Q2 2025 Vornado Realty Trust Earnings Call
Steve Borenstein: Good morning and welcome to the Vornado Realty Trust second quarter 2025 earnings call. My name is Michael 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. 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 one on your touch-tone phone. I will now turn the call over to Mr. Steve Borenstein, Executive Vice President and Corporation Counsel. Please go ahead.
Good morning and welcome to the Vornado. Realy trust second quarter, 2025 earnings call. My name is Michael 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. 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.
Steve Borenstein: Welcome to Vornado Realty Trust's second quarter earnings call. Yesterday afternoon, we issued our second quarter earnings release and filed our quarterly report on the form 10Q with the Securities and Exchange Commission. These documents, as well as our supplemental financial information package, are available on our website www.vno.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 10Q and financial supplement. 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.
I will now turn the call over to Mr. Steve borenstein, Executive Vice President and Corporation Council. Please go ahead.
Welcome to tornado. Realy trust, second quarter earnings call yesterday afternoon. We issued our second quarter earnings release and filed our quarterly report on. Thank you with the Securities and Exchange Commission. These documents, as well as our supplemental. Financial information package are available on our website www.bn.com under the investor relations section.
Steve Borenstein: Please refer to our filings with the Securities and Exchange Commission, including our annual report on form 10K for the year ended December 31st, 2024, 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 for management, for our opening comments, are Steven 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 Steven Roth.
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 supplements. Please be aware that statements made. During this call, may be being 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 Security and Exchange Commission, including our annual report on form. 10K for the year. Ended December 3124 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 states.
On the call today from management. For our opening comments are Steven Roth chairman and chief executive officer and Michael, Franco, president and Chief Financial Officer.
Steven Roth: Thank you, Steve, and good morning, everyone. Let me start by expressing our sorrow about the tragic and senseless shootings at 340 Black Block Avenue last week. Our deep condolences go out to the victims' families and friends. We have many friends in that building and ownership and occupiers, and we stand with them as they deal with this terrible tragedy. To continue, here at Vornado, our business continues to be strong, is getting stronger, and I remain incredibly enthusiastic about our future prospects. Our stock performance leaves the office sector has increased 42% over the trailing 12 months, almost double the S&P 500. I was quite surprised that, broadly speaking, every other office freak, whether East Coast or West Coast, including all the other New York office specialists, were negative during that period. We had an excellent quarter, and Michael will cover the results shortly.
Our senior team is also present and available for questions. I will now turn the call over to Stephen Ross.
Thank you, Steve and good morning everyone.
Let me start by expressing our sorrow about the tragic and senseless shootings at 3:45 Park Avenue last week.
Our deep console is go out to the victims, families and friends. We have many friends in that building and ownership and occupiers. And we stand with them as they deal with this terrible tragedy.
To continue here in Grenada, our business continues to be strong is getting stronger and I remain incredibly enthusiastic about our future prospects.
Our stock performance leads the office sector have increased 42% over the trailing 12 months, almost double, the S&P 500. I was quite surprised that broadly speaking every other office week with the East Coast or West Coast, including all the other New York office Specialists were negative during that period.
Steven Roth: By excellent, I mean leasing, balance sheet, and PIN, all excellent. Let me once again discuss what we see on the ground and our business strategies. We are a 90% New York-centric company. Actually, we are a 90% prime-pitch Manhattan-centric company. We don't own a single large building in Chicago, the MART, and a single complex at 555 California Street, the number one building in San Francisco. These two assets may be on the for-sale list for the right deal at the right time. Manhattan is universally claimed to be the strongest real estate market in the country, and I mean the strongest by far. While Manhattan may have nearly 420 million square feet of office space, we actually compete in a much smaller 180 million square foot Class A better building market. Our clients are expanding, demand is strong and broad-based, and here's the punchline.
We had an excellent quarter and Michael will cover the results shortly by excellent. I mean, leasing balance sheet and pin, all excellent.
Let me once again discuss what we see on the ground and our business strategy.
We are 90% New York Centric company. Actually, we are a 90% Prime pitch, Manhattan Centric company.
We don't own a single large building in Chicago, the mark, and a single complex is 555 California Street. The number one building is in San Francisco.
These 2 assets may be on the for sale list for the right deal, at the right time.
Manhattan is universally claimed to be the strongest real estate market in the country. And I mean, the strongest by far
Compete in a much smaller, 180 million square foot Class A Better building Market.
Steven Roth: Available space continues to evaporate quickly. Replacement costs for a Class A tower in Manhattan has risen to call it $2,500 per square foot. With interest rates at 6 or 6 plus percent, rents in the 200s are now commonplace. Think about it, $100 rents were rare only a few years ago. I believe this math is telling us there will only be a trickle of new supply for the foreseeable future, at least through the end of the decade. Remember, it takes five years from start to deliver a new build tower in New York. And that trickle of supply, however unlikely, will undoubtedly be spoken for and not create speculative space available to the market. Taken together, all this is the very definition of a landlord's market.
Our clients are expanding demand is strong broad base and here's the punch line. Available State space continues to evaporate quickly.
Replacement costs for a class a tower in Manhattan. Has risen to call it 2500 per square foot.
With interest rates at 6 or 6 Plus percent rent in the 200s are now Common Place.
Think about it. 100,000 rents were rare only a few years ago.
I believe this math is telling us there will only be a trickle of new supply for the foreseeable future. At least through the end of the decade. Remember, it takes 5 Years From Start to deliver a new build tower in New York.
And that trickle of Supply. However, unlikely will undoubtedly be spoken for and not create speculative space available to the market.
Steven Roth: With high availability and Class A better buildings in Manhattan and West Side Carolina, and no new supply coming for the rest of the decade, I believe the next few years have the potential to be one of the strongest periods of rental growth we've seen in decades. And it's already started. That said, logically and for certain, values will increase as well. Here is our industry-leading leasing scorecard. During the first half of 2025, we leased 2.7 million square feet overall, of which 2.2 million square feet was Manhattan office. That includes the 1.1 million square foot master lease within 770 Broadway, the largest New York office lease since 2019, which, by the way, absorbed 500,000 square feet of vacancy at that property.
Taken together. All this is the very definition of a landlord's Market with tight availability and Class A Better buildings in the Manhattan and Westside cargo and no new Supply coming for the rest of the decade. I believe in the next few years have the potential to be 1 of the strongest careers of rental growth we've seen in decades and it's already started. That said, logically and for certain values will increase as well.
Here is our industry-leading lease uh, leasing scorecard during the first half of 2025. We lease 2.7 million square feet overall, at which point, to which 2.2 million square feet was Manhattan office.
That includes the 1.1 million square foot Master Lease Within the play with 770 Broadway, the largest New York office lease in 2019.
Steven Roth: The remaining 1.1 million square feet of leasing during the first half was at $97 per square foot average starting rent, with mark-to-markets of plus 10.7% GAAP and plus 7.7% cash. During the second quarter in Manhattan, we executed 27 deals, totaling 1.5 million square feet, including NYU. Excluding NYU, the remaining 400,000 square feet of Manhattan office leasing for the quarter was at $101 per square foot starting rent, with mark-to-markets of plus 11.8% GAAP and plus 8.7% cash. We continue to achieve the highest average rents in the city. This quarter leasing was 190,000 square feet in PIN and 210,000 square feet in our other Manhattan assets. Importantly, our leasing this quarter included 12 transactions for 183,000 square feet at PIN 1 and an average starting rent of $101 per square foot, bringing occupancy here to 91%. Here's an interesting factoid.
Which, by the way, absorbed 500,000 square feet of vacancy, at that property.
The reigning 1.1 million square feet of leasing. During the first half, was at 97 per square foot, average, starting rents with Mark to markets of plus, 10.7% Gap, and plus 7.7% cash.
During the second quarter in Manhattan, we executed 27 deals, totaling 1.5 million square feet, including NYU.
Excluding NYU the remaining 400,000 sweeps square feet of Manhattan office. Leasing for the quarter, was at 101 dollars, per square foot starting rent with Mark to markets of plus 11.8% gas and 8.7%, plus 8.7% cash.
We continue to achieve the highest average rent in the city.
This call, I called a leasing was 190,000 square feet in pain and 210,000 square feet in our other Manhattan assets.
Importantly uh importantly our leasing this quarter included 12 transactions for 183,000 square feet. It paid 1
At an average spotting rent of $101 per square foot. Bringing occupancy here to 91%.
Steven Roth: Since the start of physical development, we have leased 1.6 million square feet at PIN 1 at average rents of $94. At PIN, we are handily exceeding both our initial underwriting and our increased underwriting. Here's another way to look at it. Looking towards the future, everyone is modeling large increases in Vornado's areas as leases at PIN 1 and PIN 2 come online, as they should. This is all based on rents of, say, $100 per square foot. But our neighbors to the west are achieving $150 per square foot, and over time, so will we. Think about it. PIN 1, PIN 2, and Farley together comprise 5 million square feet. So the math says every $10 a foot uptick in rent yields $50 million to the bottom line.
And here's an interesting factoid since the start of physical development, we have least 1.6 million square feet of pain 1 at average rents of 94 dollars at Penn, we are handling both our initial underwriting at our increased underwriting.
Here's another way to look at it.
Looking towards the future. Everyone is modeling large increases in grenades earnings as leases of 101 and pain to come online as they should. This is all based on rents of say per square foot, but our neighbors to the West are achieving $150 per square foot and over time. So will we think about it, 101, 102, and 40 together, comprise 5 million, square feet.
