• Comparable FFO for 2024: $2.26 per share.
• Fourth-Quarter Comparable FFO: $0.61 per share, down from $0.63 per share in Q4 2023.
• Leasing Activity: 3.4 million square feet leased in 2024, with 2.65 million square feet in New York office at $104 starting rents.
• Office Occupancy: 88.8% at year-end, increasing to 92.1% with the master lease at 770 Broadway.
• Debt Repayment: $450 million unsecured bonds repaid at maturity.
• Lease Termination Income: Recognized from a 304,000 square foot lease with WeWork on behalf of Amazon.
• Retail Leases: 25 leases totaling 187,000 square feet completed.
• Interest Expense: Lower than projected due to short-term rates coming down.
• Incremental Yield at PENN 2: Increased to 10.2%.
• Projected 2025 Performance: Expected to be slightly lower than 2024.

• Warning! GuruFocus has detected 11 Warning Signs with VNO.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• $Vornado Realty Trust(VNO-N)$ (NYSE:VNO) reported a significant increase in stock price, up 49% in 2024 following a 35% increase in 2023.
• The company successfully leased 3.4 million square feet in 2024, with 2.65 million square feet in New York offices at market-leading rents.
• Vornado Realty Trust (NYSE:VNO) completed several high-profile deals, including three of the top 10 largest office deals in New York.
• The company repaid $450 million in unsecured bonds, demonstrating strong financial management.
• Vornado Realty Trust (NYSE:VNO) is on track to generate an additional $1 billion in cash from upcoming transactions, including asset sales and refinancing.

Negative Points

• Comparable FFO was down from 2023, primarily due to lower NOI from known move-outs and higher net interest expenses.
• The company anticipates 2025 earnings to be slightly lower than 2024 due to lease termination income that positively impacted 2024.
• Office occupancy is expected to temporarily decrease with PENN 2 being placed into service.
• Short-term interest rates are expected to remain high, impacting borrowing costs.
• The company faces challenges in the broader office market, with limited new supply due to high construction costs and interest rates.

Q & A Highlights

Q: Can you provide more details on the leasing activity and competitive dynamics for PENN 2? A: Glen Weiss, Executive Vice President - Office Leasing, Co-Head of Real Estate, explained that PENN 2 is highly competitive, with many large tenants considering it among their top choices. The building is attracting significant interest, with a lease for 330,000 square feet expected to be finalized soon and ongoing negotiations for additional large leases. Rents have been raised across the building due to strong demand.

Q: What is the expected impact of the $1 billion in new cash proceeds from debt paydowns and dispositions? A: Steven Roth, Chairman and CEO, stated that the $1 billion will come from a combination of debt paydowns, refinancing, and asset sales. The proceeds will be used to strengthen the balance sheet, but specific details on the asset sales were not disclosed.

Q: How do you view the potential for rent increases in New York, and what is the outlook for 2026 and beyond? A: Steven Roth, Chairman and CEO, expressed optimism about significant rent increases due to limited availability and no new supply. Michael Franco, President and CFO, added that while 2026 will see improvements, substantial earnings growth is expected by 2027 as leases roll over and the market tightens.

Q: Can you elaborate on the demand for anchor space and the types of industries showing interest? A: Glen Weiss, Executive Vice President - Office Leasing, Co-Head of Real Estate, noted that demand is primarily driven by financial, legal, and tech sectors. These industries are actively seeking space across the portfolio, including the PENN District.

Q: What are your thoughts on the value of Alexander's and any potential actions to address its undervaluation? A: Steven Roth, Chairman and CEO, highlighted that Alexander's assets are undervalued compared to their stock price. He suggested that the sum of the parts analysis indicates a higher value, and the company is considering actions to unlock this value, though no specific plans were disclosed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.