of leases in negotiation and another 2.5 million feet of proposals out on the street in different states.

Michael J. Franco: We have a significant pipeline of pen two and are busy negotiating proposals with tenants across a variety of industry sectors.

Michael J. Franco: In addition to the significant Bloomberg lease renewal of almost 1 million square feet. We just completed our leasing pipeline is strong with 370000 feet of leases in negotiation and another $2 5 million feet of proposals out on the street and different stages much.

Michael J. Franco: Much of this activity is not only addressing current vacancy but also forward-looking expiration. As discussed on the fourth quarter call, we foreshadowed an occupancy decline due to the known Q1 move-outs at properties such as 1290 6th Avenue and 280 Park. We are pleased to report that we have already taken care of half of the 2024 and 2025 expirations in these properties, with more activity on the horizon, turning to retail. The retail leasing market continues to recover. As we discussed in our last call, Prada's and Kering's blockbuster retail deals on Fifth Avenue that occurred in December demonstrated their long-term commitment to Manhattan and further energized the market.

Michael J. Franco: Much of this activity is not only addressing current vacancy, but also a forward looking explorations.

Michael J. Franco: As discussed on the fourth quarter call, we foreshadowed an occupancy decline due to the known Q1 move outs at properties, such as 12, 96 Avenue and 280 Park we.

Michael J. Franco: We are pleased to report that we have already taken care of half of 2024, and 2000 22025 explorations in these properties with more activity on the horizon at each.

Michael J. Franco: And there are other potential sales rumored to be in the works. Vacancy rates are now below pre-pandemic 2019 levels in most Manhattan submarkets, and retailers are willing to pay top dollar for the best locations. Our retail leasing activity has picked up meaningfully in the last couple of quarters, with almost all our assets seeing significant increases. As evidence of the rebound, this quarter, in addition to signing many leases in the Penn District, we completed an important long-term renewal at one of our Times Square assets at the highest annual dollar rent we've achieved in our portfolio since pre-COVID, over $15 million per year.

Michael J. Franco: Turning to retail.

Michael J. Franco: Retail leasing market continues to recover as we discussed on our last call.

Michael J. Franco: Kratos and caring blockbuster retail deals on fifth Avenue that occurred in December demonstrated their long term commitment to Manhattan and as further energize the market.

Michael J. Franco: And there are other potential sales rumored to be in the works vacancy rates are now below pre pandemic 2019 levels in most Manhattan sub markets and retailers are willing to pay top dollar for the best locations.

Michael J. Franco: Our retail leasing activity has picked up meaningfully in the last couple of quarters with almost all of our assets seeing significant interest.

Michael J. Franco: As evidence of the rebound this quarter. In addition to signing many leases in the Penn District, we completed an important long term renewal with one of our times square assets at the highest annual dollar and we've achieved in our portfolio since pre COVID-19 over $15 million per year.

Michael J. Franco: Turning to the capital markets, while the financing markets still remain challenged, we are starting to see some stability for high-quality products. The CMBS market has begun to selectively reopen for office, lending at conservative metrics on quality assets with long-awaited average leases. Unsecured bond spreads for office continue to tighten.

Michael J. Franco: Turning to the capital markets now.

Michael J. Franco: While the financing markets still remain challenging we are starting to see some stability for high quality product.

Michael J. Franco: The <unk> market has begun to selectively reopened for office lending a conservative metrics on quality assets with long weighted average lease term unsecured.

Michael J. Franco: Unsecured bond spreads for office continue to tighten.

Michael J. Franco: The market is much more open for high-quality. That being said, coupons are still high, banks remain on the sidelines and generally in workout mode, and there's more pain to come for all lenders given the volume of office maturities in the next few years. This will create opportunities. We have been and continue to be very active on the Capitol Marshal.

Michael J. Franco: The market is much more open for high quality retail.

Michael J. Franco: Being said coupons are still high.

Michael J. Franco: Banks remain on the sidelines and Julian workout mode, and there's more pain to come for all lenders given the volume of office maturities in the next few years this will create opportunities for us.

Michael J. Franco: We have been and continue to be very active on the capital markets front. In addition to the recent extensions on 280 park and $4 $35 seven.

Michael J. Franco: In addition to the recent extensions on 280 Park and 435-7, we're also in the process of extending our other 2024 maturities, which we expect to complete soon. Finally, and importantly, as Steve mentioned, just a few days ago, we finalized the recast of our revolver that was scheduled to mature in 2026 for $915 million. Completing this refinancing solidified a key portion of our liquidity through 2029 and gives us significant runway to deal with any challenges over the next few years. It also highlights the continued support of our key banks in this challenging environment. We thank them for their support. Our balance sheet remains in very good shape, with strong liquidity.

Michael J. Franco: We're also in the process of extending our other 2024 maturities, which we expect to complete soon.

Michael J. Franco: Finally, and importantly, as Steve mentioned, just a few days ago, we finalized the recast of our revolver that was scheduled to mature in 2026 for $915 million.

Michael J. Franco: This refinancing solidify the key portion of our liquidity through 2029 and gives us significant runway to deal with any challenges over the next few years. It also highlights the continued support of our key banks in this challenging environment, we thank them for their support.

Michael J. Franco: Our balance sheet remains in very good shape with strong liquidity pro.

Operator: Pro forma for the new revolver size, our current liquidity is a strong $2.7 billion, including $1.1 billion of cash and restricted cash and $1.6 billion undrawn under our $2.17 billion revolving credit. With that, I'll turn it over to the operator for Q&A. Thank you very much.

Michael J. Franco: Pro forma for the new revolver size, our current liquidity is a strong $2 7 billion.

Operator: Including $1 $1 billion of cash and restricted cash and $1 6 billion Undrawn under our two $1 7 billion revolving credit facilities with that I'll turn it over to the operator for Q&A.

Operator: Thank you very much.

Operator: We will now begin the question and answer session. If you have a question, please press star, then one on your touch-tone phone. If you wish to be removed from the queue, please press star, then none. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers.

Speaker Change: We will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.

Operator: We wish to be removed from the queue. Please press star then scale it.

Operator: If you are using a speakerphone you may need to pick up the handset first before pressing the numbers.

Operator: Once again, if you have a question, please press star, then 1 on your touch-tone phone. Each caller will be allowed to ask a question and a follow-up before we move on to the next caller. Today's first question comes from Steve Skwa with Evercore ISI. Please go ahead. Yes, hi, good morning.

Operator: Once again, if you have a question. Please press Star then one on your Touchtone phone.

Stephen Thomas Sakwa: Each caller will be allowed to ask a question and a follow up before we move on to the next caller.

Operator: Okay.

Glen J. Weiss: Michael, I was wondering if you could just follow up a little bit on the comments you made about the pipeline and maybe help us think through, you know, how much of that two and a half million square feet is maybe earmarked for Penn 2 and the development and how much is geared for, I guess, future rollovers and how much is geared to kind of current vacancy in the portfolio. Good morning, Steve. Glen, would you like to take the lead on that? Sure. Hi Steve. It's Glen. How are you doing?

Stephen Thomas Sakwa: Today's first question comes from Steve Scala with Evercore ISI. Please go ahead.

Glen: Yes, Hi, good morning, Michael I was wondering if you could just follow up a little bit on the comments you made about the pipeline.

Glen: Maybe help us think through how much of that $2 5 million square feet is maybe earmarked for <unk> two in the development and how much is geared for.

Glen: I guess future rollovers and how much is geared to kind of current vacancy in the portfolio.

Glen: Good morning, Steve.

Glen: Glenn do you want to take the lead on that.

Glen: Sure Hi, David Glenn how are you doing.

Glen J. Weiss: So I would say it's a very, very balanced mix of what you just described. We're seeing a surge in proposals coming in on PEN, both PEN1 and PEN2, coming off the heels of our Major League Soccer lease. We're seeing expirations, outbound expirations, tenants coming to us to early renew, just like we did with Bloomberg this week. And in addition, much of the pipeline is dealing with expirations at the buildings where we have space available today.

Glen: So I would say, it's a very very balanced mix of what you just described.

Glen J. Weiss: Seeing a surge in proposals coming in on Pan both Penn one and Penn two coming off the heels of our major League Soccer League.

Glen J. Weiss: So I'd say it's a healthy mix across the portfolio, pen and otherwise. Okay, thanks. And as a follow-up, Michael, just to, I guess, go back to some of the information you provided on, I guess, the earnings drag from the lost, you know, occupancy this year, just to be clear, if you took the $0.30 hit from the interest expense, and now you're sort of quantifying this $0.25 to $0.30 hit from the known vacate, some of which I know has been released and will rebound maybe in $0.25 and beyond, you're kind of suggesting that there's sort of a $0.60 drag this year, as we think about $0.24, and then other positive offsets that might sort of take that number a little bit up from, say, the $2 level. Yeah.

Glen J. Weiss: Seeing.

Glen J. Weiss: Exploration outbound exploration tenants coming towards to early renew just like we did with Bloomberg This week.

Speaker Change: And in addition.

Glen J. Weiss: Much of the pipeline is hacking exploration.

Glen J. Weiss: At the buildings, where we have space available today.

Glen J. Weiss: It's a healthy mix across the portfolio.

Michael: Pan and otherwise.

Glen J. Weiss: Okay.

Speaker Change: Okay. Thanks, and then as a follow up Michael just to I guess go back to some of the information you provided on I guess the earnings drag from the lost.

Michael: Occupancy this year just to be clear.

Glen J. Weiss: If you took the 30 hit from the interest expense and now Youre sort of quantifying this 25% to 30 hit from the known Vacates some of which I know has been re leased and will rebound maybe in 'twenty five and beyond.

Glen J. Weiss: You're kind of suggesting that there is sort of a 60 cent drag this year.

Michael: As we think about 'twenty four and then are there other positive offsets that might sort of take that number a little bit up from say the $2 level.

Michael J. Franco: So, look, in terms of your sort of detail there, I think that's accurate, right? We talked about interest last quarter and sort of reaffirmed the $0.30 this quarter. Yeah, the $0.25 to $0.30 are sort of the known vacant prices, and as we've mentioned, you know, we've backfilled a lot of that already at $12.90 and $2.80. Like, we have a lot that we're working on. There are some things that could certainly make that number more positive. But I think we're trying to give you the downside version today.

Glen J. Weiss: Yes.

Speaker Change: Look in terms of your.

Michael J. Franco: So the detail there I think that's accurate we talked about interest last quarter.

Michael J. Franco: So to reaffirm the <unk> this quarter.

Michael J. Franco: 25% to 30.

Michael J. Franco: Sort of a known vacates.

Michael J. Franco: And as we've mentioned, we backfill a lot of that already at 12, 90 and $2 80.

Michael J. Franco: Look we have a lot that we're working on some.

Michael J. Franco: Some things that could certainly make that number more positive, but I think we're trying to give you the downside version today.

Michael J. Franco: And so I can't tell you where exactly it's going to come out. But I think if you say, look, let's take sort of a worst case, you know, the $0.30 plus the $0.25 to $0.30 gets you down to $0.55 to $0.60. I think that's a good baseline.

Michael J. Franco: And so I can't say, where exactly it's going to come out, but I think if you say look let's take sort of worst case patient out of the 30, plus the 25% to 30% gets you down 55% to 60, I think thats a good baseline and our objective is to beat that but.

Steven Roth: And, you know, our objective is to beat that. But, you know, there's still a lot going on around here. Great, thanks. That's it for me.

Speaker Change: Still a lot moving around.

Speaker Change: Great. Thanks, that's it for me.

Steven Roth: Steve Let me just talk on that for a second.

Steven Roth: So, I mean, the numbers that you mentioned and that Michael just mentioned are, you know, accurate. Let's build from there and see what the company's future looks like on an almost certain basis. If you start with re-renting the vacancies and we get back from whatever we are now to our normal, you know, 96, 97, 98% occupancy, that adds a big number to our earnings. When OnePen and TwoPen come online, that's another $100 million, give or take, of earnings that come online that is brand new. If interest rates settle down into some kind of stimulized number, that also improves earnings enormously. So the company has the earnings potential to be, you know, we think pretty spectacular. And that's what we're shooting at.

Steven Roth: No.

Speaker Change: I mean.

Steven Roth: Bruce that you mentioned.

Steven Roth: Michael just mentioned.

Steven Roth: Accurate for this year, but still from there and see what the company's future.

Steven Roth: It looks like.

Steven Roth: Almost certain basis so.

Steven Roth: If you start with rebranding the vacancies and we get back from whenever we are now so abnormal.

Steven Roth: 90, 690, 798% occupancy.

Steven Roth: That adds a big number to our earnings.

Steven Roth: Lynn.

Steven Roth: <unk> comes online.

Steven Roth: Another $100 million give or take.

Steven Roth: Our earnings that comes online that is.

Steven Roth: As Randall.

Steven Roth: Interest rates.

Steven Roth: Settle down into some kind of stabilized number.

Steven Roth: <unk> also.

Steven Roth: It improves earnings enormously.

Steven Roth: The company has the earnings potential of being.

Steven Roth: We think pretty spectacular and Thats what were shooting for.

Michael J. Franco: So we're looking at it, not on a one month, one quarter basis; we're looking at what the company's earning power would be, pick a number, two, three years out, okay? And we are extremely excited about that. Thank you. The next question is from John Kim with BMO Capital Markets. Please go ahead.

Steven Roth: We're looking at it.

Steven Roth: One month of a linked quarter basis, we're looking at what the company's earning power would be pick a number two or three years out okay and we are extremely excited about that.

Michael J. Franco: Thank you. Michael, in your prepared remarks, you talked about the tech sector coming back to the market in Manhattan and also referenced retailers potentially looking to purchase their flagship stores similar to Prada. Is your commentary more of a market commentary? Or do you see Vornado involved in either one of those two? I mean, look, I think it's both, John.

Michael J. Franco: Thank you. The next question is from John Kim with BMO capital markets. Please go ahead.

Michael J. Franco: Yes.

Michael J. Franco: Thank you Michael in your prepared remarks, you talked about tech sector coming back to the market in Manhattan, and also referenced retailers potentially looking to purchase there.

Michael J. Franco: Chip stores.

Speaker Change: Got it.

Michael J. Franco: Is your commentary more of a market commentary or do you see for NATO involved in either.

Michael J. Franco: Either one of those two.

Michael J. Franco: Look I think it's I think it's both John.

Michael J. Franco: I mean, we've got, you know, we've got some of the best products in town in both categories. I think we've done more tech leasing than any other landlord in the city. We have all the big four in our portfolio, so we maintain an active dialogue with all those players. So I would expect that if the tech sector becomes active again, we're going to get more than our fair share. In terms of the pipeline, I think the tech sector has been pretty dormant for the last 18-24 months, either on pause or, in some cases, downsizing space.

Speaker Change: We've got.

Michael J. Franco: We've got some of the best product in town in both categories.

Michael J. Franco: I think we've done more tech leasing than any other landlord in the city.

Michael J. Franco: Have all the big four in our portfolio. So we maintain an active dialogue with all of those players so.

Michael J. Franco: I would expect that if the tech sector becomes active again.

Michael J. Franco: We're going to get more than our fair share.

Michael J. Franco: And.

Michael J. Franco: In terms of the pipeline.

Michael J. Franco: I think the tech sector was pretty dormant for the last.

Michael J. Franco: 18 24 months.

Michael J. Franco: Pause or in some cases downsizing space and.

Michael J. Franco: You know, we've seen in the last 90 days a real pickup there. Started small, and now we're seeing some more significant requirements. So we do think some of those will convert to activity, and we're quite optimistic about that sector turning on again. On the retail side, you know, I think you know better than anybody given the discussions we've had in the past. We own, you know, the best retail in the city. So if you wanna be on Fifth Avenue, particularly given the shrinking amount of availability, and both of those submarkets. You know, the animal spirits are alive and well among retailers.

Michael J. Franco: We've seen in the last 90 days a real pickup there started small and now we're seeing some more significant requirement. So we.

Michael J. Franco: We do think some of those will convert to activity and were quite optimistic about that sector turning on again on the retail side.

Michael J. Franco: I think you know better than anybody given the discussions we've had in the past.

Michael J. Franco: We own.

Michael J. Franco: The best retail in the city.

Michael J. Franco: So if you want to be on fifth Avenue, particularly given the shrinking amount of availability.

Michael J. Franco: Can be leased.

Michael J. Franco: We're the first second third call times square, we on both sides of the bowtie. So activity level has picked up significantly in both those submarkets the animal spirits are alive and well amongst retailers.

Michael J. Franco: They see that Manhattan is thriving again. Their sales numbers reflect that, and Prada and Caring's announcements obviously garner worldwide attention and I think make every other retailer question, what are we doing, right? Both from a leasing standpoint and a buying standpoint. There's obviously been other transactions rumored, but I don't think you've seen the last of the retailer purchases and, obviously, given our portfolio, you know, we are, we're fertile ground. So we expect it to be.

Michael J. Franco: They see that Manhattan is driving again their sales numbers reflect that.

Michael J. Franco: And.

Michael J. Franco: Product and caring announcements.

Michael J. Franco: Obviously.

Michael J. Franco: Garner worldwide attention and.

Michael J. Franco: I think make every other retailer question what are we doing right. Both from a leasing standpoint buying standpoint has obviously been other transactions rumored but.

Michael J. Franco: I don't think <unk> seen the last of the retailer purchases and obviously given our portfolio.

Speaker Change: We are.

Michael J. Franco: We're fertile ground so.

Michael J. Franco: We expect to be in the mix there.

Michael J. Franco: Okay, my follow-up question is on 350 Park Avenue, the leasing environment, and the interest rate environment. I doubt if it's changed a lot in the past year and a half since you struck the deal. What is the likelihood that either Citadel or you will exercise your options at this point? There's always a likelihood, but right now, we're on full steam ahead to build a world-class headquarters for citizens.

Speaker Change: Okay and my follow up is on 350 Park Avenue.

Michael J. Franco: Leasing environment, and an instrument interest rate environments or the outlook has changed a lot in the past year and a half.

