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- **Record Leasing Activity**: 3.7M sq. ft. leased in Manhattan at $103/sq. ft., with PENN 2 occupancy hitting 78% and 2027 NOI growth expected.
- **Balance Sheet Strength**: Net debt-to-EBITDA improved to 7.3x, $2.6B liquidity, and 2027 as the earnings inflection year.
- **Strategic Acquisitions**: 623 Fifth Avenue redevelopment targeting 9%+ returns, 350 Park Avenue set for 2027 delivery.
- **Rental Growth Outlook**: 20-25%+ cumulative rent growth over 4-5 years, with tightening supply and declining free rent periods.

### Core Details - Detail Page

**CEO Summary Section**
- **Leasing Momentum**: Vornado leased 3.7 million sq. ft. in Manhattan during Q3, with average starting rents of $103/sq. ft. and mark-to-market increases of 15.7% GAAP and 10.4% cash. PENN 2 occupancy reached 78% pre-quarter-end, with 1.1 million sq. ft. of signed leases.
- **PENN District Growth**: PENN 2 is on track to exceed 80% occupancy by year-end, with incremental cash yields expected to rise above 10.2%. PENN 1 has leased 1.6 million sq. ft. at $94/sq. ft.
- **Strategic Acquisitions**: Acquired 623 Fifth Avenue for $218 million, planning to redevelop into a high-end office building with a 9%+ return on cost. 350 Park Avenue is set to deliver in 2027 with Citadel as anchor tenant.
- **Balance Sheet Strength**: Net debt-to-EBITDA improved to 7.3x, with $2.6 billion in liquidity. Comparable FFO per share for 2025 is expected to be slightly higher than 2024, with 2027 as the inflection year for earnings growth.

**CFO Financial Commentary**
- **Q3 Financials**: Comparable FFO of $0.57 per share, up 9.6% YoY. GAAP NOI growth of 9.1% offset by cash NOI decline due to free rent burn-off. PENN 2 NOI contributions are expected to accelerate in 2026.
- **Capital Allocation**: Generated $1.5 billion in net proceeds from asset sales and refinancings, reducing debt by $900 million. 2026 FFO is expected to be flattish due to non-core asset sales and capital expenditures, with 2027+ growth driven by PENN 1 and 2 lease-ups.
- **Signage Business**: Times Square and PENN District signage revenue at record highs, with 100% ownership of PENN District signs enabling unique revenue opportunities.

**Q&A Highlights**
- **PENN 2 Pipeline**: 1.1 million sq. ft. of leases in negotiation, with average rents of $112/sq. ft. and mark-to-market increases of 11.9% GAAP. Remaining space is highly sought after for single-floor deals.
- **623 Fifth Avenue Strategy**: Similar to 220 Central Park South, pre-leasing will begin with finalized designs, targeting 2027 delivery with high-end tenant demand.
- **Rental Growth Outlook**: Executives anticipate 20-25%+ cumulative net effective rent growth over 4-5 years, driven by tightening supply and broad-based demand. Free rent periods are shortening, and tenant improvement allowances are declining.
- **Litigation Impact**: PENN 15 ground lease litigation could delay NOI contributions, but management remains optimistic about appeal outcomes.
- **Dispositions and Capital Deployment**: 2026 asset sales expected to generate $250-300 million, with proceeds allocated to balance sheet delevering and strategic acquisitions.

Vornado Realty Trust (VNO) Q3 2025 Earnings Call Transcript

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