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North Carolina medical marijuana sales begin at Cherokee store
Ukrainian and Western leaders laud US aid package while the Kremlin warns of 'further ruin'
Biden sees a $35 price cap for insulin as a pivotal campaign issue. It’s not that clear-cut
'Civil War’ continues box-office campaign at No. 1
Hawaii lawmakers take aim at vacation rentals after Lahaina wildfire amplifies Maui housing crisis
Conservative Brazilians laud Elon Musk at rally in support of ex-president Bolsonaro
Tens of thousands of Colombians protest against the leftist president's reform agenda
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
North Carolina medical marijuana sales begin at Cherokee store
Ukrainian and Western leaders laud US aid package while the Kremlin warns of 'further ruin'
Biden sees a $35 price cap for insulin as a pivotal campaign issue. It’s not that clear-cut
'Civil War’ continues box-office campaign at No. 1
Hawaii lawmakers take aim at vacation rentals after Lahaina wildfire amplifies Maui housing crisis
Conservative Brazilians laud Elon Musk at rally in support of ex-president Bolsonaro
Tens of thousands of Colombians protest against the leftist president's reform agenda
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
North Carolina medical marijuana sales begin at Cherokee store
Ukrainian and Western leaders laud US aid package while the Kremlin warns of 'further ruin'
Biden sees a $35 price cap for insulin as a pivotal campaign issue. It’s not that clear-cut
'Civil War’ continues box-office campaign at No. 1
Hawaii lawmakers take aim at vacation rentals after Lahaina wildfire amplifies Maui housing crisis
Conservative Brazilians laud Elon Musk at rally in support of ex-president Bolsonaro
Tens of thousands of Colombians protest against the leftist president's reform agenda
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
North Carolina medical marijuana sales begin at Cherokee store
Ukrainian and Western leaders laud US aid package while the Kremlin warns of 'further ruin'
Biden sees a $35 price cap for insulin as a pivotal campaign issue. It’s not that clear-cut
'Civil War’ continues box-office campaign at No. 1
Hawaii lawmakers take aim at vacation rentals after Lahaina wildfire amplifies Maui housing crisis
Conservative Brazilians laud Elon Musk at rally in support of ex-president Bolsonaro
Tens of thousands of Colombians protest against the leftist president's reform agenda

Vornado Realty Trust Q3 2021 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing

Participants

Corporate Executives

  • Catherine C. Creswell
    Director of Investor Relations
  • Steven Roth
    Chairman of the Board & Chief Executive Officer
  • Michael J. Franco
    President & Chief Financial Officer
  • Glen J. Weiss
    Executive Vice President of Office Leasing & Co-Head of Real Estate

Presentation

Operator

Good morning, and welcome to the Vornado Realty Trust Third Quarter 2021 Earnings Call. My name is Vanessa, and I will be your operator for todays call. [Operator Instructions]

I will now turn the call over to Ms. Cathy Creswell, Director of Investor Relations. Please go ahead.

Catherine C. Creswell
Director of Investor Relations at Vornado Realty Trust

Thank you. Welcome to Vornado Realty Trust 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 package are available on our website, www.vno.com, under the Investor Relations section. In these documents and during todays 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 being 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, 2020, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of todays 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 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 Steven Roth.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Thanks, Cathy, and good morning, everyone. I begin by saying that I am feeling quite optimistic about the economy, about New York City and about our business. New York City is recovering rapidly. The apartment market is a case in point. It suffered a vicious decline to 70% occupancy. Nothing like that, nothing even close to that has ever happened before, as renters gave up their apartments in the work-from-anywhere period to now having recovered to pre-COVID occupancies at even higher than pre-COVID rents. This will go down as the most rapid V-shaped rebound in history. Public transit utilization rates are picking up and public transportation is, of course, the lifeblood of the city. Restaurants and sporting venues are literally jam-packed and Broadway and other cultural venues have reopened. With travel restrictions coming off this month, international tourists will be returning. We can see increased automobile and pedestrian traffic everywhere. Vaccination rates among office workers are at high levels. Im guessing around 90%. Were hearing unanimously that our tenants want their employees back in the office. COVID-19 has been climbing. And this week, we are now at 43%. I must admit that our tenants and we are a little frustrated at how long the return-to-work process is taking, but there is no doubt that work in office will win over work alone at the kitchen table.

Key things we are hearing every day are health, wellness, culture, collaboration, purpose, productivity, socialization, all under the mantra of its time to get back to work. While the timing of complete return to the office and each companys hybrid plan are still unknowable, it is clear to me that the office is still and will be the center of work and of success. Importantly, our business is rebounding on a trajectory of recovery and return to growth. Michael will cover our operating results in a few moments. We had a very good quarter and feel good about the trend line for the future. Many companies throughout the economy are experiencing a significant post-COVID pickup in activity, and we are as well. Glen and his team are as busy as they have ever been with deals in all of our assets. Citywide, third quarter leasing volume reached its highest level since 2019. Our tenants tour activity and the volume of leasing proposals we are working on, particularly large proposal, is robust as companies are thriving and clearly looking to grow, and this heightened activity demonstrates the importance of the office to their businesses. The dominance of New York, its infrastructure and scale and its deep talented and diverse workforce continue to give New York a dramatic competitive advantage. In particular, the tech sector continues to be voracious in their appetite for space in our submarkets. And New York has clearly emerged as the second largest and second most important tech hub in the country.

