Q1 2026 Vornado Realty Trust Earnings Call

May 5, 2026

Operator 2: Good morning. Welcome to the Vornado Realty Trust Q1 2026 Earnings Call. My name is Rocco, 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. I will now turn the call over to Mr. Steven Borenstein, Executive Vice President and Corporation Counsel. Please go ahead.

Operator: Good morning. Welcome to the Vornado Realty Trust Q1 2026 Earnings Call. My name is Rocco, 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. I will now turn the call over to Mr. Steven Borenstein, Executive Vice President and Corporation Counsel. Please go ahead.

Speaker #2: 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.

Speaker #2: At that time, please press *1 on your touch-tone phone. I will now turn the call over to Mr. Steve Borenstein, Executive Vice President and Corporation Counsel.

Speaker #2: Please go ahead. Welcome to Vornado Realty Trust first quarter earnings call. Yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission.

Steven Borenstein: Welcome to Vornado Realty Trust Q1 Earnings Call. Yesterday afternoon, we issued our Q1 earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. These documents, as well as our supplemental financial information package, are available on our website 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 10-Q, and financial supplement. Please be aware that statements made during this call may contain forward-looking statements and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors.

Speaker #2: 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.

Steven Borenstein: In these documents and during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q, and financial supplement. Please be aware that statements made during this call may contain forward-looking statements and actual results may differ materially from these statements due to a variety of risks, uncertainties, and other factors.

Speaker #2: Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q, and financial supplement. Please be aware that statements made during this call may be used forward-looking statements and actual results may defer materially from these statements due to a variety of risks and uncertainties and other factors.

Speaker #2: Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2025, for more information regarding these risks and uncertainties.

Steven Borenstein: Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended 31 December 2025 for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward-looking statements. On the call today from management for our own opening remarks 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.

Steven Borenstein: Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended 31 December, 2025 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.

Speaker #2: 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.

Steven Borenstein: The company does not undertake a duty to update any forward-looking statements. On the call today from management for our own opening remarks 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.

Speaker #2: On the call today for management, for our opening remarks, are Steven Roth, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer.

Speaker #2: Our senior team is also present and available for questions. I will now turn the call over to Steven Roth. Thank you, Steve, and good morning, everyone.

Steven Roth: Thank you, Steve. Good morning, everyone. Business at Vornado continues to be excellent, and it's getting better and better. We are riding the wave of a strengthening, long-lasting landlord's market. New York is by far and away the strongest real estate market in the country. Michael will get into the details shortly, but today I have different fish to fry. I will ask the first question. Question, what do you make of the spat between Mayor Mandami and Ken Griffin, and how will it affect your 350 Park Avenue development? Answer, let me begin by saying that I do not and cannot speak for Ken, but I do unambiguously stand with him. Notwithstanding the mistakes and bad form of the recent video that went viral, we are pulling for Mayor Mandami to succeed. Let me establish my credentials.

Speaker #2: Business at Vornado continues to be excellent and it's getting better and better. We are riding the wave of a strengthening long-lasting landlords market. And New York is by far and away the strongest real estate market in the country.

Speaker #2: Michael will get into the details shortly, but today I have different fish to fly. And I will ask the first question. Question: What do you make of the spat between Mayor Mondami and Ken Griffin, and how will it affect your 350 Park Avenue development?

Steven Roth: Question, what do you make of the spat between Mayor Mandami and Ken Griffin, and how will it affect your 350 Park Avenue development? Answer, let me begin by saying that I do not and cannot speak for Ken, but I do unambiguously stand with him. Notwithstanding the mistakes and bad form of the recent video that went viral, we are pulling for Mayor Mandami to succeed. Let me establish my credentials.

Speaker #2: Answer: Let me cannot speak for Ken, but I do unambiguously stand with him. And notwithstanding the mistakes and bad form of the recent video that went viral, we are pulling for Mayor Mondami to succeed.

Speaker #2: Let me establish my credentials. Vornado is a New York company, and I am a New Yorker. Born in Brooklyn and attended DeWitt Clinton Public High School in the Bronx.

Steven Roth: Vornado is a New York company, and I am a New Yorker, born in Brooklyn and attended DeWitt Clinton Public High School in the Bronx. Both Vornado and I are lucky to be New Yorkers. My daughter and three granddaughters live in the Bronx, and my son and his family live in Brooklyn. My wife of 56 years and I live and work in Manhattan. We follow the rules, and we pay our fair share. Vornado will pay $560 million in real estate taxes this year, and I'm pretty sure that's in the top three. That doesn't begin to count the personal income taxes that I and our Vornado population pay to the city and state of New York. We work our asses off. We are not boastful.

Speaker #2: Both Vornado and I are lucky to be New Yorkers. My daughter and three granddaughters live in the Bronx, and my son and his family live in Brooklyn.

Speaker #2: My wife of 56 years and I live and work in Manhattan. We follow the rules, and we pay our fair share. Vornado will pay $560 million in real estate taxes this year, and I'm pretty sure that's in the top three.

Steven Roth: Vornado will pay $560 million in real estate taxes this year, and I'm pretty sure that's in the top three. That doesn't begin to count the personal income taxes that I and our Vornado population pay to the city and state of New York. We work our asses off. We are not boastful.

Speaker #2: And that doesn't begin to count the personal income taxes that I and our Vornado population paid to the city and state of New York.

Speaker #2: We work our asses off, and we are not boastful. We are very proud of our lifetime of achievements. We are the company that is investing billions to transform the Penn District.

Steven Roth: We are very proud of our lifetime of achievements. We are the company that's investing billions to transform the Penn district. New York is a union town, we are a union shop, employing thousands of hardworking New Yorkers in our buildings and on our construction sites. The ugly, unnecessary video stunt is personal to Ken, sort of personal to me too. You see, Vornado and I are the developers of both 220 Central Park South residential building and the 350 Park Avenue Citadel Tower. We are all shocked that our young mayor would pull this stunt in front of Ken's home, single him out for ridicule. This was both irresponsible and dangerous.

Speaker #2: New York is a union town, and we are a union shop employing thousands of hardworking New Yorkers in our buildings, and on our construction sites.

Speaker #2: The ugly, unnecessary video stunt is personal to Ken, and sort of personal to me too. You see, Vornado and I are the developers of both 220 Central Park South residential building and the 350 Park Avenue Citadel Tower.

Steven Roth: You see, Vornado and I are the developers of both 220 Central Park South residential building and the 350 Park Avenue Citadel Tower. We are all shocked that our young mayor would pull this stunt in front of Ken's home, single him out for ridicule. This was both irresponsible and dangerous.

Speaker #2: We are all shocked that our young mayor would pull this stunt in front of Ken's home and sing of him out for ridicule. This was both irresponsible and dangerous.

Speaker #2: As I said, Vornado is the owner of the 65-year-old building on Park Avenue on the Park Avenue blockfront that will be raised to make way for the Citadel New York and Curtis Tower.

Steven Roth: As I said, Vornado is the owner of the 65-year-old building on Park Avenue on the Park Avenue block front that will be raised to make way for the Citadel New York headquarters tower, which will employ thousands, further cementing New York as the financial capital of the world, and pay significant taxes and on and on. This building is being designed by the same Foster + Partners architectural team that designed JPMorgan Chase's new headquarters down the block. This is now the if we move forward project. Now, a project of this scale takes years, and we have already worked with two prior city administrations, both of whom have recognized the benefits and have been enthusiastically welcoming and supporting, as evidenced by the rare unanimous ULURP approval for this project. Demolition began literally days ago, and we at Vornado are ready to go.

Speaker #2: Which will employ thousands, further cementing New York as the financial capital of the world. And pay significant taxes and on and on. This building is being designed by the same foster and partners architectural team that designed J.P.

Speaker #2: Morgan Chase's new headquarters down the block. This is now the, if we move forward, project. Now, a project of this scale takes years, and we have already worked with two prior city administrations, both of whom have recognized the benefits and have been enthusiastically welcoming and supporting as evidenced by the rare unanimous ULIP approval for this project.

Steven Roth: This is now the if we move forward project. Now, a project of this scale takes years, and we have already worked with two prior city administrations, both of whom have recognized the benefits and have been enthusiastically welcoming and supporting, as evidenced by the rare unanimous ULURP approval for this project. Demolition began literally days ago, and we at Vornado are ready to go.

Speaker #2: Demolition began literally days ago, and we at Vornado are ready to go. I must say that I consider the phrase "tax the rich" "tax the rich" when spit out with anger and contempt by politicians both here and across the country, to be just as hateful as some disgusting racial slurs and even the phrase "from the river to the sea." What these palls seem to be saying is that the rich are evil or the enemy or the targets or maybe even just suckers.

Steven Roth: I must say that I consider the phrase tax the rich, quote, "tax the rich," when spit out with anger and contempt by politicians both here and across the country, to be just as hateful as some disgusting racial slurs and even the phrase, "From the river to the sea." What these polls seem to be saying is that the rich are evil or the enemy or the targets or maybe even just suckers. The rich whom the politicians are targeting started with nothing, are the epitome of the American dream. They are our largest employers and largest philanthropists, and it is the 1% that pay 50% of New York's income taxes. They are at the top of the Great American economic pyramid for a reason. They should be praised and thanked. Ken, our partner and friend, is the best of the best.

Speaker #2: But the rich whom the politicians are targeting started as nothing, are the epitome of the American dream, they are our largest employers and largest philanthropists, and it is the 1% that paid 50% of New York's income taxes.

Steven Roth: The rich whom the politicians are targeting started with nothing, are the epitome of the American dream. They are our largest employers and largest philanthropists, and it is the 1% that pay 50% of New York's income taxes. They are at the top of the Great American economic pyramid for a reason. They should be praised and thanked. Ken, our partner and friend, is the best of the best.

Speaker #2: They are at the top of the great American economic pyramid for a reason. They should be praised and thanked. Ken, our partner and friend, is the best of the best.

Speaker #2: So where are we now? As we discussed last quarter, Ken exercised his option to enter our development joint venture and build a new $1.9 million square foot tower with Citadel as the anchor tenant.

Steven Roth: Where are we now? As we discussed last quarter, Ken exercised his option to enter our development joint venture and build a new 1.9 million square foot tower with Citadel as the anchor tenant. We have until the middle of July to decide whether to participate with Ken in the venture or to sell to him. It's a good bet that we will go all in. This fence cannot be mended by a short, terse, insincere, private apology. What I beg my mayor to do is to begin every day being business welcoming and business friendly as his first priority. That's the only way to get the growth and financial wherewithal to accomplish his programs, some of which, I must say, are interesting and valid. Public safety, schools, childcare, clean streets, housing affordability, homeless programs, et cetera.

Speaker #2: We haven't told the middle of July to sign decide whether to participate with Ken in the venture or to sell to him. It's a good bet it's a good bet that we will go all in.

Speaker #2: This fence cannot be mended by a short terce insincere private apology. What I beg my mayor to do is to begin every day being business welcoming and business friendly as his first priority.

Steven Roth: This fence cannot be mended by a short, terse, insincere, private apology. What I beg my mayor to do is to begin every day being business welcoming and business friendly as his first priority. That's the only way to get the growth and financial wherewithal to accomplish his programs, some of which, I must say, are interesting and valid. Public safety, schools, childcare, clean streets, housing affordability, homeless programs, et cetera.

Speaker #2: That's the only way to get the growth and financial wherewithal to accomplish his programs, some of which I must say are interesting and valid.

Speaker #2: Public safety schools, childcare, clean streets, housing, affordability, homeless programs, etc. The election is over, and now is the time for hard work and management, not showboating.

Steven Roth: The election is over. Now is the time for hard work and management, not showboating. New York is an enormous enterprise with a city budget of $120 billion and a state budget of $250 billion. If there is a $5 or $10 billion budget shortfall, surely that money can be found by managing rather than by taxing. It is interesting to note that high tax New York spends more than double per capita, double per capita, than low tax or no tax, no tax Florida or Texas. There is a lesson here. Maybe something good could come out of this blunder. Maybe we can draft Ken to become active and lead an effort to educate New York voters and to elect like-minded candidates. Ken can do it.

Speaker #2: New York is an enormous enterprise with a city budget of $120 billion, and a state budget of $250 billion. If there is a 5 or 10 billion dollar budget shortfall, surely that can be found that money can be found by managing rather than by taxing.

Speaker #2: It is interesting to note that high-tax New York spends more than double per capita, double per capita than low-tax or no-tax Florida or Texas.

Speaker #2: There is a lesson here. Maybe something good could come out of this blunder. Maybe we can draft Ken to become active and lead an effort to educate New York voters and to elect right-minded candidates.

Steven Roth: There is a lesson here. Maybe something good could come out of this blunder. Maybe we can draft Ken to become active and lead an effort to educate New York voters and to elect like-minded candidates. Ken can do it.

Speaker #2: Ken can do it. He's the one who can galvanize the entire business community. Here's an interesting fact to it. The members of the partnership for New York City alone employ $1 million voters.

Steven Roth: He's the one who could galvanize the entire business community. Here's an interesting factoid. The members of the Partnership for New York City alone employ 1 million voters. Hundreds of our business leaders would line up to support Ken. I would be first in that line. I was taught, and I believe that I believe in an America where after an election, all sides get behind this and support the winning candidate for the greater good. Our mayor is young, smart, and energetic. With a little tweak here and a little tweak there, his leadership could make this great city even greater. He will learn over time that growing a tax base is a winner and raising taxes is a loser. I will say it again.

Speaker #2: Hundreds of our business leaders would line up to support Ken. I would be first in that line. I was taught, and I believe that I believe in an America where, after an election, all sides get behind us and support the winning candidate for the greater good.

Steven Roth: I would be first in that line. I was taught, and I believe that I believe in an America where after an election, all sides get behind this and support the winning candidate for the greater good. Our mayor is young, smart, and energetic. With a little tweak here and a little tweak there, his leadership could make this great city even greater. He will learn over time that growing a tax base is a winner and raising taxes is a loser. I will say it again.

Speaker #2: Our mayor is young, smart, and energetic. With a little tweak here and a little tweak there, his leadership could make this great city even greater.

Speaker #2: He will learn over time that growing a tax base is a winner and raising taxes is a loser. I will say it again. He will learn over time that a growing tax base is a winner and raising taxes is a loser.

Steven Roth: He will learn over time that a growing tax base is a winner and raising taxes is a loser, and that the hardworking 1% are allies, not enemies. Let's learn from this mistake and move upward. Turning to Vornado, we now have a lineup of assets and in-process projects which I am confident will deliver the highest growth in our industry. Executing on all this is now our singular focus. In this year, 2026, we will complete the heavy lifting of leasing at Penn 1 and Penn 2. As Michael and Simon and Tom have already been saying quarter after quarter, our published numbers will reflect all this by the end of 2026 and going into 2027.