Steven Roth: And what's more, when the uptick, i.e., market rents get to $150 per square foot on 5 million square feet, that's an increment of $250 million per year. Same store asset appreciation over time is the ticket to success in the property business. Tenants are expanding in the PIN district. As an example, in the last quarter, Samsung doubled its space at PIN 1, and since its first 220,000 square foot lease signed in 2020, our major tech tenant at PIN 11 has expanded three more times, now occupying 460,000 square feet in that building. Last week, after the quarter ended, and not included in the leasing statistics, we announced the 203,000 square foot headquarters lease at PIN 2 with Verizon Communications, one of the world's leading telecommunications companies. Verizon now joins other top tenants, Madison Square Garden, Major League Soccer, and Universal Music Group at PIN 2.
So the math says, every 10 dollar, a foot uptick in red seals 50 million dollars to the bottom line.
And what's more?
Uh, when the uptick IE Market rents get to 150 dollars, a square foot about 5 million square feet. That's an increment of 250 million dollars per year.
Same store as an appreciation. Overtime is the ticket to success in the property business.
Tenants are expanding in the pain District as an example on the last quarter Samsung doubled its base at 101 and since its first 220,000 square foot lease signed in 2020, our major Tech tenant at Penn 11 has expanded 3 more times. Now occupying 460,000 square feet in that building
Last week after the quarter ended and not included. In the leasing statistics, we announced the 20033000 square foot headquarters. Lease has been to with Verizon communications 1 of the world's leading telecommunications companies.
Steven Roth: We are, of course, delighted to welcome Verizon. Verizon's choice of PIN and their enthusiasm for their new home can best be described by lifting a quote from their press release by one of their senior executives. Quote, "New York City isn't just where we work, it's who we are. Our employees deserve a workplace that is just as vibrant as our culture. PIN 2 is more than an office; it's a space designed to bring us together, to collaborate, to celebrate, to think boldly, to build the future side by side." The Verizon folks get it. This is a very important deal and continues to validate the product. This is a very important deal. Occupancy at PIN 2 is now 62%, and we have multiple deals in the on-deck circle, which will keep our occupancy marching upwards.
Verizon now joins other top, tier tenants, Madison Square Garden, Major League, Soccer, and Universal, Music Group, at Penn 2. We are of course, the lighter to welcome Verizon.
And their enthusiasm for their new home, can best be described by lifting a quote from their press release.
By 1 of their senior Executives quote.
New York City isn't just where we work. It's who we are our employees deserve, a workplace, that is just as vibrant as our culture, pentoo is more than an office at the space designed to bring us together to collaborate to celebrate to think boldly to build the future side by side close quote.
The variety of jokes, get it.
This is a very important deal and continues to validate the product. This is a very important deal.
with now, 62% and we have multiple deals in the on Deck Circle, which will keep our occupancy, marching upwards,
Steven Roth: The PIN district, our three-block-long city within a city, continues to amaze and impress tenants and stakeholders. We sit atop the nexus of Pennsylvania Station and the New York City subway system adjacent to our good neighbors to the west, Manhattan West and Hudson Yards. The three of us combined represent the new booming west side of Manhattan. At PIN, we are creating a campus of multiple interconnected buildings under one ownership. We're delivering exactly as we said we would, and there is much more to come. As a starter, we are well along in the development process for a 475-year rental residential project on our 34th street site, catty-cornered to the Moynihan train hall. Next, we are going to transform as much as 700 front feet of tired old retail on both sides of 7th Avenue along 34th Street into attractive, modern, and exciting retail offerings.
The pain District, our 3 block long City within the city continues, to amaze and impress, tenants and stakeholders.
we send a top the Nexus of Pennsylvania station and the New York City subway system, adjacent to our good neighbors, to the West Manhattan West, in Hudson yards,
The 3 of us combined represent the new booming west side of Manhattan.
At 10, we are creating a campus of multiple interconnected buildings under one ownership. We're delivering exactly as we said we would, and there is much more to come.
Steven Roth: The gateway to PIN is 7th Avenue at 34th Street. This stretch across the street from Macy's used to be an upstream location, and returning to that top three is our goal. As I said before, the PIN district will be a growth engine for companies for years to come, with rising rents and future development projects, including the PIN 15 site and potential residential opportunities. We also continue to add to our already impressive food offerings in the district with our newest restaurant, the Dynamo Room, which opened last month to great reviews. Avril will open at Farley in the fall. And our rooftop park at PIN 2, called The Perch, named The Perch, is the best spot in the city for view, food, gathering, or just chilling. Come see PIN for yourself.
As a starter we are well along in the development process for a 475 unit rental residential project on our 34th Street site, caddy corner to the moan train Hall. Next we are going to transform as much as 700 front feet of tired old retail, on both sides of 7th Avenue, along 34th Street into attractive modern and exciting. Retail offerings.
The Gateway dependent 7th Avenue, at 34th Street. This stretch across the street from Macy's. Used to be a top 3 location.
And returning to flat top, 3 is our goal.
As I said before, the pain district will be a growth engine for a company for years to come with Rising rents and future development projects, including pain 15, the pain 15 site, and potential residential opportunities.
we also continue to add to our already impressive food offerings in the district, with our newest restaurant, the Dynamo room, which opens last month, the great reviews
abroad will open at 5:00 in the fall.
At our rooftop park at 10, to called the perk name. The perks is the best spot in the city for view Foods Gathering or just chilling.
Steven Roth: I invite you to come to PIN District anytime, but especially at happy hour, where you will see every seat in every restaurant and amenity, whether it's indoors or outdoors, filled with happy employees of our tenants. Our unmatched amenity package of 180,000 square feet is surely doing its job in spades to attract and delight our tenants. Our New York office leasing pipeline is robust, with a total of 560,000 square feet of leases signed or in negotiations, setting up the third quarter, plus more than 1 million square feet in various stages of proposal. As we announced on our last call, after two years of intense deliberation, the arbitration panel issued its ruling on the PIN 1 ground lease rent reset. The PIN 1 ground lease has fully extended and goes to 2098.
Come see, Pantry Yourself by invite you to come to Penn District anytime but especially at happy hour where you will see every scene at every restaurant at amenity, whether it's indoors or Outdoors, filled with happy employees of our planet.
Our unmatched append, amenity package of 180,000 square feet is surely doing its job in Spades to attract and Delight our tenants.
Our New York office leasing pipeline is robust, with a total of 560,000 square feet of leases signed or in negotiations, setting up for the third quarter, plus more than 1 million square feet in various stages of proposal.
As we are now on our last call, if the 2 years of intense deliberations, the arbitration panel issued its ruling on the pain. 1, ground leads, rent, reset,
Steven Roth: Days ago, a ground lessor filed an 11th-hour hail Mary motion in New York County Supreme Court to vacate the rent reset panel ground rent determination. We believe the motion is entirely without merit and intend to vigorously oppose it. We also completed the following financing transactions as we continue to bolster our liquidity and handle our debt maturities. In April, we completed a $450 million financing of 1535 Broadway, using $407 million of net proceeds to partially redeem our retail JV equity on the asset. The preferred equity outstanding balance is now $1.079 billion, down from $1.828 billion. In June, we completed a five-year $675 million refinancing of Independence Plaza, a joint venture in which we own a 50.1% ownership interest. In July, we completed a five-year $450 million refinancing of PIN 11, paying down this previous loan by $50 million.
The pain 1 ground lease has fully extended goes to 2098.
Days ago groundless or filed at 11th, our Hail Mary Motion in New York County, Supreme Court to vacate the rent. Reset panel ground rents determination. We believe the motion is entirely without Merit and intensive. V vigorously, opposed it
We also completed the following financing transactions, uh, as we continue to bolster our liquidity and handle our debt maturities. In April, we completed a 450 million financing with 1535 Broadway using 407 million of net proceeds to partially redeem, our retail JV equity on the asset.
The preferred outstanding, the preferred Equity outstanding balance is now 1.079 billion down from 1.828 billion.
In June, we completed a 5-year 675 million refinancing of Independence Plaza. A joint venture in which we own a 50.1% ownership interest,
In July, we completed a 5-year, 450 million refinancing of that 11. Paying down this previous loan by 50 billion.
Steven Roth: We have meaningfully delevered our balance sheet over the past couple of quarters. Since the beginning of the year, we have generated $1.5 billion of net proceeds from sale, financings, and the NYU deal, paid down $965 million of debt, and increased our cash by $504 million. Our cash balances are now $1.36 billion, and together with our undrawn credit lines of $1.56 million, we have immediate liquidity of $2.9 billion. Our net debt to EBITDA metric has improved by 1.4 turns to 7.2 times from 8.6 times. And our fixed charge coverage ratio, as expected, is steadily rising. Please see page 23 of our financial supplement in details. Finally, we remain very excited about the redevelopment of 350 Park Avenue with Citadel as our anchor tenant and Ken Griffin as our executive partner.
We have meaningfully deliver our balance sheet over the past couple of quarters. Since the beginning of the year, we have generated 1.5 billion of net proceeds from sales financing and the NYU deal.
Paid down $965 billion of debt and increased our cash by $5,408.
Credit lines of $1.56 billion. We have immediate liquidity of $2.9 billion. Our net debt to EBITDA metric has improved by 1.4 turns, to 7.2 times from 8.6 times.
And our fixed times fixed charge coverage ratio as expected is steadily Rising. Please see page 23 of our financial supplement for details.
Steven Roth: The process to create this grand, foster, and partners-designed 1.8 million square foot tower on the west side of Park Avenue has begun, and this new building will stand out as being truly best in class. DDs are complete, i.e., the building is basically designed, and CVs are progressing. Last month, the City Planning Commission voted to approve the project, and we expect the final new look approval from the City Council this fall. Citadel is currently building out their interim swing space, which will allow us to commence demolition of the existing 350 Park Avenue building in spring. Thank you all for listening, and now over to Michael to cover our finances.
Finally, we remain very excited about the Redevelopment of 3550350 Park Avenue as Citadel. The Citadel is our anchor tenant and Ken Griffin as our 60%.
