Alexander’s Q4 Earnings Call Highlights

Vornado Realty Trust executives said leasing momentum in Manhattan accelerated in 2025 and positioned the company for what Chairman and CEO Steven Roth described as a tightening “landlords market” in the city. Speaking on the company’s fourth-quarter 2025 earnings call, management pointed to rising demand for high-quality office space, improving occupancy, and a growing pipeline of deals, while also outlining major development and redevelopment initiatives and recent balance sheet actions.

Leasing activity and market conditions

Roth said tenant demand from finance, tech, and other industries remained “extremely robust” amid “declining availabilities in the better-building subset.” He described Vornado as a “premier Manhattan-centric office company” and said New York was “on the foothills of the best landlords market in 20 years.”

For 2025, Roth reported that Vornado leased 4.6 million square feet of office space in total, including 3.7 million square feet in Manhattan, 446,000 square feet in San Francisco, and 394,000 square feet in Chicago. He said it was the company’s highest Manhattan leasing volume in over a decade and its second-highest year on record.

Excluding a 1.1 million square foot master lease with NYU, management said average starting rents in Manhattan were $98 per square foot. Mark-to-market results were cited as +10.4% on a GAAP basis and +7.8% on a cash basis, with an average lease term of more than 11 years. Roth also said Vornado led $100-per-square-foot leasing for the second year in a row, executing 46 leases totaling 2.5 million square feet—about two-thirds of its activity.

In the fourth quarter, Vornado executed 25 New York office deals totaling 960,000 square feet at average starting rents of $95 per square foot. Mark-to-market results for the quarter were +8.1% GAAP and +7.8% cash, with an average 10-year lease term, according to Roth.

Penn District progress and occupancy

Management emphasized the impact of its Penn District repositioning, citing transportation access and amenities as key advantages. At PENN 2, Roth said the company leased 908,000 square feet in 2025 at average starting rents of $109 per square foot with an average term of more than 17 years. Fourth-quarter leasing at PENN 2 totaled 231,000 square feet at $114 per square foot with an average term of more than 13 years, which Roth said was “well above our original underwriting.”

Vornado has leased more than 1.4 million square feet at PENN 2 since project inception, reaching 80% occupancy, and expects to complete leasing the remaining space this year. Based on executed leases and remaining activity, Roth said the projected incremental cash yield for PENN 2 increased from 10.2% to 11.6%.

At PENN 1, Roth said Vornado leased 420,000 square feet during 2025 at average starting rents of $97 per square foot. Since the start of the physical redevelopment, the company has leased more than 1.7 million square feet at PENN 1 at average starting rents of $94 per square foot.

Roth said PENN 2 had 348,000 square feet of vacancy remaining, while PENN 1 had 177,000 square feet of vacancy remaining plus 500,000 square feet of “first-generation leases still to roll over.” He said that “this will all generate income very shortly.”

For PENN 11, Roth said a major tenant expanded by 95,000 square feet to a total of 550,000 square feet, and AMC Networks renewed for 178,000 square feet.

Companywide office occupancy rose to 91.2% in 2025 from 88.8%, Roth said. President and CFO Michael Franco added that New York office occupancy increased to 91.2% from 88.4% in the prior quarter, driven principally by Penn District leasing, and said the company expected occupancy to continue to increase as it executes on its leasing pipeline.

Financial results and outlook

Franco reported comparable FFO of $2.32 per share for 2025, which he said was slightly higher than 2024 and “better than we had anticipated at the beginning of the year.” Fourth-quarter comparable FFO was $0.55 per share, down from $0.61 per share in the fourth quarter of 2024. Franco attributed the decline primarily to higher net interest expense and lease termination income recognized at 330 West 34th Street in the prior-year quarter, partially offset by rent commencements (net of expirations), higher FFO from the NYU master lease at 770 Broadway, and higher NOI from Vornado’s signage business.

On same-store performance, Franco said same-store GAAP NOI increased 5% for the quarter, while same-store cash NOI declined 8.3%. He reiterated that GAAP was more relevant to earnings in the period because cash results were affected by free rent from significant recent leasing and by a cash rent adjustment related to the PENN 1 ground lease true-up.