Speaker #2: And that the hardworking 1% are allies, not enemies, let's learn from this mistake and move upward. Turning to Vornado, we now have a lineup of assets and in-process projects which I am confident will deliver the highest growth in our industry.

Speaker #2: Executing on all this is now our singular focus. In this year, 2026, we will complete the heavy lifting of leasing at Penn 1 and Penn 2. As Michael and I, Tom, have already been saying quarter after quarter, our published numbers will reflect all this by the end of 2026 and going into 2027.

Steven Roth: Executing on all this is now our singular focus. In this year, 2026, we will complete the heavy lifting of leasing at Penn 1 and Penn 2. As Michael and Simon and Tom have already been saying quarter after quarter, our published numbers will reflect all this by the end of 2026 and going into 2027.

Speaker #2: As part of our focus on enhancing our portfolio and making great deals, we announced last week the acquisition of a 49% interest in Park Avenue Plaza, a $1.2 million square foot class A office building along the prime stretch of Park Avenue.

Steven Roth: As part of our focus on enhancing our portfolio and making great deals, we announced last week the acquisition of a 49% interest in Park Avenue Plaza, a 1.2 million square foot Class A office building along the prime stretch of Park Avenue. This asset is directly across the street from our 350 Park Avenue project. The building is 99% occupied by blue chip tenants with an 11-year weighted average lease term and rents that are 40% to 50% below market. Prime Park Avenue triple-A assets rarely trade, and we believe we made an excellent purchase. We're buying the asset at $950 per square foot, which is 65% to 70% discount to replacement cost.

Speaker #2: This asset is directly across the street from our 350 Park Avenue project. The building is 99% occupied by blue-chip tenants with an 11-year weighted average lease term and rents that are 40 to 50 percent below market.

Steven Roth: The building is 99% occupied by blue chip tenants with an 11-year weighted average lease term and rents that are 40% to 50% below market. Prime Park Avenue triple-A assets rarely trade, and we believe we made an excellent purchase. We're buying the asset at $950 per square foot, which is 65% to 70% discount to replacement cost.

Speaker #2: Prime Park Avenue AAA assets rarely trade, and we believe we made an excellent purchase. We're buying the asset at $950 the square foot, which is 65 to 70 percent discount to replacement cost.

Speaker #2: And we inheriting and we are inheriting a fixed-rate three a sub-3% loan through 2031 to leverage off and enhance returns. We expect the transaction to be approximately 10 cents accretive on a full-year basis in the first year.

Steven Roth: We are inheriting a fixed rate sub 3% loan through 2031 to leverage off and enhance returns. We expect the transaction to be approximately $0.10 accretive on a full year basis in the first year. We are happy to be partnering with the Fisher family, who own the other 51% of the asset. We have a long relationship with the Fisher family. They are a first-class operator who think much like we do. With Park Avenue Plaza, our recent acquisition of 623 Fifth Avenue, and the pending development of 350 Park Avenue, we will be adding call it 2 million square feet at share of the very highest quality prime assets to our portfolio at very accretive economics.

Speaker #2: We're happy to be partnering with the Fisher family who own the other 51% of the asset. We have a long relationship with the Fisher family.

Speaker #2: They are first-class operator who think much like we do. With Park Avenue Plaza, our recent acquisition of 623 Fifth Avenue and the pending development of 350 Park Avenue, we will be adding call it $2 million square feet at share of the very highest quality prime assets to our portfolio.

Steven Roth: They are a first-class operator who think much like we do. With Park Avenue Plaza, our recent acquisition of 623 Fifth Avenue, and the pending development of 350 Park Avenue, we will be adding call it 2 million square feet at share of the very highest quality prime assets to our portfolio at very accretive economics.

Speaker #2: At very accretive economics. Speaking of 623 Fifth Avenue, our 383,000-square-foot asset, which we are redeveloping to be the premier boutique office building in Manhattan.

Steven Roth: Speaking of 623 Fifth Avenue, our 383,000 square foot asset, which we are redeveloping to be the premier boutique office building in Manhattan. We are far along in our design and planning. We are receiving outstanding reaction from the market and already have active tenant interest at or above our ask rent. Demand for our retail assets is robust and accelerating. We have a handful of assets for sale in the market. I covered share buybacks in my recently posted shareholder's letter. To date, under our $200 million share buyback program, we have repurchased 7 million common shares at an average of $25.80 per share, totaling $180 million. Last week, our board authorized an additional $300 million buyback program. Now to Michael.

Speaker #2: We are far along in our design and planning. We are receiving outstanding reaction from the market and already have active tenant interest at or above our underwriting.

Speaker #2: Demand for our retail assets is robust and accelerated. We have a handful of assets for sale in the market. I covered share buybacks in my recently posted shareholders' letter.

Steven Roth: We have a handful of assets for sale in the market. I covered share buybacks in my recently posted shareholder's letter. To date, under our $200 million share buyback program, we have repurchased 7 million common shares at an average of $25.80 per share, totaling $180 million. Last week, our board authorized an additional $300 million buyback program. Now to Michael.

Speaker #2: To date, under our $200 million share buyback program, we have repurchased 7 million common shares at an average of $25.80 per share totaling $180 million.

Speaker #2: Last week, our board authorized an additional $300 million buyback program. Now to Michael. Thank you, Steven. Good morning, everyone. First quarter comp with FFO was 52 cents per share.

Michael J. Franco: Thank you, Steven. Good morning, everyone. Q1 comparable FFO was $0.52 per share, compared to $0.63 per share for last year's Q1. This decrease is consistent with our comments from the prior quarters and is primarily due to the reversal of previously accrued Pen One ground rent expense in the prior year's Q1 and higher net interest expense, partially offset by higher FFO resulting from the execution of the NYU master lease at 770 in the prior year and strong income growth at Pen One and Pen Two. We have provided a quarter-over-quarter bridge on page 2 of our earnings release and on page 6 of our financial supplement.

Michael Franco: Thank you, Steven. Good morning, everyone. Q1 comparable FFO was $0.52 per share, compared to $0.63 per share for last year's Q1. This decrease is consistent with our comments from the prior quarters and is primarily due to the reversal of previously accrued Pen One ground rent expense in the prior year's Q1 and higher net interest expense, partially offset by higher FFO resulting from the execution of the NYU master lease at 770 in the prior year and strong income growth at Pen One and Pen Two. We have provided a quarter-over-quarter bridge on page 2 of our earnings release and on page 6 of our financial supplement.

Speaker #2: Compared to 63 cents per share for last year's first quarter. This decrease is consistent with our comments from the prior quarters and is primarily due to the reversal of previously accrued Penn 1 ground rent expense in the prior year's first quarter and higher net interest expense, partially offset by higher FFO resulting from the execution of the NYU master lease at 770 in the prior year, and strong income growth at Penn 1 and Penn 2.

Speaker #2: We have provided a quarter-over-quarter bridge on page 2 of our earnings release and on page 6 of our financial supplement. We now expect full-year 2026 comparable FFO to be slightly higher than 2025, ramping up each quarter due to gap rents coming online, lower interest expense after our June 2026 bonds are repaid, and some seasonality relating to our signage business.

Michael J. Franco: We now expect full year 2026 comparable FFO to be slightly higher than 2025, ramping up each quarter due to gap rents coming online, lower interest expense after our June 2026 bonds are repaid, and some seasonality relating to our signage business. As previously indicated, we expect there to be significant earnings growth in 2027 as the positive impact from Pen One and Pen Two lease-up takes effect, as well as the positive impact of the recent acquisition of Park Avenue Plaza. Turning to leasing. The Manhattan office market is head and shoulders the best in the country and is off to its strongest start to a year in over a decade. Manhattan leasing volume reached nearly 12 million square feet, the highest Q1 level since 2014.

Michael Franco: We now expect full year 2026 comparable FFO to be slightly higher than 2025, ramping up each quarter due to gap rents coming online, lower interest expense after our June 2026 bonds are repaid, and some seasonality relating to our signage business.

Speaker #2: As previously indicated, we expect there to be significant earnings growth in 2027 as the positive impact from Penn 1 and Penn 2 lease uptakes affect as well as the positive impact of the recent acquisition of Park Avenue Plaza.

Michael Franco: As previously indicated, we expect there to be significant earnings growth in 2027 as the positive impact from Pen One and Pen Two lease-up takes effect, as well as the positive impact of the recent acquisition of Park Avenue Plaza. Turning to leasing. The Manhattan office market is head and shoulders the best in the country and is off to its strongest start to a year in over a decade. Manhattan leasing volume reached nearly 12 million square feet, the highest Q1 level since 2014.

Speaker #2: Turning to leasing. The Manhattan office market is head and shoulders the best in the country, and is off to its strongest start to a year in over a decade.

Speaker #2: Manhattan leasing volume reached nearly $12 million square feet, the highest first quarter level since 2014. There is a significant supply-demand imbalance in the $180 million class A better building market in which we compete.

Michael J. Franco: There's a significant supply demand imbalance in the $180 million Class A better building market in which we compete, as the availability rate in the prime submarkets in Midtown and the West Side has tightened significantly, and there's little new supply coming for the foreseeable future, given the significant cost and duration to build. This is all resulting in tenants competing for space and rents rising aggressively. The landlord's market we have been long predicting is very much here. While the macro environment we operate in today has gotten even more complicated since our last call, and the geopolitical volatility is as high as we've seen in some time, the US economy just continues to chug along, as does New York's.

Michael Franco: There's a significant supply demand imbalance in the $180 million Class A better building market in which we compete, as the availability rate in the prime submarkets in Midtown and the West Side has tightened significantly, and there's little new supply coming for the foreseeable future, given the significant cost and duration to build.

Speaker #2: As the availability rate in the prime submarkets in Midtown and the West Side has tightened significantly, and there's little new supply coming for the foreseeable future given the significant cost and duration to build.

Speaker #2: This is all resulting in tenants competing for space and rents rising aggressively. The landlords' market we have been long predicting is very much here.

Michael Franco: This is all resulting in tenants competing for space and rents rising aggressively. The landlord's market we have been long predicting is very much here. While the macro environment we operate in today has gotten even more complicated since our last call, and the geopolitical volatility is as high as we've seen in some time, the US economy just continues to chug along, as does New York's.

Speaker #2: While the macro environment we operate in today has gotten even more complicated since our last call and the geopolitical volatility is as high as we've seen in some time, the US economy just continues to chug along.

Speaker #2: As does New York's. While there is a risk that the Middle East conflict lasts much longer and has a greater economic impact, to date we have not seen any change in tenant behavior.

Michael J. Franco: While there is a risk that the Middle East conflict lasts much longer and has a greater economic impact, to date, we have not seen any change in tenant behavior. Moreover, while there has been a lot of AI fear-mongering out there, and while we are respectful of the risk, we believe it is overblown. Over the past 50 years, office using jobs have continually evolved based on new technology, from the computer revolution of the 1980s when personal computers and word processors were introduced, to the 2000s when the internet transformed workflows and the way we communicate, to now with AI improving efficiencies and increasing productivity. In every example, office using jobs were not reduced, but they shifted from clerical-based functions to knowledge-based roles. Each new revolution spurred productivity and economic growth with new businesses and net positive jobs created.

Michael Franco: While there is a risk that the Middle East conflict lasts much longer and has a greater economic impact, to date, we have not seen any change in tenant behavior. Moreover, while there has been a lot of AI fear-mongering out there, and while we are respectful of the risk, we believe it is overblown.

Speaker #2: Moreover, while there has been a lot of AI fear-mongering out there, and while we are respectful of the risk, we believe it is overblown.

Speaker #2: Over the past 50 years, office-using jobs have continually evolved based on new technology. From the computer revolution of the 1980s when personal computers and word processors were introduced to the 2000s when the internet transformed workflows and the way we communicate, to now with AI improving efficiencies and increasing productivity.

Michael Franco: Over the past 50 years, office using jobs have continually evolved based on new technology, from the computer revolution of the 1980s when personal computers and word processors were introduced, to the 2000s when the internet transformed workflows and the way we communicate, to now with AI improving efficiencies and increasing productivity. In every example, office using jobs were not reduced, but they shifted from clerical-based functions to knowledge-based roles. Each new revolution spurred productivity and economic growth with new businesses and net positive jobs created.

Speaker #2: In every example, office-using jobs were not reduced but they shifted from clerical-based functions to knowledge-based roles, and each new revolution spurred productivity and economic growth with new businesses and net positive jobs created.

Speaker #2: There will be winners and losers. By industry, by job function, and by geography. But make no mistake, New York and San Francisco will be winners as the intellectual and innovation capitals of the country where talent will continue to aggregate and in the best buildings.

Michael J. Franco: There will be winners and losers by industry, by job function, and by geography. Make no mistake, New York and San Francisco will be winners as the intellectual and innovation capitals of the country, where talent will continue to aggregate and in the best buildings. At Vornado, we are coming off our second-best leasing year in our company's history, where we leased 3.7 million square feet, with 960,000 square feet of New York office in the Q4. Business continues to be very good, and the momentum from last year has continued during the Q1 of 2026. In the Q1, we leased 426,000 square feet of office space overall, including 311,000 square feet in New York. Our metrics were very strong.

Michael Franco: There will be winners and losers by industry, by job function, and by geography. Make no mistake, New York and San Francisco will be winners as the intellectual and innovation capitals of the country, where talent will continue to aggregate and in the best buildings.

Speaker #2: At Vornado, we are coming off our second-best leasing year in our company's history. Where we leased 3.7 million square feet, with 960,000 square feet of New York office in the fourth quarter.

Michael Franco: At Vornado, we are coming off our second-best leasing year in our company's history, where we leased 3.7 million square feet, with 960,000 square feet of New York office in the Q4. Business continues to be very good, and the momentum from last year has continued during the Q1 of 2026. In the Q1, we leased 426,000 square feet of office space overall, including 311,000 square feet in New York. Our metrics were very strong.

Speaker #2: Business continues to be very good, and the momentum from last year has continued during the first quarter of 2026. In the first quarter, we leased 426,000 square feet of office space overall, including 311,000 square feet in New York.

Speaker #2: Our metrics were very strong. Average starting rents in Manhattan were $103 per square foot with mark-to-markets of positive 11.7% gap and positive 9.7% cash.

Michael J. Franco: Average starting rents in Manhattan were $103 per sq ft, with mark-to-market of +11.7% GAAP and +9.7% cash and an average lease term of 9 years. Our New York office pipeline is robust and has over 1 million sq ft of leases in negotiation in various stages of proposal. Turning to the capital markets. The financing markets continue to be strong and liquid for class A New York office assets, though pricing has widened a bit given the current geopolitical environment. The investment sales market continues to heat up as well, with a broadening set of buyers keenly focused on New York City. We are very active in the capital markets in Q1, most of which we covered on the last call.