The process that creates this Grand Foster and partners designed 1.8 million square foot for tower. On the best side of the Park Avenue has begun. And is that and this new building will stand out as being being truly breast and glass.
DDS are complete.
Last month, the City Planning Commission voted to approve the project. And we expect the final view of approval from the city council this fall.
Senator was currently building out their interim swing space, which will allow us to commence evolution of the existing 350 Park Avenue building.
It's free.
Thank you all for listening and now over to Michael to cover off your answers.
Michael Franco: Thank you, Steve, and good morning, everyone. Second quarter comparable FFO was 56 cents per share, which beat analyst consensus of 53 cents per share and essentially flat compared to last year's second quarter. We had lower net interest income from retail preferred repayments and lower NOI from asset sales, offset by lower real estate taxes at the MART net of tax tenant reimbursements. We have provided a quarter-over-quarter bridge on page two of our earnings release and on page six of our financial supplement. In addition, our cash NOI is lower this quarter, primarily due to the previously discussed one-time PIN 1 ground rent true-up payment made in April and free rent associated with recently commenced leases from backfilling the previously known move-outs. On our last earnings call, we said that we expected 2025 comparable FFO to be essentially flat compared to 2024 comparable FFO, $2.26 per share.
Thank you, Steve and good morning everyone.
Second quarter comparable, ffo with 56 cents per share which beat analysts consensus of 53 cents per share and essentially flat compared to last year's. Second quarter.
We have lower net interest income from retail preferred repayments and lower. Noi from asset sales offset by lower real. Estate taxes at the Martin net of tax pain reimbursements. We have provided a quarter over quarter bridge on page 2 of our earnings release on Page 6 of our financial supplement.
In addition our cach noi is lower this quarter primarily due to the previously. Discussed, 1-time pen, 1 ground. Rent throughout payment, made in April and free rent associated with recently. Commenced leases from backfilling, the previously announced known move outs
Michael Franco: This is still a good assumption as we sit here today. As previously discussed, we still expect the full positive impact of the lease up of PIN 1 and PIN 2 in 2027, resulting in significant earnings growth by 2027. New York office occupancy increased this quarter to 86.7% from 84.4% last quarter, primarily due to the full building master lease at 770 Broadway. As we continue to execute on our leasing pipeline, we anticipate that our occupancy will increase into the low 90s over the next year or so. Lastly, the financing markets are liquid, and we have been active in refinancing our 2025 maturities. On top of the recent Independence Plaza and PIN 11 refinancings, we have several others in the works. The investment sales market is also picking up as the financing markets recover and as confidence in New York City's recovery grows.
Our last earnings call. We said that we expected 2025 comparable ffo to be essentially flat compared to 2024 comparable ffo $2.26 per share.
This is still a good assumption. As we sit here today,
As previously discussed that, we still expect the full positive impact of the lease up of pin, 1 and pin 2 and 2027 resulting in significant earnings growth by 2027.
New York, office occupancy, increases quarter to 86.7% from 84.4% last quarter, primarily due to the full building Master Lease at 770 Broadway.
as we continue to execute on our leasing pipeline, we anticipate that our occupancy will increase into the low 90s over the next year or so,
Michael Franco: With that, I'll turn it over to the operator for Q&A.
lastly, the financing markets are liquid and we have been active in refinancing our 2025 maturities on top of the recent Independence Plaza and pain 11 ref financing. We have several others in the works. The investment sales Market is also picking up as the financing markets recovered and has confidence in New York City's recovery growth.
With that, I'll turn it over to the operator for Q&A.
Steve Borenstein: Thank you. We will now begin the question and answer session. If you have a question, please press star, then one on your touchstone phone. If you wish to be removed from the queue, please press star, then two. If you are using a speaker phone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then one on your touchstone phone. Each caller will be allowed to ask a question and a follow-up question before we move on to the next caller. Steve Sacqua from Evercore ISI is on the line with a question. Please go ahead.
Thank you. We will now begin the question and answer session. If you have a question, please press star, then 1 on your touchtone phone, if you wish to be removed from the queue, please press star. Then 2, if you are using a speaker-phone, you may need to pick up the handset. First, before pressing the numbers, once again, if you have a question, please press star then 1 on your touchtone phone.
Each caller will be allowed to ask a question and a follow-up question before we move on to the next caller.
Steve sakoa from evercore. Isi is on the line with a question. Please go ahead.
Steve Sakwa: Yes, thanks. Good morning. Steve, I guess I wanted to tie two comments together. You said, you know, PIN 2 was 62% occupied with, you know, multiple deals in the on-deck circle. And then you talked about the LOIs of like 560,000 feet plus a million of proposals. So can you just maybe help us understand how much of that sort of pending activity is geared towards PIN 2 and how much is for the rest of the New York City portfolio?
Uh, yes, thanks. Good morning. Uh, Steve. I guess I wanted to tie 2 comments together. You said, you know, Penn, uh, Penn 2 was 62% occupied with, you know, multiple deals, uh, in the index Circle.
Then you talked about the Louis, uh, like 560,000 ft plus a million of proposals. So,
Can you just maybe help us understand how much of that sort of pending activity is geared towards pen 2 and how much is for the rest of the New York City portfolio?
Glenn Weiss: Glenn, you want to take that?
Glenn Weiss: Sure. Good morning, Steve. It's Glenn. So of the 560,000 feet, those are leases out in negotiation. The Verizon lease is included in the 560. In our pipeline, we have about 1.4 million feet in the pipeline in various lease proposal stages, and about 50% of that is at PIN 2. That's the breakdown.
And you want to take that?
Sure, good morning, Steve, it's Glenn.
So of the 560 ft.
Those are leases out.
In negotiation, the Verizon leases included in the 560.
in our pipeline, we have about 1.4 million ft in the pipeline and various lease
Is at Penn 2, that's the breakdown.
Steve Sakwa: Great. And then for my follow-up, you know, Steve, you made some comments early on about the MART and 555 California sort of being for sale at the right price. And you know, I feel like that's maybe a little bit of a shift or change in your thinking. So maybe could you just expound upon that? And you know, is your goal to really sort of get back to being just kind of a pure New York City company, you know, in the shorter versus longer term?
Great. And then for my follow-up, you know, Steve you made some some comments early on about uh the Mart and 555 California sort of being for sale at the right price. And, you know, I feel like that's maybe a little bit of a shift or change and you're thinking, um, so maybe could you just expound upon that? And you know, is, is your goal to really, sort of get, get back to being just kind of a pure, New York City company, uh, you know, in the shorter versus longer term.
Steven Roth: Steve, hi. How are you? We've worked very hard to focus the company, stick to our meetings, and focus on the financials and our stock price. So our mission is to increase our stock price. That's our sole mission. We think that those two assets are valuable. We think one of them is free and clear. The other one has some financing on it. We think that 555 California is the single best asset in San Francisco. San Francisco is in a recovery phase now, which we think is going to be very dramatic. So as I said, those two assets we will sell for the right price at the right timing. They're not sacred. By the way, nothing is sacred. So we look upon them as a financial asset, and we will do what we think is the best financial outcome for the company.
Uh, we see.
I worked very hard to focus the company to stick to our meeting and focus on the financials and our stock price.
so, our mission is is to uh,
Uh, increase our stock price, that's our sole mission.
Uh, we think that those 2 assets are
Valuable, we think 1 of them is free and clear. The other 1 has some financing on it. We think that 5555 California is the single best asset in San Francisco. San Francisco has, uh, is, is it a recovery phase now? Which we think is going to be very dramatic.
so, as I said, um, those 2 assets, we will
sell for the right price at the right timing. Uh, there's they're not Sacred By the way, nothing is sacred. Uh, so we look upon them as, as a financial asset. And, uh, we will do what we think is the best financial, uh, uh, outcome for the company.
Steve Sakwa: Great. Thank you.
Great. Thank you.
Steve Borenstein: And your next question comes from Floris van Dijkum with Ladenberg Thalman. Please go ahead.
And your next question comes from Flores. Van dukum with L ladenburg Thalman, please go ahead.
Glenn Weiss: Hey, thanks, guys. Maybe if you can talk a little bit about your signed not open pipeline. You talked about your occupancy, your least occupancy being around, I think, 85.2% in New York. What's the physical occupancy? And i.e., how much rent is coming online over the next presumably 12 months by the time that becomes activated?
Hey, thanks guys. Um
Um, maybe if you can talk a little bit about your, uh, your sign not open pipeline. I I, I, you talked about your occupancy, your least occupancy, being around, I think, 85.2% in New York. What the physical occupancy and I what is, how much rent is coming online over the next?
Presumably 12, 12 months by the time that, uh, uh, that that becomes activated.
Michael Franco: Floris, good morning. It's Michael. Welcome back and congrats on your new position. You know, in terms of the signed but not commenced, we're going to have to come back to you on that number. I don't want to give you a guesstimate and swag. We'll have to come back on that. But obviously, you know, with Verizon signed the occupancy number, we'll continue to migrate up close to 88%. Obviously, there's ins and outs. We continue to believe that we'll, you know, be north of 90 as we get in the next year. And that income generally, and I think we've been consistent on this point, will, from an FFO standpoint, kick in heavily in 2027. Right? So 26 continues to be a year where, you know, we have the lease that's signed, but they don't kick in. 27, I think you're going to see a significant increase.
Uh force uh good morning. It's Michael uh welcome back um and and congrats on your new position. Um,
You know, in terms of the sign. Uh, but not commence, we're going to have to come back to you on that number. I I don't want to, I don't want to give you a a, a guesstimate and swag and we'll have to come back on that but um obviously
Michael Franco: And that, you know, I think is consistently said the last couple of quarters. But in terms of specific dollars, I have to come back to you on that.
