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.