Our activities in the Penn District are full steam ahead, heres the latest. At Farley, we are targeting opening The Fuller hall on the Ninth Avenue entrance by year-end. Facebooks tenant work is proceeding with first employee occupancy scheduled for second quarter 2022. At the Moynihan Train Hall, we have completed 22 retail leases. We are gratified and validated that Starbucks reports that its Moynihan -- its new Moynihan store is trending number one out of its 190 Manhattan locations. In Penn Station, our Long Island Rail Road Concourse construction is about 1/3 complete. We will now own both sides of this heavily traffic concourse. It will be a big win for us. The 34th Street, half of the PENN1 lobby is open and it is spectacular. Come take a look. Our unique 3-level world-class amenity offering will open shortly, and the other half of the PENN1 lobby which fronts our 33rd Street will be completed end of first quarter 2022. At PENN2, our full building transformation is well underway, on schedule and on budget, the job is largely bought out. The demolition of Hotel Penn will begin this month, creating the best development site in the city. Both office and retail tenant interest is high the Penn District with multiple large office users now focused on PENN2. Let me review again our Penn District financing plan. Capital required to complete Farley PENN1 and PENN2 is about $1 billion before TIs and that will be paid for entirely from our cash on balance sheet.

Further, Farley, PENN1 and PENN2 are free and clear, unencumbered by any mortgage debt whatsoever. And most importantly, as these great assets come online, they will produce, say, $200 million of incremental additional annual earnings. The Manhattan retail market has bottomed. It will take some time for rents to start rising again, but leasing activity and tenant inquiries are certainly picking up as residents, office workers and tourists return to the city. New York is still a most favorite location for retailers who are on top of their game. Of particular note is our recently announced deal with Wegmans, the premier grocer in our region at 770 Broadway, the Facebook building, replacing Kmart, and thats some big uptick. We also completed retail deals in this quarter with luxury, banks and food tenants. We have now completed the retail retenanting of 595 Madison Avenue, The Fuller Building, with luxury tenants Fendi and Berluti, both LVMH brands and Krystal and Stefano Ricci. As you know, we sold three Madison Avenue street retail assets this quarter and are contracted to sell two SoHo street retail assets in the first quarter of 2022. We still believe in high street retail and believe demand, rents and activity have bottomed. Im happy to go into detail and the whys and the wherefores of these sales in Q&A. We reaffirm the updated guidance of our retail business discussed in our last earnings call. For 2021, we still expect to do a little better than cash NOI of $135 million. For 2022, the guidance is cash NOI of $160 million. After 2023, we guided cash NOI of not less than $175 million.

Last year, the topic du jour was rent collections. You should know that rent collections are now and have been for a while at essentially 100%. Collections on the limited number of rent deferrals that we granted during the crisis are also running at essentially 100%. The topic du jour today is tenant-employee occupancy rates. Company-wide, this week, we are now at 43%, and that rate has been growing nicely since the summer. We are able to harvest lots of information about usage as employees wedge-in and many other operating statistics from our building level technology. Our buildings population by -- our building is populated by financial types, market makers and traders, enjoy occupancy in the 70. Another factoid, the busiest day of each week is Wednesday. And another factoid, the number of unique individual employees who came to work in the month of October was 61%.

Finally, let me spend a minute on sustainability where we can continue to be the leader. Vornado was recently selected as a global sector leader for all office retail diversified respondent in the 2020 Global Real Estate Sustainability Benchmark, or GRESB -- or the GRESB survey. Our GRESB score of 94 was our highest total score to date. We also placed second out of 94 publicly listed real estate companies in the Americas who responded to GRESB, including most of our office peers. Kudos to Dan Egan and his team for their leadership. Thank you. Now to Michael.

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

Thank you, Steve, and good morning, everyone. I will start with our third quarter financial results and then end with a few comments on the leasing and capital markets. With the recovery in New York City occurring, as Steve described in his opening remarks, so is our business and financial results. Third quarter comparable FFO as adjusted was $0.71 per share compared to $0.61 for last years third quarter, an increase of $0.10 or 16%. The increase would have been 26%, but for the once every 3-year Mart real estate tax increase which is largely reimbursed by tenants next year, sort of a timing issue, if you will. We have provided a quarter-over-quarter bridge in our earnings release on page five and our financial supplement on page seven. The increase was driven by the following items: $0.10 from tenant-related activities, including $0.06 from the commencement of new leases and $0.04 from the nonrecurrence of straight-line rent and tenant receivable write-offs impacting the prior period. $0.04 from the continued improvement in our variable businesses, $0.02 from the acquisition of our partners 45% interest in One Park Avenue in August and $0.02 from lower G&A resulting from our overhead reduction program last December.

The total of these increases is partially offset by the following decreases: $0.06 from the already mentioned real estate tax expense accrual due to an increase in the triennial tax assessed value of the Mart, which, as I said, will be largely billed back to tenants beginning of January 2022, and $0.02 from an increase in other miscellaneous expenses primarily related to our new preferred issuance, partially offset by interest expense savings. Our third quarter comparable results are ahead of the 2020 fourth quarter run rate we discussed at the beginning of the year and on our last earnings call, as is our expectation for this years fourth quarter. We have several noncomparable items in the quarter as well, which totaled about $0.11 per share of income. With respect to our variable businesses, we are continuing to see a recovery as the city returns to normal. Signage is picking up nicely with healthy bookings continuing in the fourth quarter. BMS is now performing near pre-pandemic levels, our garages should be fully back in 2022. And finally, a number of trade shows have successfully taken place, albeit with lower attendance, primarily due to travel restrictions. Other than Hotel Penns income, we still expect to recover most of the income from our variable businesses next year with the full return in 2023. Company-wide same-store cash NOI for the third quarter increased by 2.8% over the prior years third quarter and would have been 8.1%, but for the aforementioned additional real estate tax expense at the Mart during the quarter.

Our core New York Office business was up 7.6%. Our retail same-store cash NOI was up 14.2%, primarily due to the rent commencement on new leases at 595 Madison Avenue and four Union Square South and lower real estate taxes. Our office occupancy ended the quarter at 91.6%, up 50 basis points from the second quarter, which we believe represented the bottom for our office occupancy. We expect this figure to keep moving up from here based on leases we have out for signature and in negotiation. Retail occupancy was consistent with the second quarter at 77.2%. Now turning to the leasing markets. New York leasing volume reached its highest volume since the onset of the pandemic with more than seven million square feet leased during the quarter. Employment growth continues its upward trajectory. Asking rents and concessions have stabilized for high-quality buildings, even improving in some submarkets and sublease space has begun to be absorbed or removed. The theme of flight to quality has continued. Quality of the asset, strength of the landlord and access to transportation, all continue to be main focus for tenants coming out of the pandemic, and we are a major beneficiary given the quality of our portfolio and the capital we invested over the past 10 years to redevelop our assets. Notably, 65% of the deal volume in the city was new in expansion leases, led by 15 deals in excess of 50,000 square feet.