You know, with Verizon sign. The occupancy number will continue to migrate up, um, uh, close 88%. Obviously, there's ins and outs. Uh, we continue to believe that we'll, uh, you know, be north of 90 as we get in the next year. Uh, and that income generally, and I think we've been consistent on this point will from an ffo standpoint kick in heavily in 2027, right? So 26 continues to be a year where um you know we have the least it's signed but they don't kick in 27. I think you're going to see a significant increase um and that you know, I think it's considered. We said the last couple quarters, but in terms of specific dollars, have to come back to you on that.
Glenn Weiss: Thanks, Michael. And maybe if I can ask one follow-up, I was sort of, Steve, you piqued my interest about the upside potential in your PIN district. I think in the past, you've talked about, you know, sort of stabilized NOI at around 325. How do you see that changing, or how much has that changed over the past six months based on market rents going higher and obviously your lease activity at PIN 2 in particular?
Thanks Michael. And and maybe if I can ask, uh, 1 follow up. Uh, I, I was sort of, uh, see if you piqued my interest about the, the, the upside potential in your PIN District. I think, in the past you've talked about, you know, sort of stabilized noi, um, at around 3:25, uh, H. How do you see that changing? Uh, uh, uh, or how much has that changed over the past 6 months? Uh, based on Market rents going higher and obviously, you're you're at least, uh,
Uh, activity at at Penn 2 in particular.
Steven Roth: Floris, hi. I couldn't be more enthusiastic about what we're doing at PIN and what PIN's value appreciation to the company will be over time. So right now, we are leasing PIN 1 and PIN 2, and we predicted that the market rents would be, that we would achieve $100 of rent. We're achieving that, and we're achieving more. So we're doing better than our underwriting. But the interesting thing is that our neighbors are getting $150 a foot and more. So we believe that over time, we will also, in PIN 1, PIN 2, and whatever other buildings we build, we'll be able to achieve rents that will be approximately maybe just a pinch below those buildings.
Uh, Forest, uh, hi. Um,
I couldn't be more enthusiastic.
About what we're doing at Penn and what pens, value appreciation to the company will be over time.
So right now we are leasing pain 1 and pain 2 um and the we predicted that the market rents would be uh that we would achieve 100 dollars of of rent. We've we're cheeping that and we're achieving more so we we're doing better than our underwriting.
but the interesting thing is, is that
Steven Roth: So if you think about it, if you look at real estate as a not as a quarter-to-quarter business, but as a five-year planning cycle or something like that, if the market rents in PIN go up on the 5 million square feet that we already have by $10 a foot, that increment is $50 million to the bottom line. That's 20 cents a share. That's a fairly big number. If they should go up by $50 a foot from 100 to 150, over time, the company will realize a $250 million increase in its income. Now, there's going to be some expenses, some minor expenses about that. Real estate taxes will go up marginally, but the numbers are very big. So what I'm saying is the best part of the real estate business is great assets over time.
101 pen 2, and whatever, whatever other uh, uh, buildings. We build will be able to achieve rents that will be approximately maybe just a pinch below those build those buildings.
So if you think about it, if you look at real estate as a, not as a quarter of an order of business, but as a, uh, on a 5-year planning cycle, or something like that.
Steven Roth: And we believe that the buildings that we now have are undermarket. So that as the market appreciates and as the market comes to our buildings, these buildings will get more and more valuable each year.
If the market rents in pain go up on the 5 million square feet that we already have by ten dollars. A foot that increment is 50 million dollars to the bottom line, that's 20 cents a share. That's a fairly big number. If they should go up by $50 a foot from a 100 to 150 over time, the company will realize that 250 million dollar increase in its income. Now there's going to be some expenses, some minor expenses about that real estate taxes will go up marginally, but the numbers are very big. So what I'm saying is the best part of the real estate, business is great assets over time. And we believe that the buildings that we now have are
Under market. So that as the market appreciates it, as the market comes to our buildings, the these buildings will get more and more valuable each year.
Glenn Weiss: So Steve, as you think about that, is there a possibility that the PIN district could generate maybe up to 400 million of NOI in five years' time?
Steven Roth: Easily. Easily. By the way, and that would be, that's with no new construction, no new buildings. The existing inventory that we have now, what you're saying is going to go up by $100 million over over three or four years? Sure.
So Steve as as you think about that, is there a possibility that the pain District could generate maybe up to 400 million of noi in 5 years time?
Easily.
By the way, and that, that would be, that's what no new construction, no new buildings. The existing inventory that we have now we're just saying, is going to go up by a hundred million dollars over over 3 or 4 years.
Uh, sure.
Glenn Weiss: Thanks.
Thanks.
Steve Borenstein: And your next question comes from John Kim with BMO Capital Markets. Please go ahead.
And your next question comes from John Kim. With BMO Capital markets, please go ahead.
John Kim: Good morning. I know there's a few different occupancy numbers out there, but just focusing on your occupancy stats on page 32, New York occupancy went up 85.2%, which is a sequential improvement, which is great. But it is lower than the 86.2% that you noted post the NYU lease last quarter. So I was wondering what the headwinds were this quarter that brought that down 100 basis points or so. You know.
Good morning. Um, I know there's a few different occupancy members out there, but just focusing on your occupancy stats on page 32, um, New York, do you see 1 up 85 85.2%, which is a sequential import Improvement which is great, um, but it is lower than the 86.2% that you noted post the NYU lease last quarter. So, I was wondering what that that headwinds were. Uh, this quarter that brought that down 100 basis points, or so,
Michael Franco: I think, John, good morning. You know, I think a couple of things. One is I think that's an area of New York number office and retail. I think the office numbers are generally consistent with what we said. There's a little bit of timing, and Verizon got signed a few days after the quarter. So obviously, if that had happened before, we'd have been above even what we said last time. So a little bit of timing. I think the biggest impact there was retail. You know, we had two Forever 21 leases at 1540 and 4357 where they were paying low rent. The company obviously went bankrupt again, and they vacated those stores. And that knocked off, I think, about seven percentage points off the retail occupancy, which in total, you know, took us to the area number you see there.
You know, I think John good morning. Um, uh, you know, I think a couple things 1 is um, I think that's an arrogant New York number office in retail. I think the office numbers are generally consistent with what we've said is a little bit timing and of rising got signed a few days after the quarter. Um, so obviously, if that happened before, we'd have been above, even what we said last time. So a little bit of timing. I think the biggest impact there was retail, um, you know, we had 2 Forever, 21 leads is a 1540 and 4357
Michael Franco: So it wasn't a lot of rent coming out of either one of those stores. They were frankly placeholders, particularly at PIN, until we had a, we really sort of redeveloped that whole stretch as Steve alluded to in his remarks. But from an occupancy standpoint, I think that was the biggest driver.
Uh, where they were paying low rent coming. Obviously, when bankrupt again and they vacated those stores, uh, and then knocked off, I think about 7 percentage points off the retail occupancy, which in total, uh, you know, took us to the, to the area number you see there. So wasn't a lot of rent coming out of either 1 of those, um, stores or frankly, placeholders, particularly a pen until we had a, uh, uh, really just sort of redevelop that, that, that whole stretch of Steve alluded to and his remarks. But from a uh, documents he standpoint, I think that was the biggest driver.
John Kim: And then on 555 Cal on the MART, Steve, you talked about potentially selling this. I wanted to see if you had any more commentary on timing, if this is something that could be listed in the next 12 months. And how should we think about use of proceeds between developments, acquisitions, and reduction of debt? We did notice that you provided new disclosure on NetAttibadah. So I'm wondering if that's a KPI going forward as far as maintaining or lowering NetAttibadah.
Okay. Um, and then on 555, count on the mark. Uh, Steve, you you talked about uh potentially selling this once to see if you had any more commentary on timing, if this is something that could be listed in the next 12 months,
And how should we think about use of proceeds between developments Acquisitions and reduction of debt? Uh, we did notice that uh you provided new disclosure on net debe de. So I'm wondering if that's uh, a kpi going forward as far as uh,
Maintaining or lowering net debt, default.
Steven Roth: On the first question, we are not listing those buildings in the next year or whatever. If we sell those buildings, it'll probably be an opportunistic incoming where somebody wants them. But what I'm saying is we're not actively marketing the buildings, and we have no prediction on timing. But they are available if the deal is correct and the timing is correct. The other half of your question was what, sir?
Uh,
John Kim: Use of proceeds.
But uh what I'm saying is is we're not actively marketing the buildings that we have no prediction on timing, but they are um available if uh the deal is correct and right and the timing is correct. Uh the other half of your question. Was what sir?
Steven Roth: Use of leverage, that's right.
Glenn Weiss: John.
Michael Franco: Yeah. Yeah. So again, to Steve's point, you know, nothing is imminent. But for the right price, you know, we'll transact. And at the time, you know, we'll assess the, you know, the best way to utilize that capital, whether it's to pay down debt, whether it's to, you know, deploy those into development, you know, etc. I appreciate you recognizing the good work we've done on the leverage front. We're proud of that. We've worked hard to get our leverage debt down. We think we're now quickly moving to the head of the class there. And so we want to continue that. So, but you know, when something is more ripe, then we'll assess exactly how we'll utilize those proceeds.
Yeah, so again just Steve's point, you know, nothing is imminent. Um, but uh, for the right price, you know, we'll we'll transact. And at the time, you know, we'll assess the, you know, the best way to utilize that Capital whether it's the pay down debt, whether it's to, uh, get them deployed those into, uh, development, you know, Etc.
Steven Roth: I want to tack on to what Michael said. One of the very important things that happened over the last short period of time is the improvement in our balance sheet. Taking our leverage ratio down by 1.4 turns is a really big thing. Rebuilding our cash balances, having lots of availabilities, and having a very strong balance sheet is one of the important things that we do. And I'm very proud of what the team has accomplished over the last period of time. I think it's a really big step.
