Alexander's, Inc.

My name is Nick, and I will be your operator for today's call. This call is being recorded for replay purposes. All lines are in a listen-only mode. Our speakers will address your questions at the end of the presentation during the question-and-answer session. At that time, please press star, then 1 on your touch-tone phone. 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's 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 packages, are available on our website, www.bno.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 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, 2024, 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 Roth, 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 Roth.

Thank you, Steve, and good morning, everyone. Well, the macro environment in which we operate is certainly different today than when we last spoke three months ago. On their calls, a couple of office CEOs didn't think all this would affect their businesses too much, but it will affect our customers, clients, and tenants, so of course this will affect all of us somewhat. I know nothing more than you all do, but the way I see it, the objectives of the tariffs are to introduce symmetry and fairness, but even more so to generate a new revenue stream for the federal government, which at, say, a 10% tariff is large enough to make a big dent in getting our federal budget deficit under control. And notwithstanding the tactics, reducing government bloat has to be a good thing and will also reduce the deficit. I am agnostic. Whatever the outcome, I believe the best bet is that this global kerfuffle will be resolved, settled, and over much more quickly than you think. The basic dynamics that I outlined in my recent annual shareholders letter that make us so enthusiastic about the future of our business still hold. Our stock performance is at the head of the office class, having increased 49% in 2024, after having increased 36% in 2023. and while year-end is down 12%, we are down less than the other CBD office companies. Manhattan continues to be the best real estate market in the country, especially so for office, but also for apartments and retail. In the 180 million square foot Class A better building market in which we compete, demand continues to be robust. Available space is evaporating quickly, and with the cost of a new build, i.e. replacement cost, at say $2,500 per square foot, and interest rates at 6% to 7%, no new supply is on the horizon. All this is the very definition of a landlord's market. We've seen this all play out in past cycles, and the story has always been the same. The supply and demand dynamics will push rents higher, and existing better buildings will increase in value quite substantially. All good, very good. Here at Renato, our teams have been very busy building liquidity and doing leases and deals. In January, we completed the Uniqlo sale at 666 Fifth Avenue at a record-breaking $20,000 per square foot. We used the $342 million in net proceeds from the sale to partially redeem our retail JV preferred equity on the asset. So, $342 million cash to Renato. We use this cash to pay at maturity our 3.5% 450 million unsecured bonds. Next, last month we completed a $450 million financing of 1535 Broadway and used the $407 million of net proceeds to partially redeem our retail JV equity on the asset. So, $407 million cash to Renato, which increased our cash balance. This financing was done at a very choppy market with skill and relationships by our capital markets team, so all thanks to them. Next, on April 22, we received a favorable ruling on the PEN1 ground lease rent reset arbitration. The panel determined that the annual ground rent payables for the 25-year period beginning June 17, 2023, will be $15 million. There is pending litigation, and the panel's decision provides that if the fee owner prevails in a final judgment, the annual rent for the 25-year term will be $20.2 million, retroactive to June 17, 2023. For GAAP, we have been accruing $26.2 million per annum of ground rent, and therefore, as a result of the panel's determination, we reversed $17.2 million of previously over-approved rent expense in the first quarter. Of note, commencing in the first quarter of 2025, we are now paying $15 million annual rent, and so our gap earnings will increase by $11 million annually. By the way, this Pen 1 ground lease, as fully extended, goes to 2098. Next, in March, we finalized a major 337,000-square-foot lease in Pen 2 with Universal Music Group. the world's leading music company, think Taylor Swift and her friends. This important deal brings an exciting tenant to the Penn District and takes the building to approximately 50% lease. More leasing at Penn II will follow. Next, yesterday we finally announced the completion of an important deal with NYU at 770 Broadway, completing a master lease for 1.1 million square feet on an as-is triple net basis for a 70-year lease term. Under the terms of the lease, a rental agreement under Section 467 of the Internal Revenue Code, NYU made a prepaid rent payment of $935 million and will also make annual lease payments of $1.3 million during the lease term. NYU has an option to purchase the lease premises in 2055 and at the end of the lease term in 2095. NYU will assume the existing office leases and related tenant income at the property. We use the portion