The majority of leasing action is being driven by the tech and financial service industries, which accounted for 60% of all activity. We enjoyed a solid third quarter, signing 27 office leases totaling 757,000 square feet, with average starting rents of $77 per square foot and positive GAAP and cash mark-to-market of 4.2% and 1.4%, respectively. The highlight for the quarter, which also happened to be the largest lease done in the market, was an early lease renewal with Interpublic Group for 514,000 square feet at 100 West 33rd Street. This important transaction reaffirms IPGs commitment to the Penn District and resolves what was our largest 2023 expiration. Importantly, we also executed on a full floor expansion with Google at 85 10th Avenue, increasing their total footprint in the building to just under 300,000 square feet. Our buildings which cater to financial service users continue to thrive. During the quarter, deals we completed include 52,000 square feet at 280 Park Avenue, 37,000 square feet at 888 7th Avenue and 19,000 square feet at 650 Madison Avenue.

We are busy across our portfolio with more to come. Our leasing pipeline is very strong. We have one million square feet of leases in negotiation with an additional 1.5 million square feet trading paper or in advanced discussions. Our office expirations are very modest for the remainder of 2021 and 2022, with only 936,000 square feet expiring in total, representing only 5% of the portfolio and 189,000 of the square feet is in PENN1 and PENN2. 2023 office expirations totaled 1.5 million square feet, of which 350,000 is in PENN1 and PENN2. This total is down significantly since last quarter due to the Interpublic Group lease renewal. Retail leasing activity in the third quarter included 10 leases, totaling 111,000 square feet, with average starting rents of $110 per square foot and positive GAAP and cash mark-to-market of 45.3% and 19.6%, respectively. The largest transaction for the quarter was the previously announced 82,500 square foot lease signed with Wegmans at 770 Broadway.

In addition, we completed the lease-up of the retail to Fuller Building with a lease to Stefano Ricci, giving us four luxury retailers there with new long-term deals and reflecting the recovering market for the best locations. We also completed deals with Citibank at One Park and Capital One at 731 Lexington, reflecting the return of the banks to the marketplace. Finally, a word on the capital markets. The investment sales market is picking up again with a couple of recent strong office sales in addition to several other assets now in the market. Investor interest in New York is clearly rebounding as they see the city has bottomed and find the relative value compelling. On the debt side, pricing in the financing markets is as tight as weve ever seen and we continue to be active in refinancing our debt to take advantage of the low rates. In September, we also took advantage of the tighter preferred market to refinance our $300 million, 5.7% perpetual preferred shares with a 4.45% issuance of the same size, a very attractive rate for Forever money. Finally, our current liquidity is a strong $4.443 billion, including $2.268 billion of cash and restricted cash and $2.175 billion undrawn under our $2.75 billion revolving credit facilities. With that, Ill turn it over to the operator for Q&A.

Questions and Answers

Operator

[Operator Instructions] We have our first question from Emmanuel Korchman with Citi.

Michael Bilerman
Analyst at Smith Barney Citigroup

Hey, good morning. Its Michael Bilerman here with Manny. Maybe if I can just start on putting capital to work. Whats your current appetite to go out and buy assets? You obviously did the Park Avenue buyout of your joint venture partner. And so is that something, Michael, you talked about the market with increased activity that you want to participate in? Or are you just hoarding your capital at this point to pursue all the development and redevelopment types of activities? And maybe just talk a little bit about if you are going to go external, whether you look at other property types rather than just office?

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

Sure. Good morning, Michael. Look, the -- in terms of the capital deployment, we look at everything in the marketplace. As you know, theres been very little thats transacted for probably the first 12 months of the pandemic. And frankly, with short-term rates at basically 0 and long-term rates quite low as well, theres been very little pressure on sellers. So youve seen very little transaction activity. Youre starting to see that pick up now with assets being brought out. And to date, the buyer universe, I would say, has generally been driven by players that use higher leverage, although were still in the early days. So to the extent we see compelling opportunities, we would act on those. So far, the pricing has frankly not been compelling. And as we compare both to what were doing in Penn and prospectively what we can do in Penn, those continue to be more attractive than just buying another asset that were going to stabilize at a 5% yield after spending a lot of money and capital to lease it up or just to buy it. So we look -- were going to continue to look. If we find something interesting, we would certainly act on it. We have the capital to do that. But to date, capital continues to price assets quite aggressively, notwithstanding the volume of activity thats still down.

Michael Bilerman
Analyst at Smith Barney Citigroup

And then can you just...

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Michael, hang on.

Michael Bilerman
Analyst at Smith Barney Citigroup

Yes, Steven.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Let me just add a little bit to what Michael said -- Michael Franco said. I mean, look there has to be accretion in anything that we would buy. Right now, the math is topsy-turvy. So our stock filled in the marketplace, I dont know what it is, probably close to an 8% cap rate. Assets in our -- in Manhattan, office buildings that we would even consider, all sell at sub-5. So you cant -- that math is topsy-turvy. It makes no sense to buy an asset for 5%. And by the way, when you take the capital thats required for these asset services, thats year-over-year, maybe the cash on cash is 4%, when our stock is selling for 7%. So anything that we would do there would be dilutive to shareholder will. And obviously, were not going to do that. If we saw an empty building, by the way, that we could buy, where we thought we could create a great deal of value, we might do that. So generally speaking, its very difficult to -- for us to transact and grow right now. And so what we do have -- on the other side of that, is we do have liquidity. We do have a very, very, very dry powder balance sheet, and we still have great opportunities to accretively spend that capital thats on our balance sheet in the Penn District. So thats our main focus right now. It was in the Penn District. So Im just sort of doubling down with what Michael said.

