Vornado Realty Trust executives struck an upbeat tone on the company’s first-quarter 2026 earnings call, pointing to what they described as a strengthening “landlord’s market” in New York and accelerating leasing activity across key portfolios. Chairman and CEO Steven Roth said “business at Vornado continues to be excellent, and it’s getting better and better,” while President and CFO Michael Franco said the company believes the landlord’s market it has long anticipated “is very much here.”
First-quarter results and 2026 outlook
Franco reported first-quarter comparable FFO of $0.52 per share, down from $0.63 per share in the prior-year period. He attributed the decline primarily to the “reversal of previously accrued PENN 1 ground rent expense in the prior year’s first quarter” and higher net interest expense, partially offset by the execution of the NYU master lease at 770 in the prior year and “strong income growth” at PENN 1 and PENN 2.
Looking ahead, Franco said Vornado expects full-year 2026 comparable FFO to be slightly higher than 2025, with results “ramping up each quarter” as GAAP rents come online, interest expense declines after June 2026 bonds are repaid, and signing-fee seasonality plays out. He reiterated expectations for “significant earnings growth in 2027” as PENN 1 and PENN 2 lease-up takes effect and the company begins to realize the impact of its Park Avenue Plaza acquisition.
When asked whether the improvement versus 2025 was tied to Park Avenue Plaza closing in the second quarter or to first-quarter performance carrying through, Franco said it was “the latter.”
New York leasing trends and pipeline
Management emphasized what it sees as a sharp improvement in Manhattan office fundamentals. Franco said Manhattan leasing volume reached “nearly 12 million square feet,” the highest first-quarter level since 2014, and described a “significant supply-demand imbalance” in the Class A segment where Vornado competes. He said availability has tightened in prime submarkets and “there’s little new supply coming for the foreseeable future,” contributing to tenants competing for space and rents “rising aggressively.”
Vornado reported leasing 426,000 square feet of office space in the first quarter, including 311,000 square feet in New York. Franco said average starting rents in Manhattan were $103 per square foot, with mark-to-markets of +11.7% GAAP and +9.7% cash and an average lease term of nine years.
EVP of Office Leasing and Co-Head of Real Estate Glen J. Weiss said the company’s pipeline of more than 1 million square feet of leases in negotiation is “extremely well-balanced,” with roughly 50% new expansion and 50% renewal. Weiss added that because of the shortage of quality space, tenants are approaching the company earlier on renewals, calling it a “key indicator of a rising landlord’s market.”
Franco also discussed signed-not-commenced leasing, saying the “$200-ish million” figure referenced previously is “still in that general neighborhood” and “probably a touch larger today.” He said, from a pacing standpoint, “probably 10%-12% comes in per quarter over the next couple of years,” and reiterated a prior modeling assumption: “assume $0.40 a share flows through to the bottom line,” noting that the benefit began in the first quarter.
On the composition of the signed-not-commenced pool, Franco said it is “pretty much all office,” and estimated it is “probably two-thirds PENN.”
350 Park Avenue and the Citadel joint venture decision
Roth devoted a significant portion of his prepared remarks to political tension involving New York Mayor Mamdani and Citadel founder Ken Griffin, framing the situation around Vornado’s planned 350 Park Avenue redevelopment. Roth said Vornado owns the existing building slated for demolition and that the project received “rare unanimous ULURP approval.” He said demolition began “literally days ago.”
Roth also addressed Vornado’s decision timeline with Griffin. “As we discussed last quarter, Ken exercised his option to enter our development joint venture,” Roth said, adding Vornado has until “the middle of July” to decide whether to participate in the venture or sell to Griffin. Roth said he expects the company will use the available time and that, while he expects Vornado will be “all in,” it is “not a legal commitment at this time yet.”
