Alexander's, Inc.

Good day and welcome to the Vornado Realty Trust third quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Stephen Borenstein, Senior Vice President and Corporate Counsel. Please go ahead.

Welcome to Barnado Realty Trust Third Quarter Earnings Call. Yesterday afternoon, we issued our third 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 packages, are available on our website, www.dno.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 supplements. Please be aware that statements made during this call may be deemed 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, 2023, 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 management for our opening comments are Stephen Robb, Chairman and Chief Executive Officer, and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions. I will now turn the call over to Stephen Robb.

Thank you, Stephen. Good morning, everyone. Today is Election Day in America, and extra important since this is a once-in-four-year presidential election. Election Day is arguably the single most important day in the calendar of our democracy. Early voting participation seems to indicate that this year's turnout will be a record, and that's great. Enough said, now to business. I've been saying for the past few quarters that the office leasing market in Manhattan is at the foothills of recovery, and I think that's becoming more and more apparent. While Manhattan has over 400 million square feet of office space, we compete in a much smaller, say, 180 million square foot market of the Class A better buildings, where demand is strong and vacancies are rapidly evaporating. Look at Park Avenue and 6th Avenue now with 7% and 9% Class A vacancy, which is the very definition of a landlord's market. And the item on the cake is that there is no sign of additional office supply on the horizon. There hasn't been a major new office start in five years. The cost of building and the cost of capital make it totally uneconomic to build. History is a guide. No new supply always begets a landlord's market. As Michael and Glenn will comment in a moment, our rents are going up. I am extremely optimistic, and the stock market seems to agree. Year to date, we have leased 2.5 million square feet company-wide, including 2.1 million square feet in Manhattan. As Michael and Glenn will cover, activity is robust, and I am confident that we will sign between 3.5 and 3.8 million square feet of Manhattan leases this year, which would rank number two in our history. On the last call, we made mention of a deal on the works at 770 Broadway. I'm pleased to report we have agreed to a transaction with NYU for 770 Broadway. NYU will master lease the entire 1.1 million square foot office component, which excludes Wegmans, with an option to purchase in the 30th year and the 70th year. Master lease will provide for an upfront payment of prepaid rent sufficient to pay off our $700 billion loan on the property. as well as an annual net rent over the lease term. Both parties have signed a detailed letter of intent and expect to execute final binding papers shortly. I expect the closing and rent commencement would occur in January. We are delighted to expand our relationship with NYU. Our liquidity is a strong $2.6 billion, with $1 billion of cash on balance sheets. Our cash will shortly be augmented by over $1 billion from the Uniqlo sale, NYU prepaid rent, and the redemption for cash of over $500 billion of our street retail preferred for proceeds of an in-process 1535 Broadway financing. Note that between Uniqlo and 1535, we will have redeemed about half of the preferreds. We will pay off our $450 million January 25 bonds in January. We have well more than enough cash on balance sheet to complete our leasing program for Pen 1 and Pen 2. And remember, we have no debt on Farley, Pen 1, and Pen 2. Regarding our 350 Park Avenue site, arguably the very best site on Park Avenue, we are well along with the Norman Foster Architectural Firm in completing the design of the 1.8 million square foot tower that we will build with Citadel, who will be our major tenant, and with Ken Griffin as our 60% partner. At Bed 15, the former hotel bed site at 33rd Street and 7th Avenue, directly across from Bed 2, is now down to grade and ready for development. I believe this site, in the heart of our Penn District, and directly connected to Bed Station, is the single best site available in booming west side of Manhattan. We own one asset in San Francisco, the trophy 1.5 million square foot 555 California Street, in a city of tech buildings which are struggling with citywide vacancy of 36% and declining rents. This dominant financial services building, its performance is quite remarkable. This year we will lease 443,000 square feet at average starting rents of $110. Occupancy in the tower is 98.7%, and we haven't lost a single large tenant in all of the years of our ownership. We have a history of owning the very best retail sites, Reed Fifth Avenue and Times Square, and bringing exciting retailers to town, Reed H&M. We announced this quarter an important deal to bring Primark to the Penn District on 34th Street. This will be their flagship store in America. That's often the Federal Reserve who seem to have beaten down inflation and engineered a soft landing. Having said that, for now, borrowing rates remain stubbornly high and not accretive to real estate values. And capital to refinance maturing loans on over-leveraged assets is simply not available other than from the incumbent lender. But true to all, the economy is growing and our occupiers are expanding, and that's a very good thing. 731 Lexington Avenue, the Bloomberg headquarters tower, is owned by Alexander's Inc., of which Renato is external manager and one-third owner. In the first quarter, we extended the Bloomberg lease to 2040. In the third quarter, we financed the maturing loan on the Bloomberg H2 building. Alexander's paid the loan down by $100 million to $400 million from cash on its balance sheet. The low LTV $400 million loan was rated all AAAs, enabling us to achieve a 5% interest rate, by far the lowest we have heard of in this cycle. The AAA rating, together with the quality of the credit and the quality of the building, led to the offering being eight times oversubscribed. This refinancing will save Alexander $17 million a year. We are open to buy in the acquisitions market, but very selective on the hunt for good assets at distressed prices. No business as usual here. In this cycle, lenders seem to be working out their troubled over-leveraged problems with their existing borrowers, with few high-quality distressed assets coming to market. Having said that, this quarter we did acquire a $50 million loan in default on a very interesting mid-town site. We will keep hunting. While our business is financially better and improving, we continue to be rigorous with cash management. We will likely pay approximately the same dividend as last year, 68 cents, in a single dividend paid in December. We expect to carry over to next year this same dividend policy with a single dividend payable at year end. This strategy has been understood and endorsed by our major shareholders. I expect as conditions normalize, so will our dividends. Lastly, if you are a Veneto investor, you must tour our Penn District, and I do mean must, and I do mean tour, not just drive by. If you last visited six months ago, you must visit again. It's changed that much that quickly. The building architecture of Penn I and Penn II, the size, extent, and quality of the amenities, and the plazas and public spaces have all received universal acclaim from commentators, brokers, and occupiers alike. This was a team effort led by our senior leaders, Glenn Weiss and Barry Langer, who deserve the Gold Star Award. We are on budget here and achieving higher rents than projected, and so we will expect the returns shown on our financial statement to improve. Now over to Michael to cover our financials and the market.