Michael Franco
President & Chief Financial Officer at Vornado Realty Trust
Thank you, Steve and good morning, everyone. As Steve mentioned, we had another strong quarter. Second quarter comparable FFO as adjusted was $0.83 per share compared to $0.69 for last year's second quarter, an increase of $0.14 or 20%. This increase was driven primarily by rent commencement on new office and retail leases and the continued recovery of our variable businesses, partially offset by the straight-line impact of the estimated 2023 PENN 1 ground rent expense. We have provided a quarter-over-quarter bridge in our earnings release on Page 3 and our financial supplement on Page 6.
On our last earnings call, we said that we expected our comparable FFO per share growth for 2022 to be in the mid-to-high single-digits. It bears repeating that this expected growth which is driven by strength in our core operating business, primarily from previously signed leases in both office and retail, including metal platforms at Farley and the continued recovery of our variable businesses factored in the impact of rising rates on favorable rate debt. However, the pace of magnitude of Fed hikes have been greater than we anticipated. The faster-than-expected rise in rates will affect 2022 earnings and result in lower FFO growth than we were anticipating. Further, the additional interest expense from rising rates will have a greater impact next year as the higher rates impact our variable rate debt costs for a full year. With respect to our variable businesses, we continue to see a strong recovery in the second quarter and the EBITDA in total is currently around 90% of pre-COVID levels now, excluding the closed four development Hotel Pennsy.
Our signage business which is the largest in the city with dominant signs in the best location in Times Square and the PENN District, had another very strong quarter and forward bookings remain strong. Our trade show business at theMART is continuing to rebound nicely, including our hosting of the commercial furniture design industries, NeoCon which is typically our largest trade show. No trade shows took place during last year's second quarter due to the pandemic.
Our BMS business continues to perform near pre-pandemic levels. And finally, our garages are continuing to be on track to fully recover this year. We still expect to cover most of the income from our variable businesses this year with the full return in 2023. Company-wide same-store cash NOI for the second quarter increased by a healthy 8.4% over the prior year second quarter. Our overall office business was up 5.4% compared to the prior year second quarter, while our New York Office business was up 3.9%. Our retail same-store cash NOI was up a very strong 24.8%, primarily due to the rent commencement on important new leases, including Fendi and Christophe at 595 Madison Avenue, Sephora at 4 Union Square, Wegmans at 770 Broadway and Canada Goose at 689 Fifth Avenue.
Several analysts have reported that our New York occupancy is 90.8% but that's not really the story. That's a blend of office and retail. Our New York office occupancy ended the quarter at 92.1% which is flat against the first quarter of 2022 but still up 100 basis points from the trough in the second quarter of 2021 and the highest of our industry peers in New York. Our New York retail occupancy decreased to 76.3% since last quarter due entirely to the retail space at Farley that was previously under development being placed into service during the second quarter. Now turning to leasing markets. In New York, total employment has reached its highest level since March 2020 and office using jobs are near 1.5 million which is only 6,500 jobs below its February 2020 feed.
Tech sector leasing has slowed but the financial sector has picked up the slack, now accounting for almost half of market-wide activity with some large expansion transactions in Orix. Leasing velocity in higher-quality buildings continues to dominate the landscape with many large-scale tenants relocating to the most differentiated well-located office buildings in both ground-up new builds and best-in-class redevelopments across the city. Overall, tenant demand and rental pricing in the top end of the market remains strong, while older commodity product is experiencing higher vacancy rates and less tenant demand in sublease space availability continues to increase. Our office leasing results since the onset of the pandemic reflect the resiliency of our best-in-class portfolio and how it's benefiting these trends.
Our team's strong deal-making skills have resulted in more than five million feet of office leases signed since the first quarter of 2020 at average rents of $84 per square foot and an average lease term of 12.4 years. During the second quarter, we completed 21 transactions comprising a total of 301,000 square feet leased. We continue to outperform the market. Our consistently healthy quarter-to-quarter leasing metrics reflect the high quality of our portfolio and the immediate impact of our redevelopment program at PENN 1. This foreshadows the success we're going to have at PENN 2 also.
