In This Article:
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Comparable FFO: $0.52 per share for Q3 2024, down from $0.66 per share in Q3 2023.
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Leasing Activity: 2.5 million square feet leased year-to-date, including 2.1 million square feet in Manhattan.
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Liquidity: $2.6 billion, including $1 billion in cash.
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Office Occupancy: 87.5%, expected to increase to 90.8% with pending leases.
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New York Office Leasing: 454,000 square feet leased in Q3 2024 at starting rents of $92 per square foot.
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San Francisco Leasing: 443,000 square feet leased at 555 California Street with starting rents of $110 per square foot.
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Chicago Leasing: 239,000 square feet leased at the Mart, including a 161,000 square foot renewal with Medline.
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Cash Mark-to-Market: Reported at negative 7%, adjusted to positive 17.9% including certain transactions.
Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Vornado Realty Trust (NYSE:VNO) has leased 2.5 million square feet year-to-date, with expectations to reach between 3.5 million and 3.8 million square feet by year-end, marking one of the highest volumes in the company's history.
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The company has a strong liquidity position with $2.6 billion, including $1 billion in cash, which supports its leasing programs and debt repayments.
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Vornado Realty Trust (NYSE:VNO) has successfully negotiated a master lease with NYU for 770 Broadway, which will provide significant upfront prepaid rent and cover the $700 million loan on the property.
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The Manhattan Class A office market is showing signs of recovery, with declining vacancies and rising rents, particularly in areas like Park Avenue and Sixth Avenue.
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The company has made strategic moves in the retail sector, including bringing Primark to the Penn District, enhancing the district's appeal and tenant mix.
Negative Points
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Third-quarter comparable FFO as adjusted decreased to $0.52 per share from $0.66 per share in the previous year, primarily due to lower NOI from known move-outs and higher net interest expenses.
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The office occupancy rate has decreased to 87.5%, down from 89.3% last quarter, due to move-outs at key properties like 770 Broadway.
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The financing markets remain challenging for office properties, with high borrowing rates impacting real estate values and refinancing options.
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Despite improvements, the San Francisco office market remains weak, with city-wide vacancies at 36% and declining rents, although Vornado's 555 California Street is performing well.
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The company faces challenges with overleveraged assets that do not currently contribute to FFO, and it may need to restructure loans or consider non-recourse options.