Vornado Realty Trust

Second-quarter comparable FFO was $0.67 per share versus $0.56 in last year’s second quarter, an increase of $0.11. Management said the increase was mainly driven by rent commencements at PENN 1 and PENN 2, the NYU master lease at 770 Broadway being in the prior year, and higher signage NOI, partly offset by higher net interest expense. New York office same-store NOI increased 13.7% GAAP and 11.9% cash; New York retail same-store NOI increased 7.3% GAAP and 5.7% cash; New York business overall increased 11.9% GAAP and 6.2% cash. During Q2, Vornado executed 29 Manhattan office deals totaling 348,000 square feet at $107 per square foot average starting rent, with mark-to-markets of positive 7.7% GAAP and positive 5.0% cash. First-half 2026 leasing was 978,000 square feet overall, including 659,000 square feet of Manhattan office at $105 per square foot average starting rents with positive 9.5% GAAP and positive 7.1% cash mark-to-markets. New York office occupancy rose to 92.2%, and management expects it to be north of 93% by year-end. Liquidity was $2 billion, consisting of $789 million of cash and $1.2 billion of undrawn credit lines. Management said full-year 2026 comparable FFO should be higher than 2025, with Q2 FFO described as a decent average run rate for the rest of the year, and reiterated that significant earnings growth in 2027 should come from lease-up at PENN 1, PENN 2, other vacancies, and Park Avenue Plaza.

Steven Roth framed the quarter as evidence that the long-predicted landlord’s market in Manhattan is now here, citing record leasing volume, tightening vacancy, and scarce new supply. He emphasized Vornado’s Manhattan-centric portfolio, said rents are rising, and repeatedly pointed to PENN 1, PENN 2, 623 Fifth Avenue, Park Avenue Plaza, and 350 Park Avenue as examples of future value creation. His tone was highly confident and openly bullish, including comments that the stock remains undervalued and that the company has strong optionality from assets, development, and buybacks.

Michael Franco focused on the financial improvement and the path to higher earnings. He cited Q2 comparable FFO of $0.67 per share, up $0.11 year over year, and said the improvement came from lease commencements, the absence of the prior-year NYU master lease impact, higher signage NOI, and was partly offset by higher interest expense. He also highlighted a $2 billion liquidity position, comprised of $789 million of cash and $1.2 billion of undrawn credit lines, and said leverage should trend down into the 7s this year and could go sub-7 absent other investing. On capital needs, he said TI spend should be fairly comparable year over year in the lease-up period, with the burden expected to ease in 2028.

Analysts focused on the pace and durability of the occupancy and FFO recovery, the amount of runway remaining between leased and economic occupancy, and whether some of the expected 2027 upside is now arriving earlier in 2026. Management said historical physical occupancy was 95% to 96%, current physical occupancy is a little over 92%, and they expect to return to the historical range over the next couple of years, possibly sooner. On the $0.40 FFO uplift previously discussed for 2027, Franco said some of that growth has pulled forward into 2026, but significant growth in 2027 still remains intact. Questions also probed the economics of 350 Park Avenue, with management saying the project was committed to years ago and that incremental capital needs are back-ended and won’t become meaningful until 2029 and later.