Michael Bilerman
Analyst at Smith Barney Citigroup

Well, thats helpful. And maybe just as a follow-up, Steve, just on the Penn District, where do things currently stand in terms of pursuing the tracker? I know its probably a little bit longer than you would like to have everything prepared and ready to go. So maybe just give us a little bit of an update where you are internally in terms of preparing all the financials and getting all of that done and also externally with a lot of new governmental partners coming in to new seats? How is that all playing into sort of the timing of getting this tracker out to the marketplace?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Michael, thanks for that question. I remain committed to the tracker. And lets understand what I remain committed to. I remain committed to allowing our investors to use between our stable core business on the one hand, and then the Penn District, which is our high-growth development segment of our business and to be able to invest in either of those individually or both of those. We are very, very, very strong believers that we will create enormous values in the Penn District. We will create a district that will command premium pricing, and we couldnt be more excited about it. So I remain committed to it, number one. Number two is we are well along with the paperwork and what have you that would be required to do it -- to launch. We recognize what you said, and that is we are seeing a complete turnover in government and senior government officials.

And we have pending matters with them. And so obviously, were going to maybe slide a little bit as we -- as that goal plays out. We are very, very, very optimistic that the new government leaders at the city and state will be, let me say, how do I say this, will be constructive, will be business friendly, and I recognize that the Penn District is something that requires and demands their attention, and we believe we will get that. Theyre positive attention. The next thing is, Ive read in -- amongst the analysts, some skepticism about the idea of separating the Penn District. Im very surprised at that. Theres sort of a -- Im as enthusiastic about this as Ive ever been about any project in my career. So Im having trouble understanding it.

Also we have had conversations with multiple, multiple real estate investors as opposed to stock investors who share our judgment and my judgment about the potential of the Penn District. So -- but from the point of view of the analyst community, I am almost starting to believe that we are in a show-me mode. So what that means is that we have to knock off some more leasing to be able to service the values. So thats basically whats going on. We have no counterparty in the tracker. We have no timetable, its going to slide a little bit, not too much, and we think its going to be smashingly successful.

Michael Bilerman
Analyst at Smith Barney Citigroup

Yes. And I appreciate those comments. And look, Steve, I think part of the skepticism out of the investment community, I think everyone recognizes what the Penn District represents. Ive been following your company for almost 25 years. And weve watched that area transform and theres always been that opportunity. We can go through the list of things youve called it, the big kahuna, a lot of other things. I think it is similar to the same business that you are in, even though I would concur with your phrasing that you have core assets in this big development opportunity. I think trackers have typically been used where its a business that is different than the parent company and has other comps or other things in there in terms -- to highlight that value. Your comments about the private market are much more akin to where I think investors sort of want to be able to highlight that value. But to your point, you dont want to give up a part of that project to a private, thats going to make all the money versus something that you believe should endure to Vornado shareholders? Is that a fair comment?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

I guess so. I mean, the comment was so lengthy, I didnt really follow all of it. And the answer is that I understand the skepticism. I said -- Im looking at it as a show-only project. And believe me, we will show you.

Michael Bilerman
Analyst at Smith Barney Citigroup

Great. Thanks for your time, Steve.

Operator

And thank you. Our next question is from Steve Sakwa with Evercore ISI.

Steve Sakwa
Analyst at Evercore ISI

Thanks. Good morning. I guess, first, Michael, I wanted to just follow up on your comments about the robust leasing pipeline. If you could just maybe provide a little more color on how much of that activity is for either PENN2 or some of the other developments? And how much is for current vacancy or how much of that is forward renewals? I guess kind of a split on new versus renewals would be helpful. Thanks.

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

Im going to let Glen take it, Steve, but the answer is yes. Glen, why dont you give some color on that?

Glen J. Weiss
Executive Vice President of Office Leasing & Co-Head of Real Estate at Vornado Realty Trust

Hi, Steve. So its a very strong mix of everything. New deals, both in Penn, new deals in the core portfolio, strong renewal activity throughout all of it and expansions everywhere. Were seeing strength throughout the portfolio, both in Penn and the core portfolio, in all different shapes and sizes with all different industry types. Things have picked up really well since we last spoke.

Steve Sakwa
Analyst at Evercore ISI

And maybe just as a quick follow-up. When youre sort of talking to the tenants about space needs and space planning, what does the densities look like, particularly on sort of the new deals? And how do they compare from a space per employee perspective to maybe deals from two years ago?

Glen J. Weiss
Executive Vice President of Office Leasing & Co-Head of Real Estate at Vornado Realty Trust

So Ive said this the last couple of calls, weve seen no change at all in density. Youre seeing maybe a different mix of collaborative space, communal space for cubicle office, but generally no change. People are planning for the future. Theyre back at it. A lot of them were acting as if its pre-pandemic times, growth, new fresh start, all about talent recruitment and moving forward.

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

Steve, in your question and then a lot of the questions or comments and the reports from different analysts, there remains a skepticism as to whether New York is going to recover, whether people want to be in the office, etc.. And a little bit picking up on Steves comment, I think were sort of in a show-me mode in terms of when we put the points up on the board people see it. But as we look at the pipeline, I mean, there is activity literally at every building all types of users. I mean, Steve commented on the voracious appetite of tech is stronger now than it was pre-COVID. And the financial types are booming. Were seeing heavy activity there. You have an economy where companies are doing very well, they are in growth mode, and thats reflected in our pipeline. So I think the leasing market is sending a very strong signal that New York is going to be fine. New York is going to be one of the winners. Companies want to locate here. And I think youre going to see those stats continue to get posted over the next several quarters. Obviously, this quarter was a good start, but theres much more in the queue across our portfolio.