Michael Franco: Average starting rents in Manhattan were $103 per sq ft, with mark-to-market of +11.7% GAAP and +9.7% cash and an average lease term of 9 years. Our New York office pipeline is robust and has over 1 million sq ft of leases in negotiation in various stages of proposal. Turning to the capital markets.

Speaker #2: And an average lease term of nine years. Our New York office pipeline is robust and has over 1 million square feet of leases in negotiation and various stages of proposal.

Speaker #2: Turning to the capital markets. The financing markets continue to be strong and liquid for class A New York office assets, though pricing has widened a bit given the current geopolitical environment.

Michael Franco: The financing markets continue to be strong and liquid for class A New York office assets, though pricing has widened a bit given the current geopolitical environment. The investment sales market continues to heat up as well, with a broadening set of buyers keenly focused on New York City. We are very active in the capital markets in Q1, most of which we covered on the last call.

Speaker #2: The investment sales market continues to heat up as well, with a broadening set of buyers keenly focused on New York City. We are very active in the capital markets in the first quarter, most of which we covered on the last call.

Speaker #2: Given we've dealt with almost all of our 2026 and 2027 maturities, we don't have any significant financings we need to complete for the next 18 months.

Michael J. Franco: Given we've dealt with almost all of our 2026 and 2027 maturities, we don't have any significant financings we need to complete for the next 18 months. We do still have a few loans that we need to work through with lenders over the next 2 to 3 years. Finally, our liquidity remains strong at $2.6 billion, which is comprised of cash of $1.2 billion and our undrawn credit lines of $1.4 billion. With that, I'll turn it over to the operator for Q&A.

Michael Franco: Given we've dealt with almost all of our 2026 and 2027 maturities, we don't have any significant financings we need to complete for the next 18 months. We do still have a few loans that we need to work through with lenders over the next 2 to 3 years. Finally, our liquidity remains strong at $2.6 billion, which is comprised of cash of $1.2 billion and our undrawn credit lines of $1.4 billion. With that, I'll turn it over to the operator for Q&A.

Speaker #2: We do still have a few loans that we need to work through with lenders over the next two to three years. Finally, our liquidity remains strong at 2.6 billion dollars, which is comprised of cash of 1.2 billion dollars and our unwritten credit lines of 1.4 billion dollars.

Speaker #2: With that, I'll turn it over to the operator for Q&A.

Speaker #3: Thank you. We will now begin the question and answer session. If you have a question, please press star within one on your touchdown phone.

Operator 2: Thank you. We will now begin the question-and-answer session. If you have a question, please press star then one on your touch-tone phone. If you wish to be removed from the queue, please press star then two. If you are using a speakerphone, 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 touch-tone phone. Each caller will be allowed to ask a question and a follow-up question before we move on to the next caller. This first question comes from Steve Sakwa at Evercore ISI. Please go ahead.

Operator: Thank you. We will now begin the question-and-answer session. If you have a question, please press star then one on your touch-tone phone. If you wish to be removed from the queue, please press star then two. If you are using a speakerphone, 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 touch-tone phone. Each caller will be allowed to ask a question and a follow-up question before we move on to the next caller. This first question comes from Steve Sakwa at Evercore ISI. Please go ahead.

Speaker #3: If you wish to be removed from the queue, please press star within two. If you're using the speakerphone, you may need to pick up the handset first before pressing the numbers.

Speaker #3: Once again, if you have a question, please press star within one on your touchdown phone. Each caller will be allowed to ask a question and a follow-up question before we move on to the next caller.

Speaker #3: First question comes from Steve Sackwa at Evercore ISI. Please go ahead.

Steve Sakwa: Yeah, thanks. Good morning. Steve, thanks for your opening comments on the city and the administration. I guess maybe going to Michael's commentary on just the pipeline and the 1 million feet. I didn't know if Michael or Glenn could maybe expound a little bit on how much of that is for, you know, upcoming lease expirations, how much of that is for kind of vacancy within the portfolio. You know, I guess most of that's probably in New York, but, you know, maybe discuss kind of the New York versus Chicago versus San Francisco demand trends.

Speaker #4: Yeah, thanks. Good morning. Steve, thanks for your opening comments. On the city and the administration, I guess maybe going to Michael's commentary on just the pipeline and the million feet.

Speaker #4: I didn't know if Michael or Glenn could maybe expound a little bit on how much of that is for upcoming lease expirations, how much of that is for kind of vacancy within the portfolio, and I guess most of that's probably in New York, but maybe discuss kind of the New York versus Chicago versus San Francisco demand trends.

Speaker #5: Big question there.

Michael J. Franco: Good question, Steve.

Michael Franco: Good question, Steve.

Speaker #6: Hi, Steve. It's Glenn. How you doing? So our pipeline's extremely well-balanced. Of the million feet, it's right down the middle, 50% new expansion, 50% renewal.

Glen Weiss: Hi, Steve. It's Glen. How you doing? You know, our pipeline's extremely well balanced. Of the million feet, it's right down the middle, 50% new expansion, 50% renewal. The other thing I'll note is on renewals, due to the lack of quality space available in the market, we're seeing many of our tenants coming up to us early on renewals, since they can't find quality alternatives, which is a key indicator of a rising landlord's market. As it relates city to city, San Francisco is coming on very strong. While we have some vacancy, as you see from the Q1 numbers, we have tremendous activity on all the vacancy. Our deals in the tower at 555 are now north of 160 a foot. Volume in San Francisco overall is strengthening week to week.

Speaker #6: On the other thing I'll note is on renewals, due to the lack of quality state available in the market, we're seeing many of our tenants coming to us early on renewals since they can't find quality alternatives, which is a key indicator of a rising landlord's market.

Speaker #6: As it relates to city to city, San Francisco is coming on very strong. While we have some vacancy, as you see from the first quarter numbers, we have tremendous activity on all the vacancy.

Glen Weiss: As it relates city to city, San Francisco is coming on very strong. While we have some vacancy, as you see from the Q1 numbers, we have tremendous activity on all the vacancy. Our deals in the tower at 555 are now north of 160 a foot. Volume in San Francisco overall is strengthening week to week.

Speaker #6: Our deals in the tower at 555 are now north of $160 a foot. Volume in San Francisco overall is strengthening week to week. And certainly, everyone out there is feeling a lot better, and deals are happening at a very rhythmic pace.

Glen Weiss: Certainly everyone out there is feeling a lot better. Deals are happening at a very rhythmic pace. Chicago is starting to come on. Demand is improving. The deals are tough, but there's certainly tenants coming new to the market, and we're seeing a lot more tour and proposals coming into the market as we go into Q2 and into the summer.

Speaker #6: Chicago is starting to come on. Demand is improving. The deals are tough, but there's certainly tenants coming new to the market, and we're seeing a lot more tour proposals coming in at the Mart as we go into the second quarter and into the summer.

Steve Sakwa: Great. Thanks. Then maybe just as a, as a follow-up, we did notice that, you know, in terms of lease commencements, the Verizon lease kind of had a little bit of a change in status. I'm just wondering if you could maybe talk about kind of what their, I guess, ultimate status is with the building and, you know, did that lease kind of start earlier and is that a benefit to the 2026 earnings growth?

Speaker #4: Great. Thanks. And then maybe just as a follow-up, we did notice that in terms of lease commencements and the Verizon lease kind of had a little bit of a change in status.

Speaker #4: And I'm just wondering if you could maybe talk about kind of what their, I guess, ultimate status is with the building, and did that lease kind of start earlier?

Speaker #4: And is that a benefit to the 26 earnings growth?

Thomas Sanelli: Steve, it's Thompson. I'll take the first part of it, and then I guess, Glenn, you could talk about the status. Because Verizon told us they're not gonna build out their space and they put them in a sublet market, GAAP allows us to start revenue recognition early. You'll see that flow through all of 2026. It started in Q1.

Speaker #2: Steve, it's Thompson earlier. I'll take the first part of it, and then I guess, Glenn, you could talk about the status. So because Verizon told us they're not going to build out their space and they put it on the sublet market, GAP allows us to start revenue recognition early.

Speaker #2: So you'll see that flow through all of 2026. It started in the first quarter.

Speaker #5: On the leasing front, the block of space is excellent. It's 200,000 feet. It includes 30,000 feet of outdoor space. We're in a great position.

Glen Weiss: On the leasing front, you know, the block of space is excellent. It's 200,000 feet and includes 30,000 feet of outdoor space. We're in a great position. We have a Verizon public parent guarantee for the entire lease to begin with, so great credit. We continue to show the space, as does Verizon. There's very good action. Whatever the outcome, Vornado's in a great spot as it relates to that position.

Speaker #5: We have a Verizon public parent guarantee for the entire lease, to begin with. So great credit. We continue to show the space as does Verizon.

Speaker #5: There's very good action. And whatever the outcome, Vornado's in a great spot as it relates to that position.

Speaker #3: Thank you. And our next question today comes from John Kim at BMO Capital Markets. Please go ahead.

Operator 2: Thank you. Our next question today comes from John Kim at BMO Capital Markets. Please go ahead.

Operator: Thank you. Our next question today comes from John Kim at BMO Capital Markets. Please go ahead.

Speaker #7: Thank you. Steve, really appreciate your opening remarks. It really provided a lot of clarity on how you're thinking about moving forward. But I wanted to ask you about your statement that you're all in at 350 Park.

John Kim: Thank you. Steve, really appreciate your opening remarks. It really provided a lot of clarity on how you're thinking about moving forward. I wanted to ask you about your statement that you're all in at Three Fifty Park. Are you all in even if Citadel will not commit to the building? How should we think about the put option you have in July?

Speaker #7: Are you all in even if Citadel will not commit to the building? And how should we think about the put option you have in July?

Speaker #2: I didn't hear the last part of it.

Michael J. Franco: I didn't hear the last part.

Michael Franco: I didn't hear the last part.

Speaker #5: How should we think about it? How should we think about the put option, is that what you said, John?

Glen Weiss: Again, how should we think about the put option, is that what you said, John?

Speaker #7: Yeah, that's right. Is that something that you'll let pass, or is that something that could be the day could be extended?

John Kim: Yeah, that's right. Is that something that you'll let pass, or is that something that the date could be extended?

Speaker #5: The answer is that Ken exercised to go ahead. We have until the summer to decide whether we are a participant or a seller, and I expect that we will take all of that time, which is the smart and correct thing for us to do.

Michael J. Franco: The answer is that Ken exercised to go ahead. We have until the summer to decide whether we are a participant or a seller. I expect that we will take all of that time, which is the smart and correct thing for us to do. There are still some documents and other details to be ironed out. My remarks was that I said where I expect we will be all in. I do expect we will be all in, but that's not a legal commitment at this time yet.

Michael Franco: The answer is that Ken exercised to go ahead. We have until the summer to decide whether we are a participant or a seller. I expect that we will take all of that time, which is the smart and correct thing for us to do. There are still some documents and other details to be ironed out. My remarks was that I said where I expect we will be all in. I do expect we will be all in, but that's not a legal commitment at this time yet.

Speaker #5: There are still some documents and other details to be ironed out. But my remark was that I said where I expect we will be all in.

Speaker #5: I do expect we will be all in, but that's not a legal commitment at this time yet.

Speaker #7: And that's all in, with or without Citadel's commitment?

John Kim: That's all in with or without Citadel's commitment?

Steven Roth: Say that-- um, uh-

Speaker #5: No, the answer is the question is, is it all in regardless of whether Citadel's committed or not from a lease standpoint?

Michael J. Franco: No. The answer.

Michael Franco: No. The answer.

Steven Roth: What is it?

Michael J. Franco: The question is it all in regardless whether Citadel's committed or not from a lease standpoint?

Michael Franco: The question is it all in regardless whether Citadel's committed or not from a lease standpoint?

Speaker #2: No.

Steven Roth: No.

Speaker #5: No.

Michael J. Franco: No.

Michael Franco: No.

Steven Roth: Citadel has to be committed. They will be committed. I mean, this whole deal is based upon the fact that Citadel will be the anchor tenant taking no less than 850,000 square feet, although we expect more. Ken Griffin is the 60% partner. We are a 36% partner, and the Rudin family is a 4% partner. That's the state of play. This whole thing, Ken has committed to start. This whole thing will all come together and become very clear in the midsummer.

Speaker #2: Citadel has to be committed. They will be committed. So, I mean, this whole deal is based upon the fact that Citadel will be the anchor tenant, taking no less than 850,000 square feet, although we expect more.

Speaker #2: And Ken Griffin is the 60% partner. We are a 36% partner, and the Rudin family is a 4% partner. That's the state of play.

Speaker #2: This whole thing Ken has committed to start. This whole thing will all come together and become very clear in the mid-summer.

Speaker #7: Okay. Thank you. And then I wanted to ask about the $200 million of signed leases not commenced figure that you provided last quarter. If there's an update to that figure in terms of dollar volume, timing, and if there's any offsets through known move-outs during that timeframe?

John Kim: Okay, thank you. I wanted to ask about the $200 million of signed leases not commenced figure that you provided last quarter. If there's an update to that figure, in terms of dollar volume, timing, and if there's any offsets through known move-outs during that time frame?

Speaker #5: Good morning, John. I would say the numbers are still in that general neighborhood. It's probably a touch larger today, but it's generally in the same ballpark.

Michael J. Franco: Good morning, John. You know, I would say, I would say the number's still in that general neighborhood. It's probably a touch larger today, but it's generally in the same ballpark. You know, I think in terms of thinking about it, you know, probably 10% to 12% comes in, you know, per quarter over the next couple of years, from a pacing standpoint. You know, there are some offsets, whether it's expiries, vacancies, you know, et cetera. I think Steve, on the last call, you know, sort of said, from a modeling standpoint, you know, assume $0.40 a share flows through, you know, to the bottom line. We're gonna stick with that for now. That'll give you a sense in terms of the pacing of that $200-ish million.

Michael Franco: Good morning, John. You know, I would say, I would say the number's still in that general neighborhood. It's probably a touch larger today, but it's generally in the same ballpark. You know, I think in terms of thinking about it, you know, probably 10% to 12% comes in, you know, per quarter over the next couple of years, from a pacing standpoint.

Speaker #5: And I think in terms of thinking about it, probably 10 to 12 percent comes in per quarter over the next couple of years. From a pacing standpoint, there are some offsets.

Michael Franco: You know, there are some offsets, whether it's expiries, vacancies, you know, et cetera. I think Steve, on the last call, you know, sort of said, from a modeling standpoint, you know, assume $0.40 a share flows through, you know, to the bottom line. We're gonna stick with that for now. That'll give you a sense in terms of the pacing of that $200-ish million. That started this Q1.