Michael J. Franco: Thank you struck a deal what is the likelihood that you stood at all or you exercise your option at this point.

Michael J. Franco: There's always a likelihood but right now we're on full steam ahead to build a world class headquarters facility. We have started the public approval process.

Michael J. Franco: We've started the public approval process, and it's a couple of years process to design the building, and complete the drawings. And obviously, we will reappraise the financial markets at that time. Citadel's growing, they want the space, they're committed to the deal as are... And can you confirm the starting rent for Citadel is reported at $35 million? No, sir, we can't. To formulate the rent, which depends upon what the cost of financing is at the time that we at the time we go into the financing deal. Gotcha. Okay.

Michael J. Franco: It's a couple of year process to design the building complete the drawings.

Michael J. Franco: Through the public approval process.

Michael J. Franco: And obviously, we will reappraise the financial market, that's not growing.

Michael J. Franco: I want the space they are committed to the deal as are we.

Michael J. Franco: And can you confirm.

Michael J. Franco: The starting rent for Citadel was reported at $35 million.

Michael J. Franco: No Sir we can.

Michael J. Franco: It's a formulaic rent.

Michael J. Franco: Upon what the.

Michael J. Franco: What the cost of financing is at the time that we.

Michael J. Franco: At the time, we go into the financing market.

Speaker Change: Got you okay. Thank you.

Michael J. Franco: Thank you. Thank you. The next question is from Michael Griffin with Citi. Please go ahead.

Michael J. Franco: Thank you. The next question is from Michael Griffin with Citi. Please go ahead.

Michael J. Franco: Great, thanks. Um, Michael, I wanted to go back to your comments around concessions being stubbornly high. You know, I imagine that's the case for the market overall. But if you look at the maybe better-off submarkets like Park Avenue or even some of your properties, you on the west side, the Penn District, how are you seeing concessions there? You know, given that the environment seems to have improved? Glen, do you want to hit that?

Michael Anderson Griffin: Great. Thanks, Michael I wanted to go back to your comments around concessions being stubbornly high and I imagine that's the case for the market overall, but if you look at maybe better off sub market like Park Avenue or even some of your properties.

Speaker Change: On the West side, the Penn District, how are you seeing concessions there.

Michael J. Franco: Given that the environment seems to have improved.

Glen: Well anyway.

Glen: Yes sure.

Glen J. Weiss: Yeah. Yeah, sure. Hi, it's Glen.

Michael J. Franco: Hi, It's Glenn I would tell you no matter the sub market on new leases.

Glen J. Weiss: And I would tell you, no matter the sub-market on new leases, TI's are somewhere between 140 and 150 a foot, and free rent is somewhere in the 13, 15 month range. I think as it relates to specific submarkets, it's really about the rent. So in some of the submarkets, we are seeing an uptick in rent where supply is tightening, as you would expect. Gotcha. That's helpful. And then maybe just some color on these expirations this year.

Glen J. Weiss: Ti there is somewhere between $1 $41 50, a foot.

Glen J. Weiss: And free rent is somewhere in the <unk>.

Glen J. Weiss: 13 to 15 month range I think as it relates to sub market specific that drove it but the right.

Glen J. Weiss: So when some of the sub market, we are seeing an uptick in rent.

Glen J. Weiss: Where supply is tightening as you would expect.

Glen J. Weiss: Looks like there's a big one. In the second quarter, about 3% of the overall rent. The space rent there right now seems pretty high. What's the likelihood of renewing or backfilling the space? Or is this one of those known move-outs that you described earlier? It's the meta space that comes back to us in June that we spoke about on our last earnings call. That's the lease you're speaking about. I hope you enjoyed this video. If you did, please leave a like and subscribe.

Speaker Change: Got you that's helpful. And then maybe just some color on this exploration this year. It looks like there is a big one in the second quarter three.

Glen J. Weiss: 3% of the overall rent.

Glen J. Weiss: Shrimp, there right now seem pretty high what's the likelihood of renewing or back filling that space or is it <unk> no.

Glen J. Weiss: Known move outs that you described earlier.

Glen J. Weiss: Yes.

Glen J. Weiss: The meta space.

Glen J. Weiss: That comes back to us in June that we spoke about on our last earnings call.

Glen J. Weiss: The lease you're preparing to.

Glen J. Weiss: And in terms of potential of back billing renewing the space what demand looking like on it.

Glen J. Weiss: I'll see you in the next video. And in terms of the potential for backfilling or renewing the space, what's demand looking like for it? We have action on this space that's part of our pipeline that we've described. We feel very good about the asset and very good about backfilling that space. It's the most unique asset in Midtown South. We feel good about it. Great, that's it for me. Thanks for

Glen J. Weiss: We have action on this space.

Glen J. Weiss: That's just part of our pipeline that we described we feel very good about the asset and very good about back filling that space.

Glen J. Weiss: It's the most unique asset of Midtown South we feel good about it.

Speaker Change: Great. That's it for me thanks for the time.

Operator: Thank you. The next question is from Floris Van Diekum with Compass Point. Please go ahead.

Floris Gerbrand Hendrik Van Dijkum: Thank you. The next question is Floris van <unk> with Compass point. Please go ahead.

Floris Gerbrand Hendrik Van Dijkum: Thanks for taking my question. Rather than get into the details on the leasing, which is obviously very important as well, but I wanted to ask a question on sort of the market and get Steve and Michael's view on the opportunity that's going to be representing or presenting itself, I think, when, you know, the $200 billion of office loans mature over the next couple of years. you know, actually in 24 hours, as well as the other $100 billion next year.

Speaker Change: Hi, Thanks for taking my question.

Floris Gerbrand Hendrik Van Dijkum: Rather than get into the details on the on the leasing, which obviously is very important as well, but I wanted to ask a question on sort of the market.

Floris Gerbrand Hendrik Van Dijkum: And.

Floris Gerbrand Hendrik Van Dijkum: And get.

Floris Gerbrand Hendrik Van Dijkum: Steve Michaels view on.

Floris Gerbrand Hendrik Van Dijkum: But the opportunity there.

Floris Gerbrand Hendrik Van Dijkum: <unk> going to be.

Floris Gerbrand Hendrik Van Dijkum: Presenting itself I think when.

Floris Gerbrand Hendrik Van Dijkum: The 200 billion.

Floris Gerbrand Hendrik Van Dijkum: Office loans mature over the next actually in 24 as well as the other 100 billion next year.

Floris Gerbrand Hendrik Van Dijkum: What do you see happening with, you know, some of those are obviously unlikely to be refinanced. And so where do you see Vornado in that situation? Can you play a role in maybe buying some assets, and maybe does that help cause some of the bullishness in Steve's tone on the outlook for the next two years? Good morning, Floris.

Floris Gerbrand Hendrik Van Dijkum: What do you see happening.

Floris Gerbrand Hendrik Van Dijkum: With.

Floris Gerbrand Hendrik Van Dijkum: Some of those obviously are unlikely to be.

Floris Gerbrand Hendrik Van Dijkum: It could be refinanced and so where do you see.

Floris Gerbrand Hendrik Van Dijkum: Vornado in that situation do you have can you play a role in maybe buying some assets and maybe does that help.

Floris Gerbrand Hendrik Van Dijkum:

Floris Gerbrand Hendrik Van Dijkum: Cause some of the bullishness in Keystone on the outlook for the for the next two years.

Michael J. Franco: So, like, I think in terms of the debt rolling over, which is significant over the next few years, as we all know, the capital markets are not there to support, you know, refinancing, the vast majority. And so I think, you know, what happens there is, is, going to take, you know, one of a few forms, depends on the quality asset, the sponsor, the asset, and what its future looks like.

Floris: Good morning for us.

Floris: So like I think in terms of the debt rolling over which is significant over the next few years as we all know.

Michael J. Franco: The capital markets are not there to support our refinancing the vast majority of that.

Michael J. Franco: And so I think what happens there is going to take one of our few farms.

Michael J. Franco: Depends on the quality asset the sponsor of the asset and what its future looks like and we've seen some examples where.

Michael J. Franco: And we've seen some examples where, you know, the older obsolete buildings where debt rolls, don't have a future as an office building, or certainly without a sponsor, and the lenders have taken them back, or there's been a consensual sale of some of those assets. Something like 1740 Broadway would be a recent example.

Michael J. Franco: The older obsolete buildings, where debt rolls.

Michael J. Franco: It doesn't have a future as an office building or certainly with that sponsor and the lenders have taken it back or there has been a consensual.

Michael J. Franco: Sale of some of those assets something like a $17 40 Broadway it would be a recent example, so I think we will see a fair amount of that on.

Michael J. Franco: So I think we'll see a fair amount of that on some of those older buildings. But then there's a category where it's just over leveraged, and where there is a future. And again, I think the lender will assess, you know, whether the sponsor has the wherewithal and the capability to, you know, either re-tenant or support the asset, and in some cases they will, in many cases they won't. We're talking to the lenders about that, and I think they'll look for solutions, right?

Michael J. Franco: Some of those older buildings.

Michael J. Franco: Then there is a category, where there's just over leverage where there is a future and again I think the lender will assess.

Michael J. Franco: Whether the sponsor has the wherewithal.

Michael J. Franco: And the capability too.

Michael J. Franco: Either re tenant or support the asset and in some cases, they will in many cases they won't.

Michael J. Franco: We're talking to lenders about that and I think they'll look for solutions right I think.

Michael J. Franco: I think lenders in general know that taking back assets and operating them certainly in the office space is not a winning strategy. Value deteriorates fairly quickly. Tennis doesn't want to go into those. So, we do think there's going to be an opportunity to work with existing lenders. VA Solutions Provider.

Michael J. Franco: Lenders in general know that taken back assets and operating them certainly in the office space is not a winning strategy value deteriorate fairly quickly Dennis don't want to go into those buildings. So we do think theres going to be opportunity to work with existing lenders.

Michael J. Franco: You know, we have a leading operating platform. We expect to deploy capital there, and I think it could be in either one of those buckets.

Michael J. Franco: <unk> solutions provider, we are a leading operating platform, we expect to deploy capital there.

Michael J. Franco: It could be buildings that are, you know, that with our capabilities can be leased back, stabilized, value could be created, or it could be assets that can be repurposed from, you know, office to residential, potentially. So the answer is we are actively looking. We expect to participate in that.

Michael J. Franco: And I think it could be in either one of those buckets. It could be buildings that are.

Michael J. Franco: With our capabilities can be lease.

Michael J. Franco: Leaseback up stabilized value could be created or it could be assets that can be repurposed from office to residential potentially so the answer is we are actively looking we expect to play in that and.

Michael J. Franco: And, you know, I think we're still at the beginning stage. And I know it's early in terms of what transactions would look like, but presumably, for you to utilize part of your significant cash awards, which again sets you apart from some of your peers. You would have to have, I would imagine, returns that are in excess of the 7% plus financing rates that you would have to pay today if you were to.

Michael J. Franco: I think we're still at the beginning stages.

Michael J. Franco: And I know, it's early in terms of what.

Michael J. Franco: What transactions would look like but presumably.

Michael J. Franco: You too.

Michael J. Franco: Utilized part of your significant cash awards, which again sets you apart from some of your peers.

Michael J. Franco: You would have to have I would imagine.

Michael J. Franco: Returns that are in excess of that.

Michael J. Franco: 7% plus.

Michael J. Franco: Financing rates that you would have to pay today, if you were to.

Michael J. Franco: Erratically get assets is that the right way to think about it your returns. Thanks all.

Michael J. Franco: LIBOR plus.

Michael J. Franco: Unknown Speaker, Yeah, I mean, look, I think our objective of deploying cash is not to, you know, invest in real estate that is going to generate core returns, right? And this is an opportunity, that is [inaudible] But no question that the required yield is in the neighborhood. Great, maybe one follow-up in terms of your retail segment, again, particularly your Fifth Avenue, which is, again, as you highlight, unique. Where do you think market rents are today? And I know you have 92%, I think, is your occupancy rate in your Times Square JV, sorry, your Fifth Avenue and Times Square JV.

Speaker Change: Yeah, I mean look.

Michael J. Franco: Our objective of deploying cash does not.

Michael J. Franco: Invest in real.

Michael J. Franco: Real estate is going to generate core returns right and this is an opportunity that is.

Michael J. Franco: Probably not for the fan of heart right I mean, you're taking risk.

Michael J. Franco: And you want to get rewarded for that so the returns need to be attractive. So yes, I think the stabilized yields I think it depends a little bit on the nature of the asset and where you think ultimate cap rates settle out for particular assets, but.

Michael J. Franco: No question that the required yield.

Michael J. Franco: In the neighborhood that you mentioned.

Michael J. Franco: Great.

Michael J. Franco: One follow up in terms of.

Michael J. Franco: Your retail segment again, particularly your fifth Avenue, which is again as you highlight.

Michael J. Franco: <unk>.

Michael J. Franco: Where do you think market rents are today and I know you have 92% I think is your <unk>.

Speaker Change: Occupancy rate in your times square JV I saw your fifth Avenue and times square JV, but if you were to sign rent today.

Michael J. Franco: If you were to sign rent today on Fifth Avenue, where would you say market rents are for that space? You know, I think it's, it's, um.., there's been a couple transactions that we that we signed probably I guess last year you know and that would indicate that you know rents at the time were in the mid to high $2,000 per square foot right now maybe there was a tick or a bottom in the $1,000, $1,500 neighborhood but I think realistically it's back into that mid twos maybe even low threes depending on the situation I think for luxury given there's such a scarcity it could be higher so you know it's Fifth Avenue it's you know it's hard to paint a broad brush it's a very scarce asset class and for the right situation you know you can command rents that you know not too far off the peak for the wrong asset you know with retailers don't think it configures well you know you can't achieve that so like I think rents have recovered quite a bit they're they're continuing to recover obviously Times Square lease we signed recently I think is evidence of that and so you know we expect that to continue, Thank you. The next question comes from Dylan Burzinski with Green Street. Please go ahead.

Dylan Robert Burzinski: On fifth Avenue, where would you say market rents are for that for that space.

Dylan Robert Burzinski: I think it's.

Dylan Robert Burzinski: There's been a couple of transactions that we signed.

Dylan Robert Burzinski: Probably I guess last year.

Dylan Robert Burzinski: And that would indicate that in our rents at the time were in the mid to high $2000 per square foot Alright, now maybe there was a tick or a bottoming in the 1500 neighborhood, but I think realistically it's back into that mid twos, maybe even low threes depending on the.

Dylan Robert Burzinski: Situation and I think for luxury given there is such a scarcity it could be higher so at fifth Avenue.

Dylan Robert Burzinski: Hard to paint a broad brush it they are very scarce asset class and for the right situation you can command rents that.

Dylan Robert Burzinski: Not too far off the peak.

Dylan Robert Burzinski: For the wrong asset with retailers don't think are configured well you can achieve that so look I think rents have recovered quite a bit they're continuing to recover obviously the time square lease we signed recently I think is evidence of that.

Dylan Robert Burzinski: And so.

Dylan Robert Burzinski: We expect that to continue.

Dylan Robert Burzinski: Thank you. The next question comes from Dillon Brzezinski with Green Street. Please go ahead.

Dylan Robert Burzinski: Hi guys, thanks for taking the question. I guess just sort of going back to, you know, the acquisition point. Is there any desire to, given the lack of debt financing available out there, to sort of go into it from a debt perspective and possibly from a loan to own?

Dylan Robert Burzinski: Hi, guys. Thanks for taking the question I guess, just sort of going back to the acquisitions point is there any desire to given the lack of debt financing available out there to sort of go into it from a debt perspective, and possibly from a loan to own or is this purely as you guys are.

Unknown Executive: Or is this purely as you guys are looking at things, more so looking at things on the equity side today? The easiest way to buy a building is through the... So that's obviously target number one. Got it.

Unknown Executive: Looking at things more so looking at things on the equity side today.

Unknown Executive: The easiest way to buy a building is through the debt.

Unknown Executive: So thats, obviously target number one.

Unknown Executive: And then as you guys think about opportunities, is this purely, are you guys purely focused on office, or are there other retail opportunities that you guys think would also make sense? We're open to buying office space, obviously, and retail space, obviously. So those are the two areas that we specialize in.

Unknown Executive: Got it and then as you guys think about opportunities.

Unknown Executive: Opportunities is this purely a guess purely focused on office or are there other retail opportunities that you guys think would also makes sense.

Unknown Executive: We are open to buy office, obviously in retail obviously.

Unknown Executive: So those are the two areas that we specialize in.

Unknown Executive: And then I guess just a broader capital allocation question. I know in the past, you guys have floated, you know, opportunistically selling assets. I guess, is that still on the table, or are you guys now more focused on sort of going out and acquiring assets and growing the company on an external growth base? We have.

Unknown Executive: And then I guess, just a broader capital allocation question I know in the past you guys have floated opportunistically.

Unknown Executive: Opportunistically selling an asset.

Unknown Executive: I guess is that still on the table or are you guys now more focused on sort of going out and acquiring assets in growing the company on an external growth basis.

Unknown Executive: We have.

Unknown Executive: We have, I think, basically four fairly significant transactions that are in various stages of conversation right now. Thank you very much. The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, good morning.

Unknown Executive: We have I think basically for fairly significant.

Alexander David Goldfarb: Scale transactions that are in various stages of conversations right now as we speak.

Unknown Executive: Thank you very much. The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Unknown Executive: Hey.

Alexander David Goldfarb: Good morning.

Alexander David Goldfarb: And thank you. So, I have a few, two questions here. And first, Michael, good to hear about the rebound in street retail rents. That's really amazing. What a journey it's been.

Alexander David Goldfarb: So two.

Alexander David Goldfarb: Two questions here first.

Alexander David Goldfarb: Good to hear about the rebound in street retail rents, that's really amazing what a journey it's been.

Michael J. Franco: So the first question is, Steve, on the Bloomberg lease. So when we read the queue, the rents that are cited in there are basically a sliding scale that a negotiation in the future will address. So it's not as though we take the one rent, and then it slides up to the next. It's it's that's the range that the negotiation will be in. Alex, you published something that said there was a 25% discount on the rent. I don't know how you got that math, and it's incorrect.