Steve Sakwa
Analyst at Evercore ISI

Great. And then I guess...

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Steve, look, the stock market, if you look at the price of our stock and the registered companies in the industry, theyre all extremely, extremely depressed and theyre doubly depressed from where they were pre-COVID. There is in the stock, the -- in my mind, the sentiment that nobody -- everybody is confused, uncertain and worried about work from home and how it will affect the CBD office business, okay? We acknowledge that. We believe two things. Number one -- well, actually couple of thing. Number one, we believe in New York, we are seeing in the field that people are committed to New York, they are committed to stay in New York, theyre committed to grow in New York. Thats for the financial services industry, etc., the media industry, the entertainment industry and double and triple for the tech industry because the volume -- the scale of New York cant be replicated anywhere. I mean just -- if you just take two or three of the leading trillion-dollar tech firms, the leases theyve signed in the last 14, 15 months, they need 15,000 engineers to fill that space. You cant get that in Austin or Nashville or wherever, okay? So the scale of New York is winning the day, plus the talent pool. So thats factoid number one.

Factoid number two is the business leaders that we deal with every day, they understand work for all, theyre grappling with what their policies are going to be, what the hybrid solutions are going to be, three days in the office, four days in the -- whatever it is, they know that. Theyre grappling with it now. Yet they continue to believe that they need office space, lots of it, in fact, higher-quality office space to recruit their talent and retain their talent. So were finding in the marketplace the economy between actually a very aggressive and robust demand for space from the big boys in each of the major industries and the uncertainty, the skepticism of work from home in the marketplace. So were betting that our tenants know what theyre doing. And we think that -- so we think that work from the office will win. It will be nipped around the edges by some hybrid thing, people work from home some number of days a week. But the people -- we talked to everybody, they want the people back in the office. Thats the way to grow their businesses and they are really serious about it. So we think that, thats the answer. We are very, very pleased with the demand for space, notwithstanding the uncertainty thats in the securities market.

Steve Sakwa
Analyst at Evercore ISI

Great. And just as a quick second question, Michael, the trade shows, I know were back a little bit in the third quarter. And I know -- I think last quarter, you had mentioned that, I think, NeoCon was moving in the fourth quarter. Do you have any sense at this point as to how big trade shows could be in the fourth quarter? And I guess whats on the books for next year already? And how do the sizes shape up to kind of pre-pandemic?

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

We had -- since July, Steve, we produced eight trade shows, including our two largest shows, NeoCon and the Armory Show in New York. Obviously, there were travel restrictions, particularly internationally, which impacted attendance. And so I would say levels are probably closer to half of what they were historically, but they were put on successfully. We got the machine working again. And obviously, performance year-over-year was positive. So our expectation is that were going to put on a full set of trade shows next year. Were going to see a substantial recovery. I think just being realistic, we dont think trade shows come back fully in 22. Its probably 23 before that fully stabilizes. But in 2021, overall trade shows dont contribute a lot to our variable businesses as we currently project. And next year, we think the number will be several million dollars incremental. I dont want to give you a number today, just because we need to spend a little time with our team refining that. And obviously, its a guess, but we do think the trend line, now that the machinery is working, people are getting used to it. international travels open back up, well see a decent recovery next year.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Steve, the overriding fact is that these trade shows are desperately important to our clients as the major sales activity for each of these individual -- of each of these individual companies. So the trade shows are here to stay, theyre really important, okay? So we cant predict whats going to happen this quarter, next quarter. But our budgets show that a couple of years out, the trade show business will get back to where it was pre-COVID. And the main reason is because this is a really important business to our clients.

Steve Sakwa
Analyst at Evercore ISI

Great. Thanks [Indecipherable]

Operator

And thank you so much. We have our next question from Nick Yulico with Scotiabank.

Nick Yulico
Analyst at Scotiabank

Thanks. Good morning, everyone. Just going back to the leasing activity, youre talking about the pipeline being pretty strong, not that much in expirations next year. I mean, how should we -- is there any preview you can give us about how to think about occupancy and how it could trend in, I guess, in particular, the New York City office portfolio?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Glen?

Glen J. Weiss
Executive Vice President of Office Leasing & Co-Head of Real Estate at Vornado Realty Trust

So Michael -- Nick, Michael mentioned it in his remarks, we believe our office occupancy has bottomed. Were now at 91.6%, and we think its going to continue to improve quarter-to-quarter based on the action we have. Historically, we were at 96%, 97%. So where we are was all due to COVID. Were on our way back. We feel its getting better and that we have hit the inflection point and going back up.

Nick Yulico
Analyst at Scotiabank

Okay. Thanks and then second question is just about the Penn District. I know you talked about Hotel Penn being the prime development site in the city. And going back to your prior disclosures on that, you had, I think, about in your NAV estimate $500 million for that project, which is about $250 a foot of zoning -- per zoning, I guess. And I guess Im wondering if thats still the thought on the value of that there and then as well how we should think about PENN1 where you have the ground lease reset coming in 2023. If you have any update there and how we should think about this Hotel Penn at $250 a foot number, a good way to think about the potential land value reset at PENN1?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

We continue to be happy with the number thats in our NAV. We see no reason to raise it. And with respect to the rent arbitration, we have no comments.

Nick Yulico
Analyst at Scotiabank

Okay. I guess just in terms of -- I mean, should we think about that $250 a foot value that was employed for Hotel Penn being a reasonable number to think about PENN1, which is right across the street?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

It would be inappropriate for us to lead you either way in terms of your internal calculation. Im not going to do that. I dont think its appropriate. And Im not going to talk about a very important financial arbitration in this format.

Nick Yulico
Analyst at Scotiabank

It would be inappropriate for us to lead you either way in terms of your internal calculation. Im not going to do that. I dont think its appropriate. And Im not going to talk about a very important financial arbitration in this format.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

I think the disclosure in the footnote is appropriate. And obviously, the final answer is unknowable, and well go through the process, and well hope for the best.

