Vornado Realty Trust

Welcome to the Vornado Realty Trust Earnings and webcast for the third quarter of 2022. My name is Vanessa and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press 0 then 1 on your touch-tone phone. I will now turn the call over to Steve Borenstein, Senior Vice President and Corporate Counsel. Steve, you may begin.

Welcome to Vernado Realty Trust's 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.vernadorealty.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 relief form 10Q 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, 2021, 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 Ross, 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, Stephen. Good morning, everyone. As Michael will cover in a moment, we had another good quarter, with comparable FFO up 14% from last year's third quarter. Despite headwinds from a slowing economy and rising interest rates, we still expect this year to be up a fair amount from last year. We will feel the full effect of higher interest rates on our numbers next year, given a full year of impact. Overall this quarter, we leased 450,000 square feet, 229,000 square feet in New York, well below trend. This is a little bit the result of the slowing market and a lot the result of timing. As Michael will explain, our New York pipeline is a robust 1.5 million square feet. The Fed is deadly serious in pursuing their fight against inflation. The economy is clearly slowing, and capital markets are volatile. As a top priority, we have taken the following actions. Earlier this year, we extended our near-term debt maturity, so we now have no debt coming due in 2023, and a very modest $233 million on three assets coming due in 2024. We extended our unsecured revolving lines of credit totaling $2.5 billion with only $575 million outstanding through 2026 and 2027, providing significant liquidity for the next four to five years. In addition, we protected our floating rate debt exposure by swapping for five years $2 billion of floating rate debt to fix at a weighted average of LIBOR or SOFR, as the case may be, of 2.9%. Further, we have interest rate caps on an additional $2 billion, providing protection above 4.2% on a weighted average basis for a weighted average term of 10 months. Please see page 33 of our financial supplement, which describes all this activity line by line. Mark-to-market, in the aggregate, these swaps and caps are now in the money $232 million. Our only remaining floating rate debt exposure is $750 million, which is largely JV debt. Be aware that nothing can really protect as loans mature into a higher rate environment. The second area of our focus is, of course, the Penn District. The Penn 1 Lobby and amenities are now complete. The Penn 2 Skin and Bustle are now very far along, as is the Long Island Railroad Concourse. We invite all of you to come down and take a look or give us a call, and we will be happy to tour you through. Broker and tenant reactions have been truly outstanding. The Hotel Penn is coming down with demolition scheduled to be completed in the fourth quarter of 2023. I must say that the headwinds in the current environment are not at all conducive to ground-up development. Lastly, I want to comment on our dividends. Our policy is to pay out dividends equal to our taxable income. We now expect our taxable income to be lower in 2023. We will not have income from 220 Central Park South. We assume no asset sales, and we are budgeting to the interest rate yield curve. As such, our Board of Trustees plans to right-size our dividend in 2023, commensurate with our projection of taxable income. Of course, this will allow us to afford to retain more cash. Now over to you, Michael.