Alexander David Goldfarb: So the first question is.

Michael J. Franco: Steve on the Bloomberg lease so when we read the Q. The rents that are excited and they are basically a sliding scale better negotiation in the future. We'll address so it's not as though we take that one Ryan and then it slides up to the to the next.

Michael J. Franco: That's the range that the negotiation will be in.

Michael J. Franco: Alex.

Michael J. Franco: Butler something that there was a 25% discount on the rent.

Michael J. Franco: I don't know, how you got that math and Thats incorrect, though the way.

Steven Roth: So the way the deal is structured is... The basic rent on that building is basically net. There's a very small portion, maybe 50,000 feet out of the 950,000 feet that's gross. But 900,000 feet of it is net. So let's call it net.

Michael J. Franco: Pardon me the way the deal is structured is there.

Steven Roth: Basic rent on that building is basically net.

Steven Roth: Theres, a very small portion maybe 50000 feet out of the 950000 feet.

Steven Roth: But 900000 feet as Nick so let's call it a net lease.

Steven Roth: The lease has a bump between now and 2029. And so when we get to the end of 2029, where we basically start, the Net Rent is... $98 a foot, which grosses up to well into the 150s of dollars a foot. So, that's the starting point. Now, we establish, first of all, we recognize that we are renewing and extending a lease, five years before the lease matures, before the lease expires. And so you have to take the effect of the future, the unknown future, and contingency. So what we did there was we established what the tenant concessions, DI's, and leasing commissions were. Those are all frozen.

Steven Roth: At least.

Steven Roth: As a bump.

Steven Roth: Between now and 2029 and so when we get to the end of 'twenty 'twenty line, where we basically start.

Steven Roth: The net rent is.

Steven Roth: $98, a foot, which grosses up to well into the $150 a foot.

Steven Roth: So that's the starting point now.

Steven Roth: We established first of all.

Steven Roth: That we are renewing and extending a lease.

Steven Roth: Five years before the mature before the lease expired.

Speaker Change: And so yeah.

Steven Roth: You have to take.

Steven Roth: The effect of the future.

Steven Roth: <unk> future contingencies. So what we did there was we established what the.

Steven Roth: Session at leasing Commission for.

Steven Roth: The starting rent is frozen, and then from there, there is a market-based appraisal as to what the proper market rate would be if we did the rule at the then expiry of the lease in 2029, taking into account the already established penitent confession. But the catch is that it can't be more than 10% more than the $98 a foot net or 10% less. So we have certainty on the bottom as to what the rent would be.

Steven Roth: Those are frozen.

Steven Roth: The starting.

Steven Roth: Red is frozen and then from there there is a market space.

Steven Roth: Appraisal as to what the truckload market rate would be.

Steven Roth: If we did.

Steven Roth: Then expiry of the lease in 2029, taking into account the already established.

Steven Roth: Infection.

Steven Roth: But the color is.

Steven Roth: That.

Steven Roth: More than 10% more than the $98 a foot or 10% less so we have certainty.

Steven Roth: And it will be established as a fair rent in the then market, which we think was a very clever, by the way, old tenant landlords think was a fair deal and a clever way of handling the, There's nothing in this deal whatsoever that contemplates any reduction in the rent. It will be arbitration on the market. Steve, thank you. And I apologize for getting that incorrect. That was my apologies.

Steven Roth: On the bottom as to what the rent would be and it will be established as a fair rent in those end market, which we think was a very clever by the way.

Steven Roth: In Atlanta, I think was a fair deal at a clever way of handling the future.

Steven Roth: There is nothing in this deal whatsoever that contemplates any reduction in the rate.

Steven Roth: Concentration on the <unk>.

Steven Roth: Market.

Steven Roth: So your clarification is that the rent that cited it. I accept your apology. Thank you. That's very generous. Well, I've made an edit.

Steven Roth: Steve Thank you and I apologize for getting that incorrect that was my apologies. So youre a clarification is that the rent.

Steve: Let me just say that I accept your apology, it's very generous.

Alexander David Goldfarb: So basically, the way that rent is characterized now is that 29 million a quarter is characterized as gross, whereas the rents that are in the queue for the terms are now net. And it sounds like that's the confusion that I had on my end. Is that correct? I won't get into why you were confused.

Steven Roth: Well I've made so basically the way the rent is characterized now is the $29 million a quarter is characterized as gross whereas the rents that are in the queue for the terms are now net and it sounds like that's the confusion that I had on my end is that correct.

Alexander David Goldfarb: I won't get into why you are confused I'm just happy to admit that.

Speaker Change: You're working for you.

Steven Roth: I'm just happy that you admit that you work. Okay, great. The next question is on the rents for this year. To Steve Sakwa's question, Michael, you mentioned that originally it was down 25 to 30 cents. Now it seems to be down 55 cents based on further lease move outs, what have you. Was there some stuff that fell out of bed that was unexpected? Or was it caught, or did I not hear correctly?

Speaker Change: Okay great.

Speaker Change: Great. The next question is.

Steven Roth: The rents for this year to Steve <unk> question, Michael You mentioned that originally there was down 25% to 30 now.

Steven Roth: Now it seems to be down 55.

Steven Roth: Based on further lease move outs, what have you was there some stuff that fell out of bed that was unexpected or what caught or did I not hear correctly I. Just wanted to understand like was there stuff that came up and surprised or what drove what's driving the additional earnings impact this year.

Michael J. Franco: I just want to understand like, was there stuff that came up and surprised you? Or what's driving the additional earnings impact this year? Yeah, yeah. Maybe a little bit more confusion there, Alex.

Speaker Change: Yes, yes.

Michael J. Franco: Maybe a little bit more confusion there Alex.

Alex: That's right Paul.

Michael J. Franco: On the last call, you know, we talked about it being early in the year; I gave you clarity on the interest reduction because, you know, a lot of that was baked in with hedges that were going to roll off. We knew where those were going to roll off to, and we mentioned that there would be an impact from the known move-outs, right, and cited what those were, but obviously, there are a lot of people moving out, so it wasn't, you know, we didn't quantify what the impact of those numbers were.

Michael J. Franco: On the last call.

Michael J. Franco: We talked about it it was early in the year I gave clarity on the interest reduction.

Michael J. Franco: Because a lot of that was baked in with hedges that were going to roll off we knew those where there is going to roll off and we mentioned that there would be an impact from the known move outs right and cited those were but.

Michael J. Franco: Obviously, theres a lot of moving out so it was.

Michael J. Franco: We didn't quantify what the impact of those numbers were.

Michael J. Franco: We're quantifying that for everybody's benefit on this call, so I don't think, no surprises, right, just trying to put a little more precision on it now that we're in May as opposed to where we were, and, you know, look, there's going to be more that moves around, and that number, you know, could be less, but I think in terms of where we sit today, we have a known set between, Obviously, we've talked about, you know, releasing a lot of that, and a lot of those deals have been announced, but just trying to get more precision on just the general statement we made last... Thank you. The next question is from Michael Lewis with Truist Securities. Please go ahead.

Michael Robert Lewis: We're quantifying that for everybody's benefit on this call.

Michael Robert Lewis: I don't think no surprises just trying to put a little more precision on it now that we're in may as opposed to where we were and there's going to be more of that moves around and that number could be less but.

Michael Robert Lewis: In terms of.

Michael Robert Lewis: Where we sit today, we have we have a known set between particularly 12 90 $772 80.

Michael Robert Lewis: Drive the bulk of that obviously, we've talked about re leasing a lot of that in all of those deals have been announced but just trying to get more precision to just a general statement, we made last quarter.

Michael J. Franco: Thank you. The next question is from Michael Lewis with <unk> Securities. Please go ahead.

Michael Robert Lewis: Great, thank you. I'm just going to follow up on that question about the release activity on some of the known move-outs. So I could probably triangulate an occupancy rate on that 25 percent drag, but could you share, you know, maybe just share how much square footage is related to known move-outs this year and how much of that square footage you've already addressed? Do you want to take that, or do you want to leave that?

Michael Robert Lewis: Great. Thank you I'm just going to follow up on that question about the re leasing activity on some of the known move outs.

Speaker Change: So I could probably triangulate.

Michael Robert Lewis: And occupancy rate on that 25 drag.

Michael Robert Lewis: But could you share maybe just share how much square footage is related to known move outs. This year and how much of that square footage you've already addressed.

Speaker Change: But I do want to take that I can take that.

Unknown Executive: The bulk of the number is at 280 Park, 770 Broadway, and 1290 Avenue in America, at 1290 and 280. We've taken care of, as Michael said in his remarks, 51% of the roll, so call it 500,000 feet. And as we said, it's 770 Broadway, we have MetaRolling in June, along with the current vacancy, we have pipeline activity on that space. So that's how we're, you know, approaching the big ones that are in that occupancy number.

Speaker Change: So the bulk of the.

Michael Robert Lewis: The number is that a 280 park 770 Broadway and 12 nine do you have in the Americas.

Unknown Executive: At 12, 90, and $2 80, we've taken care of.

Unknown Executive: As Michael said in his remarks, 51% of their role so call. It 500000 of 1 million feet.

Unknown Executive: And as we said at 770 Broadway.

Unknown Executive: We have met a rolling in June.

Unknown Executive: Along with the current vacancy we have pipeline of activity on that space.

Unknown Executive: So that's how we're approaching.

Unknown Executive: The big ones that are in that occupancy number so.

Unknown Executive: So, you know, as we take into account our pipeline of deals, as we take into account our expirations going through 24. We may see more of a dip in occupancy, and as we complete transactions during the next, you know, six to nine months, we expect that occupancy to then climb back as we get into 2025, gets down to 77.6% in the most recent quarter. You know, pre-pandemic, that was always, you know, 95 to 100.

Unknown Executive: Taking into account our pipeline of deals as.

Unknown Executive: As we take into account our exploration going through 'twenty four.

Unknown Executive: We may see more of a dip in occupancy and as we complete transactions during the next.

Unknown Executive: The nine months.

Unknown Executive: We expect that occupancy climbed back as we get into 2025.

Speaker Change: Okay, Great. Thanks, and then my second question is about the Mark so.

Unknown Executive: Occupancy dipped down to 77, 6% above the most recent quarter.

Unknown Executive: Pre pandemic that was always 95 to 100 could you maybe talk a little bit about kind of the roadmap there.

Unknown Executive: Could you maybe talk a little bit about kind of the roadmap there and, you know, what you think stabilized occupancy or, you know, given that there's obviously some volatility at that asset, what might be a stabilized kind of revenue figure might look like for the market? So I'll start, and then you can jump in. Like the Chicago market is obviously... challenging right now. Probably one of the more challenging ones in the country.

Unknown Executive: What you think stabilized occupancy or or given that there is obviously some volatility in that asset what maybe like a stabilized kind of revenue figure might look like.

Speaker Change: For tomorrow.

Speaker Change: So I'll start Matt jump in.

Unknown Executive: The Chicago market is obviously.

Unknown Executive: Challenging right now probably one of the more challenging ones.

Unknown Executive: The country.

Unknown Executive: But, you know, we do have decent activity on the asset. I would say, alluding to some of the prior questions, there's quite a bit of distress in the Chicago office market. Many landlords do not have the wherewithal to lease their assets, given the debt situation there.

Unknown Executive: But we do have decent activity on the asset I would say that.

Unknown Executive: Alluding to some of the prior questions.

Unknown Executive: Quite a bit of distress in Chicago office, many landlords do not have the.

Unknown Executive: Sure.

Unknown Executive: You don't have the wherewithal to lease our assets given the debt situation. There we have an asset that has no debt on it and so I think the sponsorship the strength is.

Unknown Executive: You know, we have an asset that has no debt on it, and so I think the sponsorship, the strength, is well known by the brokers and the tenants. And I think that's helping us. You know, we just finished what we call Mark 2.0, which is the second stage of amenities that we've put in, fitness, conferencing, et cetera. And again, the reaction has been positive.

Unknown Executive: As well known by the brokers and tenants and I think that's helping US. We just finished what we call Mark to point, which is the second stage of amenities that we've put in.

Unknown Executive: Fitness conferencing et cetera.

Unknown Executive: And again the reaction has been positive so the market's tough.

Unknown Executive: So the market's tough, you know; you cannot dismiss that. But, you know, I think we're seeing more than our fair share there. And I think it's going to take, you know, probably three years to get back to stabilized occupancy, realistically. Maybe it's two.

Unknown Executive: Cannot.

Unknown Executive: I dismissed that but I think we're seeing more than our fair share there and I think thats going to take.

Unknown Executive: Probably three years to get back to stabilized occupancy realized maybe it's too, but I think when the income fully comes online probably in the neighborhood and our objective is to get it back into the 90% occupied at 95 plus percent.

Unknown Executive: But I think when the income fully comes online, it's probably in a neighborhood. And our objective is to get it back into the 90% occupied, you know, get it 95 plus percent. And get the income back up to that $90 to $100 million. Cash on a lie basis.

Unknown Executive: And get the income back up to that $90 million to $100 million.

Unknown Executive: So there's a fair amount of growth to come there, but, you know, the market is, as I said, challenging. Thank you. The next question is from Caitlin Burrows with Goldman Sachs. Please go ahead. Hi, this is Julien on behalf of Caitlin.

Unknown Executive: Cash NOI basis, so theres, a fair amount of growth to come there.

Unknown Executive: But.

Julien: The market is as I said challenging right now.

Julien: Thank you. The next question is from Caitlin Burrows with Goldman Sachs. Please go ahead.

Julien Blouin: Thanks for taking the question. One quick one, can you comment on whether the leasing spreads in the quarter benefited from Penn District leasing? and what that leasing spread might have been, ex-pen lease. Yeah, I think the answer is that, you know, the spread, Penn 2 was the major league soccer team with the big lease in this quarter, you know, that's a new lease, first generation, so it didn't affect the spread. Okay, good to know.

Julien: Hi, This is Julian on for Caitlin. Thanks for thanks for taking the question. One quick one can you comment on whether the leasing spreads in the quarter.

Julien Blouin: Benefited from the Penn District leasing and what.

Julien Blouin: That leasing spread might've been at Penn leases.

Julien Blouin: Yeah.

Julien Blouin: Yes.

Julien Blouin: Yes, I think I think the answer is that.

Julien Blouin: <unk>.

Julien Blouin: Spreads tend to as you immediately cycle with the big lease in this quarter.

Julien Blouin: New lease FERC generation, so didn't didn't affect the spreads.

Speaker Change: Okay good to know.

Unknown Executive: And then a second one on the debt covenant, it looked like interest coverage and fixed charge coverage tied to bid in the quarter. I know longer term, the metric is gonna benefit from the occupancy gain you talked about from Penn District, NOI. And it also sounds like you have some sales underway, but can you give us a sense of maybe the trajectory over the coming quarters, given the fact that I know there's that?

Julien Blouin: Then.

Julien Blouin: One on the debt covenant it looked like interest coverage and fixed charge coverage tightened a bit in the quarter I know longer term metric is going to benefit from the occupancy gains you talked about from Penn District NOI.

Unknown Executive: And it also sounds like you have done sales underway, but can you give us a sense of maybe the trajectory over the coming quarters, given the fact that I know theres that sort of big swap exploration at <unk>.

Unknown Executive: Big Swap Exploration at 555 Cal. Yeah, no, you're you're accurate. Yeah, I think the impact this quarter was predominantly the big item was the swap increase on 10.11 that we were coming up with. I think, if I go from memory, I think it was 17 basis points out.

Unknown Executive: 555 Cal.

Unknown Executive: Yeah, no youre accurate.

Unknown Executive: I think the impact this quarter was predominantly the.

Unknown Executive: The big item was the swap.

Unknown Executive: The increase in <unk>.

Unknown Executive: Even if we are coming up I think from recollection. It was 17 basis points.

Speaker Change: Too bad that couldn't go forever, but.

Unknown Executive: There was a material item this quarter a couple of other things as well, but that was the big one.

Unknown Executive: Next quarter.

Unknown Executive: Second quarter, if you will you're accurate Wi Fi five we've put in place another swap that will kick in and increase so.

Unknown Executive: [inaudible] As we look forward, we continue to have sufficient cushion, you know, in our covenants. Fixed charges will tighten up, you know, over the next couple of quarters, but you know, we still have an efficient buffer there. And then as the income comes in from some of these leases, you know, that number will grow again, but it will tighten up a little bit based on the 555 swap rate. Thank you. The next question is from Nick Yulico with Scotiabank. Please go ahead.

Unknown Executive: As we look forward, we continue to have sufficient cushion in our covenant fixed charge will tighten up.

Nicholas Philip Yulico: Over the next couple of quarters, but we still have.

Nicholas Philip Yulico: <unk> buffer there and then as the income comes online from some of these leases.

Nicholas Philip Yulico: That number will grow again, but it will tighten up a little bit based on the 505.

Nicholas Philip Yulico: Swap rate increase.

Nicholas Philip Yulico: Thank you. The next question is from Nick <unk> with Scotiabank.

Nicholas Philip Yulico: <unk> Bank. Please go ahead.

Nicholas Philip Yulico: Thank you. I just wanted to go back to the $0.2530 impact this year from vacancy. So I guess, you know, that adds up to about $55-60 million of NOI versus your total NOI share last year of $1.14 billion. So it's somewhat like a 5% NOI loss on that math, if that's correct.

Nicholas Philip Yulico: Thank you I just wanted to go back to the.

Nicholas Philip Yulico: The 25 to 30 cents impact this year from vacancy.

Speaker Change: Yes, there is.

Nicholas Philip Yulico: It's up to about $55 $60 million of NOI versus your total NOI share last year, a 1.1 dollars 4 billion. So it's someone like a <unk>.

Nicholas Philip Yulico: 5%.

Nicholas Philip Yulico: NOI loss.

Nicholas Philip Yulico: On that math that's correct.