Nick Yulico
Analyst at Scotiabank

Thanks.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Thank you.

Operator

We have our next question from Jamie Feldman with Bank of America.

Jamie Feldman
Analyst at Bank of America

Thank you and good morning. Id like to go back to your comments on retail. It sounds like you think it could be bottoming here. Just your thoughts on why and what we should expect going forward?

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

I mean, Jamie, look, I think the comments on retail are reflective of what were seeing on the ground from tenants. Tenants were in a shell for a year. Obviously, there were a few people on the streets. Vacancy was high and not much was going on. Right now the transaction machine is working again, people are back out on the streets. Youre seeing tourism pick up, albeit its all been domestic so far. International tourism will kick off actually in the next week, which should be another shot in the arm for the city. And we dont expect to snap back to 60 million people immediately, but thats the trend line from the city being opening and the attendance that -- at sporting events and Broadway shows and other things is quite good and quite indicative of what we think is going to happen. So retailers want to know there are shoppers out there. And there are clearly shoppers out there again.

And weve talked about the flight to quality in the best locations, and thats continuing to occur. Weve been a beneficiary of that at a place like a Fuller, for example. At a place like a 770, which is a prime spot for Wegmans to go to. And fundamentally, were just seeing more interest from retailers. By the way, thats all submarkets, right? The tourist-oriented submarkets, the Fifth Avenue and Times Square, obviously, you would expect to be the ones to come back the last because thats so dependent on tourism. And with that now opening up, retailers wanted to see it happen. But again, even there, were seeing inquiry from tenants in both those submarkets. Rents are obviously down. Thats inducing demand. And so theres discussions that are underway and an action thats occurring. So thats what gives us, I think, the confidence to make that statement. I think Steve was pretty clear. Activity has to happen before you start getting rental movement, and its going to take, I think, a decent amount of activity before that happens. So I wouldnt expect rents to rise near term. But once we start getting some pace of transactions, I think that will be a shot in the arm for the market.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

But to be clear, Jamie, this is going to be a multiyear recovery. This is not going to be a rapid V-shaped rebound. Its going to take years for this market to recover and it may never recover to the peaks that were five or seven years ago.

Jamie Feldman
Analyst at Bank of America

Okay. And then I guess...

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

It has bottomed. And it will recover. And think about it this way. The shutdown from COVID was probably the most traumatic event that any of us have ever lived through. The total shutdown of the global economy. I mean, thats never happened before. The retailers, hotels, airlines, etc., or I mean the suffering was monumental. So the first reaction from the retailers was to go into a shell, stop everything and shed liability. So the market went stone cold for the better part of two years. People are now understanding that there is life after it. People are succeeding, the better retailers are actually flying from the pent-up demand, and we are seeing a very, very robust pickup in interest and demand. We are not seeing an aggressive increase in pricing that people are willing to pay. So were bottomed, were in a recovery. We are budgeting and underwriting that the recovery will be slow paced.

Jamie Feldman
Analyst at Bank of America

Okay. Thank you and then I guess as you think about...

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Im sorry, just to continue, the last thing. And we did reaffirm our guidance on retail in my prepared remarks.

Jamie Feldman
Analyst at Bank of America

Right. Do you see -- I know in your prepared remarks, you had mentioned the sales. I mean, do you see yourself selling more? Or do you see yourself actually buying, going forward?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

We certainly are open to buy. We are certainly probably the most expert in retails around. And we will buy the highest quality at very attractive prices, and there hasnt been that kind of availability or offering yet. I said -- let me give you a feeling for the five assets that we have either sold the contract, thats what our thinking was, okay? Number one, those assets this year are losing, actually have a negative income of more than $3 million. I think we said in the press release that the occupancy was 30% and the vacancy, therefore, was 70%. That is accurate, of course, but theres one track that you have to consider. There is one tenant in those five properties that is basically a swing tenant who is rebuilding a store. And so if you take that out, and we know for sure that, that tenant is going to leave in a couple of years because its a swing set. Its not a pop-up. Its a swing tenant. And so if you take that out, I think the occupancy is 11%. So if you take that into account -- and by the way, if you take the -- so that would make the -- when that goes away, the earnings are -- the negative earnings are greater than $3 million. The capital -- if you add the capital that would be required to lease up those five properties.

And we have to lease up 90% of them. So its almost a total lease-up job. You take the time and you take our underwriting as to how long it will take to climb up to a decent return. Our judgment was that for our business, its a proper strategy to sell those assets. And so the proceeds where the assets are unencumbered, theres no debt on the assets, so that will bring in 100 -- I think $84 million, $85 million of new cash that we think we can put to better use. Now we are selling the Madison Avenue assets to a friend. And they are an extremely substantial offshore buyer who have a history of making very intelligent distressed buys. We know that, we respect it and were friends. We laugh about it to each other. We expect that the buyer of the Madison Avenue properties will make money and have a very satisfactory investment, but it will be in our judgment over a 10-year hole. That time frame made us to be a seller rather than a holder of those assets. So we believe that the buyer will do well, and we think the seller, thats us, will do well. Theres one last point. 25 years ago, Madison Avenue was an isolated oasis in New York.

There was one submarket that worked in terms of luxury high income, etc., and that was the Upper East Side. Over the 25 -- and so obviously, the luxury brands all clustered in Madison Avenue. And Madison Avenue had effectively an oligopoly or a monopoly on luxury shopping in the city of New York because all the customers live within walking distance of that and all the tourists basically stay in Upper East Side largely. Over the years, that has been diluted enormously so that every submarket, whether it be in Chelsea or Tribeca or West Village or the Upper West side, every submarket now is thriving with customers for one of these brands. So obviously, over the years, instead of having one store in Madison Avenue, they now have five stores. One in the meat market, one in Chelsea, one here and there. So Madison Avenue has been diluted enormously. It was that sociodemographic thinking that also led us to be a seller of those assets. And by the way, that thinking is totally different than Fifth Avenue or Times Square, which continue to be enormous attractions

Jamie Feldman
Analyst at Bank of America

So as you think about putting capital to work, I mean do you still think luxury is the way to go? Or now youre thinking actually more middle-of-the-road type brand?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Were agnostic to that. We are retail investors. We love our Times Square assets, which are not really luxury. We love our Fifth Avenue assets. And so were agnostic as to the price point of our customers. Were in the landlord business, not in the retail business.