Um, appreciate you recognizing the good work. We've done in the leverage front. Uh, we're proud of that. We've worked hard to get our leverage that down. Uh, we think we're now, uh, quickly moving to the Head of the Class there and, uh, and so, we want to continue that. So, um, but you know, when, when, when something is more right? Then we'll assess exactly how we utilize this program.
I want to, I want to tack on to what Michael said, 1 of the very important things that happened over the last
Short period of time is the improvement in our balance sheet, uh, taking our uh uh, leverage ratio down by 1.4. Turns is a really big thing rebuilding, our cash balances having lots of availability and having a very strong balance sheet is 1 of the important things that we do and I'm very proud of what has what the team has accomplished over the last period of time.
I think it's a really big set.
You.
John Kim: Thank you.
Steve Borenstein: And your next question comes from Dylan Berzinski with Green Street. Please go ahead.
In the next question. Comes from Dillon, berzinski with Green Street, please go ahead.
Dylan Burzinski: Hi, guys. Thanks for taking the question. Just can you sort of talk about just the, I know you guys talked about how strong the leasing pipeline is. Obviously, you mentioned occupancy will continue to increase into the low 90s sometime next year. But can you guys talk about just the ability to push net effective rents in that environment and strong backdrop?
Hi guys, thanks for, thanks for taking the question. Just can you sort of talk about just that? I know you guys talked about how strongly we can pipeline is, obviously, you mentioned occupancy, will continue to increase in the low 90s sometime next year. Uh, but can you guys talk about just the ability to to push net effective rents in in that environment and strong backdrop?
Michael Franco: Yeah. Why don't I start? Glenn, jump in here. You know, if you look at the current environment in the marketplace, whether it's Park Avenue, 6th Avenue, etc., you know, the vacancy rates are generally under 10% for Class A buildings, probably Park Avenue under 5. In general, you know, citywide, in Midtown, on the west side, very tight. And I think in terms of large blocks of space, I think there's less than a handful of a couple hundred thousand feet or larger, PIN 2 being one of those, and I think widely viewed as the best of those. So, you know, Steve talked about, you know, we're in a landlord's market, and we certainly feel that. I think tenants feel that. There's strong demand in the marketplace. You know, a number of tenants that are focused on expiry to years out.
Uh, yeah, when I started Glenn, Glenn jump in here. Um,
you know, if you, if you look at the current environment in the marketplace, um, whether it's Park Avenue, 6th Avenue Etc. You know, the vacancy rates are generally under 10% for class A buildings, probably Park Avenue under 5 um in in general you know city-wide in Midtown in the west side uh very tight and and I think in terms of large blocks of space.
I think there's less than a handful of a couple hundred thousand feet or larger uh pain, tubing 1 of those. Uh and I think widely viewed as as the best of those. So um, you know, Steve talked about, you know, we're a landlord's market. And we certainly feel that I think tenants feel that, uh, the strong demand in the marketplace uh, you know, a number of
Michael Franco: They're worried about whether they're going to be able to, you know, either consolidate in a single location, have enough expansion space, etc. So, you know, the dynamics have shifted. And, you know, we are, I would say, on a weekly basis evaluating our space and trying to determine how much we can push rents. And we're going to continue to push rents, I think, across the board. We've done it aggressively on Park. We're doing it in other buildings in Midtown, and we're doing it in PIN. I think that what you're hearing and what you're seeing in terms of the stats is a continued movement to push up rents there, where I think we started at PIN 1 in the mid-80s, maybe $90, and now we're achieving rents north of 100. We're going to continue to push those same on PIN 2.
attendance that are focused on expertise and number of years out, that worried about uh, whether they're going to be able to, uh, you know,
Michael Franco: So, you know, we're pretty optimistic in terms of what's going to happen to rental rate growth, just given the lack of quality space available and the demand side we're seeing. So, you know, I think we have the potential to see, you know, growth rates we haven't seen in quite some time. And, you know, we're going to push. We're going to find the resistance level as we move out here.
Either consolidate and single location. Have enough expansion space, Etc. So you know, the the Dynamics have shifted and, you know, we are, I would say on a weekly basis, evaluating our space and and trying to determine uh, how much we can push rents. And, and we're going to continue to push rents. I think across the board, uh, we've done an aggressively on Park and we're doing in other buildings in Midtown and we're doing in pet. I think the, the what you're hearing and what you're seeing, in terms of the stats, as they continued movement to push up rents there where I think we started at Penn 1 in the mid 80s, maybe 90 dollars. And now we're achieving around north of 100, we're going to continue to push those same on pin 2. Uh, so I, you know, we're, we're pretty optimistic in terms of what's going to happen to rental a growth, just given the lack of quality space available and the demand side we're seeing, uh, so you know, I think I think we have the potential to see, you know, growth rates we haven't seen in in quite some time. Uh, and you know, we're we're
We're going to push, we're going to find the resistance level. Uh, as we as we move out here,
Dylan Burzinski: That's helpful. And then I guess one last one from me. Are you guys able to talk about the A-node and B-node investments that you guys did?
That's helpful. And then I guess 1 1 last 1 for me, are you guys able to talk about the the the a known B node Investments? Do you guys have did?
Michael Franco: You know, it's on a site in Midtown. It's a node that, you know, we've legged into in two phases. It's a high-quality site, and it can go either way. You know, on one hand, we might just collect the coupon and earn a, you know, reasonable return relative to what we could earn in cash. And alternatively, you know, it could be an opportunity to own the asset and, you know, capitalize on the opportunity there. So it could go either way, but we just view it as it's a high-quality asset. We're happy if we earn the return and may leverage into a broader opportunity. And that's as much as we can say right now.
Um, you know, it's on a, it's on a site in Midtown. Uh, it's a, it's a note that, uh, you know, we've liked into in 2 phases, uh,
We're happy if we are in the return and they leverage into a into a broader opportunity that's and that's as much as as we can say, right now.
Dylan Burzinski: Appreciate it.
Appreciate it.
Michael Franco: Okay.
Okay.
Steve Borenstein: And your next question comes from Seth Berge with City. Please go ahead.
And your next question comes from. Seth Bergie with City. Please go ahead.
John Kim: Hi, thanks for taking my question. You know, I think on the last call, you spoke to kind of hitting, you know, the 80% target for PIN 2 by year-end. I guess just given the recent leasing activity, and it sounds like half the, you know, 1.4 billion development pipeline is kind of on leases out on PIN 2. Do you think you could kind of exceed that target?
Hi. Thanks for taking my question. Um, you know, I think on the last call, you spoke to kind of hitting, you know, the 80% Target for and to buy year end, I guess just giving the recently seen activity and its sounds like after, um, you know, 1.4 billion development pipeline is kind of, on, Lisa's out on to do you think you could kind of exceed that Target?
Steven Roth: I doubt it.
Glenn Weiss: Sorry, it's Glenn.
I doubt it. All right, it's going.
Steven Roth: No, Glenn, I said I doubt it. The question is, could we exceed 80%? And I'm saying I doubt it. Go ahead, Glenn.
Glenn Weiss: I mean, look, we're feeling very good about where we are at PIN 2. We'll feel we'll get there. I will say we're being patient. We're being smart. I might even say we're being a little choosy in terms of our credit profile, our tenant mix, and we do keep looking at our price increasing it. So we're not rushing just to lease space. That's not what we do. So while we think we'll get there, we're being careful and smart about our strategy. We're in it for the long term, not for the short-term statistics.
I know. I I Glenn I said I doubt it. The question is, can we see 80% that I'm saying? I doubt it. Go ahead. What?
I mean, look, we're feeling very good about where we are at Penn to
Um, we'll get there. I will say we're being patient; we're being smart.
I might even say we're being a little choosy in terms of our credit profile or tenant mix and we do keep looking at our pricing increasing it. So we're not rushing just to leave space, that's not what we do. So while we think we'll get there. Um, we're being careful and smart about our strategy. We're in it for the long term, not for the short term.
Statistics.
Steven Roth: Well said, Glenn.
Well, well said, Glenn.
Steve Borenstein: And your next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
In your next question comes from. Alexander Goldfarb with Piper Sandler. Please go ahead.
Steve Sakwa: Hey, good morning, and congrats to you guys on the Verizon deal. So that was nice to see. Glenn, you partially answered my question on the leasing ex-NYU. It sounds like you guys are choosier on the types of deals that you're doing, especially in this market. But what stood out in the quarter is ex-NYU, the average lease term was just 6.8 years, which given, you know, CBD leasing would expect that longer. So can you just give us a little bit more color? Clearly, you're on for a big whale of deals. But on the smaller deals, can you just give a context of the types of tenants and space and tenure? Because again, would expect deals to be longer than averaging 6.8 years.
Glenn Weiss: Yeah, of course. Hi, Alex. So I look at it, you know, for the full year, the half year thus far, our average is 12 years on 1.1 million feet of leasing outside of NYU, of course. For the quarter, it's an outlier this quarter. It was a mix of large renewals that were less than 10 years with a lot of pre-build deals at PIN 1 and other buildings that are multi-tenant like the Fuller Building and others. So it was an odd mix of leasing this quarter. I certainly would not say there will be a trend of this type of average lease term, particularly you know us and you know our averages are normally at least 10 years. It's an outlier, and I'm not concerned at all.
Hey, uh, good morning and, uh, congrats to you guys on the Verizon deal. Uh, so that was nice to see. Uh, Glenn, you partially answered my question on the leasing X NYU. It sounds like you guys are choosier on the types of deals that you're doing, especially in this market. But what stood out in the quarter is X and you, the average lease term was just 6.8 years, which given, you know, CBD leasing would expect that longer. So can you just give us a little bit more color? Clearly you're on for big whale of deals but on the smaller deals. Can you just give a contact of the types of tenants and space and tenure because again would expect deals to be longer than averaging 6.8 years.