of the prepaid rent to prepay rent payment to repay the $700 million mortgage loan which previously encumbered the property and $200 million to increase our cash balances. Though this transaction is a lease, the gap, which can be a little wacky, it is treated as a sale. As such, we will recognize the GAAP financial statement gain of approximately 800 million in the second quarter. We will retain the Wegmans retail condo, which will produce 407 million in income this year. The NYU lease absorbs 500,000 square feet currently vacated at the asset. Overall, the transaction is accreted by $25 million annually. If we pro forma leasing the vacancy at market rents with related capital spends, downtime, and free rent, it would have been a pro forma push, as you might expect. We are delighted to expand our relationship with NYU and congratulate NYU Board Chair Evan Chesler and President Linda Mills and their team. We are excited about their ambitions for this project. As I have said before, this is all very good for NYU and is very good for New York. NYU's press release issued yesterday is available at www.nyu.edu. All told so far this year, as a result of the above activity, we reduced our debt by $915 million, increased our cash by $500 million, and our retail JV preferred equity, which is an asset on our balance sheet. began the year at $1,828,000,000, is now down to $1,079,000,000. Our cash balances are now $1.4 billion, and together with our undrawn credit lines of $1.6 billion, we have immediate liquidity of $3 billion. The above transactions will increase GAAP earnings by approximately $36 million, $25 million from the NYU transaction, and $11 million from the PEN1 ground rent recent results. Tom, that would be Tom Cinelli, who all of you know. In a more complete analysis, including debt repayments and the loss of preferred income, calculates 30 million of accretion. I'm happy to defer to Tom. In a moment, Michael will review the quarter and the financials, but here are a few headlines of a very good first quarter. Comparable FFO is 63 cents increased by eight cents versus last year's first quarter. and is 9 cents higher than analyst consensus. Our overall GAAP same-store NOI is up 3.5%. We leased 1,039,000 square feet overall, of which 709,000 square feet was New York office. At $95 starting rents, we've marked the markets of 6.5% cash and 9.5% GAAP, and an average lease term of 14.7 years. In addition to the 337,000 square foot lease with Universal Music at Pen 2, we leased 163,000 square feet at Pen 1. We completed leases totaling 222,000 square feet at our 555 California Trove office tower in San Francisco at $120 starting rent. 555 continues to be the preferred financial services headquarters in San Francisco. And even in this historically soft market, 555 continues to outperform. It is proving that it is the best building in San Francisco. We are big fans of the new San Francisco mayor, Mayor Dan Lurie. Our New York leasing pipeline is a robust 2 million square feet. As I said in my annual shareholders letter released on April 8th, The lease-up of Penn II and the lease-up of our retail vacancies alone will generate incremental NOI of $125 million and $15 million respectively over the next several years. Tom, here is Tom again, specifies that while NOI for Penn II is budgeted to increase by $125 million, FFO is budgeted to increase by $95 million, the difference being capitalized interest. Either way, These are big numbers, and with Penn II built and ready, this $125 million a year is as close to a sure thing as there is. The Penn District, a three block long city within a city, continues to amaze and receive outstanding reviews. We sit on top of Penn Station adjacent to our good neighbors to the west, Manhattan, and Hudson Yards. The three of us combined are what I call the new, booming west side of Manhattan. One of our analysts calls the Penn District one of the largest mixed-use projects in the country. Be that as it may, the Penn District will be a growth engine for our company for years to come. As I said in my annual letter, we raise market rents in the Penn District from $50 to $100. Our neighbors to the west are achieving rents of over $150, and I predict that we will do the same in the Penn District in due time. You can all do the math as to what an incremental $50 on 4.3 million square feet will do to our earnings and values. 350 Park Avenue, with Citadel as our anchor tenant and Ken Griffin as our 60% partner, has begun the development process to create a grand 1.8 million square foot headquarters tower on the best site, Park Avenue. The new building will stand out as being truly the best in class. and we have several other assets for sale in the market. We recently filed our very comprehensive sustainability report, which can be found in the sustainability page of our website. Bernadette was the first in the nation to achieve 100% LEED certification across our entire portfolio of in-service buildings. The many awards we have achieved can also be found on the sustainability page of our website. Kudos to Lauren Moss and her team. Finally, one other observation I would make is that the majority of our secured loans reflect current market rates, while others are still living off their low rate loans. As I have said before, there is really no protection against loans that mature into a rising rate market. Now to Michael.