Speaker #5: Whether it's experies, vacantsies, etc., I think Steve on the last call sort of said from a modeling standpoint, assume 40 cents a share flow through to the bottom line.

Speaker #5: So we're going to stick with that for now. But that'll give you a sense in terms of the pacing of that 200-ish million dollars.

Speaker #5: And that started this first quarter.

Michael J. Franco: That started this Q1.

Speaker #3: Thank you. Our next question today comes from Floris Van Dijkham with Lattenberg. Please go ahead.

Operator 2: Thank you. Our next question today comes from Floris van Dijkum with Ladenburg. Please go ahead.

Operator: Thank you. Our next question today comes from Floris van Dijkum with Ladenburg. Please go ahead.

Speaker #7: Hey, thanks, guys. Appreciate some more color on that large S&O pipeline. Could you maybe just expand on that a little bit? What percentage of that S&O pipeline is in the pen district, and how much of your does it include retail leases?

Floris van Dijkum: Hey, thanks, guys. Appreciate some more color on that large SNO pipeline. Could you maybe just expand on that a little bit? What percentage of that SNO pipeline is in the Penn District, and how much of your does it include retail leases? You've done some leasing on Upper Fifth Avenue in particular. Maybe if you give us a little bit more color, you know, the Penn District versus other areas in your portfolio.

Speaker #7: You've done some leasing on upper Fifth Avenue in particular. Maybe if you give us a little bit more color the pen district versus other areas in your portfolio.

Speaker #4: Good morning, Floris. That number is pretty much all office, so I can't give you the retail number as we sit here right now. Obviously, the lease with Meta is a big positive.

Michael J. Franco: Morning, Floris. You know, that number is pretty much all office. I can't give you the retail number as we sit here right now. Obviously, the lease with Meta is a big positive. In terms of the 200, in terms of Penn versus others, I would say it's probably two-thirds Penn.

Michael Franco: Morning, Floris. You know, that number is pretty much all office. I can't give you the retail number as we sit here right now. Obviously, the lease with Meta is a big positive. In terms of the 200, in terms of Penn versus others, I would say it's probably two-thirds Penn.

Speaker #4: And in terms of the 200, in terms of pen versus others, I would say it's probably two-thirds pen. It should not be surprising given the lease up to pen too and the balance in pen one.

Floris van Dijkum: Thank you.

Michael J. Franco: surprising given the lease up at Penn 2 and the balance in Penn 1.

Michael Franco: surprising given the lease up at Penn 2 and the balance in Penn 1.

Speaker #7: And maybe my follow-up question as it relates to your Park Avenue Plaza acquisition. I mean, what caused that deal to happen? Why did the Fisher Brothers, I guess, sell out?

Floris van Dijkum: Maybe my follow-up question, as it relates to your Park Avenue Plaza acquisition. I mean, what caused that deal to happen? Why did the Fisher Brothers, I guess, you know, sell out? It looks like it's like a 6, 7 yield on cost, if I'm not mistaken, to get to the $0.10 accretion. That seems pretty attractive. Is that a cash yield or is that a GAAP yield? How much of a mark-to-market? How much more growth in terms of earnings do you expect to get from that property going forward?

Speaker #7: It looks like it's like a six, seven yield on cost, if I'm not mistaken, to get to the 10 cent accretion. That seems pretty attractive.

Speaker #7: Is that a cash yield, or is that a gap yield? And how much of a mark-to-market how much more growth in terms of earnings do you expect to get from that property going forward?

Michael J. Franco: I honestly like to remember everything you asked here, Floris. Look, we're thrilled about the acquisition. You know, these types of assets don't trade very often on Park Avenue. It's certainly one of the best assets on Park Avenue. And, you know, in terms of the yields on a cash basis, you know, given the in-place debt, it's, you know, roughly 8%. On a GAAP basis, it's, you know, well into double digits. As Steve said in his remarks, you know, rents are, you know, well below market here. You know, probably, at least $50 a foot below market. Over time, you know, things are not static. There's action with tenants. We'll capture that. And that's without, you know, rents growing.

Speaker #4: All right. Let me see if I can remember everything you asked there, Floris. Look, we're thrilled about the acquisition. These types of assets don't trade very often on Park Avenue.

Michael Franco: I honestly like to remember everything you asked here, Floris. Look, we're thrilled about the acquisition. You know, these types of assets don't trade very often on Park Avenue. It's certainly one of the best assets on Park Avenue.

Speaker #4: It's certainly one of the best assets on Park Avenue. And in terms of the yields on a cash basis, given the inflated debt, it's roughly 8%.

Michael Franco: And, you know, in terms of the yields on a cash basis, you know, given the in-place debt, it's, you know, roughly 8%. On a GAAP basis, it's, you know, well into double digits. As Steve said in his remarks, you know, rents are, you know, well below market here. You know, probably, at least $50 a foot below market. Over time, you know, things are not static. There's action with tenants. We'll capture that. And that's without, you know, rents growing.

Speaker #4: On a gap basis, it's well under the double digits. And as Steve said in his remarks, rents are well below market here. Probably at least $50 a foot below market.

Speaker #4: So over time, things are not static. There's action with tenants. We'll capture that. And that's without rents growing. So if rents grow further, that gap should widen.

Michael J. Franco: If rents grow further, that gap should widen. We're excited. By the way, the Fisher family did not sell out. They remain. They still hold their 51%. I think their track record of performance on the asset is stellar. It's a blue-chip set of tenants. They're leased long term. You know, they're quite effective at signing long-term leases with high-quality tenants, and that's reflected in this asset. The tenants, you know, some of which we spoke to about their experience, you know, couldn't have raved any more about the quality of the asset, and they have grown, you know, over time there. We're excited about the asset. We think there's tremendous value to be created over time.

Michael Franco: If rents grow further, that gap should widen. We're excited. By the way, the Fisher family did not sell out. They remain. They still hold their 51%. I think their track record of performance on the asset is stellar. It's a blue-chip set of tenants. They're leased long term.

Speaker #4: So we're excited. By the way, the Fishers did not sell out. They remained. They still hold their 51%. And I think their track record of performance on the asset is stellar.

Speaker #4: It's a blue-chip set of tenants. They're leased long-term. They're quite effective at signing long-term leases with high-quality tenants, and that's reflected in this asset.

Michael Franco: You know, they're quite effective at signing long-term leases with high-quality tenants, and that's reflected in this asset. The tenants, you know, some of which we spoke to about their experience, you know, couldn't have raved any more about the quality of the asset, and they have grown, you know, over time there. We're excited about the asset. We think there's tremendous value to be created over time.

Speaker #4: And the tenants some of which we spoke to about their experience couldn't have raved any more about the quality of the asset and they have grown over time there.

Speaker #4: So we're excited about the asset. We think there's tremendous value to be created over time. And so I think I addressed all your comments or questions.

Michael J. Franco: I think I addressed all your comments or questions.

Michael Franco: I think I addressed all your comments or questions.

Speaker #3: Thank you. Our next question today comes from Alexander Goldfarb at Piper Sandler. Please go ahead.

Operator 2: Thank you. Our next question today comes from Alexander Goldfarb at Piper Sandler. Please go ahead.

Operator: Thank you. Our next question today comes from Alexander Goldfarb at Piper Sandler. Please go ahead.

Speaker #8: Hey, good morning, down there. And Steve, yeah, echoing, appreciate your comments. Upfront, just crazy. But thank you for your statements. Michael, just following up on Floris's question, the two items in the 26 guidance, one, the 10-cent accretion for Park Avenue, was that gap impact or that's the cash just as we think about FFO?

Alexander Goldfarb: Hey. Good morning down there. Steve, yeah, echoing, appreciate your comments upfront. Just crazy. Thank you for your statements. Michael, just following up on Floris's question. The two items in the 2026 guidance. One, the $0.10 accretion, you know, for Park Avenue, was that the GAAP impact or that's the cash, just as we think about FFO? The second part of that guidance question is there was an item about the master lease changing at 350, and just wanna know how that impacts the earnings for this year. That's my first question.

Speaker #8: And then the second part of that guidance question is there was an item about the master lease changing at 350. And just want to know how that impacts the earnings for this year.

Speaker #8: That's my first question.

Michael J. Franco: Park Avenue Plaza, the $0.10, by the way, is a full year run rate. Obviously we're not gonna have that, you know, for 2026. That's a GAAP number. On the 350, you know, the change there was done given, you know, Citadel wanted to kick off the development. They wanted to vacate. We couldn't start demolition without defeasing the old CMBS loan. That loan was defeased, as you saw in our Q. The master lease was modified. There were a number of changes made to the documents. That was a negative to 2026 earnings, which, you know, when we talked about it, we've given our comments.

Speaker #4: Park Avenue Plaza to the 10 cents by way as a full-year run rate. So obviously, we're not going to have that for 26. That's a gap number.

Michael Franco: Park Avenue Plaza, the $0.10, by the way, is a full year run rate. Obviously we're not gonna have that, you know, for 2026. That's a GAAP number. On the 350, you know, the change there was done given, you know, Citadel wanted to kick off the development. They wanted to vacate. We couldn't start demolition without defeasing the old CMBS loan. That loan was defeased, as you saw in our Q. The master lease was modified. There were a number of changes made to the documents. That was a negative to 2026 earnings, which, you know, when we talked about it, we've given our comments.

Speaker #4: And on the 350, the change there was done given Citadel wanted to kick off the development. They wanted to vacate. We couldn't start demolition without defeasing the old CMBS loan.

Speaker #4: And so that loan was defeased, as you saw in our queue. The master lease was modified. There were a number of changes made in the documents.

Speaker #4: And so that was a negative to 26 earnings, which when we talked about it, we've given our comments.

Steven Roth: Alexander, the deal always contemplated that when Citadel vacated the building so that the building would be demolished, that the rent would be reduced.

Speaker #8: Alex, the deal always contemplated that, when Citadel vacated the building so that the building would be demolished, the rent would be reduced.

Michael J. Franco: Even go away.

Speaker #4: Or even go away.

Michael Franco: Even go away.

Steven Roth: The earnings ding by that reduction, much of it will be made up by capitalizing interest, et cetera. What exactly is gonna happen?

Speaker #8: The earnings ding by that reduction, much of it will be made up by capitalizing interest, etc. So while the earnings—what exactly is going to happen?

Steven Roth: The earnings ding by that reduction, much of it will be made up by capitalizing interest, et cetera. What exactly is gonna happen?

Speaker #5: So in 2026, for the next few months until we decide whether we're going into the JV, there's a wash. There's no earnings coming out of 350 Park.

Thomas Sanelli: In 2026, you know, for the next few months until we decide whether we're going into the JV, there's a wash. There's no earnings coming out of 350 Park. Once we make that decision, assuming we go into the JV, we're gonna start capitalizing interest and costs. You'll start seeing.

Speaker #5: Once we make that decision, assuming we go into the JV, we're going to start capitalizing interest and cost. And so you'll start seeing.

Steven Roth: Will that equal, exceed what, or be less than the $36 million?

Speaker #8: Will that equal, exceed, or be less than the 36 figure?

Steven Roth: Will that equal, exceed what, or be less than the $36 million?

Thomas Sanelli: It initially will be a little less, and then it eventually, over 2027, 2028, 2029, basically equates to what we were getting.

Speaker #5: Initially, it'd be a little less. And then it eventually over 27, 28, 29, basically equates to what we were getting.

Speaker #4: But for five or six months, there's a negative ding given the master lease. But again, that's previously communicated, Alex. Does that satisfy you, Alex?

Michael J. Franco: For five or six months there's a negative ding given the master lease. Again, that's previously communicated out.

Michael Franco: For five or six months there's a negative ding given the master lease. Again, that's previously communicated out.

Steven Roth: Does that satisfy you, Alex?

Alexander Goldfarb: That's awesome. Second question, Steve, is big picture. You know, with regard to Citadel and the whole, you know, tension with the mayor. You know, back in 2019, Amazon wanted to open in Queens. They were rebuffed, I don't recall this amount of instant, you know, negativity and political nervousness. Today, it's clearly, you know, escalated a lot quicker. What do you think has changed? I mean, certainly politics have become more left, more progressive here, why do you think, Ken, this time the politicians seem to be much more eager to make this everyone be happy versus Amazon, the city and the state seemed happy, you know. It wasn't even a ripple when Amazon walked from Queens. It doesn't seem that. What's the difference now versus then?

Speaker #8: That's awesome. Second question, Steve, is big picture. With regard to Citadel and the whole tension with the mayor—back in 2019, Amazon wanted to open in Queens.

Speaker #8: They were rebuffed. But I don't recall this amount of instant negativity and political nervousness today. It's clearly escalated a lot quicker. What do you think has changed?

Alexander Goldfarb: What do you think has changed? I mean, certainly politics have become more left, more progressive here, why do you think, Ken, this time the politicians seem to be much more eager to make this everyone be happy versus Amazon, the city and the state seemed happy, you know. It wasn't even a ripple when Amazon walked from Queens. It doesn't seem that. What's the difference now versus then?

Speaker #8: I mean, certainly, politics have become more left, more progressive here. But why do you think this time the politicians seem to be much more eager to make everyone happy, versus Amazon, the city, and the state just seeming happy?

Speaker #8: It wasn't even a ripple when Amazon walked from Queens. It doesn't seem that. What's the difference now versus then?

Steven Roth: Gee, I don't know. You know, you're correct that the body politics doesn't seem to have any remorse about losing Amazon. On the other hand, the body politics thinks that the Citadel team is important and an enormous contributor. There is a significant feeling amongst the political leadership and the business leadership that this was a mistake, which I described as a blunder. You know, this is something that should be repaired. We'll see where it goes.

Speaker #4: Gee, I don't know. But you're correct that the body politic doesn't seem to have any remorse about losing Amazon. On the other hand, the body politics thinks that the Citadel team is important.

Speaker #4: And the enormous contributor and there is a significant feeling amongst the political leadership and the business leadership that this was a mistake which I described as a blunder.

Speaker #4: And this is something that should be repaired. And we'll see where it goes.

Speaker #3: Thank you. Our next question today comes from Dylan Brzezinski at Green Street. Please go ahead.

Operator 2: Thank you. Our next question today comes from Dylan Burzinski at Green Street. Please go ahead.

Operator: Thank you. Our next question today comes from Dylan Burzinski at Green Street. Please go ahead.

Speaker #9: Hi, guys. Thanks for taking the question. Michael, I think you mentioned that pricing has widened given some capital markets volatility associated with the war in Iran.