Of course. Hi Alex. Um, so
A look at it, you know, for the full year, the half year thus far, our average is 12 years on 1.1 million ft of leasing outside of NYU. Of course,
For the quarter, it's an outlier this quarter. It was a mix of large renewals
That were less than 10 years.
Steve Sakwa: Okay. The second question is, Steve, I appreciate your comments on the cash balance for Vornado, but when we look at Alexander's, it seems to be the inverse in the sense of the dividend overpayment, the cash needs for the Bloomberg in 2029 replacing Home Depot. So can you just help us understand the dividend overpayment relative to the cash balance relative to how we should think about Alexander's on a go-forward basis?
Uh, with a lot of pre-built deals at 10 1 and other buildings that are multi-tenant like the Fuller building and others. So it was, it was an odd mix of leasing this quarter. I certainly would not uh, say there will be a trend of this type of average lease term, um, particularly, you know, us and, you know, our averages are normally at least 10 years. Um, it's an outlier and I'm not concerned at all.
Okay, the second question is Steve, uh, I appreciate your comments on the cash balance for Vornado, but when we look at Alexander's, it seems to be uh, the inverse in the sense of the dividend overpayment the cash needs for the Bloomberg in 2029. Replacing Home Depot. So, can you just help us understand the dividend overpayment relative to the cash balance relative to how? We should think about Alexander's on a go forward basis?
Steven Roth: This is a Vornado call. I think it's inappropriate to get into Alexander's. We had this conversation last quarter, as I remember. There are things going on at Alexander's that you don't know about. And as a result of that, you know, I quibble with your analysis. Alexander's is going to be just fine.
This is a bernado call, I think it's inappropriate to get in to Alexander. We had this conversation at last quarter. As I remember, there are things going on at Alexander's that you don't know about. And as a result of that, um, you know, I quibble with your analysis,
Alexander is going to be just fine.
Steve Sakwa: Okay. I appreciate that, Steve. Thank you.
Okay, I appreciate that. Steve, thank you.
Steven Roth: And just to clarify it just a little bit more, I mean, there are some assets that are going to be sold at Alexander's, which will, how do I say it, probably surprise you greatly. And it's not the biggest.
Otherwise but I'm just to clarify just a little bit more. I mean there are some aspects that are going to be sold at Alexander's which will uh how do I say it? Uh, probably surprisingly
And that and and it's not the big.
Steve Sakwa: I like surprises, so I appreciate your time, Steve. Thank you.
Steven Roth: Thank you.
I like surprises, so I appreciate that. I appreciate your time, Steve. Thank you.
Thank you.
Steve Borenstein: And your next question comes from Jana Galon with Bank of America. Please go ahead.
Caitlin Burrows: Thank you. Good morning. Maybe just following up on the retail leasing environment, can you talk a little bit more about the timing around the vision for the 34th Street quarter and then the potential timing of backfilling the Forever 21 space?
Thank you, good morning. Um, maybe just following up on the retail leasing environment. Can you talk a little bit more about the timing around the vision for the 44, 34th Street quarter and then the potential timing of backfilling the Forever 21 Space.
Steven Roth: Hi, thanks. You know, this is a long-term activity. We have held that space off the market. Well, first of all, let's talk about the quality of the real estate. 34th Street, over the years, has been one of the top two or three shopping streets in Manhattan. The subway stations are the second busiest and the third busiest in the entire system. The footfall is amazing. The traffic is getting accelerating now with all of the office buildings that have been built in the district. And when you look at the transportation system, the transportation system really is at 7th Avenue and 33rd Street and 6th Avenue and 33rd Street. So all of the buildings to the west, the people, in order to get into the transportation system, basically come east into our neighborhood. So we're very enthusiastic about the quality of the retail.
Uh hi thanks. Um you know this is a long-term activity, we have held that space Off the Mark. Well first of all, let's talk about the quality of the of the real estate.
Uh 34th Street over the years has been 1 of the top 2 or 3 shopping streets in Manhattan.
but,
Subway stations are the second busiest and the third busiest in the entire system. The footfall is amazing. The traffic is getting, uh, accelerating. Now, with all of the office buildings that have been built in the district. And when you look at the transportation system, the transportation system really is at 7th Avenue, and 30, and 33rd Street and 6th, Avenue and 333rd street. So, all of the buildings to the West, the people in order to get into the transportation system, basically come east into our neighborhood
Steven Roth: The street has gotten, dare I say, shabby. We have held lots of space, maybe even all the space off the market, waiting for the right timing. The timing is now. So what I said was that we're going to take, it looks like it's 700 front seats. 700 front seats is basically three and a half blocks. Nobody has that kind of concentration under one ownership. So we're very excited about the opportunity. With respect to when the Forever 21 space gets released, it may be reconfigured, and I really can't predict what the timing is going to be. It will undoubtedly be a different building, and it will take some time and be patient with us. But what's going to happen is going to be a great result.
So we're very enthusiastic about the quality of the retail, the street has gotten needed there, I say shopping. We have held lots of space, maybe even all the space off the market. Waiting for the right timing, the timing is now. So what I said was, uh, that we're going to take it looks like it's 700. Uh, front seat. 700 front feet is basically 3 and a half bucks.
Uh, nobody has that kind of concentration on the 1 on the ship. So we we're very excited about the opportunity.
With respect to when the Forever 21 uh space gets released. It may be reconfigured and I really can't predict what it's uh what the timing is going to be uh it will undoubtedly be a different building and it will take some time and be patient with us. But what's going to happen is going to be a great result.
Caitlin Burrows: Great. Thank you, Steve. And question for Michael. Thank you for the comments on the comparable FFO for this year versus last. But can you help us think about kind of the revenue ramp at the end of the year? Just trying to help us kind of think about the full impact of PIN 1 and PIN 2 being in 2027, but kind of how will that trend quarter to quarter?
Great. Thank you, Steve. And, um, question for Michael, uh, thank you for the comments on the comparable ffo for this year versus last. But can you help us? Think about, kind of the, the revenue ramp at the end of the year. Um, just trying to help us kind of think about the full impact of pain 1 and Pen 2 being in 2027. But kind of how will that Trend quarter to quarter?
Michael Franco: Sounds like you're asking for guidance from that, which we don't give. I think it will build over those quarters. But it's going to be, you know, as we think about both PIN 1 and PIN 2, it's going to be more back-ended there. But I don't think, I know they started building a little more towards fourth quarter this year and then into next year. But I think most of it's going to happen in 2027 from a run rate standpoint. So I don't want to give you a 26 prediction here today. You know, we haven't done our budgets yet. Obviously, the market's moving positively. We'll see where we end up. But I think most of that will hit, you know, it's going to be a pretty steep growth from 26 to 27.
Um, sounds like you're asking for guidance Janna. Um, which which, which we don't give, uh, I think, I think it will build over those quarters. Um, but um, uh, it's going to be, you know, as we think about both panel and Penta is going to be more back ended there. Um, but I don't, I don't think uh, and I'll just start going a little more towards fourth quarter this year and then in the next year. But I think most of it's going to happen in 2027 from a run rate standpoint. So, uh, I don't want to give you a 26 prediction here today. You know, we haven't done our budget yet. Uh, I was the Market's moving positively, we'll see where we end up, but, uh, I think most that will hit, you know, it's going to be a pretty steep uh, growth from 26 to 27.
Caitlin Burrows: Great. Thank you.
Great. Thank you.
Steve Borenstein: And your next question comes from Vikram Alhotra with Mizuho. Please go ahead.
And your next question comes from vicram Malhotra with meizuo, please go ahead.
Vikram Malhotra: Thanks so much for doing the question. Michael, I guess I wanted to just get some more color on that last few comments. So you obviously talked about the 27 growth. We're not looking for a number for 26, but just are there any big moving pieces we should be aware of as we model this out? Like anything that'll really, I guess, depress 26, or is it just a step function change as we go into it from 26 to 27?
Uh thanks so much for taking the question Michael. I just I want to just um, get some more color on that last few comments. Um, so you obviously talk about the 27th growth. We're not looking for a number for 26 but just
Are there any big moving pieces? We should be aware of as we model this out like anything. That'll really I guess depressed 26 or is it just a a step function change as we go into from 26 to 27?
Michael Franco: I think it's largely just step function. You know, I don't think it's anything unusual to me. Like we have space releasing up really across the board, both New York, some space in California, Chicago. You know, we got activity on the retail area. That'll kick in as well. So I think generally across the board, nothing unusual, but largely, as I said, you know, just given timing of when we signed those leases, stepping heavily into.
I think it's largely just step function, um, you know, I don't think it's anything, uh, unusual. I mean, like, we have space releasing up really across the board, both New York, uh, some space in California, Chicago. Um, you know, we got activity on the retail area that'll kick in as well. So I think generally across the board. Um,
Vikram Malhotra: Okay. So no big move-outs or like interest expense, I guess, any swaps or anything expiring that'll like pressure 26 relative to 25 before we get a step up in 27?
Uh no no nothing unusual but but uh, but but but largely, as I said, uh uh, you know, just given timing of when we sign those leases stepping heavily into, okay, okay.
So no, so no big move outs or like interest expense. I guess any swaps or anything expiring that like pressure 26 relative to 25 before we get a step up in 27.