Unknown Executive: So I guess I'm just wondering, you know, how does that, you know, are there other moving parts here besides, you know, some of the vacancy impact you talked about? Because if I look at your supplement, you know, in the fourth quarter, you had 5% of your rent expiring in New York. And, you know, you're obviously not all expiring. The 5% wine loss number seems a little bit, you know, high relative to your expiration. There may have been one time it expired, December 31st last year, but I think, in a nutshell, that's it. You know, I mean, it's pure and simple.

Nicholas Philip Yulico: I guess I'm, just wondering how does that.

Unknown Executive: Is there other moving parts here besides just.

Unknown Executive: Some of the vacancy impact you talked about because if I look at your supplement.

Unknown Executive: In the fourth quarter, you had 5%.

Unknown Executive: You ran expiring in New York and Youre, obviously, not on all expiring so the 5% NOI loss number seemed a little bit.

Unknown Executive: High relative to what your expirations for this year.

Unknown Executive: There may be one tenant that expired December 31 last year, but.

Unknown Executive: I think in a nutshell that's it.

Unknown Executive: It's pure and simple.

Unknown Executive: You know, the vast majority of it is 1290, 6, 280 Park, and 770. And you get to that sort of number. I mean, there's a little bit of positives, a little bit of negatives. But, you know, those are the three main drivers.

Unknown Executive: The vast majority of it is 12 96 280 park in 2017.

Unknown Executive: When you get to that sort of number I mean, theres a little bit of <unk>.

Unknown Executive: Positives or negatives, but.

Unknown Executive: Those are the three main drivers so.

Unknown Executive: So, you know, we just, we came through a period where there was some known move outs. And, you know, we're back on those as we discussed, but that's it, you know, and it just occurred at various stages everywhere from December 31st, you know, through probably the last one is, you know, META, which is in the middle of this year. Okay, thanks. And I just want to be clear on, you know, you know, that the way to think about occupancy and Michael last last quarter, when you're talking about sort of a flattish occupancy this year, does that mean that, you know, by the time we get to the fourth quarter of this year, it's a, you know, sort of a flat year over year occupancy, I'm assuming it's not a sort of average occupancy for the year, that would be flat year over year based on that.

Unknown Executive: We just came through a period, where there was some known move outs.

Unknown Executive: And we are back on those as we've discussed but.

Unknown Executive: That's it and Theres just occurred at various stages everywhere from December 31.

Unknown Executive: Through.

Unknown Executive: Probably the last one is a matter which is in the middle of this year.

Speaker Change: Okay. Thanks, and then I just wanted to be clear on.

Unknown Executive: The way to think about occupancy and Michael last last quarter. When you are talking about sort of a flattish occupancy. This year does that mean that by the time, we get to the fourth quarter of this year. It's a.

Unknown Executive: Sort of a flat year over year occupancy I'm, assuming it's not a sort of average occupancy for the year that would be flat year over year based on that.

Unknown Executive: Yeah, I would say, you know, by the end of the year. I mean, again, it depends on the timing of certain things. And, you know, I don't know that I can play it with precision, you know, this will happen by the fourth quarter as opposed to January and so forth.

Michael: Yes, I would say by the end of the year and again it depends on timing of certain things in.

Unknown Executive: I don't know that I can tell you with precision yet this will happen by the fourth quarter as opposed to January or whatnot, but.

Unknown Executive: We think rough numbers.

Unknown Executive: Wind up there so but we'll see.

Unknown Executive: There's still we're still.

Unknown Executive: In the first half of the year and.

Unknown Executive: We just have to see how it plays out, but I think like occupancy.

Unknown Executive: Now it is going to trend down a little bit more given for example, the metal move out in June.

Unknown Executive: But we have some other things in the works.

Unknown Executive: Pick that up so we'll see where it comes out in total I think as we look at frontline.

Unknown Executive: But, you know, we think, you know, rough numbers. [inaudible] So, we'll see where it comes out in total. I think as we look at the trend line, it will, you know, it'll... [inaudible] Thank you. The next question is a follow-up from Michael Lewis with Truist. Please go ahead. Yeah, thanks. I just have one more.

Unknown Executive: Will.

Michael Robert Lewis: It will.

Michael Robert Lewis: I think it increased meaningfully over time, we're going to bring Penn two into numbers next year, depending on where we are from a leasing standpoint, there that number could bring the average down but obviously, that's sort of an extraneous events being added to the denominator. So we'll evaluate it.

Michael Robert Lewis: As we get closer.

Unknown Executive: Thank you. The next question is a follow up from Michael Lewis with <unk>. Please go ahead.

Michael Robert Lewis: You know, you sold two condo units at 220 Central Park South for about $32 million. Are the remaining four units similar in value, roughly 16 million a unit? I don't know if you have, you know, maybe you have a penthouse left or you have smaller units. I was just wondering about that. No, the remaining four units are smaller, lower. View Impaired, so they're much less bad.

Michael Robert Lewis: Yes. Thanks, I just have one more at you told to condo units at 220 Central Park South.

Michael Robert Lewis: For about $32 million or the remaining four unit similar in value roughly $16 million a unit I don't know if you have maybe you have a penthouse last where you have smaller units I was just wondering about that.

Michael Robert Lewis: No. The remaining four units are smaller lower.

Michael Robert Lewis: Our view impaired so they are much less valuable.

Unknown Executive: That job is basically sold. Perfect. Thanks.

Speaker Change: Okay basically thank you.

Speaker Change: My job is basically sold out.

Unknown Executive: Perfect. Thanks.

Unknown Executive: Yeah.

Alexander David Goldfarb: Thank you. The next question is a follow-up from Alexander Goldfarb with Piper Sandler. Please go ahead.

Unknown Executive: Thank you. The next question is a follow up from Alexander Goldfarb with Piper Sandler. Please go ahead.

Steven Roth: Thank you. Steve, with the new Office to Conversion incentives, does this open a door for you to contemplate either assets from the existing portfolio or perhaps, you know, assets that are, you know, that you've always eyed as would be great for conversion and seem to maybe have a motivated owner who would be willing? It just seems like the incentive package that they passed is pretty lucrative for office landlords to convert. Alex, good morning again.

Alexander David Goldfarb: Thank you Steve.

Alexander David Goldfarb: Steve with the new office to conversion incentives does this open the door for you.

Steven Roth: Contemplate.

Steven Roth: Either assets from the existing portfolio or perhaps assets that are that.

Steven Roth: That <unk> always items would be great for conversion and seem to maybe have a motivated owner who would be willing just seems like the.

Steven Roth: The incentive package that they passed is pretty lucrative for office landlords to convert.

Steven Roth: Yes, the answer is yes, of course. So there are a couple of things. First of all, the building that you're going to be converting, the target building, at a price somewhere in the neighborhood of $200 a foot or under $200. So these are really.

Steven Roth: Alex.

Alex: Good morning, again, yes, the answer is yes of course.

Alex: So theres a couple of things first of all.

Steven Roth: <unk>.

Steven Roth: Building.

Alex: That you are going to be converting the target building.

Alex: The price somewhere in the neighborhood of two.

Alex: $200 a foot.

Alex: So these are really.

Steven Roth: Distressed office buildings. They're not these, you know; they're distressed office buildings. Let me leave it at that. So the pricing and the economics really don't allow you to pay more, maybe even a pinch more, but probably not. So that's step number one.

Alex: Distressed office building.

Steven Roth: Yes.

Steven Roth: First off let me leave it at that.

Steven Roth: The pricing and the economics really don't.

Steven Roth: <unk> allow you to pay.

Steven Roth: More maybe even a pinch more but probably not.

Steven Roth: Step number two is that obviously, if those are the economics, and those are the target, the target building, these are the B and C buildings in the office market. So, when those buildings are taken out of the conventional... Office Market, they really don't help the prime a market because the tenants that we deal with who are interested in a space don't really ever look at that. So the answer is that we will be able to, as an industry, convert a decent number of buildings.

Steven Roth: So that's step number one step number two is is that obviously if those are the economics than those of the target.

Steven Roth: Target building.

Steven Roth: These are the D&C buildings in the office market.

Steven Roth: Those buildings are taken out of the conventional.

Steven Roth: Office market.

Steven Roth: Really don't know.

Steven Roth: Hello.

Steven Roth: Prime a market because the tenants that we deal with who are interested in a space.

Steven Roth: <unk> really ever look at that so the answer is that we will be able to as an industry.

Steven Roth: Decent number of buildings.

Steven Roth: It will make a dent, not a big dent, but a dent in the residential market and the demand for residential properties, but it'll have a marginal, a marginal... But clearly, we're looking at that. It's an interesting... activity, and it's something that we will look at.

Steven Roth: We'll make a bet on a big dent in the residential market and the demand for our residential space.

Steven Roth: But it will have a marginal module.

Steven Roth: Effect on the conventional class a office market.

Steven Roth: But clearly we're looking at that.

Steven Roth: Interesting.

Steven Roth: Activity.

Steven Roth: But.

Steven Roth: I'm not 100% sure that the returns on capital are going to be what some people think they are. But anyway, we are looking at it pretty aggressively. Thank you very much.

Steven Roth: It's something that we will look at I'm not 100% sure that the returns on capital.

Steven Roth: Going to be what some people think they are but anyway, we are looking at it pretty aggressively.

Steven Roth: Yeah.

Speaker Change: Thank you very much there are no further questions at this time.

Operator: There are no further questions at this time. Okay, thank you all very much. We appreciate your joining us this morning, and we will be anxious to, we always learn from these calls, and so thank you for that. We are excited about the next quarter and the future, and we'll see you at the next hearing call. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect your lines.

Speaker Change: Okay. Thank you all very much we appreciate your joining us this morning, and we will be.

Operator: Yes.

Operator: We always learn from these calls and so thank you for that we are.

Operator: Excited about the deck.

Operator: The quarter in the future and we will see you at the next earnings call. Thank you.

Operator: Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect your lines.

Operator: Okay.

Operator: [music].

Operator: [music].

Operator: [inaudible] the the the the the the the the ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, and welcome to the Vornado Realty Trust first quarter 2024 earnings call. My name is MJ, and I will be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen-only mode.

Operator: Good morning, and welcome to the Vornado Realty Trust first quarter 'twenty 'twenty four earnings call. My name is M. Jay and I will be your operator for today's call. This call is being recorded for replay purposes.

Operator: All lines are in a listen only mode.

Operator: Our speakers will address your questions at the end of the presentation. During the question and answer session at.

MJ: At that time. Please press Star then one on your Touchtone phone.

Operator: Our speakers will address your questions at the end of the presentation during the question and answer session. At that time, please press star, then 1 on your touchtone phone. I would now like to turn the call over to Steven Borenstein, Executive Vice President and Corporation Counsel. Please go ahead. Welcome to Vornado Realty Trust's first quarter earnings call. Yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission.

Operator: I would now like to turn the call over to Steven Bernstein Executive Vice President and Corporation Counsel. Please go ahead.

Operator: Welcome to Vornado Realty Trust's first quarter earnings call yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q, with the Securities and Exchange Commission. These documents as well as our supplemental financial information packages are available on our website www Dot <unk> dot.

Operator: These documents, as well as our supplemental financial information packages, are available on our website www.bno.com under the investor relations section. In these documents and during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q, and financial supplement.

Operator: Com under the Investor Relations section in these documents and during today's call. We will discuss certain non-GAAP financial measures reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release Form 10-Q and financial supplement.

Steven J. Borenstein: Please be aware that statements made during this call may be deemed forward-looking statements, and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2023, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date.

Operator: Please be aware that statements made during this call maybe deemed forward looking statements and actual results may differ materially from these statements due to a variety of risks uncertainties and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31 2020.

Steven J. Borenstein: Three for more information regarding these risks and uncertainties. The call may include time sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward looking statements on the call today from management for our opening comments are Steven Roth, Chairman and Chief Executive Officer, and Michael Franco.

Operator: The company does not undertake the duty to update any forward-looking statement. On the call today from management for our opening comments are Stephen Roth, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions. I will now turn the call over to Stephen Roth. Thank you, Steve, and good morning, everyone.

Steven Roth: President and Chief Financial Officer, our senior team is also present and available for questions I will now turn the call over to Steven Roth.

Steven Roth: Thank you, Steve and good morning, everyone.

Steven Roth: We've been busy. Let's start with Bloomberg. As a reminder, 731 Lexington Avenue, the mixed-use tower whose 950,000 square foot office condo is Bloomberg's global headquarters, is owned by Alexander's, a separately traded public REIT. Vornado owns 32.4% of Alexander's.

Steven Roth: We've been busy.

Steven Roth: The background facts are that Bloomberg's lease expires in February 2029, 500 million, and 500 million of debt on the office. Condo is due next month, June 2024. Yesterday, we announced that we renewed and extended the Bloomberg lease for an 11-year term to begin in February 2029 and take us through February 2040. So 16 years of term from now. As you can imagine, every developer in town tried to poach Bloomberg, and, of course, they looked at every opportunity as they must. We are delighted that they chose to stay with 731 Lexington. By the way, the Bloomberg building is as much Mike's creation as mine. He had significant input into the design of the original building.

Operator: Let's start with Bloomberg as a reminder, 730, what lessons did avenue. The mixed use tower, who is 950000 square foot office condo is bloomberg's global headquarters is old, but it's owned by Alexander as a separately traded public REIT Rene.

Steven Roth: <unk> was 32, 4% of Alexander's the backgrounds XR Bloomberg lease expires in February 2020 line.

Steven Roth: 500, and $500 million of debt on the office condo is due next month June 2024.

Steven Roth: Yesterday, we announced that we renewed and extended the Bloomberg lease for an 11 year term to begin in February 2029.

Steven Roth: And take us through to February 2040.

Steven Roth: So 16 years of term from now as you can imagine a redevelopment town tried to postpone work and of course.

Steven Roth: They looked at every opportunity as they as they bust we are delighted that they chose to stay with 731 Lexington by the way. The Bloomberg building is as much Mike's creation. His mind he had significant input into the design of the original building.

Steven Roth: The design of the building and bloomberg's internal fit out.

Steven Roth: With what we would have built today, but of course now they don't need to.

Steven Roth: The design of the building and Bloomberg's internal fit out are on a par with what we would have built today, but of course, now they don't need that. The terms of the lease are spelled out in yesterday's SEC filings, tenant concessions in the form of TIs and free rent have been established, and the net rent will be the subject of an appraisal in 2029 with the then rent adjusted up or down no more than 10% either way based on the then market conditions.

Steven Roth: In terms of the leaves us build out in yesterday's SEC filings tenant concessions in the form of Tis and free rent has been established and the net rent will be the subject of an appraisal in 2020 with Zen rent adjusted up or down no more than 10% either way based on the then market conditions we.

Steven Roth: We're in the process of refinancing this asset, but I must say I am not excited about paying today's market rate of 7 or even 8% for debt, with all the trappings of leasing reserves, cash suites, and such, which are admittedly protective of the lender but don't do much for our equity value. As we speak, my personal favorite is to pay the debt down and maybe even pay the debt off. We shall see.

Steven Roth: We are in the process of refinancing this asset, but I must say I am not excited about paying today's market rate, a seven or even 8% for that with all the trappings of leasing reserves cash suites, as such which are admittedly protective of the lender, but don't do much for our equity value as we speak my personal favorite is the pace.

Steven Roth: That down and maybe even pay the debt off we shall see.

Steven Roth: Yes.

Steven Roth: Now let's focus on our credit lines. Traditionally, we have had two separate but similar credit lines with staggered maturities. One credit line for $1.25 billion has been renewed through 2027. And the renewal of the second credit line was finalized last Friday at a reduced amount of $915 million, with a term extended to April 2029. As expected in these times, several banks have dropped out. We use our credit lines very sparingly, generally for short-term requirements with a known source of repayment, and rarely have we exceeded 25% drawdown.

Steven Roth: Now lets focus on our credit lines traditionally we've had two separate but similar credit lines with staggered maturities. One credit line for 125 billion has been renewed through 2027 and the renewal of the second credit line was finalized last Friday at a reduced amount of 915 million with a term <unk>.

Steven Roth: Tended to April 2029.

Steven Roth: As expected in these times several banks dropped out.

Steven Roth: We use our credit lines very sparingly generally for short term requirements with a known source of repayment and really rarely have we exceeded 25% drawdowns.

Steven Roth: Now to 280 Park Avenue. We own 50% of 280 Park Avenue. Since our joint venture partner has already reported, I'm guessing you are pretty much up to date on the details. What we did here was extend the maturity of the senior loan for four years, keeping the rate constant with no pay down, but posting significant cash reserves for future leases. Several analysts have commented that the loan and the equity value pretty much cancel out.

Steven Roth: Now the 280 Park Avenue, we owned 50% of 280 Park Avenue since our joint venture partner has already reported Im guessing you are all pretty much up to date on the details. What we did here was extend the maturity of the senior loan for four years, keeping the rate constant with no paydown, but post.

Steven Roth: The significant cash reserves for future leasing.

Steven Roth: Several analysts have commented that the loan and the equity value is pretty much cancel out.

Steven Roth: And that fact allowed us to DPO the NIS loan at 50 cents on the dollar, realizing a $31.3 million gain on the share, which we will recognize in the second quarter. This is not yet a big win, but it does create a cheap warrant on a wonderful asset located on Prime Park Avenue, where there is already a very low 7% vacancy and a shortage of space. We think it's a first-class bet

Steven Roth: And Thats fact allowed us to depot the Mezz loan at 50 cents on the dollar realizing a $31 $3 million gain share, which we will recognize in the second quarter.

Steven Roth: This is not yet a big win but it does create a cheap warrants on a wonderful asset located in Prime Park Avenue, where there is already a very low 7% vacancy at a shortage of space. We think it's a first class bet bye.

Steven Roth: By the way, we are leasing very well here. We continue to protect our balance sheet with interest rate caps and swaps. But when a 3% loan matures into a 7% market, there really is no place to hide.

Steven Roth: By the way, we are leasing very well here.

Steven Roth: We continue to protect our balance sheet with interest rate caps and swaps, but when a 3% loan matures into a 7% market. There really is no place to hide.

Steven Roth: We continue to prospect for good real estate in distress where our best-in-class operating platform can be helpful to the lender. We expect these opportunities to accelerate. The gold rush on the part of the luxury brands to own, control, and dominate the very best locations is accelerating, and the knockout effect on prime New York City retail space is palpable.