Jamie Feldman
Analyst at Bank of America

Okay. And if I could just ask, you had talked about no debt on any of the assets at Penn Station, at least the development, redevelopment assets. Whats the plan there to put more permanent capital on those projects? And how do you think about using those funds?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

We will, obviously, have a financing plan for the growth of the Penn District. Were very comfortable now having those assets unencumbered for the moment. And I think its premature to start getting into what our -- what we will -- what we -- how we will permanently finance those assets if we do. Our balance sheet strength is based upon a mix of secured debt, unsecured debt, lines of credit and unencumbered assets are an important part of that. So right now, were very comfortable having those assets unencumbered. Were even more comfortable with having, I dont know, those assets are worth an enormous amount of money, many billions of dollars. Were very comfortable having those assets available, should it -- available as a source of credit should the opportunities come up.

Jamie Feldman
Analyst at Bank of America

Okay. And I assume that helps with the tracking stock if theyre not encumbered? Or does that have nothing to do with it?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

The tracking stock will have its own financing plan which well get to when we launch the tracker. I mean low debt on the tracker is an important part of that strategy.

Jamie Feldman
Analyst at Bank of America

Okay. Thank you.

Operator

And we have our next question from John Kim with BMO Capital Markets.

John Kim
Analyst at BMO Capital Markets

Thank you. Good morning. I realize the tax sustenance at the Mart is backward looking, but are you surprised by the level of increase? Just given you renovated the asset five years ago over the last 1.5 years, almost two years, theres been a lot of disruption to the trade shown up and office occupancy of the asset. I was just wondering if you were surprised by the amount of increase on taxes there.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

I didnt hear the question

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

John, look, I would say anytime your taxes go up 4% to 7%, youre surprised at the magnitude of that. So we knew there would be an increase. I think the magnitude has surprised the entire market. We were not alone, right? I think theres been a number of articles written about how most of the large landlords have been impacted by similar increases. So its high. Were certainly going to appeal it. We dont make any promises on that, but it is what it is. And as we said, the meaningful portion of that will be reimbursed by tenants beginning in 2022. And were -- I think were no different than the balance of the market, frankly.

John Kim
Analyst at BMO Capital Markets

A few years ago, you gave indication that you thought you could collect 80% of the tax increase as the tenant reimbursement. Do you feel like you could still obtain that level of reimbursement from your tenants?

Michael Bilerman
Analyst at Smith Barney Citigroup

Yes. I mean I think -- look, its obviously dependent on the occupancy in the building, which is down a little bit now. But I think 75% to 80% is not a incorrect assumption. It will be in the neighborhood.

John Kim
Analyst at BMO Capital Markets

Okay. My second question is on Facebook, or now its called Meta, I suppose, looking to expand in New York. Im wondering if they do expand at 770 Broadway, can you accommodate them without losing Verizon as a tenant?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

No.

John Kim
Analyst at BMO Capital Markets

So the net impact would be like nothing?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

First of all, these are important clients and these are pending transactions. So were really not going to speak about anything. Were really not going to get into the detail of it. But obviously, if a tenant moves in and a tenant moves out, the net result will be pretty much the same.

John Kim
Analyst at BMO Capital Markets

Are they looking elsewhere in your portfolio?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Say again?

John Kim
Analyst at BMO Capital Markets

Is Facebook looking also in your portfolio to expand?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Were not going to comment on Facebook or pending transactions with important clients.

John Kim
Analyst at BMO Capital Markets

Okay. Thank you.

Operator

And thank you. [Operator Instructions] Our next question is from Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb
Analyst at Piper Sandler Companies

Hey. Good morning. Good morning Gen, Michael and Steve. So just want to go back to Michaels opening questions. And I think you can appreciate the skepticism, I mean the original Penn Station was around for about 50 years, and you guys have been talking about the redevelopment for 20, clearly enhanced by whats gone on the West side. But if youre a VNO shareholder, you may or may not be able to hold the tracking stock when it spun out for whatever fund mandates you have. And if the whole thing that weve been looking at in the past 10, 15 years has been this holy grail of confluence between Midtown South and the Far West side, now Penn Station is going to be there and youre a VNO shareholder who has held out for that. How is the tracking stock helpful on that if not every VNO shareholder can own the tracker? And also thats what -- thats where a lot of that revenue growth -- or sorry, earnings growth is going to come from, from those lease-ups. So I think thats the area where people are grappling, which is how does this help an existing VNO [Indecipherable] to not be able to actually own a tracker versus right now, they can pencil and model all this upside that you guys have been laying out.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Well, obviously, if you sell the tracker, youre not going to benefit from it. I mean that goes without saying...

Alexander Goldfarb
Analyst at Piper Sandler Companies

Right. But some -- not every fund can own the tracker because of mandates.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

We are happy with the fact that, as you say, some of our shareholders will have to sell the tracker. Weve done the calculation. We think at the margin, it is not a significant transfer. And so the -- its unfortunate that some investors have to sell it. But what Im looking at is the greater good is the investors that can tip it or buy it, we think will be enormously enhanced by the transaction. Said another way, we think that the Penn District future in the larger company where its diluted is not as good an outcome as -- if its separated, where its a pure play for the Penn District. We understand what youre saying. Were unhappy about the fact that some funds will have to sell. They are not large numbers. We think -- we think its handleable. But what we believe there is the greater good will be enhanced by the idea.

