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The call portrays a constructive, opportunity-driven outlook: strong leasing momentum, attractive opportunistic acquisitions (Park Avenue Plaza, 623 Fifth) and robust liquidity/ buybacks point to accelerating earnings potential into 2027. Near-term headwinds — a Q1 comparable FFO decline (~17%), temporary earnings drag from the 350 Park master lease modification, elevated TI, and modestly wider financing costs — create short-term pressure on cash flow and 2026 results. On balance, management presents multiple durable positives (tightening prime availability, solid pipelines, accretive acquisitions, strong liquidity and capital discipline) that outweigh the temporary challenges.
Management guided that comparable FFO was $0.52 in Q1 vs. $0.63 a year ago and that full‑year 2026 comparable FFO is expected to be slightly higher than 2025, ramping each quarter (helped by GAAP rents coming online and lower interest after bonds are repaid in June 2026) with “significant” earnings growth forecast for 2027 as PENN 1/PENN 2 lease‑up and the Park Avenue Plaza acquisition take effect; highlights and metrics cited include Q1 office releases of 426,000 sqft (311,000 sqft in NY), Manhattan leasing volume of nearly 12 million sqft in Q1, 2025 leasing of 3.7 million sqft (960,000 sqft in NY Q4), a New York pipeline of >1 million sqft in negotiation, average Manhattan starting rent of $103/sqft with mark‑to‑markets +11.7% GAAP / +9.7% cash and a 9‑year average lease term, Park Avenue Plaza (49% interest) 1.2M sqft, 99% occupied with 11‑year WAL bought at $950/sqft (~65–70% below replacement cost) with in‑place sub‑3% debt through 2031 and ~+$0.10 GAAP accretion on a full‑year basis, signed‑but‑not‑commenced rentpool ~$200M (modelers: ~$0.40/share flow over time, ~10–12% per quarter pacing), liquidity of $2.6B ($1.2B cash, $1.4B undrawn lines), no material financings needed over the next ~18 months, occupancy expected to return to mid‑to‑high‑90s over a couple years, and the board has authorized an additional $300M buyback after repurchasing 7M shares for $180M at an average $25.80.
Manhattan leasing volume reached nearly 12 million square feet in Q1 (highest first quarter since 2014). Vornado leased 3.7 million square feet in 2025 (company's second-best year) with 960,000 square feet in Q4. In Q1 2026 Vornado released 426,000 square feet of office space overall, including 311,000 square feet in New York. Over 1.0 million square feet of leases are in negotiation across Vornado's New York pipeline.
Average starting rents in Manhattan were $103 per square foot in Q1 with GAAP mark-to-market gains of +11.7% and cash mark-to-market gains of +9.7%. Management reports continued positive mark-to-markets and expects reductions in free rent and TI over time.
Acquired 49% interest in Park Avenue Plaza (1.2 million sq ft). Building is ~99% occupied with an 11-year weighted average lease term. Purchase price ~$950 per sq ft, described as 65%–70% below replacement cost; inheriting sub-3% loan through 2031. Management expects roughly $0.10 per share full-year accretion (GAAP run rate).
Total liquidity of $2.6 billion composed of $1.2 billion cash and $1.4 billion undrawn credit lines. Management reports no significant financings required for the next ~18 months and a history of prefunding major projects.
Under the $200 million buyback program Vornado repurchased 7 million common shares at an average of $25.80 totaling $180 million (~90% of the program). Board approved an additional $300 million buyback authorization.
Management expects to complete heavy lifting of leasing at PENN 1 and PENN 2 in 2026 with GAAP rents ramping through 2026 and meaningful earnings growth anticipated in 2027 as those lease-ups take effect. The $200M (approx.) of signed but not commenced leases is expected to flow through at roughly $0.40 per share over time, with pacing ~10%–12% per quarter.
Recently acquired/repositioned assets include Park Avenue Plaza and 623 Fifth Avenue (383,000 sq ft boutique redevelopment). Management highlights selective acquisitions in prime heartland locations and preference for non‑recourse, project-level financing.
San Francisco demand improving: rents at 555 California (the Tower) have moved north of $160 per square foot for substantial leases; broader activity includes technology/AI and financial services tenancy gains.
Good morning, and welcome to the Vornado Realty Trust First Quarter 2026 Earnings Call. My name is Rocco, and I will be your operator for today's call. This call is being recorded for replay purposes. [Operator Instructions] I will now turn the call over to Mr. Steve Borenstein, Executive Vice President and Corporation Counsel. Please go ahead.
Welcome to Vornado Realty Trust First Quarter Earnings Call. Yesterday afternoon, we issued our first quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. These documents as well as our supplemental financial information package are available on our website, www.vno.com, under the Investor Relations section. In these documents and during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q and financial supplement. Please be aware that statements made during this call may be forward-looking statements, and actual results may differ materially from these statements due to a variety of risks, uncertainties and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2025, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date.
The company does not undertake a duty to update any forward-looking statements. On the call today from manageme...