Steven Roth: We continue to prospect for good real estate in distress, where our best in class operating platform can be helpful to the lender. We expect these operate opportunities to accelerate.

Steven Roth: The gold rush on the part of the luxury brands to own control and dominate the very best locations is accelerating and then knock on effect on Prime New York City retail space is palpable.

Steven Roth: It should be noted that in New York, we have much more prime retail space than anyone else by a wide margin. Some commentators have noted that the values of Fifth Avenue and Times Square seem to have recovered to the pricing of our retail JV sale five years ago. It would seem so. However, I continue to strongly believe the contrarian bull case I made in my annual shareholder's letter that, basically, with a frozen supply, i.e. No new developer office starts, and none on the horizon.

Steven Roth: It should be noted that in New York, we have much more prime retail space than anyone else by a wide margin.

Steven Roth: Some commentators have noted that the fifth Avenue and times square values seem to have regions recovered to the price of a retail JV sales five years ago.

Steven Roth: It would seem so.

Steven Roth: I continue to strongly believe the contrarian Bull case I've made in my annual shareholders letter that basically with frozen supply I E. No new developer office starts in London on the horizon.

Steven Roth: With tenant requirements picking up and vacancies shrinking, I couldn't be more optimistic about the future. And also note that while the New York market has a huge 422 million square feet, when you cancel out the non-prime space, we really only compete in a much smaller 177 million square foot market. Great things are happening in our Penn District. Come by and take a look. Our team here at Renato couldn't be more optimistic. Now, over to Michael.

Steven Roth: Tenant requirements picking up and vacancies shrinking I couldnt be more optimistic about the future.

Michael: And also note that while the New York market has a huge 422 million square feet. When you cancel out the non prime.

Michael: Space, we really only competing in a much smaller 177 million square foot market.

Steven Roth: Great things are happening in our Penn district come by and take a look.

Michael: Our team here at Vornado Couldnt be more optimistic now over to Michel.

Steven Roth: Thank you, Steve, and good morning, everyone. As expected, the financial results for the quarter were down from last year due to items that we previously forecasted. First quarter comparable FFO as adjusted was $0.55 per share compared to $0.60 per share for last year's first quarter, a decrease of $0.05.

Michael: Thank you, Steve and good morning, everyone as expected the financial results for the quarter were down from last year due to items that we previously forecasted.

Steven Roth: First quarter comparable <unk> as adjusted was <unk> 55 per share compared to <unk> 60 per share for last year's first quarter a decrease of <unk>.

Michael J. Franco: This decrease is primarily driven by lower NOI from higher net interest expense and no move-outs, partially offset by lower G&A expenses. We have provided a quarter over quarter bridge in our earnings release in our financial section. Overall, New York business, same store cash NOI was down 5.1%, primarily due to the aforementioned expiration. As we indicated in our last earnings call, we expect our 2024 comparable FFO to be down from 2023 comparable FFO of $2.61 per share, primarily due to higher projected net interest expense of about $0.30 per share due to the impact of known vacancies at certain of our properties, primarily at 1290 Avenue of the Americas, 770 Broadway, and 280 Park Avenue. We anticipate the impact of these expirations in 2024 to be roughly 25 to 30

Steven Roth: This decrease is primarily driven by lower NOI from higher net interest expense and known move outs, partially offset by lower G&A expense, we have provided a quarter over quarter bridge in our earnings release and our financial supplement.

Michael J. Franco: Our overall, New York business same store cash NOI was down five 1% primarily due to the aforementioned explorations.

Michael J. Franco: As we indicated on our last earnings call. We expect our 2024 comparable <unk> to be down from 2023 comparable <unk> of $2 61 per share.

Michael J. Franco: Primarily due to higher projected net interest expense of about 30 per share and the impact of known vacancies at certain of our properties primarily at 12 90 Avenue. The Americas 770, Broadway and 280 Park Avenue we.

Michael J. Franco: We anticipate the impact of these explorations in 2024 to be roughly 25% to 30 per share.

Michael J. Franco: We expect this impact to be temporary, as we have already leased up a good chunk of this space, but the gap earnings from these leases won't begin until sometime in 2025. We then expect earnings to increase as income from the lease-up of Penn and other vacancies comes online and as rates trend down. Now turning to the leasing markets, the New York office market continues to show signs of strength.

Michael J. Franco: We expect this impact to be temporary as we have already leased up a good chunk of this space, but the GAAP earnings from these leases won't begin until sometime in 2025. We then expect earnings to increase as income from the lease up of 10 and other vacancies comes online and as rates trend down.

Michael J. Franco: Now turning to the leasing markets.

Michael J. Franco: The New York Office market continues to show signs of strengthening.

Michael J. Franco: Well, first quarter office leasing in New York took a bit of a breather from the strong year-end, but there is a healthy backlog of activity with a number of large deals in the works. Overall, tenant space requirements continue to trend upward, sublease space continues to fall, best-in-class renovated and amenitized product located in transit Hubs continues to dominate leasing, and the new supply pipeline is close to zero. These dynamics set the table for continued improvement and conditions in the upper tier of the market, which we are already experiencing in our best-of-class portfolio. Overall, asking rents are stable, even rising in top-tier properties, but concessions remain stubbornly high across all sub-markets.

Michael J. Franco: While first quarter office leasing in New York took a bit of a breather from the strong year end. There is a healthy backlog of activity with a number of large deals in the works overall tenant space requirements continue to trend upward sublease space continues to fall best in class renovated and a monetized product located in transit hubs.

Michael J. Franco: <unk> continues to dominate the leasing and the new some pipeline new supply pipeline is close to zero.

Michael J. Franco: These dynamics set the table for continued improvement in conditions in the upper tier of the market, which we are already experiencing in a best of class portfolio.

Michael J. Franco: Overall, asking rents are stable, even rising in the top tier properties, but concessions remains stubbornly high across all submarkets the financial services and legal sectors are continuing to drive the leasing activity is both are in growth mode.

Michael J. Franco: The financial services and legal sectors are continuing to drive the leasing activity, as both are in growth. We are also seeing the first signs of life in the tech sector again after a couple years of being on pause or decline. And our experience is, when they grow, they tend to leave big chunks of space.

Michael J. Franco: We are also seeing the first signs of life in the tech sector again after a couple of years of being on pause or downsizing and our experience is when they grow they tend to lease big chunks of space.

Michael J. Franco: The Midtown and New Westside markets are outperforming, as leasing activity in Midtown is strong not only on Park Avenue but also on 6th Avenue and the 5th Avenue-Madison Avenue corridor. On the west side, tenant demand continues apace. If you walk from 7th Avenue to the Hudson River, you will see why.

Michael J. Franco: The Midtown and new West side markets are outperforming as leasing activity in Midtown is strong not only on park Avenue, but also on sixth Avenue in the fifth Avenue Madison Avenue corridor on.

Michael J. Franco: On the West side tenant demand continues at pace. If you walk from seventh Avenue to the Hudson River, you will see wide.

Michael J. Franco: Turning now to our leasing activity, after completing a slew of large leases in December 2023 and finishing last year with a market-leading 2.1 million square feet of deals, we expected a more muted first quarter of completed transactions, given where our deal pipeline stood in negotiation. In the first quarter, we leased 291,000 square feet at a healthy $89 per square foot, reflecting the overall quality and premium locations of our property. The highlight of the quarter was our 125,000 square foot headquarters lease with Major League Soccer at the new Penn II.

Michael J. Franco: Turning now to our leasing activity after completing a slew of large leases in December 2023, and finishing last year with a market, leading $2 1 million square feet of deals we expected a more muted first quarter's completed transactions given where our deal pipeline stood in the negotiation process.

Michael J. Franco: In the first quarter, we leased 291000 square feet at a healthy $89 per square foot, reflecting the overall quality and premium locations of our properties the.

Michael J. Franco: The highlight of the quarter was our 125000 square foot headquarters lease with major League soccer at the new Penn two ml.

Michael J. Franco: MLS had been in the market for some time, looking mainly in the Midtown core. Until late in their process when they toured Penn and were wowed by what we've done with the building in the district. The project is now complete and really shows terrific. Our new town hall event space is open. By the way, we hosted our first event just two weeks ago, attended by 300 people. And the rooftop pavilion and park are truly spectacular.

Michael J. Franco: <unk> had been in the market for some time looking mainly in the Midtown core until late in their process. When they toured pin too and were wowed by what we've done with the building and the district. The project is now complete and really shows terrifically, our new town Hall event spaces open by the way we hosted our first event just two weeks ago.

Michael J. Franco: Tend to buy 300 people in the rooftop pavilion and park a truly spectacular.

Michael J. Franco: Tenants are responding positively to everything that we've done and what's still to come. We have a significant pipeline of PIM2 and are busy negotiating proposals with tenants across a variety of industries. In addition to the significant Bloomberg lease renewal of almost one million square feet we just completed, our leasing pipeline is strong, with 370,000 feet of leases in negotiation and another two and a half million feet of proposals out on the street in different states.

Michael J. Franco: Tenants are responding positively to everything that we've done and what's still to come.

Michael J. Franco: We have a significant pipeline of pen two and are busy negotiating proposals with tenants across a variety of industry sectors.

Michael J. Franco: In addition to the significant Bloomberg lease renewal of almost 1 million square feet. We just completed our leasing pipeline is strong with 370000 feet of leases in negotiation and another $2 5 million feet of proposals out on the street in different stages.

Michael J. Franco: Much of this activity is not only addressing current vacancy but also forward-looking expiration. As discussed on the fourth quarter call, we foreshadowed an occupancy decline due to the known Q1 move-outs at properties such as 1290 6th Avenue and 280 Park. We are pleased to report that we have already taken care of half of the 2024 and 2025 expirations in these properties, with more activity on the horizon, turning to retail. The retail leasing market continues to recover.

Michael J. Franco: This activity is not only addressing current vacancy, but also a forward looking explorations.

Michael J. Franco: As discussed on the fourth quarter call, we foreshadowed an occupancy decline due to the known Q1 move outs at properties, such as 12, 96 Avenue and 280 Park.

Michael J. Franco: We are pleased to report that we have already taken care of half of 2024, and 2000 22025 explorations in these properties with more activity on the horizon at each.

Michael J. Franco: Turning to retail.

Michael J. Franco: Retail leasing market continues to recover as we discussed on our last call.

Michael J. Franco: As we discussed in our last call, Prada's and Kering's blockbuster retail deals on 5th Avenue that occurred in December demonstrated their long-term commitment to Manhattan and further energized the market, and there are other potential sales rumored to be in the works. Vacancy rates are now below pre-pandemic 2019 levels in most Manhattan submarkets, and retailers are willing to pay top dollar for the best locations. Our retail leasing activity has picked up meaningfully in the last couple of quarters, with almost all our assets seeing significant increases.

Michael J. Franco: Proud of and caring blockbuster retail deals on fifth Avenue that occurred in December demonstrated their long term commitment to Manhattan and as further energize the market.

Michael J. Franco: And there are other potential sales rumored to be in the works vacancy rates are now below pre pandemic 2019 levels in most Manhattan sub markets and retailers are willing to pay top dollar for the best locations.

Michael J. Franco: Our retail leasing activity has picked up meaningfully in the last couple of quarters with almost all of our assets seeing significant interest.

Michael J. Franco: As evidence of the rebound, this quarter, in addition to signing many leases in the Penn District, we completed an important long-term renewal at one of our Times Square assets at the highest annual dollar rent we've achieved in our portfolio since pre-COVID, over $15 million per year. Turning to the capital markets, while the financing markets still remain challenged, we are starting to see some stability for high quality products. The CMBS market has begun to selectively reopen for office, lending at conservative metrics on quality assets with long-weighted average leases. Unsecured bond spreads for office continue to tighten.

Michael J. Franco: As evidence of the rebound this quarter. In addition to signing many leases in the Penn District, we completed an important long term renewal with one of our times square assets at the highest annual dollar and we've achieved in our portfolio since pre COVID-19 over $15 million per year.

Michael J. Franco: Turning to the capital markets now.

Michael J. Franco: While the financing markets still remain challenging we are starting to see some stability for high quality product.

Michael J. Franco: The <unk> market has begun to selectively reopened for office lending a conservative metrics on quality assets with long weighted average lease term unsecured.

Michael J. Franco: Unsecured bond spreads for office continue to tighten.

Michael J. Franco: The market is much more open for high-quality retail. That being said, coupons are still high. Banks remain on the sidelines and generally in workout mode, and there is more pain to come for all lenders given the volume of office maturities in the next few years. However, this will create opportunities. We have been and continue to be very active in the capital market. In addition to the recent extensions at 280 Park and 435 7, we're also in the process of extending our other 2020 form of charities, which we expect to complete soon.

Michael J. Franco: The market is much more open for high quality retail.

Michael J. Franco: Being said coupons are still high.

Michael J. Franco: Banks remain on the sidelines and Julian workout mode, and there's more pain to come for all lenders given the volume of office maturities in the next few years this will create opportunities for us.

Michael J. Franco: We have been and continue to be very active on the capital markets front. In addition to the recent extensions on 280 park and $4 $35 seven.

Michael J. Franco: We're also in the process of extending our other 2024 maturities, which we expect to complete soon.

Michael J. Franco: Finally, and importantly, as Steve mentioned, just a few days ago, we finalized the recast of our revolver that was scheduled to mature in 2026 for $915 million. Completing this refinancing solidified a key portion of our liquidity through 2029 and gives us significant runway to deal with any challenges over the next few years. It also highlights the continued support of our key banks in this challenging environment, and we thank them for their support. Our balance sheet remains in very good shape, with strong liquidity.

Michael J. Franco: Finally, and importantly, as Steve mentioned, just a few days ago, we finalized the recast of our revolver that was scheduled to mature in 2026 for $915 million.

Michael J. Franco: This refinancing solidify the key portion of our liquidity through 2029 and gives us significant runway to deal with any challenges over the next few years. It also highlights the continued support of our key banks in this challenging environment, we thank them for their support.

Michael J. Franco: Our balance sheet remains in very good shape with strong liquidity pro.

Michael J. Franco: Pro forma for the new revolver size, our current liquidity is a strong $2.7 billion, including $1.1 billion of cash and restricted cash and $1.6 billion undrawn under our $2.17 billion revolving credit. With that, I'll turn it over to the operator for Q&A. Thank you very much. We will now begin the question and answer session. If you have a question, please press star, then one on your touchtone phone. If you wish to be removed from the queue, please press star, then one again. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers.

Michael J. Franco: Pro forma for the new revolver size, our current liquidity is a strong $2 7 billion.

Michael J. Franco: Including $1 $1 billion of cash and restricted cash and $1 6 billion Undrawn under our two $1 7 billion revolving credit facilities with that I'll turn it over to the operator for Q&A.

Speaker Change: Thank you very much.

Operator: Once again, if you have a question, please press star, then 1 on your touch-tone phone. Each caller will be allowed to ask a question and a follow-up before we move on to the next caller. Today's first question comes from Steve Skwa with Evercore ISI. Please go ahead. Yes, hi, good morning.

Michael J. Franco: We'll now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.

Speaker Change: We wish to be removed from the queue. Please press star then scale it.

Operator: If you are using a speakerphone you may need to pick up the handset first before pressing the numbers.

Operator: Once again, if you have a question. Please press Star then one on your Touchtone phone.

Stephen Thomas Sakwa: Each caller will be allowed to ask a question and a follow up before we move on to the next caller.

Operator: Okay.

Glen J. Weiss: Michael, I was wondering if you could just follow up a little bit on the comments you made about the pipeline and maybe help us think through, you know, how much of that two and a half million square feet is maybe earmarked for Penn 2 and the development and how much is geared for, I guess, future rollovers and how much is geared to kind of current vacancy in the portfolio. Good morning, Steve. Glen, would you like to take the lead on that? Sure. Hi Steven, Glen, how are you doing?

Stephen Thomas Sakwa: Today's first question comes from Steve Scala with Evercore ISI. Please go ahead.

Glen: Yes, Hi, good morning, Michael I was wondering if you could just follow up a little bit on the comments you made about the pipeline.

Glen: Maybe help us think through how much of that $2 5 million square feet is maybe earmarked for Penn two into development and how much is geared for.

Glen: I guess future rollovers and how much is geared to kind of current vacancy in the portfolio.

Glen: Good morning, Steve.

Glen: Glenn you want to take the lead on that.

Glen: Sure Hi, David Glenn how are you doing.

Glen J. Weiss: So I would say it's a very, very balanced mix of what you just described. We're seeing a surge in proposals coming in on PEN, both PEN1 and PEN2, coming off the heels of our Major League Soccer lease. We're seeing expirations, outbound expirations tenants coming to us to early renew, just like we did with Bloomberg this week. And in addition, much of the pipeline is targeting expirations at the buildings where we have space available today. So I'd say it's a healthy mix across the portfolio, pen, and otherwise.

Glen: So I would say, it's a very very balanced mix of what you just described.

Glen J. Weiss: Seeing a surge in proposals coming in on Pan both Penn one and Penn two coming off the heels of our major League Soccer League.

Glen J. Weiss: We're seeing.

Glen J. Weiss: Explorations outbound exploration tenants coming to us to early renew just like we did with Bloomberg This week.

Glen J. Weiss: And in addition.

Glen J. Weiss: Much of the pipeline is it hacking exploration.

Glen J. Weiss: At the buildings, where we have space available today.

Glen J. Weiss: The healthy mix across the portfolio.

Glen J. Weiss: Pan and otherwise.

Glen J. Weiss: Okay.

Michael J. Franco: Okay, thanks. And as a follow-up, Michael, just to, I guess, go back to some of the information you provided on, I guess, the earnings drag from the lost, you know, occupancy this year, just to be clear, if you took the $0.30 hit from the interest expense, and now you're sort of quantifying this $0.25 to $0.30 hit from the known vacate, some of which I know has been released and will rebound maybe in $0.25 and beyond, you're kind of suggesting that there's sort of a $0.60 drag this year, as we think about $0.24, and then other positive offsets that might sort of take that number a little bit up from, say, the $2 level. Yeah.

