Vornado Realty Trust (VNO) BofA Securities 2025 Global Real Estate Conference summary

Market momentum and leasing trends

• New York City office market is experiencing strong momentum, with leasing activity at high levels and robust demand across industries, especially finance, tech, and entertainment.

• Class B office spaces are filling up as demand outpaces supply in trophy assets, with rents rising and free rent packages being reduced.

• Year-to-date through June 30, 2.3 million sq ft leased, with another 1.5 million sq ft in the pipeline, balanced between PENN District and Midtown.

• Vacancy rates are dropping, and most upcoming lease rollovers are already in discussion, indicating continued strength through 2026.

• Tenants are prioritizing quality, culture, and recruitment, willing to pay premium rents for top-tier spaces.

Portfolio strategy and development plans

• Focus remains on curating high-quality tenants at PENN 2, with recent leases to Verizon, Universal Music, and Major League Soccer.

• Targeting 80% occupancy at PENN 2, with strong demand and ongoing lease negotiations; full-year rent contribution expected in 2027, possibly late 2026.

• Development pipeline includes residential projects at 34th and 8th, ongoing interest in PENN 15, and 350 Park with demolition starting by March after ULURP approval.

• Pier 94 Studio development to open by year-end, positioned as a unique asset despite softness in the national studio market.

Capital markets, acquisitions, and dispositions

• Leverage reduced from 8.8x to 7.2x net debt-to-EBITDA, aiming for investment-grade status as PENN leasing completes.

• Recent rating agency outlook upgraded to positive, reflecting improved financial position and credibility.

• Opportunistic approach to dispositions, open to selling non-core assets like 555 California and the Mart if pricing is attractive.

• Transaction market in New York has picked up, with increased capital availability and competitive debt markets, especially for stabilized assets.

• Recent acquisition of 623 Fifth Avenue exemplifies strategy to reposition underappreciated assets; strong market reception with over 30 tours scheduled.