Our portfolio-wide average starting rent this quarter was strong at $85 per square foot, including $97 per square foot for 75,000 square feet of deals at our highly amenitized PENN 1 which exceeds our underwriting and further validates our program to significantly increase rents in our redeveloped PENN assets.
Other transaction highlights this quarter include a 45,000 square foot headquarters expansion relocation lease with a private equity firm at 650 Madison, a new 60,000 square foot transaction with a nonprofit at 825 Seventh Avenue and 61,000 square feet of various deals at 150 East 58th Street. Importantly, the average lease term of this quarter's activity was 11.5 years, while our mark-to-market on these deals was positive 5.1% GAAP and 1.7% cash. Overall, our pipeline remains active with more than 700,000 square feet of deals in lease negotiations and an additional 700,000 square feet in lease proposal stages.
Now turning to Chicago, where the market is lagging behind New York's recovery. At theMART, while our office leasing pipeline is active with more than 800,000 square feet in discussion, conversions are taking longer and concessions remain elevated. We recently commenced our capital program to add world-class fitness conferencing and other amenities which will be completed by summer 2023 and it is already having a positive impact on our leasing efforts.
During the quarter, we leased 59,000 square feet a majority of which were leasing renewals and expansions within our showroom industries at an average starting line of $56 per square foot. In San Francisco, while the market overall is experiencing record level vacancy rates and low return to work numbers, our 555 California Street campus remains full other than our vacant 78,000 square foot building at 345 Montgomery Street. We are currently in renewal expansion dialogue with more than 200,000 square feet of existing tenants within the Trophy 555 Tower and we continue to see market-leading triple-digit rents of 555 with very healthy mark-to-market. Retail leasing results were fairly modest for the quarter, with a highlight being a new long-term deal with Chase for 7,500 square feet at PENN 2 at a significant positive mark-to-market. This deal set a new high watermark for retail rents in the PENN District along Seventh Avenue.
Retail leasing activity in the city continues to be concentrated in the highest footfall locations. This is proving true for our newly renovated retail spaces in the Long Island Railroad concourse, typically PENN Station's busiest tour fair. We have leases out for signature for almost half of the 30 spaces fronting the concourse and our rents exceeding the previous high watermark for retail rents in PENN Station. These commitments demonstrate retailers' belief in public transportation and specifically in PENN Station. More broadly, the city is bustling with New York City tourism projected to reach 56 million visitors in 2022 and to return to pre-pandemic levels in 2023. However, this positive momentum is being offset by retailer concerns about inflation and recession and many retailers are becoming more conscious about making commitments.
Turning to the capital markets now. Overall, the increased market volatility and spike in interest rates is impacting the capital markets with the volume of both asset sales and debt financing down significantly from last year. The CMBS and balance sheet markets are being much more selective which accrues to the benefit of stronger sponsors and high-quality properties. As such, spreads have generally widened out with lower leverage available.
As previously announced in June, we completed $3.2 billion in refinancings which consisted of extending one of our two $1.25 billion unsecured revolving credit facilities and our $800 million unsecured loan to December 2027 as well as refinancing 770 Broadway and 100 West 33rd Street. We're quite pleased with these executions as they were completed at attractive spreads, a reflection of lenders heightened focus on sponsorship and quality properties. We had anticipated the financing markets becoming more challenging. And with all that 770, we refinance these loans early. And while the forward curve is historically over-predicted rates, we fixed 770 Broadway, improving our fixed to floating ratio to 60-40 which is more in line with our historical operations. Importantly, with these refinancings, we have dealt with all of our significant maturities through mid-2024.
We also announced the completion of the sale of our Long Island City office building for $173 million during the quarter, continuing our efforts to monetize our non-core assets. Despite the challenging market, we are hard at work on our other non-core asset sales to go.
Finally, our current liquidity is a strong $3.5 billion, including $1.6 billion of cash, restricted cash and investments in U.S. treasury bills and $1.9 billion undrawn under our $2.5 billion revolving credit facilities.
With that, I'll turn it over to the operator for Q&A.