Speaker Change: Okay, Thanks, and as a follow up Michael just to I guess go back to some of the information you provided on I guess.

Michael J. Franco: The earnings drag from the lost.

Michael J. Franco: Occupancy this year just to be clear.

Michael J. Franco: If you took the 30 <unk> hit from the interest expense and now Youre sort of quantifying this 25% to 30 hit from the known Vacates some of which I know has been re leased and will rebound maybe in 'twenty five and beyond.

Michael J. Franco: Kind of suggesting that there is sort of a 60 cent drag this year.

Michael J. Franco: As we think about 'twenty four and then all their other positive offsets that might sort of take that number a little bit up from say the $2 level.

Michael J. Franco: So, look, in terms of your sort of detail there, I think that's accurate, right? We talked about interest last quarter and sort of reaffirmed the $0.30 this quarter. Yeah, the $0.25 to $0.30 are sort of the known vacants. And as we've mentioned, you know, we've backfilled a lot of that already at $1,290 and $280. We have a lot that we're working on. There are some things that could certainly make that number more positive. But I think we're trying to give you the downside version today.

Michael: Yeah, So look in terms of your.

Michael J. Franco: That sort of detail there I think thats accurate, we talked about interest last quarter and sort of reaffirmed the 30 this quarter.

Michael J. Franco: 5% to 30.

Michael J. Franco: There's sort of a known vacates.

Michael J. Franco: And as we've mentioned.

Michael J. Franco: <unk> got a lot of that already at $12 90, and $2 80.

Michael J. Franco:

Michael J. Franco: Look we have a lot that we're working on there.

Michael J. Franco: Some things that could certainly make that number more positive, but I think we're trying to give you the downside version today.

Michael J. Franco: And so I can't say, where exactly it's going to come out, but I think if you say look let's take sort of worst case patient out of the 30, plus the 25% to 30 gets you down 55% to 60, I think thats a good baseline and our objective is to beat that but.

Michael J. Franco: And so I can't tell you where exactly it's going to come out. But I think if you say, look, let's take sort of a worst case, you know, the $0.30 plus the $0.25 to $0.30 gets you down to $0.55 to $0.60. I think that's a good baseline.

Steven Roth: And, you know, our objective is to beat that. But, you know, there's still a lot going on around here. Great, thanks. That's it for me.

Speaker Change: Still a lot moving around.

Speaker Change: Great. Thanks, that's it for me.

Steven Roth: Steve, let me just add to that for a second. So, I mean, the numbers that you mentioned and that Michael just mentioned are, you know, accurate. Let's build from there and see what the company's future looks like on an almost certain basis. If you start with re-renting the vacancies and we get back from whatever we are now to our normal, you know, 96, 97, 98% occupancy, that adds a big number to our earnings.

Steven Roth: Steve Let me just talk on that for a second.

Steven Roth: No.

Steven Roth: I mean.

Steven Roth: Numbers that you mentioned.

Speaker Change: Michael just mentioned.

Steven Roth: Accurate for this year, but still from there and see what the company's future.

Steven Roth: It looks like.

Speaker Change: It almost certain basis so.

Speaker Change: <unk> you.

Speaker Change: With re renting the vacancies that we get back from whenever we are now so abnormal.

Steven Roth: 90, 690, 798% occupancy.

Steven Roth: When OnePen and TwoPen come online, That's another $100 million, give or take, of earnings that come online that is brand new. If interest rates settle down into some kind of stimulized number, that also improves earnings enormously. So the company has the earnings potential of being, you know, we think pretty spectacular. And that's what we're shooting for.

Steven Roth: That adds a big number to our earnings.

Steven Roth: Once <unk> comes online.

Steven Roth: Another $100 million give or take.

Steven Roth: Our earnings that comes online that is brand new.

Steven Roth: If interest rates.

Steven Roth: Settle down into some kind of stabilized number.

Steven Roth: That also.

Steven Roth: Improves earnings enormously so the company has the earnings potential of being.

Steven Roth: We think pretty spectacular and Thats what were shooting for so we're looking at it.

John P. Kim: So we're looking at it, not on a one month, one quarter basis; we're looking at what the company's earning power would be, pick a number, two, three years out. And we are extremely excited about that. Thank you. The next question is from John Kim with BMO Capital Markets. Please go ahead.

Steven Roth: One month of a linked quarter basis, we're looking at what the company's earning power would be pick a number two or three years out and we are extremely excited about that.

Michael J. Franco: Thank you. Michael, in your prepared remarks, you talked about the tech sector coming back to the market in Manhattan and also referenced retailers potentially looking to purchase their flagship stores, similar to Prada. Is your commentary more of a market commentary? Or do you see Vornado involved in either one of those two? I mean, look, I think it's I think it's both, John.

John P. Kim: Thank you. The next question is from John Kim with BMO capital markets. Please go ahead.

Michael J. Franco: Yes.

Michael J. Franco: Thank you Michael in your prepared remarks, you talked about tech sector coming back to the market in Manhattan, and also referenced retailers potentially looking to purchase there.

Michael J. Franco: That's historic.

Speaker Change: Got it.

Michael J. Franco: Is your commentary more of a market commentary or do you see for NATO involved.

Michael J. Franco: Either one of those two.

Michael J. Franco: I mean, we've got, you know, we've got some of the best product in town in both categories. I think we've done more tech leasing than any other landlord in the city. We have all the big four, you know, in our portfolio. So we maintain, you know, an active dialogue with all those players.

Michael J. Franco: Look I think it's I think it's both John I mean, we've got.

Michael J. Franco: <unk> got some of the best product and found in both categories.

Michael J. Franco: I think we've done more tech leasing than any other landlord in the city.

Michael J. Franco: Have all the big four in our portfolio. So we maintain an active dialogue with all of those players so.

Michael J. Franco: So I would expect that if the tech sector becomes active again, we're going to get more than our fair share. And, you know, in terms of the pipeline, I think the tech sector was, you know, pretty dormant for the last 18-24 months, either on pause or, in some cases, downsizing space. And, you know, we've seen in the last 90 days a real pickup there. It started small, and now we're seeing some more significant requirements.

Michael J. Franco: I would expect that if the tech sector becomes active again.

Michael J. Franco: We're going to get more than our fair share.

Michael J. Franco: And in.

Michael J. Franco: In terms of the pipeline.

Michael J. Franco: I think the tech sector was pretty dormant for the last.

Michael J. Franco: 18 to 24 months.

Michael J. Franco: Pause or in some cases downsizing space and.

Michael J. Franco: We've seen in the last 90 days a real pickup there started small and now we're seeing some more significant requirement. So we.

Michael J. Franco: So, we do think some of those will convert to activity, and we're, you know, quite optimistic about that sector turning on again. You know, on the retail side, I think you know better than anybody, given the discussions we've had in the past, we own, you know, the best retail in the city. So, if you want to be on 5th Avenue, particularly given the shrinking amount of availability, the... [inaudible] and Prada and Caring's announcements obviously garner worldwide attention and I think make every other retailer question, what are we doing, right?

Michael J. Franco: We do think some of those will convert to activity and were quite optimistic about that sector turning on again on the retail side.

Michael J. Franco: I think you know better than anybody given the discussions we've had in the past.

Michael J. Franco: We own.

Michael J. Franco: The best retail in the city.

Michael J. Franco: So if you want to be on fifth Avenue, particularly given the shrinking amount of availability.

Michael J. Franco: It.

Michael J. Franco: Can be leased.

Michael J. Franco: We're the first second third call times square, we on both sides on both sides. So activity level has picked up significantly in both those submarkets. The animal spirits are alive and well amongst retailers. They see that Manhattan is driving again their sales numbers reflect that.

Michael J. Franco: And.

Michael J. Franco: Prada and caring announcements.

Michael J. Franco: Obviously.

Michael J. Franco: Garner worldwide attention and.

Michael J. Franco: I think like every other retailer question what are we doing right. Both from a leasing standpoint buying standpoint has obviously been other transactions rumored but.

Michael J. Franco: Both from a leasing standpoint and a buying standpoint. There's obviously been other transactions rumored, but [inaudible] Okay, and my follow-up question is on 350 Park Avenue, the leasing environment, and the interest rate environment, or I doubt if it's changed a lot in the past year and a half since you struck the deal. What is the likelihood that either Citadel or you will exercise your option at this point? There's always a possibility, but right now, we're on full steam ahead to build a world-class headquarters for citizens.

Michael J. Franco: I don't think <unk> seen the last of the retailer purchases and obviously given our portfolio.

Michael J. Franco: We are.

Michael J. Franco: We're fertile ground so.

Michael J. Franco: We expect to be in the mix there.

Michael J. Franco: Okay and my follow up is on 350 Park Avenue.

Michael J. Franco: This environment and an instrument interest rate environments or the outlook has changed a lot in the past.

Michael J. Franco: Last year and a half.

Michael J. Franco: Thank you struck a deal what is the likelihood that you stood at all or you exercise your option at this point.

Michael J. Franco: There's always a likelihood but right now we're at full steam ahead to build.

Michael J. Franco: <unk> class headquarters facility.

Michael J. Franco: We've started the public approval process, and it's a couple of years process to design the building, and complete the drawing. And obviously, we will reappraise the financial markets at that time. Citadel's growing. They want the space.

Michael J. Franco: We started the public approval process and.

Michael J. Franco: It's a couple of year process to design the building complete the drawings.

Michael J. Franco: Sure.

Michael J. Franco: Through the public approval process.

Michael J. Franco: And obviously, we will reappraise the financial markets at that time digital is growing.

Michael J. Franco: Want the space they are committed to the deal as are we.

Michael J. Franco: They're committed to the deal as is. And can you confirm that the starting rent for Citadel is reported at $35 million? No, sir, we can't.

Michael J. Franco: And can you confirm.

Michael J. Franco: The starting rent for citadel's reported that $35 million.

Speaker Change: No Sir we can.

Michael J. Franco: It's a formulaic rent, which depends upon what the cost of financing is at the time that we at the time we go into the financial, Gotcha. Okay. Thank you. Thank you. The next question is from Michael Griffin with Citi. Please go ahead.

Michael J. Franco: It's a formulaic rent.

Michael J. Franco: Heads up on what the.

Michael J. Franco: What the cost of financing is at the time that we bought.

Michael J. Franco: At the time, we go into the financing market.

Michael Anderson Griffin: Got you okay. Thank you.

Michael J. Franco: Great, thanks. Um, Michael, I wanted to go back to your comments around concessions being stubbornly high. You know, I imagine that's the case for the market overall. But if you look at the maybe better-off submarkets like Park Avenue or even some of your properties, you know, on the west side, the Penn District, how are you seeing concessions there? You know, given that the environment seems to have improved? Glen, do you want to hit that?

Michael J. Franco: Thank you. The next question is from Michael Griffin with Citi. Please go ahead.

Glen: Great. Thanks, Michael I wanted to go back to your comments around concessions being stubbornly high and I imagine that's the case for the market overall, but if you look at maybe better off Submarkets like Park Avenue or even some of your properties.

Speaker Change: On the West side, the Penn District, how are you seeing concession there.

Michael J. Franco: Given that the environment seems to have improved.

Speaker Change: But anyway I hit that.

Glen: Yes sure.

Glen J. Weiss: Yeah. Yeah, sure. Hi, it's Glen.

Michael J. Franco: Hi, Glenn I would tell you no matter the sub market on new leases.

Glen J. Weiss: And I would tell you, no matter the sub-market on new leases, TI's are somewhere between 140 and 150 a foot, and free rent is somewhere in the 13, 15 month range. I think as it relates to specific submarkets, it's really about the rent. So in some of the submarkets, we are seeing an uptick in rent where supply is tightening, as you would expect. Gotcha. That's helpful. And then maybe just some color on lease expirations this year. Looks like there's a big one.

Glen J. Weiss: Ti there is somewhere between $1 $41 50, a foot.

Glen J. Weiss: And free rent is somewhere in the 13 to 15 month range.

Glen J. Weiss: As it relates to sub market specific and told me about the rent.

Glen J. Weiss: So when some of the sub markets, we are seeing an uptick in rent.

Glen J. Weiss: Our supply is tightening as you would expect.

Glen J. Weiss: Got you that's helpful. And then maybe just some color on lease explorations. This year. It looks like there is a big one in the second quarter.

Glen J. Weiss: In the second quarter, about 3% of the overall rent. The space rent there right now seems pretty high. What's the likelihood of renewing or backfilling the space? Or is this one of those known move outs that you described earlier?

Glen J. Weiss: 3% of the overall rent.

Glen J. Weiss: Strength, there right now seems pretty high what's the likelihood of renewing or back filling that space or is it those known move outs that you described earlier.

Glen J. Weiss: It's the meta space that comes back to us in June that we spoke about on our last earnings call. That's the lease you're speaking about. And in terms of the potential for backfilling or renewing the space, what's demand looking like for it? We have action on this space; that's part of our pipeline that we've described. We feel very good about the asset and very good about backfilling that space. It's the most unique asset in Midtown South, and we feel good about it. Great, that's it for me. Thanks for the time.

Glen J. Weiss: Yes.

Glen J. Weiss: The meta space.

Glen J. Weiss: Oh that comes back to us in June that we spoke about on our last earnings call.

Glen J. Weiss: What's the lease you're preparing to.

Glen J. Weiss: Okay.

Glen J. Weiss: And in terms of potential of back billing renewing the space, what's demand looking like on it.

Glen J. Weiss: We have action on this space.

Glen J. Weiss: Just part of our pipeline that we described we feel very good about the asset and very good about back filling that space.

Glen J. Weiss: The most unique asset of Midtown South we feel good about it.

Speaker Change: Great. That's it for me thanks for the time.

Floris Gerbrand Hendrik Van Dijkum: Thank you. The next question is from Floris Van Dijkum with Compass Point. Please go ahead.

Floris Gerbrand Hendrik Van Dijkum: Thank you and next question is Floris van <unk> with Compass point. Please go ahead.

Michael J. Franco: Thanks for taking my question. Rather than get into the details on the leasing, which is obviously very important as well, but I wanted to ask a question on sort of the market and get Steve and Michael's view on the opportunity that's going to be representing or presenting itself, I think, when, you know, the $200 billion of office loans mature over the next several years. you know, actually in 24 hours, as well as the other $100 billion next year.

Speaker Change: Alright, Thanks for taking my question.

Speaker Change: Rather than get into the details on the on the leasing, which obviously is very important as well, but I wanted to ask a question on <unk>.

Michael J. Franco: What are the market and and.

Speaker Change: And get.

Michael J. Franco: Michael's view.

Michael J. Franco: On.

Michael J. Franco: But the opportunity.

Michael J. Franco: That's going to be presenting itself I think when the.

Michael J. Franco: The 200 billion.

Michael J. Franco: Office loans mature over the next actually in 'twenty four as well as the other 100 billion next year.

Michael J. Franco: What do you see happening with, you know, some of those are obviously unlikely to be refinanced. And so where do you see Vornado in that situation? Can you play a role in maybe buying some assets, and maybe does that help cause some of the bullishness in Steve's tone on the outlook for the next two years? Good morning, Floris.

Speaker Change: What do you see happening.

Michael J. Franco: With.

Michael J. Franco: Some of those obviously are unlikely to be.

Michael J. Franco: It could be refinanced and so where do you see.

Michael J. Franco: Tornado in that situation do you have can you play a role in maybe buying some assets and maybe does that help.

Michael J. Franco:

Michael J. Franco: Cause some of the bullishness in Keystone on the outlook for the for the next two years.

Michael J. Franco: So, like, I think in terms of the debt rolling over, which is significant over the next few years, as we all know, the capital markets are not there to support, you know, refinancing, the vast majority. And so I think, you know, what happens there is going to take, you know, one of a few forms, depending on the quality asset, the sponsor, the asset, and what its future looks like. And we've seen some examples where, you know, the older obsolete buildings where debt rolls, don't have a future as an office building, or certainly with that sponsor and the lenders have taken it back, or there's been a consensual sale of some of those assets. Something like 1740 Broadway would be a recent example.

Floris: Good morning Floris.

Floris: So like I think in terms of the debt rolling over which is significant over the next few years as we all know.

Michael J. Franco: The capital markets are not there to support our refinancing the vast majority of that.

Michael J. Franco: And so I think what happens there is going to take one of our few farms.

Michael J. Franco: Depends on the quality asset the sponsor of the asset and what its future looks like and we've seen some examples where.

Michael J. Franco: The older obsolete buildings, where that rolls.

Michael J. Franco: It doesn't have a future as an office building or certainly with that sponsor and the lenders have taken it back or there has been a consensual.

Michael J. Franco: Sale of some of those assets something like a $17 40 Broadway would be a recent example, so I think we'll see a fair amount of that on.

Michael J. Franco: So I think we'll see a fair amount of that on some of those older buildings. Then there's a category where it's just over leveraged, where there is a future. And again, I think the lender will assess whether the sponsor has the wherewithal and the capability to, you know, either re-tenant or support the asset, and in some cases they will, in many cases they won't.

Michael J. Franco: Some of those older buildings.

Michael J. Franco: Then there is a category, where there's just over leverage where there is a future and again I think the lender will assess.

Michael J. Franco: Whether the sponsor has the wherewithal.

Michael J. Franco: And the capability too.

Michael J. Franco: Either re tenant or support the asset and in some cases, they will in many cases they won't.

Michael J. Franco: You know, we're talking to the lenders about that, and I think they'll look for solutions, right? I think lenders, in general, know that taking back assets and operating them, certainly in office space, is not a winning strategy. Value deteriorates fairly quickly. Tenants don't want to go into those.

Michael J. Franco: We're talking to lenders about that and I think they'll look for solutions right I think.

Michael J. Franco: Lenders in general know that taking back assets and operating them certainly in the office space is not a winning strategy value deteriorate fairly quickly Dennis don't want to go into those buildings. So we do think theres going to be opportunity to work with existing lenders.

