Vornado Realty Trust (VNO) Q2 2024 earnings summary

Executive summary

• Net income attributable to common shareholders for Q2 2024 was $35.3M ($0.18 per diluted share), down from $46.4M ($0.24 per share) in Q2 2023.

• FFO for Q2 2024 was $148.9M ($0.76 per diluted share), up from $144.1M ($0.74 per share) in Q2 2023 due to non-recurring items; adjusted FFO was $112.8M ($0.57 per share), down from $140.7M ($0.72 per share).

• Revenues for Q2 2024 were $450.3M, a decrease from $472.4M year-over-year, mainly due to lower rental and fee income.

• Business performance is on plan with month-over-month improvement, driven by strong leasing activity, especially at PENN 2 and across the portfolio, with over two-thirds of recent vacancies already committed.

• Major transactions include the $350M sale of the UNIQLO Fifth Avenue flagship and a handshake deal for a long-term master lease at 770 Broadway, both enhancing liquidity and reducing leverage.

Financial highlights

• Q2 2024 FFO per diluted share was $0.76, including $0.19 from non-comparable items; adjusted FFO was $0.57 per share, down from $0.72 year-over-year due to known move-outs, lower termination income, and higher net interest expense.

• Q2 2024 revenues were $450.3M (down from $472.4M in Q2 2023); six-month revenues were $886.6M (down from $918.3M in 2023).

• Same store NOI at share for Q2 2024 decreased 9.0% year-over-year; New York segment same store NOI at share fell 4.4%.

• Leasing activity in the first half of 2024 totaled 1.6M sq ft at average rents of $130–$132 per sq ft, with a strong mark-to-market on new leases.

• Retail portfolio rent spreads were positive by about 13%, with continued recovery in rents and declining vacancy rates.

Outlook and guidance

• 2024 comparable FFO is expected to be down from 2023’s $2.61 per share, mainly due to higher net interest expense and temporary vacancies, with a larger impact in the second half of the year.

• Earnings are projected to increase in late 2025 as new leases commence and interest rates trend down, partially offset by reduced capitalized interest.

• Management expects cash flow from operations and cash on hand to be adequate for business needs and distributions over the next 12 months.

• A common share dividend for 2024 is anticipated in Q4, subject to board approval.

• Modest lease expirations are expected in 2025, with a calming of large expirations going forward.