Dylan Burzinski: Hi, guys. Thanks for taking the question. Michael, I think you mentioned that pricing has widened given some capital markets volatility associated with the war in Iran. Curious if you can just provide more color on that, and then maybe if you can sort of flavor in some commentary around I think last quarter you guys mentioned looking to put assets in the market. Just sort of any sort of color you can provide on sort of how those processes are going.

Speaker #9: Curious if you can just provide more color on that. And then maybe if you can sort of flavor in some commentary around, I think last quarter you guys mentioned looking to put assets in the market, and just sort of any sort of color you can provide on how those processes are going.

Speaker #4: Yeah. On the financing markets, financing markets were incredibly strong in the last year, beginning of this year, as tight as spreads as we had seen in some time.

Michael J. Franco: You know, financing markets were incredibly strong in the last year, beginning of this year. As tight a spread as we had seen in some time. You know, given the volatility, it's backed off a little bit. Like, there's still depth in the market. Deals still can get done, particularly for high-quality assets. I wouldn't call it a huge impact, the reality is, look, treasuries are probably up 30 basis points or so, and the spreads have widened that a little bit, so that makes the borrowing costs a little wider. You know, not wildly different. You know, this is still a very functioning marketplace for high-quality assets. You know, off maybe 40, 50 basis points in tow.

Michael Franco: You know, financing markets were incredibly strong in the last year, beginning of this year. As tight a spread as we had seen in some time. You know, given the volatility, it's backed off a little bit. Like, there's still depth in the market. Deals still can get done, particularly for high-quality assets.

Speaker #4: Given the volatility that's backed off a little bit, there's still depth in the market. Deals still can get done, particularly for high-quality assets. I wouldn't call it a huge impact.

Michael Franco: I wouldn't call it a huge impact, the reality is, look, treasuries are probably up 30 basis points or so, and the spreads have widened that a little bit, so that makes the borrowing costs a little wider. You know, not wildly different. You know, this is still a very functioning marketplace for high-quality assets. You know, off maybe 40, 50 basis points in tow.

Speaker #4: But the reality is, look, treasuries are probably up 30 basis points or so and spreads have widened out a little bit. So that makes the borrowing costs a little wider.

Speaker #4: But not wildly different. Just this is still a very functioning marketplace for high-quality assets. But off maybe 40, 50 basis points in total. I'm glad we did what we did when we did it.

Michael J. Franco: I'm glad we did what we did, you know, when we did it. You know, we're not really dealing in today's markets, but again, you can get deals done. You know, on the asset sales side, I think Steve referenced, you know, we're working on some asset sales. That is true. You know, when we have something ready to announce, we'll announce. The answer is we got a few things that are meaningful in the pipeline. We're in active discussions with potential buyers. I would say the interest in New York City, as I said in my remarks, you know, continues to expand in terms of the type of buyer.

Michael Franco: I'm glad we did what we did, you know, when we did it. You know, we're not really dealing in today's markets, but again, you can get deals done. You know, on the asset sales side, I think Steve referenced, you know, we're working on some asset sales.

Speaker #4: So we're not really dealing in today's markets. But again, you can get deals done. On the asset sale side, I think Steve referenced we're working on some asset sales.

Speaker #4: And in that, it is true. And when we have some rate announced, we'll announce. But the answer is, we've got a few things that are meaningful in the pipeline.

Michael Franco: That is true. You know, when we have something ready to announce, we'll announce. The answer is we got a few things that are meaningful in the pipeline. We're in active discussions with potential buyers. I would say the interest in New York City, as I said in my remarks, you know, continues to expand in terms of the type of buyer.

Speaker #4: We're in active discussions with potential buyers. I would say the interest in New York City, as I said in my remarks, continues to expand in terms of the type of buyer.

Michael J. Franco: You know, I think there is consensus on, you know, New York being head and shoulders the best market. You know, rents are rising, assets are at a discount to replacement cost is a recognition there's not a lot of supply coming. I think global capital has a lot of comfort in it. I think, you know, one of the things we're hearing from capital sources around the world is, you know, the US remains the safest, most liquid market, particularly given everything going on around the world. I think you're gonna continue to see capital emanate from other parts of the world to come into the US. I mean, New York City is gonna get a heavily disproportionate share of that. That's, that's what we're seeing. When we have specifics to announce, we'll announce it.

Speaker #4: I think there is consensus on New York being head and shoulders best market. Assets are rents are rising. Assets are at a discount or replacement cost as a recognition there's not a lot of supply coming.

Michael Franco: You know, I think there is consensus on, you know, New York being head and shoulders the best market. You know, rents are rising, assets are at a discount to replacement cost is a recognition there's not a lot of supply coming. I think global capital has a lot of comfort in it.

Speaker #4: And so I think global capital has a lot of comfort in it. I think one of the things we're hearing from capital sources around the world is the US remains the safest, most liquid market, particularly given everything going on around the world.

Michael Franco: I think, you know, one of the things we're hearing from capital sources around the world is, you know, the US remains the safest, most liquid market, particularly given everything going on around the world. I think you're gonna continue to see capital emanate from other parts of the world to come into the US. I mean, New York City is gonna get a heavily disproportionate share of that. That's, that's what we're seeing. When we have specifics to announce, we'll announce it. We're encouraged by what we're working on.

Speaker #4: And I think you're going to continue to see capital emanate from other parts of the world to come into the US. And I think New York City is going to get a heavily disproportionate share of that.

Speaker #4: So that's what we're seeing. And when we have specifics to announce, we'll announce it. But we're encouraged by what we're working on.

Michael J. Franco: We're encouraged by what we're working on.

Speaker #9: And then just on the rent growth piece, I think several quarters ago, I asked 20, 25 percent rent growth if you saw that over the next five years, what were your thoughts would be on that?

Dylan Burzinski: Just on the rent growth pie-piece, I think, you know, several quarters ago, I asked, you know, 20% to 25% rent growth, if you saw that over the next 5 years, you know, what were your thoughts would be on that? Steve, I think you mentioned, like, while that's good, that would be disappointing given everything you're seeing on the supply and demand imbalance, especially for high-quality office. I mean, can you guys just talk about how far rent growth could go in your mind? Has your thoughts around that 25% cumulative rent growth figure changed at all?

Speaker #9: Steve, I think you mentioned while that's good, that would be disappointing given everything you're seeing on the supply and demand imbalance, especially for high-quality office.

Speaker #9: I mean, can you kind of just talk about how far rent growth could go in your mind? And has your thoughts around that 25% cumulative rent growth figure changed at all?

Speaker #4: I think we'd still be disappointed in that, Dylan. Look, as I think we've said in the last couple of calls, right, the backdrop for offers is as favorable as it's been in a long, long time.

Michael J. Franco: I think we'd still be disappointed in that, Dylan. You know, look, is I think we've said on the last couple of calls, right? The backdrop for office is as favorable as it's been in, you know, a long, long time. It's very difficult to add supply here, which at some point, you know, we're gonna need. You know, there's gonna be a building a year maybe as we get into the next decade. You know, that's very little. At the same time, we have supply coming out of the bottom end of the market. You know, the fundamentals are great. Companies, as we've said, you know, continue to want to grow here. You know, we're seeing, you know, still significant activity from the financial service sector, law firms, accounting firms.

Michael Franco: I think we'd still be disappointed in that, Dylan. You know, look, is I think we've said on the last couple of calls, right? The backdrop for office is as favorable as it's been in, you know, a long, long time. It's very difficult to add supply here, which at some point, you know, we're gonna need. You know, there's gonna be a building a year maybe as we get into the next decade.

Speaker #4: And it's very difficult to add supply here. Which at some point, we're going to need. So there's going to be a building a year, maybe, as we get into the next decade.

Speaker #4: But that's very little. At the same time, we have supply coming out of the bottom end of the market. So the fundamentals are great.

Michael Franco: You know, that's very little. At the same time, we have supply coming out of the bottom end of the market. You know, the fundamentals are great. Companies, as we've said, you know, continue to want to grow here. You know, we're seeing, you know, still significant activity from the financial service sector, law firms, accounting firms.

Speaker #4: Companies as we've said continue to want to grow here. We're seeing still significant activity from the financial service sector, law firms, accounting firms. Frankly, AI has picked up more recently.

Michael J. Franco: You know, frankly, AI has picked up, you know, more recently. I think all that, you know, results in, you know, rents continuing to rise. You know, I don't know that it makes sense to give you a prediction, but we'd be disappointed at 25% over 5 years. I don't know. You wanna add any comments on what you're seeing from-

Michael Franco: You know, frankly, AI has picked up, you know, more recently. I think all that, you know, results in, you know, rents continuing to rise. You know, I don't know that it makes sense to give you a prediction, but we'd be disappointed at 25% over 5 years. I don't know. You wanna add any comments on what you're seeing from-

Speaker #4: So I think all that results in rents continuing to rise. So I don't know that it makes sense to give you a prediction. But we'd be disappointed at 25% over five years.

Speaker #4: I don't know. You want to add any comments on what you're seeing from?

Speaker #5: I mean, look, rent sensitivity is not even high on the list right now. Tenants want to be in the best buildings with the best landlords.

Glen Weiss: I mean.

Michael J. Franco: Go ahead, Glen.

Michael Franco: Go ahead, Glen.

Glen Weiss: these tenants, rent sensitivity is not even high on the list right now. Tenants wanna be in the best buildings with the best landlords. If you think about our leasing performance, $100 a foot's become the norm for us because of the quality of our product. You know, over the past 8, 9 quarters, our average starting rent's $100 a foot. That's a great trend. You know, as we go on here, the way we're shaping the portfolio with the addition of 623 Park Avenue Plaza, the new 350 Park, I mean, we think, you know, rents are gonna continue to spike. The way we're balanced on the west side and now Park Avenue, we're really excited about that. We think we're in perfect position for what's to come on rents and tenant demand.

Speaker #5: And if you think about our leasing performance, $100 a foot's become the norm for us because of the quality of our product. I mean, over the past eight, nine quarters, our average starting rent's $100 a foot.

Speaker #5: That's a great trend. So as we go on here and the way we're shaping the portfolio with the addition of 623 Park Avenue Plaza, the new 350 Park, I mean, we think rents are going to continue to spike.

Glen Weiss: That's a great trend. You know, as we go on here, the way we're shaping the portfolio with the addition of 623 Park Avenue Plaza, the new 350 Park, I mean, we think, you know, rents are gonna continue to spike. The way we're balanced on the west side and now Park Avenue, we're really excited about that. We think we're in perfect position for what's to come on rents and tenant demand.

Speaker #5: And the way we're balanced on the west side and now Park Avenue, we're really excited about that. We think we're in perfect position for what's to come on rents.

Speaker #5: And tenant demand.

Speaker #3: Thank you. Our next question today comes from Yana Gallen with Bank of America. Please go ahead.

Operator 2: Thank you. Our next question today comes from Jana Galan with Bank of America. Please go ahead.

Operator: Thank you. Our next question today comes from Jana Galan with Bank of America. Please go ahead.

Speaker #10: Good morning. Thank you and congrats on the strong start to the year. Michael, appreciate your comments on the 2026 FFO now expected to exceed 25.

Jana Galan: Good morning. Thank you, and congrats on the strong start to the year. Michael, appreciate your comments on the 2026 FFO now expected to exceed $25. Just curious if that's primarily from the Park Avenue Plaza closing in Q2 or also from Q1 being slightly ahead and carrying throughout the year.

Speaker #10: Just curious if that's primarily from the Park Avenue Plaza closing in two Q or also from one Q being slightly ahead and carrying throughout the year.

Michael J. Franco: I'd say it's the latter.

Speaker #4: I'd say it's the latter.

Michael Franco: I'd say it's the latter.

Speaker #10: Great. And then maybe on 555 California, if you could give some update on kind of demand, leasing, and rents there. And our AI tenants becoming a bigger part of the pipeline there and in the New York pipeline as well.

Jana Galan: Great. Maybe on 555 California, if you could give some update on kind of demand leasing and rents there, are AI tenants becoming a bigger part of the pipeline there and in the New York pipeline as well?

Speaker #4: Got it. Because it's Glenn. How are you? So, rents in San Francisco are rising a lot. As I said earlier, our rents in the Tower of Now have gone north of $106 a foot for substantial leases—50,000 feet and greater, not small deals.

Glen Weiss: Hi. Yeah, well, thank you, Glen. How are you? Rents in San Francisco are rising a lot. As I said earlier, our rents in the tower have now gone north of $160 a foot for substantial leases, 50,000 feet and greater, not small deals. We are leading the market by far at 555 Cal. We are also seeing a lot of really good activity at 315 Montgomery in the campus with more technology, AI-type tenants. Certainly, that activity we're seeing at our project, at our complex as well. You know, other than tech and AI, financial services is growing in San Francisco, something we've kept a very keen eye on, as well as law firms. It isn't just AI, although it's helping a lot as the city improves.

Speaker #4: So we are leading the market by far at 555 Cal. We're also seeing a lot of really good activity at 315 Montgomery in the campus.

Glen Weiss: We are also seeing a lot of really good activity at 315 Montgomery in the campus with more technology, AI-type tenants. Certainly, that activity we're seeing at our project, at our complex as well. You know, other than tech and AI, financial services is growing in San Francisco, something we've kept a very keen eye on, as well as law firms. It isn't just AI, although it's helping a lot as the city improves.

Speaker #4: With more technology, AI-type tenants. So certainly, that activity we're seeing at our project at our complex as well. But other than tech and AI, financial services is growing in San Francisco.

Speaker #4: Something we've kept a very keen eye on. As well as law firms. So it isn't just AI, although it's helping a lot as the city improves.

Speaker #4: But the other industry sectors are really coming on strong. And the city overall feels great. I was out there a few months ago, walking the streets, meeting with people.

Glen Weiss: The other industry sectors are really coming on strong, and the city overall feels great. I was out there a few months ago, walking the streets, meeting with people. It's really feeling good out there, and people are very positive again in San Francisco.

Speaker #4: It's really feeling good out there, and people are very positive again in San Francisco.

Speaker #3: Thank you. Our next question today comes from Anthony Paulone with JPMorgan. Please go ahead.

Operator 2: Thank you. Our next question today comes from Anthony Paolone with J.P. Morgan. Please go ahead.

Operator: Thank you. Our next question today comes from Anthony Paolone with J.P. Morgan. Please go ahead.

Anthony Paolone: Great. Thanks. You talked about having some assets out in the market for sale, but if we think about just, you know, whether it's 350, 54th Street and then Fifth Avenue, some of these projects that are gonna be in the pipeline, how are you thinking about just your pro rata leverage level over the next couple of years, and whether there's gonna likely be a bigger disposition program or whether you think, you know, you'll just use project financing and take on a bit more leverage?