Michael Franco: No, I mean, look, it's, you know, in terms of move-out, I mean, you know, we're in the leasing business, right? And there's going to be a certain amount of tenants that move out, a certain amount you keep, a certain amount that grow, a certain contract. I think we're more in the grow than contract right now. But, you know, apparently, there's always some level of move-out. So, you know, in New York office, you know, you're going to have, we'll just have to see what sort of, you know, comes about over the course of the next year. I will say on the interest expense side, and I think we talked about this on the last quarter, you know, I think we're generally on the downhill trajectory on that. You know, we hit fairly well hedged. You know, we're now A, between delevering the balance sheet.
Certain amount of, uh, tenants that move out certain amounts, you keep certain amount that grow certain contract. I think we're more in the groin contract right now but, um, uh, you know, apparently there's always some level of move out. So, uh, you know, in in New York office, um, you know, you're going to have
Michael Franco: I think we're generally rolling over assets. You know, I would say flat in terms of, you know, interest, you know, maybe a little bit down, maybe a little bit up, but generally flat. But with less debt, you know, the interest expense is coming down. So, you know, and if short-term rates come down, that'll help a little bit more. So I think we're, I think we're on the backside on the interest front.
We'll just have to see what sort of, you know, comes about over the course of the next year. I will say on the interest expense side and I think we talked about this on the last quarter, you know, I think we're generally on the downhill trajectory on that, uh, you know, we we had, uh, we had have been fairly well hedged, um, you know, we're now a between de-levering, the balance sheet and I think we're generally rolling over assets, uh, you know,
Steven Roth: Think about it just, hang on for a minute. Think about it from the big picture point of view. We operate our business, 90% of our business, in the single best market in the country by far. We are in the best building category, which is a smaller market than the entirety. It's a 180 million square foot market. The vacancies in that market, our customers are expanding. Our customers are doing well. The demand for space is robust, aggressive in the market that we serve. Vacancies are evaporating. The markets are getting tighter. So that all augurs to a better business and shareholder value creation. So that's where we are.
I would say flat in terms of, you know, interest, you know, maybe a little bit down, maybe a little bit up but generally flat. Uh, but with less debt, you know, the interest expenses coming down. Uh so you know, and if short-term rates come down, that'll help a little bit more. So I think I think we're I think we're on the back side on the interest front.
Think about think about this.
The kind of a minute uh think about it from the big picture point of view.
We operate.
Our business, 90% of our business in the single best Market in the country by far.
we are in the best building category, which is
A smaller Market than the entirety, it's a 180 million square foot Market.
The vacancies in that market our customers are expanding. Our customers are um are doing well. The demand for space is robust, aggressive in the in the market that we serve
uh,
they can seize our, uh, evaporating. The markets are getting tighter so that all organs to a, a, a, a, a, a Better Business, and shareholder value creation. Uh, so that's where we are.
Vikram Malhotra: Okay. I just wanted to clarify. So I guess, Steve, you mentioned, you know, San Francisco liked to come back very, very, I guess, I don't know if it was the word ferocious, and then obviously New York doing very well. I'm just wondering, like, does this create an opportunity for Vornado to use some capital, you know, to buy assets, invest in debt? I know you're paying down debt, but just, like, what are the investment opportunities today for Vornado?
Okay, I just wanted to clarify so I guess Steve you mentioned, you know, San Francisco like to come back very very I guess I don't know if it was the word feral shift and then obviously in Europe doing very well. Um, I'm just wondering like, does this create an opportunity for bernado to use some Capital, uh, you know, to buy assets? Invest in debt. I know you're paying down debt but just like, what are the investment opportunities today for Beto?
Steven Roth: The answer is capital allocation is probably the single most important thing that we have to do. And we are going to be very vigorous and very disciplined in what we do. We look at everything that comes up, and we invest cautiously, and we invest aggressively when we think there's something that creates real shareholder value. So I don't have anything in the way of predictions for you other than the fact that we are very responsible in our capital allocation.
Um, the answer is capital. Allocation is probably the single most important thing that we have to do, uh and we are going to be very vigorous and very disciplined in what we do. Uh, we look at everything that comes up and we invest, uh, cautiously and we invest aggressively when we think there's something that uh, uh, creates real shareholder value. Uh, so I don't have any anything in the way of predictions for you, other than the fact that we are very responsible that our Capital allocation
Steve Borenstein: And your next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.
Caitlin Burrows: Hi, good morning. Earlier, somebody asked about net effective rents, and you talked about pushing rents across New York City. I guess on the tenant improvement and leasing commission side, you show it as a percent of initial rent, and it's up in New York City for the second, sorry, for 2Q and the first half to like 12 to 13 percent of initial rent. So I was wondering, would you say that 2025 outcome is a result of something in particular, or is that just the reality of leasing today, and what will it take for that to change?
And the next question comes from Caitlyn Burroughs with Goldman Sachs. Please go ahead.
Hi, good morning. Uh, earlier somebody asked about net effective rents and you talked about pushing rents across New York City, I guess on the tenant Improvement and leasing commission side, you show it as a percent of initial rent and it's up in New York City for the second. Uh, sorry for 2 q and the first half to like 12 to 13% of initial rent. So, I was wondering, um, would you say that 2025 outcome is a result of something in particular? Or is that just the reality of leasing today and what will it take for that to change?
Steven Roth: You know, I don't know that the.
Glenn Weiss: Go ahead, Glenn.
You know, I don't know.
Yeah, go ahead.
Steven Roth: I was just going to say that, look, the TIs have stabilized, haven't come down yet, but we are seeing free rent come down, which is not in that percentage. But we expect, you know, as things tighten, that the TIs will eventually come down. But free rent certainly is starting to come down in our deal-making with rents rising. So I think that's a great start to the net effective story strengthening for owners like us, for sure.
I was just gonna say that look, the TI's, um, have stabilized haven't come down yet, but we are seeing free, rent, come down, which is not in that percentage.
Um but we expect you know, as things tighten um that the TI's will eventually come down but free rent. Certainly is starting to come down in our deal making uh with rents Rising. So I think that's a great start to the net effect of storage strengthening um for owners like us for sure.
Caitlin Burrows: Got it. Okay. And then I was wondering if you could just give any update on your dividend thoughts as it relates either to 2025 or just broadly in having a quarterly dividend reinstated.
okay, and then I was wondering if you could just give
Any update on your, um, dividends thoughts. I as it relates either to 2025 or just broadly and having a quarterly dividend reinstated.
Michael Franco: Good morning, Caitlin. So on the dividend front, obviously, you know, that's a board decision, and we'll meet with the board, discuss it with the board as we get at year-end. I would say a couple of things, though. You know, given the positive trends in the business.You
Michael Franco: know, and where taxable income is expected to be. And you know, there's still things that could move it around, you know, in a number of different ways, including, you know, some, you know, you've seen us sell a couple of small assets, et cetera. But I would say, as we get towards year-end, you know, our expectation, given the trends, are, you know, at a minimum, we think we'll pay as much as we paid last year, which was 74 cents a share. So that's for 2025. And again, you know, we'll get with the board at year-end. You know, I think as we look out, and I think Steve made this comment maybe a couple of quarters ago, you know, as the environment heals, we'll look towards more of a regular dividend.
Friends in the business. Um, uh, you know, and, and where taxable income is expected to be, and, you know, there's still things that could move it around, uh, you know, in, in a number of different ways including, you know, some some, you know, you've seen Us sell a couple, small assets, Etc. But I, I would say as we get towards your end, you know, our expectation given the trends are, you know, at a minimum we think we'll pay as much as we paid last year, which was 74 cents. A share
Michael Franco: You know, I think that some will also look hard at a year-end and, you know, get back to our more normalized, you know, quarterly dividend, whether that results in any different outcome. And there's a total, you know, I can't comment on that, but I think certainly as we enter this year, you know, no less than last year to the expectation. And, you know, again, given the positive trends, you know, we think that the dividend, you know, will start growing over time, particularly as we get into that, you know, 2027, you know, significant increase in earnings.
Uh, so that's that's, uh, that's for 25. And, and again, you know, we'll we'll get with the board at at year end, you know? I think as we look out and I think Steve made this comment, uh, maybe a couple quarters ago. Uh, you know, as the environment heals we'll look towards more of a regular dividend, you know, I think that's something we'll also look hard at a year end. Um, and, you know, get back to our more normalized, you know, quarterly dividend, whether that, that results in any different outcome, in terms of total, you know, I can't comment on that. But I think certainly as we, as we entered this year, uh, you know, no less than last year. The expectation and, you know, again given the positive Trends, uh, you know, we think that the dividend, uh, you know, will start growing over time particularly as we get into that, you know, 2027 you know, significant increase in earnings,
Speaker 2: Thanks.
Thanks.
Glenn Weiss: And your next question comes from Ronald Camden with Morgan Stanley. Please go ahead.
Rachel Smith: Hey, I just got two quick ones. Just on the going back to the same store in Hawaii and some of the callouts, just wondering if any high-level thoughts as you sort of anniversary this period in '26 or '27, just any sort of color on where that same store, you know, could look like or how we should think about it without asking for guidance.
And your next question comes from. Ronald Camden with Morgan Stanley, please go ahead.
Hey, I just got 2 quick ones just on the going back to the same store on AI and some of the call outs just wondering if any high-level thoughts as you sort of anniversary, this period in 26 or 27.
Just any sort of color on where that same store.
Um you know could look like or how we should think about it without asking for guidance.
Michael Franco: You know, I think that, boy, in NOI, we got a lot going on because obviously 7/7 comes out in there now. We obviously paid off the debt too. But, look, I think as we get to particularly next year, you know, we'll start seeing positive same-store NOI and beyond. I can't give you the percentages yet. but, you know, again, just given the leasing pipeline, we expect that that'll be the case.