In response to an analyst question, Roth and Franco said participation is dependent on Citadel’s lease commitment. Roth said, “This whole deal is based upon the fact that Citadel will be the anchor tenant taking no less than 850,000 square feet, although we expect more.” Roth also outlined the contemplated ownership structure: Griffin as a 60% partner, Vornado at 36%, and the Rudin family at 4%.
Franco and EVP of Finance and Chief Administrative Officer Thomas Sanelli provided additional detail about near-term earnings impacts at 350 Park. Franco said the master lease was modified as part of steps required to begin demolition, including defeasance of the existing CMBS loan, and that the changes were a “negative to 2026 earnings.” Sanelli said that for the next several months, “there’s a wash” with “no earnings coming out of 350 Park” until Vornado decides whether to enter the JV; if it does, the company would begin capitalizing interest and costs. Sanelli said capitalization “initially will be a little less, and then it eventually…basically equates to what we were getting.”
Franco also clarified that the revised rent at the property started with only “a few days in March” and would largely be reflected in the second quarter. He said the new lease runs “until early 2027,” and that the rent is not expected to extend beyond that because “there’ll be a resolution…before that.”
Portfolio actions: acquisitions, buybacks, capital markets, and other city trends
Roth highlighted several portfolio initiatives, including the acquisition of a 49% interest in Park Avenue Plaza, a 1.2 million-square-foot Class A office building. He said the property is 99% occupied, has an 11-year weighted average lease term, and in-place rents are “40%-50% below market.” Roth said Vornado is buying at $950 per square foot, which he described as a 65%-70% discount to replacement cost, and noted the deal includes a fixed-rate, sub-3% loan through 2031.
Franco said the investment’s yield is “roughly 8%” on a cash basis given the in-place debt and “well into double digits” on a GAAP basis, and he emphasized that the Fisher family remains as the 51% owner. In response to another question, Franco said the previously cited expectation that the transaction would be approximately $0.10 accretive is a “full year run rate” and is a GAAP number.
Roth also provided an update on share repurchases. Under a $200 million program, he said Vornado repurchased 7 million common shares at an average of $25.80 per share, totaling $180 million. He added that the board authorized an additional $300 million buyback program.
On capital markets, Franco said financing remains “strong and liquid for Class A New York office assets,” though spreads have widened “a little bit” amid geopolitical volatility, referencing the “war in Iran.” He said borrowing costs have moved modestly, estimating treasuries up about 30 basis points and overall costs “off maybe 40, 50 basis points.” Franco said Vornado has addressed “almost all” of its 2026 and 2027 maturities and doesn’t have significant financings to complete for the next 18 months. He also reported liquidity of $2.6 billion, comprised of $1.2 billion of cash and $1.4 billion of undrawn credit lines.
Management also discussed asset sales, with Franco saying the company has “a few things that are meaningful in the pipeline” and is in active discussions with potential buyers, though no specific transactions were disclosed. Roth reiterated his “no sacred cows” approach, saying that assets may be sold depending on price and strategy, including some that the company has “already determined” it doesn’t want in its mix.
Outside New York, Weiss said San Francisco leasing is “coming on very strong.” He said deals at Tower 555 are now “north of $160 a foot” for substantial leases of 50,000 square feet or more, and he described improving activity across sectors including tech/AI, financial services, and law firms. Weiss also said Chicago demand is improving, though he called deals “tough” and noted concessions remain high.
On the PENN 2 Verizon lease, Sanelli said Verizon decided not to build out its space and put it on the sublet market, allowing GAAP revenue recognition to start early; he said it began in the first quarter and will flow through 2026. Weiss said the company has a Verizon parent guarantee and reported “very good action” on the space. Roth emphasized that Vornado does not intend to terminate the long-term Verizon lease.
Vornado also briefly touched on other items, including Sunset Pier Studio. Weiss said the project is currently leased and has strong interest from both long- and short-term users, and Roth said ownership would “definitely prefer” long-term leasing there. On Hotel Penn and Manhattan Mall, Roth said there was “no update.”
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.
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