Speaker #11: Great. Thanks. You talked about having some assets out in the market for sale. But if we think about just whether it's 350, 54th Street, and then 5th Avenue, some of these projects that are going to be in the pipeline, how are you thinking about just your pro rata leverage level over the next couple of years and whether there's going to likely be a bigger disposition program or whether you think you'll just use project financing and take on a bit more leverage?

Speaker #12: Morning, Tony. We've got the capital earmarked for all these opportunities. In our cash forecast, we've got some asset sales in the works that we obviously have a lot going on between these investments.

Michael J. Franco: Morning, Anthony. You know, we've got, you know, the capital earmarked for all these opportunities, you know, in our cash forecast. You know, we've got some asset sales in the works that. Look, we obviously have a lot going on between these investments that we've made recently, you know, 623 Park Avenue Plaza, the buybacks, some of the future developments. You know, what I would say about the future developments, something like a 350. You know, the bulk of our equity is coming from our land contribution, right? Any incremental capital is really not required from Vornado for probably close to 3 years. We've got, you know, ample time to plan for that and so forth.

Michael Franco: Morning, Anthony. You know, we've got, you know, the capital earmarked for all these opportunities, you know, in our cash forecast. You know, we've got some asset sales in the works that. Look, we obviously have a lot going on between these investments that we've made recently, you know, 623 Park Avenue Plaza, the buybacks, some of the future developments.

Speaker #12: We've made recently 623 Park Avenue Plaza. The buybacks, some of the future developments. What I would say about the future developments, something like a 350, the bulk of our equity is coming from our land contribution, right?

Michael Franco: You know, what I would say about the future developments, something like a 350. You know, the bulk of our equity is coming from our land contribution, right? Any incremental capital is really not required from Vornado for probably close to 3 years. We've got, you know, ample time to plan for that and so forth.

Speaker #12: So any incremental capital is really not required from Vornado for probably close to three years. So we've got ample time to plan for that.

Speaker #12: And so forth. So when you look at our sort of capital needs, if you will, over the next few years, it's fairly well laddered.

Michael J. Franco: When you look at our sort of capital needs, if you will, over the next few years, you know, it's fairly well-laddered. You know, at the same time, you know, as we execute, hopefully on some of these asset sales, that's gonna give us some additional firepower, frankly, beyond just, you know, what we're talking about in terms of these developments.

Michael Franco: When you look at our sort of capital needs, if you will, over the next few years, you know, it's fairly well-laddered. You know, at the same time, you know, as we execute, hopefully on some of these asset sales, that's gonna give us some additional firepower, frankly, beyond just, you know, what we're talking about in terms of these developments.

Speaker #12: But at the same time, as we execute, hopefully on some of these asset sales, that's going to give us some additional firepower frankly, beyond just we're talking about in terms of these

Speaker #4: If you look at our history, if you look at our history with respect to capital planning, we have three or four things that we have historically done.

Steven Roth: If you look at our history, with respect to capital planning, we have three or four things that we have historically done. Number one, we generally hold billion-dollar plus cash balances. The second is that we almost always pre-fund well in advance of our capital needs. For example, we loaded in, I don't know, 2, $2.5 billion of capital 2 years before we started the Penn One and Penn Two developments. That notwithstanding the fact that the capital markets got a little bit rough and volatile when we were actually building, we had the capital on our balance sheet. That's what you can look at for what we do. The other thing is that we like to operate with lower rather than higher debt levels for the obvious reason.

Speaker #4: Number one, we generally hold billion-dollar-plus cash balances. The second is that we almost always pre-fund well in advance of our capital needs. So for example, we loaded in, I don't know, two, two and a half billion dollars of that notwithstanding the fact that the rough and volatile when we were actually building, we had the capital on our balance capital markets got a little bit what you can look at for what we do.

Steven Roth: That notwithstanding the fact that the capital markets got a little bit rough and volatile when we were actually building, we had the capital on our balance sheet. That's what you can look at for what we do. The other thing is that we like to operate with lower rather than higher debt levels for the obvious reason.

Speaker #4: The other thing is that we like to operate with lower rather than higher debt levels for the obvious reason. The last is that our philosophy is that we like non-recourse project-level debt as opposed to unsecured credit, which basically makes the entire corpus I guess you could say personally liable.

Steven Roth: The last is that our philosophy is that we like non-recourse project-level debt as opposed to unsecured credit, which basically makes the entire corpus, I'd like the I guess you could say personally liable. We like non-recourse project-level debt, which is the majority of the way we finance our business.

Speaker #4: So we like non-recourse project-level debt, which is the majority of the way we finance our business.

Speaker #11: Okay. Got it. And then just follow-up question on the leasing side. I think there's about 600,000

Anthony Paolone: Okay, got it. Then, just a follow-up question on the leasing side. I think there's about 600,000 sq ft in Q4, that comes up. Is there anything larger in there that's a known vacate? I just can't remember if there's any big deals in that mix to watch out for.

Speaker #11: square feet in the fourth sheet.

Speaker #11: quarter So that's that comes up. Is there anything larger in there that's a known vacate? I just can't remember if there's any big deals in that mix to watch out for.

Glen Weiss: There's Glen Weiss. There's 2 larger tenants expiring in H2 of this year, and we believe both will renew their leases, so we feel good about our expirations for the remainder of 2026. As you would expect, we're all over the 2027, 2028 expirations as well. 2026, we're pretty well taken care of. We feel good about what's gonna happen.

Speaker #4: It's Glenn Height. There's two larger tenants expired in the second half of this year. And we believe both will renew their leases. So we feel good about our expirations.

Speaker #4: For the remainder of '26. And as you would expect, we're all over the '27, '28 expirations as well. But '26, we're pretty well taken care of.

Speaker #4: We feel good about what's going to happen.

Speaker #3: Thank you. Our next question today comes from Victor Moholtra with Mizuho. Please go ahead.

Operator 2: Thank you. Our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Operator: Thank you. Our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Speaker #13: Morning. Thanks for getting the questions. I guess first one, given all the kind of activity you've had with all the PEN assets, any update on hotel PEN and Manhattan Mall in terms of users, monetization, etc.?

Vikram Malhotra: Morning. Thanks for taking the question. I guess first one, you know, given all the kind of activity you've had with all the Penn assets, any update on Hotel Penn and Manhattan Mall in terms of, you know, users, monetization, et cetera?

Speaker #4: No update.

Steven Roth: No update.

Speaker #13: Okay. And then just on the earnings side, you mentioned 2027 FFO, nice pickup. I'm wondering, two things: one, are there any offsets we should be thinking about for '27?

Vikram Malhotra: Okay. Just on the earnings side, you mentioned 2027 FFO, nice pickup. I'm wondering, you know, two things. One, are there any offsets we should be thinking about for 2027? In particularly FAD, given the, you know, ramp in FFO, I'm assuming there's still gonna be elevated TI into 2027. Should we think about FAD really, you know, perhaps picking up only in 2028? Thanks.

Speaker #13: And then particularly FAD, given the ramp in FFO, I'm assuming they're still going to be elevated TI. Into '27, so should we think about FAD really perhaps picking up only in '28?

Speaker #13: Thanks.

Speaker #4: Yeah. Good morning, Victor. On the earnings.

Michael J. Franco: Yeah. Good morning, Vikram. You know,

Michael Franco: Yeah. Good morning, Vikram. You know,

Speaker #13: Hey, Victor. I would make one comment, okay? I can't wait for the free rent to burn off. That's when this business will get to be real fun and will generate substantial positive cash.

Steven Roth: Hey, Vikram, I would make one comment, okay? I can't wait for the free rent to burn off. That's when this business will get to be real fun and will generate substantial positive cash. That happens over the next year or two. I can't wait for that. Now go ahead, Michael.

Speaker #13: That happens over the next year or two. I can't wait for that. Now, go ahead, Michael.

Speaker #12: So I.

Michael J. Franco: So, so, uh-

Michael Franco: So, so, uh-

Speaker #13: By the way, Glenn, take note of what I say.

Steven Roth: By the way, Glenn, take note of what I say.

Michael J. Franco: On the FAD side, Vikram, you know, your comment is right? There'll be continued elevated TIs this year, next year. You know, even on deals we've committed this year, you know, tenants sometimes don't call those for a while. That'll go into next year. 2028, you know, we expect to see that drop, you know, materially and cash flow, you know, be much higher. I think your general direction is accurate. On the earnings side, you know, there's always ins and outs, so there's always offsets. I can't tell you specifically what those are, but in the history of Vornado, I think we've given you as much guidance as we can give you with respect to next year in terms of what the bottom line's gonna be.

Speaker #12: So on the FAD side, Victor, your comment is right, right? There'll be continued elevated TIs this year, next year. Even on deals that have committed this year, tenants sometimes don't call those for a while.

Michael Franco: On the FAD side, Vikram, you know, your comment is right? There'll be continued elevated TIs this year, next year. You know, even on deals we've committed this year, you know, tenants sometimes don't call those for a while. That'll go into next year. 2028, you know, we expect to see that drop, you know, materially and cash flow, you know, be much higher.

Speaker #12: So that'll go in the next year. And then '28, we expect to see that drop materially and cash flow be much higher. So I think your general direction is accurate.

Michael Franco: I think your general direction is accurate. On the earnings side, you know, there's always ins and outs, so there's always offsets. I can't tell you specifically what those are, but in the history of Vornado, I think we've given you as much guidance as we can give you with respect to next year in terms of what the bottom line's gonna be.

Speaker #12: On the earnings side, there's always ins and outs. So there's always offsets. I can't tell you specifically what those are, but in the history of Vornado, I think we've given you as much guidance as we can give you with respect to next year in terms of what the bottom line is going to be.

Speaker #3: Thank you. Our next question today comes from Nick Uliko at Scotiabank. Please go ahead.

Operator 2: Thank you. Our next question today comes from Nicholas Yulico at Scotiabank. Please go ahead.

Operator: Thank you. Our next question today comes from Nicholas Yulico at Scotiabank. Please go ahead.

Nicholas Yulico: Thanks. I just wanted to go back to 350 Park and just be clear on a couple things. One, in terms of the, you know, the new $16 million annual rent versus the old rent, did that already happen in Q1? Is that a Q2, you know, accounting impact? I also want to be clear on that new rent that's being paid. What is the maturity on that lease? Is that concurrent with the debt, the new mortgage that matures next year, or does it extend beyond that?

Speaker #14: Thanks. I just wanted to go back to 350 Park and be clear on a couple of things. One, in terms of the new $16 million annual rent versus the old rent, did that already happen in the first quarter?

Speaker #14: Is that a second quarter accounting impact? And then I also want to be clear on that new rent that's being paid. What is the maturity on that lease?

Speaker #14: Does that concurrent with the debt? The new mortgage that matures next year? Is it extend beyond that?

Speaker #12: Good morning, Nick. So on your first question, new rent started—I mean, there are a few days in March where it started, but by and large, it'll be second quarter.

Michael J. Franco: Morning, Nick. On your first question, new rent started I mean, there are a few days in March where it started, but, you know, by and large, it'll be Q2. I don't know, maybe there 15 days in the, in the Q1 where the new rent was reflected.

Michael Franco: Morning, Nick. On your first question, new rent started I mean, there are a few days in March where it started, but, you know, by and large, it'll be Q2. I don't know, maybe there 15 days in the, in the Q1 where the new rent was reflected.

Speaker #12: So I don't know. Maybe there are 15 days in the first quarter. Where the new rent was reflected.

Steven Roth: The new rent is co-terminous with the execution of the new mortgage. I don't know what that date is, but it's a couple of weeks or 3 weeks ago, whatever.

Speaker #4: The new rent is co-terminated with the execution of the new mortgage. So I don't know what that date is, but it's a couple of weeks or three weeks ago or whatever.

Steven Roth: The new rent is co-terminous with the execution of the new mortgage. I don't know what that date is, but it's a couple of weeks or 3 weeks ago, whatever.

Speaker #12: Yeah. So, that's a new lease that runs until early '27. And your question is, why is that? Because there will be a resolution one way or the other.

Michael J. Franco: Yeah. That new lease runs until early 2027. You know, your question is, you know, why is that? Because, you know, there will be a resolution one way or the other. Either the venture will be formed, we'll put the asset, you know, something will happen prior to that maturity.

Michael Franco: Yeah. That new lease runs until early 2027. You know, your question is, you know, why is that? Because, you know, there will be a resolution one way or the other. Either the venture will be formed, we'll put the asset, you know, something will happen prior to that maturity.

Speaker #12: Either the venture will be formed, we'll put the asset. Something will happen. Prior to that maturity.

Speaker #14: Okay. So the rent, that new rent only is only in place until the point at which the mortgage matures. There's no rent being paid beyond that date.

Nicholas Yulico: Okay. The rent, that new rent, only, is only in place until the point at which the mortgage matures. There's no rent being paid beyond that date.

Speaker #14: Onto the new agreement.

Michael J. Franco: Right.

Michael Franco: Right.

Nicholas Yulico: the new agreement.

Speaker #12: Correct. But there'll be a there'll be a resolution, door A or door B before that, which the rent will have gone away anyway.

Michael J. Franco: Correct. There'll be a, you know, there'll be a resolution, door A or door B, before that, which, you know, the rent would've gone away anyway.

Michael Franco: Correct. There'll be a, you know, there'll be a resolution, door A or door B, before that, which, you know, the rent would've gone away anyway.

Steven Roth: There's no building.

Speaker #4: There's no billing. There's no billing for the tenant to pay rent for.

Steven Roth: There's no building.

Nicholas Yulico: Okay.

Steven Roth: There's no building for the tenant to pay rent for.

Speaker #14: Got it. Okay. I just wanted to be clear on that. And then I guess second question is, obviously, I mean, you've talked a lot about you've given some of the breadcrumbs on 2027, how to think about that.

Nicholas Yulico: Got it. Okay. I just wanted to be clear on that. I guess second question is, you know, obviously, you've talked a lot about. You've given some of the breadcrumbs on 2027, how to think about that. You know, it is also 2027 FFO is a piece of the executive comp, you know, per the proxy plan. I guess I'm just wondering, like, if you've any new thoughts on this, Steve, about, you know, finally giving earnings guidance? It's, you know, you're at the point now where the tide is turning. You're being, you know, measured by that from a comp standpoint. Why not give formal FFO guidance at some point?

Speaker #14: It is also 2027 FFO is a piece of the executive comp. Per the proxy plan. So I guess I'm just wondering, if you've any new thoughts on this, Steve, about finally giving earnings guidance?

Speaker #14: You're at the point now where the tide is turning. You're being measured by that from a comp standpoint. Why not give formal FFO guidance at some point?