For 2026, Franco said the company still expected comparable FFO to be in line with 2025, reflecting anticipated non-core asset sales and “taking income offline” related to redevelopment plans for 350 Park Avenue and 34th and 7th retail at Penn. He said the first quarter would be more impacted by GAAP rent ramp-up through the year, higher interest expense from the recent bond issuance, and signage business seasonality. Franco reiterated expectations for significant earnings growth in 2027 as PENN 1 and PENN 2 lease-up benefits take effect, while Roth cautioned modelers not to assume “more than a $0.40 uptick in the 2027 year,” later confirming in Q&A that the $0.40 comment referred to FFO.

Roth also discussed the difference between signed leases and GAAP-recognized occupancy, saying Vornado had more than $200 million of signed and committed revenue not yet reflected in GAAP results that would be recognized over the next several years as tenants build out space or take occupancy.

Development, redevelopment, and capital allocation

Roth said construction would commence in April on the 1.85 million square foot 350 Park Avenue project, with Citadel as anchor tenant and Ken Griffin as Vornado’s 60% partner. In Q&A, management said Griffin chose to accelerate the option exercise, and the deal was amended to allow Vornado and Rudin flexibility to invest within a range—described as 20% to 36%—rather than a fixed equity percentage. Management said Citadel’s rent is determined by a formula tied to a premium over permanent financing costs with a cap and collar, and that Citadel was still finalizing space planning, with its appetite for space having “grown from the original deal.”

Roth highlighted two recent acquisitions:

• 623 Fifth Avenue: A 383,000 square foot asset acquired in September for $218 million, or $569 per square foot. Roth said the building is substantially vacant and Vornado plans to redevelop it into what he described as the “best of the best” boutique office product, with delivery expected by the end of 2027. He said the project’s “all-in” cost including concessions is budgeted at $1,175 per square foot and suggested the economics could translate into “a little bit more than” $0.11 of incremental earnings based on his math.
• 3 East 54th Street: A development site acquired in January for $141 million. Roth said the company previously acquired an $85 million mortgage on the property that accreted to $107 million and was credited toward the purchase price. The site is owned for 232,500 square feet as of right and is being evaluated for hotel, office, and residential uses.

Roth also said Vornado expects to break ground in the fall on a 475-unit rental residential project at 34th Street and 8th Avenue, and plans to replace what he called “junkie retail” along 34th Street and Seventh Avenue near the Penn District with more modern retail offerings.

On Sunset Pier 94, Vornado’s 50%-owned film studio facility with partners HPP and Blackstone, Roth said the project has opened and all six sound stages were immediately leased by Paramount and Netflix on short-term leases. Later in Q&A, management said its projected cash yield declined from 10% to 9% due to “reality,” citing challenges in the streaming business and the short-term nature of the initial leases.

On capital allocation, Roth said Vornado had started repurchasing shares, buying 2.352 million shares for $80 million at an average price of about $34 over the last few months. Since the 2023 board authorization, the company has repurchased 4.376 million shares for $109 million at an average price of about $25 per share. Roth said management viewed the stock as “stupid cheap” and indicated the company could become more aggressive if the valuation disconnect persists, while also stressing it would proceed carefully.

Franco said liquidity totaled $2.39 billion, including $978 million of cash and $1.41 billion of undrawn credit capacity. Management described extending maturities through 2031 on nearly $3.5 billion of debt and issuing $500 million of 70-year bonds at 5.75% to pre-fund a June 2026 maturity. Franco also detailed refinancings and credit facility changes, and said net debt-to-EBITDA improved to 7.7x from 8.6x at the start of the year. He added that S&P changed Vornado’s outlook from negative to stable and affirmed its BBB-minus unsecured rating.

In response to questions about dividends, Roth said management has an incentive to return to a “normalized dividend” over time, but stated it would not happen in 2026. He said normalization would follow improvement in the income stream as leasing free rent and tenant improvement periods roll off.

Management also briefly addressed Upper Fifth Avenue retail, saying conditions were “improving dramatically and rapidly” but still “struggling to meet the top-tick rents of four or five years ago.” Roth said it was “inappropriate” to discuss details of the Meta lease at 657 Fifth Avenue at this time.

About Alexander’s (NYSE:ALX)

Alexander’s (NYSE: ALX) is a publicly traded real estate investment trust focused on owning, leasing and managing commercial properties in the New York metropolitan area. The company’s portfolio encompasses office buildings, retail storefronts and parking facilities, all held on a wholly owned basis. By concentrating on prime urban and suburban locations, Alexander’s seeks to generate stable rental income and long-term asset appreciation.

Founded in 1928 as a family-run department store chain, Alexander’s transitioned during the early 1990s into a pure-play real estate company following the sale of its retail operations.