Vornado Realty Trust

Good morning, and welcome to the Bornado Realty Trust third quarter 2020 earnings call. My name is Richard, and I'll 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 Ms. Kathy Cresswell, Director of Investor Relations. Please go ahead.

Thank you. Welcome to Vernado Realty Trust third quarter earnings call. While Vernado typically holds its earnings call the morning after releasing earnings, today's call was moved to accommodate voting in the presidential and national elections yesterday. On Monday 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 package, are available on our website, www.vno.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, 2019, and our quarterly report on Form 10-Q for the quarter ended September 30, 2020, 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 our senior team is present and available for questions. I will now turn the call over to Stephen Roth.

Thank you, Kathy, and good morning, everyone. I hope all of you are safe and healthy. Yesterday was Election Day in America, arguably the most important single day in the calendar of our great democracy. Our nation is deeply divided, and this election appears to be a historical cliffhanger. The TV analysts are calling it a nail-biter. Whatever the final outcome of this election, it is our hope that we will unite as a country in pursuit of American values and prosperity. Before Michael gets into the business review and the numbers, let me make a few comments. These are anything but normal times. Actually, the COVID-19 pandemic is a once in a hundred year event. The activity level in New York and all other American cities is a fraction of normal. For example, office building occupancy in New York is currently in the teens. There is a tension between the very serious COVID health risk and related government protocols and lockdowns. And everyone's desire to get back to work, get back to school, get back to their favorite restaurants, and get back to normalcy. And for sure, normalcy will return. It's just a matter of how long it will take. And I believe return to normalcy will be the order of the day in months, not in years. The city generally feels normal in the residential areas, whether it be Tribeca or the Village or the Upper East or Upper West Side. The commercial areas, however, feel quiet, and that obviously negatively affects restaurants and retail. Most importantly, we are hearing from all our tenants that Zoom fatigue is real, productivity is down, and CEOs want their employees back in the office. But again, that will take some time. We are very proud of our corporate teams who are working really hard and doing a brilliant job of keeping the trains running on time. And we are especially proud of our building teams who have executed our industry-leading protocols and enhanced sanitation to make our buildings ready and safe for our tenants. Current liquidity is a strong 3.67 billion, including 1.49 billion of cash and restricted cash, and $2.18 billion undrawn under our $2.75 billion revolving credit facilities. During the quarter, we repaid $500 million on our revolver that we had drawn in the spring at the outset of the pandemic. With respect to the closely watched metric of rent collections, in the third quarter, rent collections excluding deferrals improved 500 basis points to 93%, driven by a significant pickup in retail collections during the quarter. Details of third quarter collections are, we collected 95% of office rents, 97% including agreed to deferrals. We collected 82% of retail rents, 85% including deferrals, which amounts to 93% on a combined basis, 95% including deferrals. Year to date, we have deferred $30.9 million in rent and abated $8.8 million Rents which we have agreed to defer are generally scheduled to be repaid over the course of the next year. We continue marketing 555 California Street and 1290 Avenue of the Americas. There is active interest from investors and widespread appreciation for the quality of these assets. But given investor caution, it does not look like we're going to achieve our original top-tick pricing objective. We continue to actively pursue a transaction involving these assets, which may take the form of a sale, a partial sale, a joint venture, or a refinancing. In the Penn District, the Moynihan Train Hall, an extension of Penn Station with its majestic 100-foot skylight, will be opening to the public at year end only weeks away. At our adjacent Farley Building, we will be delivering Facebook's 730,000 square feet in phases beginning in the first quarter of 2021. Our transformation and redevelopment of the 2.5 million square foot Pen 1, with its unique and outstanding amenity package, will be completed in phases, with the north lobby opening to tenants in the third quarter of next year and the remainder of the project in early 2022. And Pen 1's 1.8 million square foot sister, Pen 2, is next in line. Remember, as these large, important Penn District projects come online, they will deliver very, very significant earnings. 220 Central Park South is unquestionably the most successful residential development ever, and it continues to perform. This year through September, and in the teeth of the COVID crisis, we closed 30 units and suites for net proceeds of $939 million, and that includes 19 closings in the third quarter for $591 million. From inception through September 30, we have closed 95 units and suites for net proceeds of $2.76 billion. In October, after quarter end, we closed another four units for net proceeds of $105 million. Now, if I may, a word of caution And this should be obvious. We are in the midst of a once-in-a-century pandemic. Every medical scientist worldwide is working 24-7 on therapeutics and vaccines. So it is our hope that we can win the battle with this disease in months, not years. Our financial results, as well as our peers, are suffering. But it's important to appreciate that today's quarterly results are a reaction to a short-term crisis and are certainly not predictive of the future. As I have said several times, we expect normalcy to begin to return in months, not years, and we are highly confident that each of our businesses will rebound to pre-COVID levels. Now to Michael.