Steven Roth: Oh, Lord, how do I answer that question? You know, the two sides of it is that, you know, we have a simple business which has complexity, and the numbers are moving. It's very I mean, we find it that it's sort of difficult to guide and counterproductive. Warren Buffett, who's not a friend of mine, but an acquaintance of mine, he didn't guide for his whole career, so that's one thing. The big bank guy, he doesn't guide either. All of our competitors seem to be able to guide, so what's wrong with us? Right now we have no plan to guide, other than the snippets that we put in these calls here and there, which I think, I hope you find helpful.

Speaker #4: Oh, Lord. How do I answer that question? The two sides of it is that we have a simple business which has complexity. And the numbers are moving.

Speaker #4: It's very I mean, we find it that it's sort of difficult to guide and counterproductive. So Warren Buffett, who's not a friend of mine, but an acquaintance of mine, he didn't guide for his whole career.

Steven Roth: Warren Buffett, who's not a friend of mine, but an acquaintance of mine, he didn't guide for his whole career, so that's one thing. The big bank guy, he doesn't guide either. All of our competitors seem to be able to guide, so what's wrong with us? Right now we have no plan to guide, other than the snippets that we put in these calls here and there, which I think, I hope you find helpful.

Speaker #4: So that's one thing. And the big bank guy, he doesn't guide either. But all of our competitors seem to be able to guide. So what's wrong with us?

Speaker #4: But right now, we have no plan to guide. Other than the snippets that we put in these calls here and there, which I think I hope you find all find hopeful.

Speaker #4: Helpful. Now, what I think you're saying is that if our earnings are going to explode upward, why don't we just take a pat on the back for that and guide to that?

Steven Roth: What I think you're saying is that if our earnings are gonna explode upwards, why don't we just take a pat on the back for that and guide to that? That's something that I'm gonna put under my pillow and think about because that sounds like maybe it's a good idea. As of right now, our policy is we selectively and in a limited way guide, but we don't give full guidance. I think you can probably guess that that's gonna continue for the, you know, for the, you know, for the future. Tom, what do you think?

Speaker #4: So that's something that I'm going to put under my pillow and think about because that sounds like maybe it's a good idea. But as of right now, our policy is we selectively and in a limited way guide but we don't guidance.

Speaker #4: And I think you can probably guess that that's going to continue for the future. Tom, what do you think?

Speaker #15: I agree.

Thomas Sanelli: I agree.

Speaker #4: Tom's saying he's happy he doesn't have to guide.

Steven Roth: Thomas's saying he's happy he doesn't have to guide.

Speaker #3: Thank you. And our next question today comes from Seth Bergy at Citi. Please go ahead.

Operator 2: Thank you. Our next question today comes from Seth Bergey at Citi. Please go ahead.

Operator: Thank you. Our next question today comes from Seth Bergey at Citi. Please go ahead.

Speaker #16: Hi. Thanks for taking my question. In the annual shareholder letter, you kind of reference the no sacred cows policy again. It sounds like the New York office trans market is improving.

Seth Bergey: Hi. Thanks for taking my question. In the annual shareholder letter, you kind of referenced, you know, the no sacred cows policy again. It sounds like the New York office trans market is improving. You mentioned possible kind of inflows. You know, given it's a liquid market, and the US is just safety, how do you kind of think about, you know, potential asset sales? Should we think about those being more non-core dispositions or any core asset sales that you're kind of thinking about?

Speaker #16: You mentioned possible kind of inflows. Given it's a liquid market, in the US, it's just safety. How do you kind of think about potential asset sales?

Speaker #16: Should we think about those being more non-core dispositions or any core asset sales that you're kind of thinking about?

Steven Roth: summarize the question for me.

Speaker #4: Summarize the question for me.

Steven Roth: summarize the question for me.

Michael J. Franco: You mentioned your letter, the no sacred cows. Is that just New York, or is that some other assets we should think about non-core dispositions?

Speaker #12: It's kind of you mentioned you added a 'no sacred cows.' Is that just New York, or is that some other assets we should think about—non-core dispositions?

Michael Franco: You mentioned your letter, the no sacred cows. Is that just New York, or is that some other assets we should think about non-core dispositions?

Speaker #4: I mean, I don't want to shock you. But basically, I'm in it for the money. And so therefore, there are no sacred cows. There are assets that are critical to the business.

Steven Roth: I mean, I don't wanna shock you, basically, I'm in it for the money. Therefore, there are no sacred cows. There are assets that are critical to the business. There are assets that are important to the business. There are assets that we love more than other assets. Based upon, price, economics, and business strategy, there are no sacred cows. What does that mean? There's a handful of assets that we actually have already determined that we don't want in the business mix, and those assets are for sale. Our intensive, our intensivity, if that's a word, to liquidate those assets rises and falls with the market. Over a short period of time, there's a handful of assets that will not be part of our portfolio.

Speaker #4: There are assets that are important to the business. There are assets that we love more than other assets. But based upon price, economics, and business strategy, there are no sacred cows.

Speaker #4: Now, what does that mean? There are a there's a handful of assets that we actually have already determined that we don't want in the business mix.

Steven Roth: What does that mean? There's a handful of assets that we actually have already determined that we don't want in the business mix, and those assets are for sale. Our intensive, our intensivity, if that's a word, to liquidate those assets rises and falls with the market. Over a short period of time, there's a handful of assets that will not be part of our portfolio.

Speaker #4: And those assets are for sale. Our intensity—if that's a word—to liquidate those assets rises and falls with the market. But over a short period of time, there's a handful of assets that will not be part of our portfolio.

Steven Roth: Now getting to the rest of it, there are assets that we hold near and dear that we think are very valuable, that we underwrite as being much more valuable than apparently the stock market underwrites it. Even those assets, if I think Sam Zell said a god, the phrase, a godfather bid, if some, you know, very aggressive bid came in for one of those important assets, we would execute on that, because that would be the right thing to do. That's the right thing for us, for the management to do, and more importantly, it's the right thing for the shareholders to do. There are no sacred assets. There are prices that are critical. In terms of whether we would execute on selling something, it's all a function of what the price is.

Speaker #4: Now, getting to the rest of it, there are assets that we hold near and dear that we think are very valuable that we underwrite as being much more valuable than apparently the stock market underwrites it.

Speaker #4: Even those assets if I think Sam Zell said a the phrase a godfather bid if some very aggressive bid came in for one of those important assets, we would execute on that because that would be the right thing to do.

Speaker #4: That's the right thing for the management to do. And more importantly, it's the right thing for the shareholders to do. So there are no sacred assets.

Steven Roth: That's the right thing for us, for the management to do, and more importantly, it's the right thing for the shareholders to do. There are no sacred assets. There are prices that are critical. In terms of whether we would execute on selling something, it's all a function of what the price is.

Speaker #4: There are prices that are critical. But in terms of whether we would execute on selling something, it's all a function of what the price is.

Speaker #16: Great. Thank you. And then for my second question, I guess, how do you think about kind of incremental potential acquisitions versus accelerating the share buyback and balancing that versus your current leverage levels?

Seth Bergey: Great. Thank you. For my second question, I guess, how do you think about kind of incremental, you know, potential acquisitions versus accelerating the share buyback and balancing that versus your current leverage levels?

Speaker #4: So, there are three things inherent in that question. There's acquisitions versus stock acquisition, and leverage levels. So, the answer to that is that we think—no, let me rephrase that.

Steven Roth: There's three things inherent in that question. There's acquisitions versus stock acquisition and leverage levels. The answer to that is that we are certain that we can basically do all three. We are certain that we can buy selectively important assets that come up in the, in the bull's eye location of our heartland. We are certain that we have the capital to buy back our stock in a measured way. We are also certain that we are able to keep our leverage in a to a measured and under control level. We think we can do all of that. We have some things that are in process that will augment all of that.

Speaker #4: We are certain that we can basically do all three. We are certain that we can buy selectively important assets that come up in the bullseye location of our heartlands.

Speaker #4: We are certain that we can we have the capital to buy back our stock. In a measured way. And we are also certain that we are able to keep our leverage in to a measured and under-control level.

Speaker #4: So what we think we can do all of that. And we have some things that are in process that will augment all of that.

Steven Roth: Our two most recent acquisitions of 623 Fifth Avenue, which we think, I mean, I've written about that, and we think is a terrific deal. The Park Avenue Plaza acquisition that we just announced a couple of weeks ago, we think is an equally terrific deal. Then we think buying back our stock at $30 a share is a terrific deal as well. We're doing all of that. I hope that answers your question.

Speaker #4: So our two most recent acquisitions of 623 Fifth Avenue which we think I mean, I've written about that. And we think it's a terrific deal.

Speaker #4: And the Park Avenue Plaza acquisition that we just announced a couple of weeks ago, we think is an equally terrific deal. And then, we think buying back our stock at $30 a share is a terrific deal as well.

Speaker #4: So we're doing all of that. And I hope that answers your question.

Speaker #3: Thank you. Our next question today comes from Caitlin Burrows at Goldman Sachs. Please go ahead.

Operator 2: Thank you. Our next question today comes from Caitlin Burrows at Goldman Sachs. Please go ahead.

Operator: Thank you. Our next question today comes from Caitlin Burrows at Goldman Sachs. Please go ahead.

Speaker #17: Hi. Good morning, everyone. Maybe just on the pricing side, I realized the reported leasing spreads are only on a subset of second generation space.

Caitlin Burrows: Hi. Good morning, everyone. Maybe just on the pricing side, I realize the reported leasing spreads are only on a subset of second generation space. First, I was just wondering if you can go through your expectation today of portfolio mark-to-market across New York, San Francisco, and The Mart. Then also whether you expect that portion that gets included in the spreads to increase, as in, like, could downtime become smaller?

Speaker #17: So, first, I was just wondering if you can go through your expectation today of portfolio mark-to-market across New York, San Francisco, and the Mart, and then also whether you expect that portion that gets included in the spreads to increase—as in, could downtime become smaller?

Speaker #4: Good morning. It's Glenn. So on the question of mark-to-markets, we expect to continue to performance we've had over the past couple of years which are positive, positive, and positive.

Glen Weiss: Good morning. It's Glenn. On the question of mark-to-market, we expect, you know, to continue the performance we've had over the past, you know, couple years, which are positive and positive. You know, during the last 2 years, we've only had 1 quarter negative, which we like, and we expect to continue. You know, many have been in the double-digit positives. We expect free rent to continue to reduce, and even TIs are starting to come down. We're working hard on that piece, of course. San Francisco is the same. You know, with the rents we're achieving, the mark-to-market will continue to improve. Chicago, as I said, is still most challenging, although demand is picking up. You know, rents are staying firm. Concessions are high in Chicago.

Speaker #4: During the last two years, we've only had one quarter negative, which we like. And we expect to continue. Many have been in the double-digit positives.

Speaker #4: We expect free rent to continue to reduce. And even TIs are starting to come down. So we're working hard on that piece, of course.

Glen Weiss: We expect free rent to continue to reduce, and even TIs are starting to come down. We're working hard on that piece, of course. San Francisco is the same. You know, with the rents we're achieving, the mark-to-market will continue to improve. Chicago, as I said, is still most challenging, although demand is picking up. You know, rents are staying firm. Concessions are high in Chicago. Those have yet to break, you know, downwards, but demand is certainly improving.

Speaker #4: And San Francisco is the same. With the rents we're achieving, the mark-to-markets will continue to improve. Chicago, as I said, is still most challenging, although demand is picking up.

Speaker #4: Rents are staying firm. Concessions are high in Chicago—those have yet to break downwards. But demand is certainly improving. I mean, think about just Economics 101 or macroeconomics.

Glen Weiss: Those have yet to break, you know, downwards, but demand is certainly improving.

Steven Roth: I mean, think about just economics 101 or macroeconomics. Focusing on New York for the moment, I mean, you know, we've said, and I've written about, that we compete in a subset of better building Class A space, which is under 200 million feet. The fact that there may be 400 million feet in New York is irrelevant, because we really compete in a market which is about half that size. The availabilities of space in that market is evaporating very quickly. I mean, somebody used the analogy of an ice cube in a microwave. I mean, we know that because we are a key factor in the market.

Speaker #4: Focusing on New York for the moment, I mean, we've said and I've written about that we compete in a subset of better-building Class A space which is under 200 million feet.

Speaker #4: So the fact that there may be 400 million feet in New York is irrelevant because we really compete in a market which is about half that size.

Speaker #4: The availabilities of space in that market are evaporating very quickly. I mean, somebody used the analogy of an ice cube in a microwave. We are getting—I mean, we know that because we are a key factor in the market.

Speaker #4: We know that because the incoming calls from brokers looking for space for their clients are starting to get more anxious and even more desperate.

Steven Roth: We know that because the incoming calls from brokers looking for space for their clients are starting to get more anxious and even more desperate. As this availability of space shrinks, obviously the price goes up. Now, there's something else going on which is equally important, and that is the cost of a new building has gone from whatever to somewhere around, pick a number, $2,500 a foot. Interest rates and the cost of capital has gone from, you know, 0% or 2% to 5%, 6% and 7%. The rents that have to be achieved to make a new building economic are, you know, well into the $200 a foot and even touching $300 a foot. That's never happened before.

Speaker #4: So as the availability of space shrinks, obviously, the price goes up. Now, there's something else going on which is equally important. And that is the cost of a new building has gone from whatever to somewhere around pick a number, 2,500 dollars a foot.

Speaker #4: Interest rates and the cost of capital has gone from 0 and 2 percent to 5, 6, and 7 percent. So the rents that have to be achieved to make a new building economic are well into the 200s of dollars a foot and even touching 300 dollars a foot.

Steven Roth: Interest rates and the cost of capital has gone from, you know, 0% or 2% to 5%, 6% and 7%. The rents that have to be achieved to make a new building economic are, you know, well into the $200 a foot and even touching $300 a foot. That's never happened before.

Speaker #4: That's never happened before. So, obviously, rents on older buildings—which are still great buildings in great locations—are going up because of scarcity and because of the cost of new supply coming on the market.

Steven Roth: Obviously, rents on older buildings, which are still great buildings and great locations, are going up because scarcity and because of the cost of new supply coming on the market. This is just basic economics 101. The next part of it is that I believe, and I, you know, my team can speak for themselves. I believe that we are in a long, long, long-term landlord's market where these dynamics will continue. Why is that? Because there's nothing in the short term that can change that other than if interest rates dip down to 2% or something like that, which, you know, you can make your own judgment whether that might or might not happen.

Speaker #4: So this is just basic economics 101. The next part of it is that I believe, and my team can speak for themselves, I believe that we are in a long, long, long-term landlords' market where these dynamics will continue.

Speaker #4: Why is that? Because there's nothing in the short term that can change that other than if interest rates dip down to 2 percent or something like that, which you can make your own judgment whether that might or might not happen.

