Vornado Realty Trust (NYSE:VNO) held its third-quarter earnings call, discussing its financial performance, leasing activity, and future plans. Despite the challenging markets, the company continues to perform well and is on track for the year, according to Chairman and CEO Steven Roth. CFO Michael Franco noted a decrease in comparable FFO due to factors such as real estate tax adjustments and higher net interest expenses. The company has no significant maturities until mid-2024 and is actively working with lenders to extend loan maturities.
Key takeaways from the call include:
- Vornado's current liquidity stands at $3.2 billion, including $1.3 billion in cash and restricted cash and $1.9 billion undrawn under their revolving credit facilities.
- The company is focused on filling vacancies in their PENN properties and has so far leased 2.5 million square feet in the PENN District.
- Vornado expects to pay out between $0.20 and $0.30 in cash for the fourth quarter as part of its dividend and share repurchase programs. It also has a $200 million stock buyback authorization.
- The company is actively discussing extensions with their lending counterparties and is working on refinancing loans that mature in 2024 and beyond.
- There hasn't been significant change in sublease activity in their portfolio in the past year, with some spaces being leased or taken off the market.
During the call, Roth also highlighted the progress of the PENN 2 construction project, noting increased tenant interest as completion nears. The completion of the Wegmans supermarket at the 770 Broadway property and the contribution of the Pier 94 leasehold to a joint venture with Hudson (NYSE:HUD) Pacific and Blackstone (NYSE:BX) were also mentioned as significant achievements.
Franco provided updates on leasing activity in the New York office and retail markets, pointing out strong leasing volume and rental rates. He mentioned the company's focus on maintaining a strong balance sheet and highlighted its sustainability achievements. The company is studying opportunities to generate cash flow from the Hotel Penn site until it is ready for development.
The executives anticipate reaching 2 million square feet of leasing by the end of the year and expect to close 750,000 square feet of leases in the fourth quarter, including deals at 280 Park, 1290 Ave of Americas, and THE MART. They are currently in discussions about mortgage debt due for 280 Park.
Roth concluded the call by expressing confidence in the future of American cities, particularly New York, and emphasized the importance of office spaces. The next earnings call is scheduled for Tuesday, February 13.
InvestingPro Insights
In the light of the data provided by InvestingPro, Vornado Realty Trust presents a complex investment outlook. The company's market cap stands at 4150.0M USD, with a negative P/E ratio of -9.90 and a PEG ratio of 0.02 as of the last twelve months of Q2 2023. Despite a revenue of 1339.41M USD, the company experienced a revenue growth decline of -27.92% in the same period.
InvestingPro Tips suggest that while the company's stock has fared poorly over the last month, with a significant price drop over the last five years, there has been a large price uptick over the last six months. This could be a sign of recovery and potential growth. Additionally, VNO has maintained dividend payments for 34 consecutive years, which is a positive sign for income-focused investors.
Analysts anticipate sales growth in the current year and predict that the company will be profitable this year. This coincides with the company's focus on filling vacancies in their PENN properties and the expected payout as part of its dividend and share repurchase programs.
For more detailed insights and additional tips, consider exploring the InvestingPro platform, which provides a comprehensive analysis of various companies including VNO. Currently, there are 11 additional tips available for VNO on InvestingPro.
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