Vornado Realty Trust Q1 2025: Unpacking Contradictions in Retail Recovery, Leasing Expectations, and Sales Strategy

Retail property valuations and market recovery, occupancy and leasing expectations, leasing pipeline and activity at PENN 2, street retail sales strategy, office leasing and concessions are the key contradictions discussed in Vornado Realty Trust's latest 2025Q1 earnings call.



Strong Leasing Activity and Occupancy Recovery:
- Vornado reported strong leasing activity with 709,000 square feet of transactions in Q1, leading to an increase in New York office occupancy to 87.4%.
- Occupancy is expected to rise further to the low-90s over the next year, driven by lease-up at PENN 2 and other leasing efforts.

Financial Performance and Earnings Growth:
- Comparable FFO was $0.63 per share, up $0.08 from the previous year, with a 3.5% increase in same-store NOI.
- Growth was driven by favorable rent resets, higher signage NOI, and strong leasing activity, offset by known move-outs.

Retail and Corporate Transactions:
- Vornado completed significant retail transactions, including the $342 million sale of 666 Fifth Avenue and the $407 million financing at 1535 Broadway.
- These transactions were used to repay debt, enhancing liquidity and supporting a cash balance of $1.4 billion.

Penn District and Development Projects:
- Vornado is focused on leasing up PENN 1 and PENN 2, with 2 million square feet of leases negotiated, and plans to expand beyond office to include residential components.
- The Penn District is expected to be a significant growth engine due to strong demand and high-quality offerings.