Michael J. Franco: So we do think there's going to be an opportunity to work with existing lenders. VA Solutions Provider. You know, we have a leading operating platform. We expect to deploy capital there. And I think it could be in either one of those buckets.

Michael J. Franco: Solutions provider, we are a leading operating platform, we expect to deploy capital there.

Michael J. Franco: It could be buildings that are, you know, that with our capabilities can be leased back, stabilized, value could be created, or it could be assets that can be repurposed from, you know, office to residential, potentially. So the answer is we are actively looking. We expect to play on that, and you know, I think we're still at the beginning stage. And I know it's early in terms of what transactions would look like, but presumably, for you to utilize part of your significant cash awards, which again sets you apart from some of your peers. You would have to have, I would imagine, returns that are in excess of the 7% plus financing rates that you would have to pay today if you were to.

Michael J. Franco: And I think it could be in either one of those buckets. It could be buildings that are.

Michael J. Franco: With our capabilities can be leased.

Michael J. Franco: Leaseback up stabilized value could be created or it could be assets that can be repurposed from office to residential potentially so the answer is we are actively looking we expect to play on that and.

Michael J. Franco: I think we're still at the beginning stages.

Michael J. Franco: And I know, it's early in terms of what transactions would look like but presumably.

Michael J. Franco: For you too.

Michael J. Franco: Utilized part of your significant cash awards, which again set you apart from some of your peers.

Michael J. Franco: You would have to have I would imagine returns that are in excess of the 7% plus.

Michael J. Franco: Nancy rates that you would have to pay today, if you were to.

Michael J. Franco: Theoretically, get assets. Is that the right way to think about it? You're returning? Yeah, I mean, look, I think our objective of deploying cash is not to invest in, you know, real estate is going to generate core returns, right? And this is an opportunity that is, by the way, not for the faint of heart, right? I mean, you're taking risk, and you want to get rewarded for that.

Michael J. Franco: E radically get assets is that the right way to think about it you're.

Michael J. Franco: So I think probably more 8% plus.

Michael J. Franco: Yeah, I mean look I think with our objective of deploying cash is not.

Michael J. Franco: Best in.

Michael J. Franco: Real estate is going to generate core return right and this is an opportunity that is.

Michael J. Franco: Probably not for the fan of heart right. I mean, you are taking risk.

Michael J. Franco: And you want to get rewarded for that so the returns need to be.

Michael J. Franco: So, you know, the returns need to be, you know, attractive. So, yes, I think the stabilized yields depend a little bit on the nature of the asset and where you think the ultimate cap rate settled out for a particular asset, but no question that the required yield is in the neighborhood. Great, maybe one follow-up in terms of your retail segment, again, particularly your Fifth Avenue, which is, again, as you highlight, unique.

Michael J. Franco: Attractive so yes, I think the stabilized yields I think it depends a little bit on the nature of the asset and where you think ultimate cap rates settle out for particular assets, but.

Michael J. Franco: No question that the required yield.

Michael J. Franco: In the neighborhood that you mentioned.

Michael J. Franco: Great.

Speaker Change: One follow up in terms of.

Michael J. Franco: Your retail segment again, particularly your fifth Avenue, which is again as you highlight.

Michael J. Franco: <unk>.

Michael J. Franco: Where do you think market rents are today? And I know you have, 92%, I think, is your occupancy rate in your Times Square JV, I'm sorry, your Fifth Avenue and Times Square JV, but if you were to sign rent today on Fifth Avenue, where would you say market rents are for that space? You know, I think it's, it's, um.., there's been a couple transactions that we that we signed probably I guess last year you know and now it indicate that you know rents at the time were in the mid to high $2,000 per square foot all right now maybe there was a tick or a bottom in the 1,000 1,500 neighborhoods but I think realistically it's back into that mid twos maybe even low threes depending on the situation I think for luxury given there's such a scarcity it could be higher so you know it's Fifth Avenue it's you know it's hard to paint a broad brush it's a very scarce asset class and for the right situation you know you can command rents that you know not too far off the peak for the wrong asset you know with retailers don't think it configures well you know you can't achieve that so like I think rents have recovered quite a bit they're they're continuing to recover obviously Times Square lease we signed recently I think is evidence of that and so you know we expect that to continue, Thank you. The next question comes from Dylan Burzinski with Green Street. Please go ahead.

Speaker Change: Where do you think market rents are today and I know you have 92% I think is your <unk>.

Dylan Robert Burzinski: Occupancy rate in your times square JV, sorry, your fifth Avenue and times square JV, but if you were to sign rent today.

Dylan Robert Burzinski: On fifth Avenue, where would you say market rents are for that for that space.

Dylan Robert Burzinski: I think it is.

Dylan Robert Burzinski: There's been a couple of transactions that we signed.

Dylan Robert Burzinski: Probably I guess last year.

Dylan Robert Burzinski: And now it indicate that in our rents at the time were in the mid to high $2000 per square foot Alright, now maybe there was a tick or a bond and 1500 neighborhood, but I think realistically it's back into that mid twos, maybe even low threes depending on the.

Dylan Robert Burzinski: Situation and I think for luxury given there is such a scarcity it could be higher so at fifth Avenue.

Dylan Robert Burzinski: Hard to paint a broad brush, it's a very scarce asset class.

Dylan Robert Burzinski: And for the right situation you can command rents that.

Dylan Robert Burzinski: Not too far off the peak.

Dylan Robert Burzinski: For the wrong asset with retailers don't think are configured well you can achieve that so look I think rents have recovered quite a bit they're continuing to recover obviously the time square lease we signed recently I think is evidence of that.

Dylan Robert Burzinski: And so.

Dylan Robert Burzinski: We expect that to continue.

Dylan Robert Burzinski: Thank you. The next question comes from Dillon Brzezinski with Green Street. Please go ahead.

Dylan Robert Burzinski: Hi guys, thanks for taking the question. I guess just sort of going back to the acquisition point, is there any desire to, given the lack of debt financing available out there, to sort of go into it from a debt perspective and possibly from a loan-to-own? Or is this purely, as you guys are looking at things, more so looking at things on the equity side today? The easiest way to buy a building is through debt.

Dylan Robert Burzinski: Hi, guys. Thanks for taking the question I guess, just sort of going back to the acquisitions point is there any desire to given the lack of debt financing available out there to sort of go into it from a debt perspective, and possibly from a loan to own or is this purely as you guys.

Dylan Robert Burzinski: Looking at things.

Dylan Robert Burzinski: So looking at things on the equity side today.

Dylan Robert Burzinski: The easiest way to buy a building is through the debt.

Unknown Executive: So that's obviously target number one. Got it. And then as you guys think about opportunities, is this purely, are you guys purely focused on office, or are there other retail opportunities that you guys think would also make sense? We're open to buying office space, obviously, and retail space, obviously. So those are the two areas that we specialize in. And then I guess just a broader capital allocation question. I know in the past, you guys have floated, you know, opportunistically selling assets. I guess, is that still on the table, or are you guys now more focused on sort of going out and acquiring assets and growing the company on an external growth basis? We have to.

Dylan Robert Burzinski: So thats, obviously target number one.

Unknown Executive: Got it and then as you guys think about opportunities.

Unknown Executive: Opportunities is this purely a guess purely focused on office or are there other retail opportunities that you guys think would also makes sense.

Unknown Executive: We are open to buy office, obviously and retail obviously.

Unknown Executive: So those are the two areas that we specialize in.

Unknown Executive: And then I guess, just a broader capital allocation question I know in the past you guys have floated opportunistically.

Unknown Executive: Opportunistically selling an asset.

Unknown Executive: I guess is that still on the table or are you guys now more focused on sort of going out and acquiring assets in growing the company on an external growth basis.

Unknown Executive: We have.

Unknown Executive: We have, I think, basically four fairly significant transactions that are in various stages of conversation right now as well. Thank you very much. The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, good morning.

Unknown Executive: We have I think basically for fairly significant.

Alexander David Goldfarb: Scale transactions that are in various stages of conversations right now as we speak.

Unknown Executive: Thank you very much. The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Unknown Executive: Hey.

Alexander David Goldfarb: Good morning.

Alexander David Goldfarb: And thank you. So, I have two questions here. And first, Michael, good to hear about the rebound in street retail rents. That's really amazing. What a journey it's been.

Alexander David Goldfarb: So two.

Alexander David Goldfarb: Two questions here first.

Alexander David Goldfarb: Good to hear about the rebound in street retail rents.

Alexander David Goldfarb: Really amazing what a journey it's been.

Alexander David Goldfarb: So the first question is.

Alexander David Goldfarb: Steve on the Bloomberg lease so when we read the Q the <unk>.

Alexander David Goldfarb: <unk> cited and there are basically a sliding scale better negotiation in the future. We'll address so it's not as though we take that one Ryan and then it slides up to the to the next.

Steven Roth: So the first question is, Steve, on the Bloomberg lease. So when we read the queue, the rents that are cited there are basically a sliding scale that a negotiation in the future will address. So it's not as though we take one rent and then it slides up to the next. It's, it's that's the range that the negotiation will be in. Alex, you published something that said there was a 25% discount on the rent. I don't know how you got that math, and it's incorrect.

Alexander David Goldfarb: That's the range that the negotiation will be in.

Steven Roth: Alex.

Steven Roth: Published something that there was a 25% discount on the rent.

Steven Roth: I don't know how you got that.

Speaker Change: Mask and Thats incorrect so the way.

Steven Roth: So the way the deal is structured is... The basic rent on that building is basically net. There's a very small portion, maybe 50,000 feet out of the 950,000 feet that's gross. But 900,000 feet of it is net. So let's call it net.

Steven Roth: Pardon me the way the deal is structured is.

Steven Roth: Basic rent on that building is basically net.

Steven Roth: Theres, a very small portion maybe 50000 feet out of the 950000 feet that growth.

Steven Roth: But 901000 feet of his net so let's call it a net lease.

Steven Roth: Belize has a bump between now and 2029. And so when we get to the end of 2029, where we basically start, The Net Rent is... $98 a foot, which grosses up to well into the 150s of dollars a foot. So that's the starting point. Now, we establish, first of all, we recognize that we are renewing and extending a lease, five years before the lease matures, before the lease expires. And so you have to take the effect of the future, the unknown future, and contingency. So what we did there was we established what the tenant confessions, DI's, and leasing commissions were. Those are shows.

Steven Roth: The lease.

Steven Roth: Has a bump.

Steven Roth: Between now and 2029 and <unk>.

Steven Roth: When we get to the end of 'twenty 'twenty line, where we basically start.

Steven Roth: Net rent is.

Steven Roth: $98, a foot, which grosses up to well into the $150 a foot.

Steven Roth: So that's the starting point now.

Steven Roth: Establishing first of all.

Steven Roth: Recognize that we are renewing and extending a lease.

Steven Roth: Five years before the mature before the lease expired.

Steven Roth: And so.

Steven Roth: You have to take.

Steven Roth: The future is unknown future contingency. So what we did there was we established what the.

Steven Roth: Session Ti's and leasing commissions for.

Steven Roth: Those are frozen.

Steven Roth: The starting rent is frozen, and then from there, there is a market-based appraisal as to what the proper market rate would be if we did the rule at the then expiry of the lease in 2029, taking into account the already established penitent confession. But the catch is, that it can't be more than 10% more than the $98 a foot net, or 10% less.

Steven Roth: The starting.

Steven Roth: Red is frozen and then from there there is a market space.

Steven Roth: Appraisal as to what the proper market rate would be.

Steven Roth: If we did the key available than expiry of the lease in 2029, taking into account the already established.

Steven Roth: Sure.

Steven Roth: But the color is that.

Steven Roth: That can't be more than 10% more than the $98 a foot or 10% less so we have certain things.

Steven Roth: So we have certainty on the, on the, bottom as to what the rent would be. And it will be established as a fair rent in the Zen market, which we think was a very clever, by the way, old tenant landlord think was a fair deal and a clever way of handling the. There's nothing in this deal whatsoever that contemplates any reduction in the rent. It will be a arbitration vote on the market. Steve, thank you. And I apologize for getting that incorrect. That was my apology.

Steven Roth: Sure.

Steven Roth: On the bottom as to what the rent would be and it will be established as a fair rent in the debt market, which we think was a very clever by the way both tenant and landlord think was a fair deal at a level way of handling the future is.

Steven Roth: Nothing in this deal whatsoever that contemplates any reduction in the rate.

Steven Roth: <unk> on the market.

Speaker Change: Steve Thank you and I apologize for getting that incorrect that was my apologies. So youre a clarification is that the rent.

Steven Roth: So your clarification is that the rent that cited Wait a second, I accept your apology. Thank you. That's very generous. Well, I've made an exception for it.

Speaker Change: Let me say that I accept your apology, it's very generous.

Steven Roth: So basically, the way that rent is characterized now is that 29 million a quarter is characterized as gross, whereas the rents that are in the queue for the terms are now net. And it sounds like that's the confusion that I had on my end. Is that correct? I won't get into why you were confused; I'm just happy that you admit that you were confused.

Speaker Change: I've made so basically the way the rent is characterize now is the $29 million a quarter is characterized as gross whereas the rents that are in the queue for the terms are now net and it sounds like that's the confusion that I had on my end is that correct.

Steven Roth: I won't get into why you were confused I'm just happy to admit that you.

Steven Roth: Working fleet.

Steven Roth: Okay, great. The next question is on the rents for this year in response to Steve Sakwa's question, Michael. You mentioned that originally it was down $0.25 to $0.30. Now it seems to be down $0.55 based on further lease move-outs, what have you. Was there some stuff that fell out of bed that was unexpected, or did I not hear correctly?

Steven Roth: Okay.

Speaker Change: Great. The next question is on the rents for this year to Steve <unk> question. Michael You mentioned that originally there was down 25% to 30 now.

Steven Roth: Now it seems to be down 55.

Steven Roth: Based on further lease move outs, what have you was there some stuff that fell out of bed that was unexpected or what caught or did I not hear correctly I. Just wanted to understand like was there stuff that came up and surprised or what drove what's driving the additional earnings impact this year.

Michael J. Franco: I just want to understand, was there stuff that came up and surprised you, or what's driving the additional earnings impact this year? Yeah, yeah. Maybe a little bit more confusion there, Alex.

Alex: Yes, yes.

Speaker Change: Maybe a little bit more confusion there Alex.

Alex: So thats right Paul.

Michael J. Franco: That's right. On the last call, you know, we talked about it being early in the year. I gave you clarity on the interest reduction because, you know, a lot of that was baked in with hedges that were going to roll off. We knew where those were going to roll off to, and we mentioned that there would be an impact from the known move-outs, right, and cited what those were, but obviously, there are a lot of people moving out, so it wasn't, you know, we didn't quantify what the impact of those numbers were.

Michael J. Franco: On the last call.

Michael J. Franco: <unk>.

Michael J. Franco: We talked about it it was early in the year I gave clarity on the interest reduction.

Michael J. Franco: Because a lot of that was baked in with hedges that were going to roll off we knew those where there is going to roll off and we mentioned that there would be an impact from the known move outs right and cited those were but.

Michael J. Franco: Obviously, theres a lot moving out stones it was.

Michael J. Franco: We didn't quantify what the impact of those numbers were.

Michael J. Franco: We're quantifying that for everybody's benefit on this call, so I don't think, no surprises, right, just trying to put a little more precision on it now that we're in May as opposed to where we were, and, you know, look, there's going to be more that moves around, and that number, you know, could be less, but I think in terms of where we sit today, we have a known set between, Obviously, we've talked about, you know, releasing a lot of that, and a lot of those deals have been announced, but just trying to get more precision on just the general statement we made last week. Thank you. The next question is from Michael Lewis with Truist Securities. Please go ahead.

Michael Robert Lewis: We're quantifying that for everybody's benefit on this fall.

Michael Robert Lewis: So I don't think no surprises right I'm, just trying to put a little more precision on it now that we're in may as opposed to where we were and there's going to be more of that moves around and that number could be less but I think in terms of.

Michael Robert Lewis: Where we sit today, we have we have a known set between particularly 12 90 $772 80.

Michael Robert Lewis: The drive the bulk of it that obviously, we've talked about re leasing a lot of that in all of those deals have been announced but just trying to get more precision to just a general statement, we made last quarter.

Michael Robert Lewis: Thank you.

Michael J. Franco: Question is from Michael Lewis with <unk> Securities. Please go ahead.

Michael Robert Lewis: Great, thank you. I'm just going to follow up on that question about the release activity on some of the known move-outs. So I could probably triangulate an occupancy rate on that 25 percent drag, but could you share, you know, maybe just share how much square footage is related to known move-outs this year and how much of that square footage you've already addressed? And if you want to take that, you want to take that. The bulk of the number is at 280 Park, 770 Broadway, and 1290 Avenue in America, at 1290 and 280.

Michael Robert Lewis: Great. Thank you I am just kind of follow up on that question about the re leasing activity on some of the known move outs.

Speaker Change: So I could probably triangulate.

Michael Robert Lewis: And occupancy rate on that 25 drag.

Michael Robert Lewis: But could you share maybe just share how much square footage is related to the known move outs this year and how much of that square footage you've already addressed.

Michael Robert Lewis: Yeah.

Speaker Change: And you want to take that aren't Tiger.

Speaker Change: So the bulk of the.

Michael Robert Lewis: The number is that a 280 park.

Michael Robert Lewis: Broadway and 12 nine do you have in the Americas.

Unknown Executive: We've taken care of, as Michael said in his remarks, 51% of the roll, so call it 500,000 feet out of a million feet. And as we said, it's 770 Broadway; we have metarolling in June, along with the current vacancy, we have pipeline activity in that space. So, that's how we're, you know, approaching the big ones that are in that occupancy number. So, you know, as we take into account our pipeline of deals, as we take into account our expirations going through 24, we may see more of a dip in occupancy, and as we complete transactions during the next, you know, six to nine months, we expect that occupancy to then climb back as we get into 2025, gets down to 77.6% in the most recent quarter.

Speaker Change: At 12, 90, and $2 80, we've taken care of.

Unknown Executive: As Michael said in his remarks, 51% of their roles so call it 500000 of a million feet.