Alexander Goldfarb
Analyst at Piper Sandler Companies

But its still a synthetic, Steve, isnt it? I mean its just laying sort of paper claim to the -- its not like Alexanders, which physically owns those assets. Its just laying claim on paper. Its a synthetic. Its not like its direct, correct?

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

It is -- the answer is yes. But thats sort of argumented about. The tracker should perform as the asset -- the underlying assets that it is -- that it tracks as they perform.

Michael J. Franco
President & Chief Financial Officer at Vornado Realty Trust

Actually, if you think about -- I think your Alexanders analogy actually is an interesting one. If you think about Alexanders, Alexanders is an externally advised entity, right? The public owns 1/3. That stock has done -- when you look at it from the time that development really convinced substantially in that company has done extraordinarily well. And so I think the corollary here is actually quite similar, right, where -- were in the -- yes, weve been talking about it for a long time. But the reality is the development really just commenced in the last couple of years, right? And its underway right now with Farley, PENN1, PENN2 and, obviously, a lot more behind that. So weve talked about the public owning a portion of it, not all of it, probably less than half of it. And so if you think about it, its kind of like Alexanders in the sense of that public tracker is sort of an externally advised entity managed by Vornado, very similar to Alexanders. And in terms of the shareholders, that theres no -- the only shareholders that are going to be forced to sell this are some of the index funds. By the way, not all of them, not most of them, but some of them.

Any investor that is an active investor that makes dedicated decisions about specific companies can continue on both pieces. By the way, they can sop up even more of the trackers. So we talk about this like theres four sellers, theres no buyers. On the other side, we know for a fact there are investors that have tremendous belief in the Penn District, would like to just own the Penn District, like the higher risk, higher reward, believe in whats going on in that part of the city and what were doing and prefer to own that directly and not with everything else. So theres going to be -- obviously, it will settle out when we distribute it. Therell be some net selling from some of the funds that you alluded to that have to sell. But we also think there is a group of investors that are not in Vornado that will sop up that demand. And our goal is for that to trade very well. And I think your Alexanders analogy come back, that is a very good analogy in terms of the trajectory of that company once the development commenced.

Alexander Goldfarb
Analyst at Piper Sandler Companies

Okay. And then, Steve, going back to the politics, clearly, the mayor race, we can only do better and either candidate is obviously much more pro business, much more understanding of the city than the prior. But when you look at the governors race, there Hochul is definitely tracking to the left as she tries to veer off State Attorney General James. So if you look at whats going on in the good eviction, probably end up with statewide rent control, why are you optimistic at the state level that it will be as productive and supportive of real estate and business in New York as the mayor election when the -- when you look at the politics, it seems to be taking the opposite angle.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

I cant answer that question, Alex. I mean weve met the governor. Shes a seasoned politician with a 25-year career. She has an entire career of being supportive of business. She understands whats going on in New York. She understands the Penn District. And we believe that she will be a perfectly fine leader. Other than that, I cant get into it. I want to get back for a moment to Michaels very fine answer to your question about the tracker. There are trade-offs here. In order to create a separate legal entity, a spin-off, for example, which we have done twice before with JBG Smith and Urban Edge, we would have to have a totally separate management team, totally separate board, totally separate everything. Thats untenable. Thats not a doable prospect, and its untenable, and we cant do it. We need the same people with our leasing and development team, for example, okay? And also it would be very -- the additional overhead would be enormous. So the trade-off is that we can use the same team, the same Board, the same governance, but we can get investors to be able to invest in whichever part of our company they want to or both, okay? So its interesting, I expect that many investors will continue to hold both securities, which is actually the same thing as if we did nothing in terms of separating the tracker. But at the margin, there will be a new group, as Michael said, of investors who actually have an enormous level of enthusiasm for the west side of New York, for Penn coming into New York and for what were doing in the Penn District. And at the margin, we think it will be a very successful investment.

Alexander Goldfarb
Analyst at Piper Sandler Companies

Okay. Thank you, Steve. Thank you, Michael.

Operator

And we have our last question from Ronald Kamdem with Morgan Stanley.

Ronald Kamdem
Analyst at Morgan Stanley

Two quick ones from me. One is just going back to sort of the retail portfolio. Just curious in terms of just more commentary when retailers are looking at space today, what are they focused on? Is it occupancy cost? Is it gross margin? Is it traffic levels, just sort of whats making the marginal decision for retailers maybe today that may have been different sort of pre-pandemic and so forth. Thanks.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Its the same as its always been forever, and that is what sales volume can they do in a particular store versus the cost structure versus the rent. Things are a little different today than they were. Some stores in Manhattan were sort of flagships and advertising for the brand, thats kind of gone by the wayside. Retailers today want to make money in each individual store. So the number one statistic is what their expected sales volumes will be versus what the health index would be to the occupancy cost.

Ronald Kamdem
Analyst at Morgan Stanley

Great. And then if I could just follow up on the Wegmans deal. Just any sort of color on what the opportunity could be in the portfolio. Is there anything different about sort of their lease structure versus a typical structure? Any color would be helpful.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

I dont think I have anything to anything to add there. I mean, were replacing -- first of all, 770 Broadway is the Facebook building. Were replacing Kmart with Wegmans. Thats a huge uptick. The rent is significantly higher, and its a traditional lease, its a long-term lease. And were very, very excited about it. And there may be other opportunities with Wegmans and the rest of our portfolio.

Ronald Kamdem
Analyst at Morgan Stanley

Okay. Thats it for me.

Operator

Thank you. We have no further questions in queue. I will now turn the call over to Mr. Steven Roth, Vornados Chairman and CEO, for closing remarks.

Steven Roth
Chairman of the Board & Chief Executive Officer at Vornado Realty Trust

Thank you. I have one final important note before we end this call, and that is that Cathy Creswell -- this is Cathy Creswells final earnings call before she retires. I want to thank her for her many years of service and friendship. We wish her well, and Im sure everybody on the call wishes her well. Well see you at the next call. Thanks very much.

Operator

[Operator Closing Remarks]

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