Steven Roth: Why is that? Because there's nothing in the short term that can change that other than if interest rates dip down to 2% or something like that, which, you know, you can make your own judgment whether that might or might not happen. If that happens, I'm not in a big rush to rent space at today's prices because I think tomorrow's prices are going to be higher and maybe even a fair, a lot higher. Thanks.

Speaker #4: So if that happens, basically, I'm not in a big rush to rent space at today's prices because I think tomorrow's prices are going to be higher and maybe even a fair a lot higher.

Steven Roth: If that happens, I'm not in a big rush to rent space at today's prices because I think tomorrow's prices are going to be higher and maybe even a fair, a lot higher. Thanks.

Speaker #4: Thanks.

Speaker #17: I guess maybe just to follow up on that last point, I know leasing volume in the first quarter was relatively low. So would you just say that that's lumpy?

Caitlin Burrows: I guess maybe just to follow up on that last point. I know leasing volume in Q1 was relatively low. Would you just say that that's lumpy? Is it more about that you're not in a rush because rents could be rising or something else?

Speaker #17: Is it more about that you're not in a rush because rents could be rising, or is it something else?

Speaker #4: Yeah. Glenn is in the business of renting space as quickly and aggressively, and as hungry as he can be. So if there is any falloff in volume, it's not because I directed Glenn to get out of the market.

Steven Roth: Glen is in the business of renting space as quickly and aggressively and as, and as hungry as he can be. If there is any fall off in volume, it's not because I directed Glen to get out of the market. Glen's in the market every day working his ass off. Thank you, Glen.

Speaker #4: Glenn's in the market every day working his ass off. Thank you, Glenn.

Speaker #3: Thank you. Our next question today comes from Ronald Camden at Morgan Stanley. Please go ahead.

Operator 2: Thank you. Our next question today comes from Ronald Kamdem at Morgan Stanley. Please go ahead.

Operator: Thank you. Our next question today comes from Ronald Kamdem at Morgan Stanley. Please go ahead.

Speaker #4: I can't respond to that now.

Steven Roth: Can't respond to that, no.

Ronald Kamdem: Hey, if you want to respond, I could wait.

Speaker #18: Hey, two quick—if you want to respond, I could wait.

Speaker #4: Go ahead, Ronald. Go ahead.

Steven Roth: Go ahead, Ronald. Go ahead.

Speaker #18: Okay, great. Just two quick ones, and thanks for taking the questions. Number one, I think last call you talked about some guideposts for occupancy over the next 12 to 18 months.

Ronald Kamdem: Okay, great. Just two quick ones, and thanks for taking the questions. Just number one, I think, you know, I think last call you talked about some guideposts for occupancy over the next 12 to 18 months and, you know, thinking sort of mid-90s on a lease basis. Just wondering if you could provide any update both on the, on a lease and on a physical occupied basis, what that occupancy target to look like over the next 12 to 18 months again. Thanks.

Speaker #18: And thinking sort of mid-90s on a lease basis, just wondering if you could provide an update both on the lease and on a physical occupied basis what that occupancy target could look like over the next 12 to 18 months again.

Speaker #18: Thanks.

Speaker #4: Yeah. Look, we've historically run our portfolio in the mid to high 90s, and we expect to get back there. So that probably is over a couple of year period.

Michael J. Franco: We've historically, you know, run our portfolio in the mid to high nineties. You know, we expect to get back there. You know, that probably is over a couple of year period. You know, that's and again, I think given all the dynamics that Steve alluded to and we've talked about in the market, and the lack of space availability, you know, that's gonna happen. Obviously leasing at 10 is a key part of that. You know, and I think one of the analysts picked up this quarter, you know, that our occupancy actually went up 70 basis points, not the 40, because we took Three Fifty Park out of service. That's where we expect to get.

Michael Franco: We've historically, you know, run our portfolio in the mid to high nineties. You know, we expect to get back there. You know, that probably is over a couple of year period. You know, that's and again, I think given all the dynamics that Steve alluded to and we've talked about in the market, and the lack of space availability, you know, that's gonna happen. Obviously leasing at 10 is a key part of that.

Speaker #4: But that's and again, I think given all the dynamics of Steve alluded to, and we've talked about in the market and the lack of space availability, that's going to happen.

Speaker #4: So obviously, leasing up 10 is a key part of that. But I think one of the analysts picked up this quarter that occupancy actually went up 70 basis points, not to 40 because we took 350 Park out of service.

Michael Franco: You know, and I think one of the analysts picked up this quarter, you know, that our occupancy actually went up 70 basis points, not the 40, because we took Three Fifty Park out of service. That's where we expect to get. I can't tell you exactly what quarter it's gonna be, but, you know, over the next, you know, couple of years or so, that's where we expect to get back to.

Speaker #4: So that's what we expect to get. I can't tell you exactly what quarter it's going to be. But over the next couple of years or so, that's what we expect to get back to.

Michael J. Franco: I can't tell you exactly what quarter it's gonna be, but, you know, over the next, you know, couple of years or so, that's where we expect to get back to.

Speaker #4: But there's a couple of things to focus on. There is a couple of buildings that we are not renting. Why is that? Because they are over-leveraged and underwater.

Steven Roth: There's a couple of things to focus on. There is a couple of buildings that we are not renting. Why is that? Because they are over-leveraged and underwater, and it's uneconomic for us to rent spaces in those buildings, which really, they're almost owned by the banks. If we put TI into those buildings, it's basically burning money. If you take those few, we have chosen, I don't know whether this is a good decision or not. We've chosen to leave those in the aggregate statistics, where some of the folks in our industry have taken those buildings out of the numbers, which makes their occupancy higher. If you take those buildings out of our numbers, our occupancy goes to what?

Speaker #4: And we it's uneconomic for us to rent spaces in those buildings which really they're almost owned by the banks. And if we put TI into those buildings, it's basically burning money.

Speaker #4: So if you take those few and we have chosen I don't know whether this is a good decision or not. We've chosen to leave those in the aggregate statistics where some of the folks in our industry have taken those buildings out of the numbers which makes their occupancy higher.

Steven Roth: If you take those few, we have chosen, I don't know whether this is a good decision or not. We've chosen to leave those in the aggregate statistics, where some of the folks in our industry have taken those buildings out of the numbers, which makes their occupancy higher. If you take those buildings out of our numbers, our occupancy goes to what?

Speaker #4: So if you take those numbers out, those buildings out of our numbers, our occupancy goes to what? Ninety-four, something like that, ninety-five? Ninety-four percent. Ninety-four percent.

Steven Roth: 94, something like that, 95.

Thomas Sanelli: 94%.

Steven Roth: 94. We know that number, although we don't publish that number, and maybe we should. Although right now I'm publishing it.

Speaker #4: So we know that number, although we don't publish that number. And maybe we should, although right now, I'm publishing that number. So that's the first thing.

Thomas Sanelli: Should be a number.

Steven Roth: That's the first thing. The second thing is that, I look upon in a landlord's market like this, I look upon vacancy and available space as an asset because that as we rent that space, and we will with 100% certainty, that will grow our earnings. When you think about investing, maybe the best company to invest in is the company that does have available space in this market, as opposed to a company that has all space already rented. You can make out of that, what, you know, whatever you will. Thanks.

Speaker #4: The second thing is that I look upon in a landlords' market like this, I look upon vacancy and available space as an asset. Because that as we rent that space and we will with 100% certainty, that will grow our earnings.

Speaker #4: So when you think about investing, maybe the best company to invest in is the company that does have available space in this market as opposed to a company that has all the space already rented.

Speaker #4: You can make out of that whatever you will. Thanks.

Ronald Kamdem: Really helpful color. My second one, if I may, was just on a lot of the footnotes in the supplement. Just on, I guess on 10-1, any idea when that litigation will be just in terms of timing, obviously can't comment either way, but just in terms of timing, is that something that could be done this year? Also, the change in retail from the base of the office buildings being put in the office segment, just the thinking there. Thanks.

Speaker #18: Really helpful caller. And then my second one, if I may, was just a lot of the footnotes and the supplement. Just on I guess on pen one, any idea when that litigation will be just in terms of timing?

Speaker #18: Obviously, you can't comment either way. But just in terms of timing, is that something that could be done this year? And also, the change in retail from the base of the office buildings being put in the office segment, just the thinking there.

Speaker #18: Thanks.

Speaker #4: I'll take the litigation. I have absolutely no comment on anything having to do with that litigation. Other than I'm optimistic. Tom, what about the retail?

Steven Roth: I'll take the litigation. I have absolutely no comment on anything having to do with that litigation, other than I'm optimistic. Tom, what about the retail?

Speaker #19: Yeah. So we didn't change our segment reporting. Obviously, we have two segments, New York and other. This is a subsegment. Ronald, what we did here is we tried to align the subsegment more on how we view the assets.

Thomas Sanelli: Yeah. We didn't change our segment reporting. Obviously, we have two segments, New York and other. This is a sub-segment. Ronald, what we did here is we tried to align the sub-segment more on how we view the assets. We grouped all the retail assets together and the office assets. The base of 1290 retail is now included in office as opposed to being in retail. Any ancillary office space that's in a retail building is obviously in the retail sub-segment. It's all disclosed, obviously, in the supplement, and we give you the exact buildings that are in each sub-segment, so you could follow along. I think this is the better way of looking at it, as opposed to the way we were doing it previously.

Speaker #19: So we grouped all the retail assets together. And the office assets. So the base of 1290 retail is now included in office as opposed to being in retail.

Speaker #19: And any ancillary office space that's in a retail building is obviously in the retail subsegment. And it's all disclosed, obviously, in the supplement. And we give you the exact buildings that are in each subsegment so you could follow along.

Thomas Sanelli: Any ancillary office space that's in a retail building is obviously in the retail sub-segment. It's all disclosed, obviously, in the supplement, and we give you the exact buildings that are in each sub-segment, so you could follow along. I think this is the better way of looking at it, as opposed to the way we were doing it previously.

Speaker #19: I think this is the better way of looking at it as opposed to the way we would do in the previously.

Speaker #3: Thank you. Our next question today comes from Brendan Lynch at Barclays. Please go ahead.

Operator 2: Thank you. Our next question today comes from Brendan Lynch at Barclays. Please go ahead.

Operator: Thank you. Our next question today comes from Brendan Lynch at Barclays. Please go ahead.

Speaker #20: Great. Good morning. Thanks for taking my questions. First one on Sunset Pier Studio. Is there any interest in the curvature term tenants in converting to longer-term leases?

Brendan Lynch: Great. Good morning. Thanks for taking my questions. First one on Sunset Pier Studio. Is there any interest in the current short-term tenants in converting to longer-term leases? Just an update on that.

Speaker #20: And just an update on that.

Speaker #4: Hi, it's Glenn. There's great interest in Sunset and the studios. We're a lease right now. The place is great—unbelievably great. I would say best in the country.

Glen Weiss: Hi, it's Glenn. There's great interest in Sunset and the studios. You know, we're leased right now. Place is great. Unbelievably great. You know, I would say best in the country. Great, in a great location. We have very good activity. Long-term folks looking, short-term folks looking. We expect to continue to fill up the project once this year's leases expire. It's off the charts. The reception's been A plus. We expect to do really good things there on the leasing.

Speaker #4: Great. Great location. We have very good activity. Long-term folks looking, short-term folks looking, so we expect to continue to fill up the project once this year's lease is expired.

Speaker #4: But it's off the charts. The reception's been A-plus. And we expect to do really leasing. But direct answer to your would definitely prefer to be in the long-term leasing business with that asset rather than in the month-by-month leasing in that asset.

Steven Roth: A direct answer to your question, I would definitely prefer to be in the long-term leasing business with that asset rather than in the, you know, month-by-month leasing in that asset. The answer is, the ownership of that asset prefers to be in the long-term leasing if the market gives us that opportunity.

Speaker #4: So the answer is the ownership of that asset prefers to be in the long-term leasing if the market gives us that opportunity.

Speaker #20: Okay, thank you. That's helpful. And then a follow-up on the Verizon space at PENN2. Can you just walk us through if they find out about potential termination fees?

Brendan Lynch: Okay. Thank you. That's helpful. A follow-up on the Verizon space at 10 2. Can you just walk us through if they find a subtenant versus you finding a tenant and how we should think about potential termination fees, and any accounting around the TIs that you might still be responsible for, if it's just a sublease instead of a cancellation and new lease?

Speaker #20: And any accounting around the TIs that you might still be responsible for if it's just a sublease instead of a cancellation and new lease?

Speaker #4: Glenn prefers that I don't talk about it. Go ahead.

Steven Roth: Glenn prefers that I don't talk about it. Go ahead.

Speaker #21: As I said earlier, we're in a great spot no matter how it comes out. And we will only be opportunistic to make money on the space.

Glen Weiss: As I said earlier, you know, we're in great spot no matter how it comes out. We will only be opportunistic to make money on the space. We have a very good lease position and we'll see how it plays out, but that's as much as I think I wanna talk about it for now.

Speaker #21: We have a very good lease position. And we'll see how it plays out. But that's as much as I think I want to talk about it for now.

Steven Roth: What do we have? It's basically a 19 or a 20-year lease. We have a long-term lease with a super credit. That lease we will never terminate under any conditions. The only thing that might happen is around the dynamics of a subtenant coming in because Verizon wants to reduce their liability. We don't have anything to say other than that long-term credit lease really Is not something that we are going to terminate or monkey with.

Speaker #22: What do we have? It's basically a 19 or a 20-year lease. So we have a long-term lease with a super credit. That lease will never terminate that lease under any conditions.

Speaker #22: So the only thing that might happen is around the dynamics of a subtenant coming in because Verizon wants to reduce their liability. But we don't have anything to say other than that long-term credit lease will is not something that we are going to terminate or monkey with.

Speaker #3: Thank you. There are no further questions at this time. So I'd like to hand it back to Steven Roth for any closing remarks.

Operator 2: Thank you. There are no further questions at this time. I'd like to hand it back to Steven Roth for any closing remarks.

Operator: Thank you. There are no further questions at this time. I'd like to hand it back to Steven Roth for any closing remarks.

Speaker #4: Thank you all very much. I mean, the I think the team and I are delighted with our activity over the last three, four, six months.

Steven Roth: Thank you all very much. I mean, as the, I think the team and I are delighted with our activity over the last three, four, six months. We are excited. I did make the statement in my remarks this morning that I am certain that over the next year or two, we will have the highest growth performance of any company in our sector. We're excited about that. We've got a lot of great stuff going on. Thank you for participating. We'll see you next quarter.

Speaker #4: We are excited. We think we and I did make the statement in my remarks this morning that I am certain that over the next year or two, we will have the highest growth performance of any company in our sector.

Speaker #4: And we're excited about that. We've got a lot of great stuff going on. And thank you for participating. We'll see you next quarter.

Speaker #3: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful.

Operator 2: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.