Unknown Executive: And as we said at 770 Broadway.

Unknown Executive: We have met a rolling in June.

Unknown Executive: Along with the current vacancy we have pipeline activity on that space.

Unknown Executive: So that's how we're approaching.

Unknown Executive: The big ones that are in that occupancy number.

Unknown Executive: Taking into account our pipeline of deal.

Unknown Executive: As we take into account our exploration going through 'twenty four.

Unknown Executive: We may see more of a dip in occupancy and as we complete transactions during the next.

Unknown Executive: The nine months.

Unknown Executive: We expect that occupancy climbed back as we get into 2025.

Speaker Change: Okay, Great. Thanks, and then my second question is about the Mark so.

Unknown Executive: Occupancy dipped down to 77, 6% in the most recent quarter.

Unknown Executive: You know, pre-pandemic, that was always, you know, 95 to 100. Could you maybe talk a little bit about kind of the roadmap there and, you know, what you think stabilized occupancy or, you know, given that there's obviously some volatility at that asset, what might be a stabilized kind of revenue figure might look like for the market? So, I'll start. Glenn, you jump in.

Unknown Executive: Pre pandemic that was always 95 to 100 could you maybe talk a little bit about kind of the roadmap there.

Unknown Executive: What do you think stabilized occupancy or or given that theres, obviously, some volatility in that asset what maybe like a stabilized kind of revenue figure might look like.

Unknown Executive: For the market.

Glenn: So I'll start and then ill jump in.

Unknown Executive: Like the Chicago market is obviously... and Michael S. We are in a very challenging time. It is probably one of the more challenging times in the country.

Glenn: The Chicago market is obviously.

Unknown Executive: Challenging right now probably one of the more challenging ones.

Unknown Executive: Countries.

Unknown Executive: But we do have decent activity on the asset I would say that.

Unknown Executive: Alluding to some of the prior question.

Unknown Executive: But we do have decent activity on the asset. I would say, alluding to some of the prior questions, there is quite a bit of distress in the Chicago office. Many landlords do not have the wherewithal to lease their assets, given the debt situation there.

Michael J. Franco: Quite a bit of distress in Chicago office, many landlords do not have the.

Unknown Executive: Sure.

Unknown Executive: You don't have the wherewithal to lease our assets given the debt situation. There we have an asset that has no debt on it and so I think the.

Unknown Executive: We have an asset that has no debt on it, and so I think the sponsorship, and the strength is well known by the brokers and the tenants, and I think that's helping us. We just finished what we call Mark 2.0, which is the second stage of amenities that we've put in, fitness, conferencing, et cetera, and again, the reaction has been positive. So the market's tough, you know, cannot dismiss that, but you know, I think we're seeing more than our fair share there, and I think it's going to take, you know, probably three years to get back to stabilized occupancy, realistically, maybe it's two, but I think when the income, Cash In a Lie Basis. So there's a fair amount of growth to come there. But, you know, the market is, as I said, challenging.

Unknown Executive: <unk> shipped the strength is as.

Unknown Executive: As well known by the brokers and tenants and I think that's helping us.

Unknown Executive: We just finished what we call Mark to point, which is the second stage of amenities that we've put in.

Unknown Executive: Fitness conferencing et cetera.

Unknown Executive: And again the reaction has been positive so the market's tough.

Unknown Executive: Yeah.

Unknown Executive: Cannot.

Unknown Executive: Dismissed that but.

Unknown Executive: We're seeing more than our fair share there and I think thats going to take.

Unknown Executive: Probably three years to get back to stabilized occupancy realized maybe it's too, but I think when the income fully comes online probably in the neighborhood and our objective is to get it back into the 90% occupied at 95 plus percent.

Unknown Executive: And get the income back up to that $90 million to $100 million cash.

Unknown Executive: Cash NOI basis, so theres, a fair amount of growth to come there.

Unknown Executive: But.

Unknown Executive: The market is as I said challenging right now.

Unknown Attendee: Thank you. The next question is from Caitlin Burrows with Goldman Sachs. Please go ahead. Hi, this is Julien on behalf of Caitlin.

Unknown Executive: Thank you. The next question is from Caitlin Burrows with Goldman Sachs. Please go ahead.

Julien Blouin: Thanks for taking the question. One quick one. Can you comment on whether the leasing spreads in the quarter benefited from Penn District leasing and what that leasing spread might have been, X-pen leasing? Yeah, I think the answer is that, you know, the spread, Penn 2 was, Major League Soccer was the big lease in this quarter, you know, that's a new lease, first generation, so it didn't affect the spread.

Julien Blouin: Hi, This is Julian on for Caitlin. Thanks for thanks for taking the question. One quick one can you comment on whether the leasing spreads in the quarter.

Julien Blouin: Benefited from the Penn District leasing and what.

Julien Blouin: That leasing spread might've been at Penn leases.

Julien Blouin: Yeah.

Julien Blouin: Yes.

Speaker Change: Yes, I think I think the answer is that.

Julien Blouin: <unk>.

Julien Blouin: Spreads pen two major league soccer with the big lease in this quarter.

Julien Blouin: New lease FERC generation, so didn't didn't affect the spreads.

Speaker Change: Okay good to know.

Unknown Executive: Okay, good to know. And then on the debt covenant, it looked like interest coverage and fixed charge coverage tied the bid in the quarter. I know longer term, the metric is gonna benefit from the occupancy gain you talked about from Penn District, NOI, and it also sounds like you have some sales underway, but can you give us a sense of maybe the trajectory over the coming quarters, given the fact that I know there's that... Big Swap Exploration at 555 California.

Julien Blouin: And then.

Julien Blouin: One on the debt covenant it looked like interest coverage and fixed charge coverage tightened a bit in the quarter I know longer term metric is going to benefit from the occupancy gains we've talked about from Penn District NOI.

Unknown Executive: And it also sounds like you have some sales underway, but can you give us a sense of maybe the trajectory over the coming quarters, given the fact that I know theres that sort of big swap exploration at <unk>.

Unknown Executive: <unk> hundred 55 Cal.

Unknown Executive: Yeah, no, you're you're accurate. You know, I think the impact this quarter was predominantly the big item was the swap increase on 1011 that we were coming up with. I think, if I go from memory, I think it was 17 basis points. You know, too bad that couldn't go forever. But, you know, that was the material item this quarter. A couple other things as well, but that was a big one.

Speaker Change: Yeah, no youre accurate.

Unknown Executive: I think the impact this quarter was predominantly the.

Unknown Executive: The big item was the swap.

Unknown Executive: The increase in <unk>.

Unknown Executive: Even if we are coming up I think from recollection. It was 17 basis points.

Unknown Executive: Too bad that couldn't go forever, but.

Unknown Executive: That was the material item this quarter, a couple of other things as well, but that was a big one.

Unknown Executive: You know, next quarter, second quarter, if you're accurate, 5-5-5, you know, we put in place another swap that will kick in, you know, an increase. You know, as we look forward, we continue to have sufficient cushion, you know, in our covenant. The fixed charge will tighten up, you know, over the next couple of quarters, but we still have an efficient buffer there. And then as the income comes online from some of these leases, you know, that number will grow again, but it will tighten a little bit based on the 555 swap rate. Thank you. The next question is from Nick Yulico with Scotiabank. Please go ahead.

Unknown Executive: Next quarter.

Nicholas Philip Yulico: Second quarter, if you will you're accurate.

Nicholas Philip Yulico: We've put in place another swap that would kick in and increase so.

Nicholas Philip Yulico: As we look forward, we continue to have sufficient cushion in our covenant fixed charge will tighten up.

Nicholas Philip Yulico: Over the next couple of quarters, but we still have.

Nicholas Philip Yulico: Efficient buffer there and then as the income comes online from some of these leases.

Nicholas Philip Yulico: That number will grow again, but it will tighten up a little bit based on the 505.

Nicholas Philip Yulico: Swap rate increase.

Nicholas Philip Yulico: Thank you. The next question is from Nick <unk> with <unk>.

Nicholas Philip Yulico: Scotia Bank. Please go ahead.

Nicholas Philip Yulico: Thank you. I just wanted to go back to the $0.2530 impact this year from vacancy. So I guess, you know, that adds up to about $55-60 million of NOI versus your total NOI share last year of $1.14 billion. So it's somewhat like a 5% NOI loss on that math, if that's correct.

Nicholas Philip Yulico: Thank you I just wanted to go back to the.

Nicholas Philip Yulico: The 25 to 30 cents impact this year from vacancy.

Speaker Change: I guess.

Nicholas Philip Yulico: Adds up to about $55 $60 million of NOI versus your total NOI share last year, a 1.1 dollars 4 billion. So it's someone like <unk>.

Nicholas Philip Yulico: 5%.

Nicholas Philip Yulico: NOI loss.

Nicholas Philip Yulico: On that math that's correct.

Unknown Executive: So I guess I'm just wondering, you know, how does that, you know, are there other moving parts here besides? [inaudible] The 5% wine loss number seems a little bit, you know, high relative to what your expiration date is. There may have been one tenant that expired December 31st last year, but like I think, in a nutshell, that's it. You know, I mean, it's pure and simple.

Nicholas Philip Yulico: So I guess I'm, just wondering how does that.

Unknown Executive:

Unknown Executive: Or is there other moving parts here besides just.

Unknown Executive: Some of the vacancy impact you talked about because if I look at your supplement.

Unknown Executive: In the fourth quarter, you had 5%.

Unknown Executive: You ran expiring in New York, and you're obviously not as not all expiring so the 5% NOI loss number seems a little bit high.

Unknown Executive: High relative to what your explorations were this year.

Unknown Executive: And then may be one tenant that expired December 31 last year, but.

Unknown Executive: In a nutshell that's it.

Unknown Executive: It's pure and simple.

Unknown Executive: You know, the vast majority of it is 1290, 6, 280 Park, and 770. [inaudible] And, you know, we're back on those as we discussed, but that's it, you know, and it just occurred at various stages everywhere from December 31st, you know, through probably the last one is, you know, META, which is in the middle of this year. Okay, thanks. And I just want to be clear on, you know, you know, the, the way to think about occupancy and Michael last last quarter, when you're talking about sort of a flattish occupancy this year, does that mean that, you know, by the time we get to the fourth quarter of this year, it's a, you know, sort of a flat year over year occupancy, I'm assuming it's not a sort of average occupancy for the year, that would be flat year over year based on that.

Unknown Executive: The vast majority of it is 12 96 280 park in 2017.

Speaker Change: And you get to that sort of number I mean, there's a little bit of.

Unknown Executive: Positives or negatives, but.

Unknown Executive: Those are the three main drivers so.

Unknown Executive: We just came through a period, where there was some known move outs.

Unknown Executive: And we're back on those as we've discussed but.

Unknown Executive: And then just occurred at various stages everywhere from December 31.

Unknown Executive: Through.

Unknown Executive: Probably the last one is a matter which is in the middle of this year.

Speaker Change: Okay. Thanks, and then I just wanted to be clear on that.

Unknown Executive: The way to think about occupancy and Michael asked last quarter, when you're talking about sort of a flattish.

Unknown Executive: Occupancy this year does that mean that by the time, we get to the fourth quarter of this year, it's a sort of a flat year over year occupancy I'm, assuming it's not a sort of average occupancy for the year that would be flat year over year based on that.

Unknown Executive: Yeah, I would say, you know, by the end of the year. It depends on the timing of certain things. And, you know, I don't know that I can play it with precision, but this will happen, you know, by the fourth quarter, as opposed to January or whatnot.

Michael: Yes, yes, I would say by the end of the year and again it depends on timing of certain things and.

Unknown Executive: I don't know that I can tell you with precision yet this will happen by the fourth quarter as opposed to January whatnot, but we think rough numbers.

Unknown Executive: End up there so but we'll see.

Unknown Executive: Theres still were still.

Unknown Executive: In the first half of the year.

Unknown Executive: We just have to see how it plays out, but I think like occupancy.

Unknown Executive: Down now, it's going to trend down a little bit more given for example, the met a move out in June.

Speaker Change: But we have some other things in the works but.

Speaker Change: I can pick that up so we'll see where it comes out in total I think as we look at frontline.

Unknown Executive: But, you know, we think, you know, rough numbers. [inaudible] that up. So we'll see where it comes out in total. I think as we look at the timeline, it will, you know, it'll [inaudible] Thank you. The next question is a follow-up from Michael Lewis with Truist. Please go ahead. Yeah, thanks. I just have one more.

Michael Robert Lewis: It will.

Michael Robert Lewis: They can increase meaningfully over time, we're going to bring <unk> into the numbers next year, depending on where we are from a leasing standpoint, there that number could bring the average down but obviously, that's sort of an extraneous events being added to the denominator. So we'll evaluate it.

Michael Robert Lewis: As we get closer.

Unknown Executive: Thank you. The next question is a follow up from Michael Lewis with <unk>. Please go ahead.

Michael Robert Lewis: You know, you sold two condo units at 220 Central Park South for about $32 million. Are the remaining four units similar in value, roughly 16 million a unit? I don't know if you have, you know, maybe you have a penthouse left or you have smaller units. I was just wondering about that. No, the remaining four units are smaller, lower. View Impaired, so they're much less bad.

Michael Robert Lewis: Yes. Thanks, I just have one more you're told to condo units at 220 Central Park South.

Michael Robert Lewis: For about $32 million or the remaining four unit similar in value roughly $16 million a unit I don't know if you have maybe you have a penthouse last year you have smaller units I was just wondering about that.

Michael Robert Lewis: No. The remaining four units are smaller lower.

Michael Robert Lewis: View impaired so they're much less valuable.

Unknown Executive: Okay, basically, thank you. That job is basically sold. Perfect. Thank you. The next question is a follow-up from Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker Change: Basically thank you.

Speaker Change: My job is basically sold out.

Alexander David Goldfarb: Perfect. Thanks.

Unknown Executive: Thank you. The next question is a follow up from Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander David Goldfarb: Thank you. Steve, with the new office conversion incentives, does this open a door for you to contemplate either assets from the existing portfolio or perhaps, you know, assets that are, you know, that you've always eyed as would be great for conversion and seem to maybe have a motivated owner who would be willing? It just seems like the incentive package that they passed is pretty lucrative for office landlords to convert. Alex, good morning again.

Alexander David Goldfarb: Thank you Steve.

Alexander David Goldfarb: Steve with the new office to conversion incentives does this open the door for you.

Alexander David Goldfarb: Contemplate.

Alexander David Goldfarb: Either assets from the existing portfolio or perhaps assets that are that.

Alexander David Goldfarb: That <unk> always items would be great for conversion and seem to maybe have a motivated owner who would be willing just seems like the.

Alexander David Goldfarb: The incentive package that they passed is pretty lucrative for us.

Alexander David Goldfarb: S landlords to convert.

Steven Roth: Yes, the answer is yes, of course. So there are a couple of things. First of all, the building that you're going to be converting the target building for somewhere in the neighborhood of some $200 a foot or some $200. So these are really.

Alexander David Goldfarb: Alex.

Alex: Good morning, again, yes, the answer is yes of course.

Alex: So theres a couple of things first of all.

Steven Roth: <unk>.

Steven Roth: Building.

Alex: That you are going to be converting the target building.

Alex: As the price somewhere in the neighborhood of so.

Alex: $200 a foot.

Steven Roth: Yes.

Alex: So these are really.

Steven Roth: Distressed office buildings. They're not, you know, they're distressed office buildings. Let me leave it at that. So the pricing and the economics really don't allow you to pay more, maybe even a pinch more, but probably not.

Alex: Distressed office building.

Steven Roth: Yes.

Steven Roth: First off let me leave it at that.

Steven Roth: So the pricing and the economics really don't allow you to pay.

Steven Roth: More maybe even a <unk>, but probably not.

Steven Roth: So that's step number one. Step number two is that obviously, if those are the economics and those are the target building, these are the B and C buildings in the office market. So when those buildings are taken out of the conventional Office Market, they really don't help the Prime A market because the tenants that we deal with who are interested in A space don't really ever look at that.

Steven Roth: Step number one step number two is is that obviously if those are the economics than those of the target.

Steven Roth: Building.

Steven Roth: These are the B and C buildings in the office market.

Steven Roth: When those buildings are taken out of the conventional.

Steven Roth: Office market.

Steven Roth: <unk> health.

Steven Roth: Prime a market because the tenants that we deal with who are interested in a space built really ever look at that so the answer is that we will be able to as an industry.

Steven Roth: So the answer is that we will be able to, as an industry, convert a decent number of buildings. It will make a dent, not a big dent, but a dent in the residential market and the demand for residential housing, but it'll have a marginal, a marginal... But clearly, we're looking at that; it's an interesting activity, and it's something that we will look at. I'm not 100% sure that the returns on capital are going to be what some people think they are.

Steven Roth: Is it number of buildings.

Steven Roth: It will make a bid on a big debt, but that in the residential market and the demand for residential space.

Steven Roth: It will have a marginal module.

Steven Roth: Effect on the conventional class a office market.

Steven Roth: But clearly we're looking at that.

Steven Roth: Interesting.

Steven Roth: Activity.

Steven Roth: Hey.

Steven Roth: Sure.

Steven Roth: It's something that we will look at I'm not 100% sure that the returns on capital.

Steven Roth: Are going to be what some people think they are but any way we are looking at it pretty aggressively.

Speaker Change: Thank you very much.

Speaker Change: No further questions at this time.

Steven Roth: Yeah.

Steven Roth: But anyway, we are looking at it pretty aggressively. Thank you very much. There are no further questions at this time. Okay, thank you all very much. We appreciate your joining us this morning, and we will be anxious to, we always learn from these calls, and so thank you for that. We are excited about the next recorder in the future, and we'll see you at the next hearing call. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect your lines.

Speaker Change: Okay. Thank you all very much we appreciate your joining us this morning, and we will be just too.

Steven Roth: You always learn from these calls and so thank you for that.

Steven Roth: Excited about the deck.

Steven Roth: The quarter in the future and we'll see you at the next earnings call. Thank you.

Steven Roth: Yeah.

Steven Roth: Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect your lines.