Um, you know, I think that, uh, by the way in no idea to get a lot going on because obviously 777 comes out there now we obviously paid off the debt too. But, um, like I think as we get to particularly next year, you know, we'll start seeing positive, same story on a lot, uh, and and Beyond, I can't give you the percentages yet. Um, but you know, again just giving the leasing pipeline, uh, we expect that that that that'll be the case.
Rachel Smith: Makes sense. And then my second question, just some updated thoughts. I mean, I think the Hotel Penn land site, some of the activity on sort of the Fifth Avenue and retail monetization. Just curious if you can give us a pulse on those assets and how you're thinking through about potential monetization there or what you're hearing. Thanks.
Makes sense. And then my my second question, just some updated thoughts. I mean, I think the hotel Penn land site, uh, some of the activity on sort of the Fifth Avenue and Retail monetization, just curious, if you can give us a pulse on on those assets and how you're thinking through about potential monetization there or what you're hearing. Thanks.
Michael Franco: The Penn 15 site is, I believe, the single best site in the West New York market. Obviously, it will require a new build. A new build now is, as I said in my prepared remarks, the escalation in cost of the new builds is fairly dramatic. So we will, we're trolling for tenants. We talk, we see every large requirement that comes along. And when the right tenant comes along, we will make a deal and develop the land. The timing on that is uncertain, but it certainly will not be imminent or quick.
Uh, the the Panthers team site is, uh, I believe the single best site in the west. Uh, West New York Market. Um,
Uh, obviously, it will require a new build. A new build now is, as I've said in my prepared remarks, the escalation in cost of the new builds is fairly dramatic. So, uh, we will...
Uh, we're trolling for tenants. We talked, we see every large requirement that comes along, and when the right tenant comes along, we will make a deal and develop the land.
Uh, the timing on that is uncertain, but it certainly will not be imminent or quick.
Glenn Weiss: And your next question comes from Brendan Lynch with Barclays. Please go ahead.
Speaker 5: Great. Thanks for taking my question. As you guys mentioned, San Francisco is showing a broad sense of improvement in demand. Can you give us an update on progress for renewing or releasing some of the upcoming expirations at 555 California?
In your next question comes from Brandon Lynch with Barclays. Please go ahead.
Great. Thanks for taking my question. As you guys mentioned in the San Francisco showing a broad sense of improvement and demand, can you give us an update on progress for renewing or releasing some of the upcoming expirations at 5:55 in California?
Michael Franco: Brendan, you want to take that?
Steve Borenstein: Sure. I'm sorry. Just in San Francisco a few days ago, things are markedly improved. The streets feel good, safer, cleaner. Buildings are busier. And the good news is leasing is starting to tick up and improve. It feels a lot like New York, I'd say, probably 18 months ago or so, where things are starting to happen in a positive way. The beat is better. The brokers are smiling a little bit all of a sudden. So it all feels good. You know, we've just completed a huge run of leasing. They're about 600,000 feet. We have some vacancy to contend with right now, 100,000 feet in bits and parts. And then we have a couple of tenants moving on next year. We have action on everything. Our tour volume is great, almost daily in the building. Everyone is coming through.
Then you want to take that?
I'm sorry, just since San Francisco a few days ago, things are marketed the streets, feel good, safer, cleaner, buildings are busier. And the good news is leasing is starting to tick up and improve. Um, it feels a lot like New York. I'd say, probably 18 months ago or so where things are starting to happen in a positive way. Um, the bead is better, the Brokers are smiling a little bit, all of the sudden so it all feels good.
You know, we've just completed a, a huge run of leasing. There are about 600,000 ft.
Steve Borenstein: And the building continues to outperform everybody by a long shot. The best tenants with the highest rents are all coming to 555. We feel great about our prospects. But overall, the market seems to be coming on now. The mayor's done an excellent job improving the environment, working well with landlords like us and with our tenant base. So we feel like things are signaling to improvement and strength.
Tenants moving on next year, we have action on everything. Our tour volume is great almost daily. In the building, everyone is coming through and the building continues to outperform everybody by a long shot. Um, the best tenants with the highest rents are all coming to 555.
Uh, we feel great about our prospects, but overall the market seems to be coming on. Now, the mayor is on an excellent job, improving the environment.
Working well with landlords like us and with our tenant base. Um, so we feel like things are signaling to Improvement in strength.
Speaker 5: Great. Thanks. That's helpful. And maybe more broadly on the demand picture, our checks with brokers have suggested that a lot of the demand that they've seen in recent quarters has reflected real-time needs and urgency among tenants versus the more traditional longer-term capacity planning needs that would have been more of a characteristic of the past cycles. Have you seen any shift in recent quarters in how the tenant base is approaching their need for space in terms of real-time needs versus longer-term planning?
Great. Thanks, that's helpful and maybe more broadly on the demand picture. Um, but our checks with Brokers have suggested that a lot of the demand that they've seen in, uh, recent quarters has reflected real time needs and urgency among tenants versus in some more traditional longer term capacity planning needs that would have been more of a characteristic of the, the past Cycles. Have you seen any shift in, uh, recent quarters in? How the tenant base is approaching their need for space? Um, in terms of real-time needs versus longer term planning.
Steve Borenstein: Brendan, I'm not sure it's going to... So Verizon's a perfect example. You know, it's a deal that started percolating to us in mid-June and closed at the end of July. That's fast. We love that. Tenant decided to move their headquarters, acted quickly, concisely, perfectly, and smoothly. So that's something we see. We have other activity at Penn 2, Penn 1, and elsewhere in the portfolio is similar, where tenants are now coming quickly. It's not as much of our lease expires in two years or three years or four years. It's the action that we like, a landlord's market type of action. And a lot of it is both relocation and expansion. There's a lot of expansion, particularly in New York right now, where we're seeing signs of growth and people are acting very quickly.
Sure.
So Verizon's a perfect example.
Um, you know, it's a deal that started percolating to us in mid-June and closed at the end of July. That's fast. I love that, uh, the tenant decided to move their headquarters. They acted quickly and it went perfectly and smoothly.
Um, so that's something we see. We have other activity at 10, 2, and 1, and elsewhere in the portfolio, similar.
Steve Borenstein: And even in some cases, we have tenants now battling for space throughout the portfolio. So I think your comment is on cue in terms of what we're seeing.
Where tenants are now coming quickly. Um, it's not as much of a lease expires in 2 years or 3 years or 4 years. It's it's the action that we like, um, a landlord's Market type of action. Um, and a lot of it is both relocation and expansion. There's a lot of expansion particularly um, in New York right now. Um, where we're seeing signs of growth, and people are acting very quickly, and even in some cases, we have tenants now battling for space throughout the portfolio.
So I think your comment is, uh, is on Q in terms of what we're seeing.
Speaker 5: Great. Thanks, Glenn.
Great. Thanks, bud.
Glenn Weiss: And your next question is a follow-up from Alexander Goldfarb with Piper Sandler. Please go ahead.
Steve Borenstein: Hey, and thank you. Glenn and Steve, I just want to go back. Steve, you mentioned $100 in place. I think it was in place in Penn that could go to $150 if you guys get the same rents as your neighbors to the west. But I thought the new deals that you were signing were in sort of the $120, $130 range. I thought that's where the new deals are commanding. So maybe I'm wrong, but maybe you can just provide a little perspective versus what are in-place rents at the Penn 1, Penn 2 versus where you guys are signing rents. As I said, I thought your signed rents had been moving up steadily.
In the next question is a follow-up from Alexander Goldfarb with Piper Sandler. Please go ahead.
Hey, and and thank you. Um, Glenn and Steve, I just want to go back. Steve, you mentioned a hundred dollars in place. I think it was in place in Penn that could go to 150. If you guys get the same rents as your neighbors to the west, but I thought the new deals that you were signing were in sort of the 120 130 range. I thought that's where the new deals are commanding, so maybe I'm wrong but maybe you can just provide a little perspective versus what are in place. Rents at the pain. Uh pain 1 pen, 2 versus where you guys are start signing rents. As I said, I thought your your signed rents had been moving up. Steadily
Steve Borenstein: Glenn, you want to handle that for a minute? Certainly, we're moving steadily up. As Michael said, we were in the 80s and the 90s, now in the 100s. That's on average. We, of course, have seen deals well into the 100s, the 110s, the 120s, the 130s. So we are certainly seeing month-to-month improvement, rising rates. We expect that to continue. So our average rents have risen quarter to quarter, and we're seeing deals well into the hundreds now. You're correct, Alex.
Uh Glen, do you want to handle that for a minute?
Um, certainly we're moving steadily up.
Steve Borenstein: Okay, cool. Thank you. Thank you.
Um, is Michael said, we were in the 80s and the 90s. Now, in the hundreds, that's on average. We of course have seen deals well into the hundreds, the 110s, the 120s, the 130s. Um, so we are certainly seeing month-to-month Improvement Rising rates, we expect that to continue. Um, so our average rents have risen in order to quarter. I don't know, we're seeing deals well into the hundreds now, you're correct. Alex.
Okay, cool. Thank. Thank you. Thank you.
Glenn Weiss: This concludes our question and answer session. I would like to turn the conference back over to Mr. Steve Roth for any closing remarks.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Steve Roth for any closing remarks
Michael Franco: Thank you for joining us today, everybody. And we'll, we continue to be very excited about a lot of things. We're very excited about Penn, obviously. We're very, very proud of what we've done with our balance sheet over the last couple of quarters. And business is actually pretty terrific. We'll see you next quarter. Thank you.
Thank you for joining us today everybody. Um, and we'll we can continue to be very excited about a lot of things. We're very excited about pain. Obviously we're very, very proud of what we've done with our balance sheet over the last couple of quarters.
And the business is actually uh actually pretty terrific. Um we'll see you next quarter. Thank you.
Glenn Weiss: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.
Ladies and gentlemen, this concludes today's conference.
thank you for your participation. You may now disconnect