Vornado Realty Trust

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 one on your touch-tone phone. I will now turn the call over to Mr. Steve Bornstein, Executive Vice President and Corporate Counsel. Please go ahead.

Welcome to Vernado Realty Trust's second quarter earnings call. Yesterday afternoon, we issued our second 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.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, 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 Steven 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 Steven Ross.

Thank you, Steve, and good morning, everyone. Our business is on plan and continuing to improve month by month. Our primary focus is always on leasing, and I can report that Penn II is extremely active, and further, that in the overall portfolio, more than two-thirds of the recent vacancies have already been spoken for. Our focus continues to be on enhancing our liquidity, reducing leverage, and of course, taking advantage of opportunities created by the current market dislocation. New York City is as crowded as ever, and that's a good thing. As I predicted over the past couple of years, working at the kitchen table wasn't an existential threat. We're now seeing building utilization percentages in the 70s, and that's just about normal. Tenants are expanding and growing and actively searching for space. We actually compete in a market of over 200 million square feet, and in many of the prime submarkets, good space is being eaten up and rents are rising. It may be that the most important dynamic in our market is that it is almost economically impossible to build new, thereby cutting off new supply. There hasn't been a new office building of size started in New York in the last five years. If history is a guide, when supply shuts down, it quickly leads to a landlord's market. As Michael will cover in a moment, we are off to a very strong start in our leasing this year. The Bloomberg renewal and extension of their 947,000 square feet at 731 Lexington Avenue, creating 16 years of term, is the highlight. And we have good activity at all of our assets. As I said, at Penn, too, with the lobbies, common spaces, amenities, and plazas now complete, we're seeing a significant uptick in tour activity, and our pipeline at Penn is strong. Prospective tenants are really appreciating our transformations. and that Penn is really an extension of the new west side from Hudson Yards to Manhattan West to Penn. The public space surrounding Penn 1 and Penn 2 is transformational, and I encourage all of you to go out and check it out. The district is really bustling with our new food and beverage offerings. We could not be more optimistic. I mentioned on the last call that we've been working on several large monetization transactions. We announced the first one yesterday. the sale of our portion of Uniqlo's Fifth Avenue flagship to Uniqlo for $350 million. This asset is in our retail joint venture, 52% of which is owned by us. Uniqlo is also acquiring the upper two floors of their store from the office owner. This transaction continues the theme of Fifth Avenue users purchasing their space. Uniqlo's lease was set to expire in April 2026. protecting and perpetuating their control of this high-volume, prominent Fifth Avenue store was paramount to the tenant. My bet is this won't be the last user purchase on Fifth Avenue. As you will recall, we recapitalized this asset at a 4.5% cap rate as part of our street retail joint venture in 2019. The sale to Uniqlo is at a 4.2% cap rate on in-place NOI and the cap rate on the mark-to-market rent is in the mid-to-high 3% range. The sale is expected to close in the first quarter 2025. Importantly, all net proceeds will go towards repaying our preferred equity on this asset. There are a few other transactions in our pipeline to repatriate portions of the remaining $1.5 billion of preferred equity, all of which will substantially increase our liquidity. The second transaction I'll quickly comment on, which has been rumored in the market, relates to 770 Broadway. We have reached a handshake deal with a user for a long-term master lease of the entire 1.1 million square foot office component. We will retain the 92,000 square foot Wegmans Market. After a difficult four or so years, market dynamics are now reversing and growing constructive. There is no new supply on the horizon, Tenants are growing and expanding and searching for space. And New York continues to be the single best market in the nation. And importantly, our Penn District is finally showing brilliantly. Worry about the elephant in the room. The activity in the government bond and stock markets over the last three days is confirmation that the Federal Reserve fight against inflation has succeeded and likely foretells a significant reversal of interest rates. All this will have significant positive impact on our numbers and our values. Now over to Michael to cover our financials and the market.