Vornado Realty Trust Q2 Earnings Call Highlights

Comparable FFO rose to $0.67 per share in Q2 from $0.56 a year earlier, beating consensus by $0.10, driven by PENN District lease commencements, stronger signage revenue and improved New York operations. Manhattan leasing momentum accelerated, with New York office occupancy reaching 92.2% and management forecasting more than 93% by year-end. Vornado cited nearly 2.2 million square feet of leases under negotiation and expects a broad-based “landlord’s market.” Management expects 2026 comparable FFO to exceed 2025 levels and significant additional growth in 2027 as leases commence. Vornado ended the quarter with $2 billion of liquidity, repurchased 1.8 million shares, and is pursuing asset sales to preserve investment capacity.

Vornado Realty Trust NYSE: VNO reported second-quarter comparable funds from operations of $0.67 per share, up from $0.56 a year earlier, as lease commencements at its PENN District properties, stronger signage revenue and improved New York operations contributed to results. Chairman and Chief Executive Officer Steven Roth said the company exceeded analyst consensus by $0.10 per share and described Manhattan office conditions as increasingly favorable to landlords. He pointed to strong leasing activity, declining availability of large office blocks and limited future supply in the market.

During the first half of 2026, Vornado leased 978,000 square feet across its portfolio. Manhattan office leasing totaled 659,000 square feet at average starting rents of $105 per square foot, with positive mark-to-market changes of 9.5% on a GAAP basis and 7.1% on a cash basis.

In the second quarter, the company completed 29 Manhattan office leases covering 328,000 square feet at average starting rents of $107 per square foot. Leasing included 181,000 square feet in the PENN District and 167,000 square feet in Vornado’s other Manhattan properties. Roth said PENN 2 had 67,000 square feet of leases out for signature and that management expects the property to be “fully leased here down to dribs and drabs by year-end.” At PENN 1, the company had 246,000 square feet of leases out for signature at an average mark-to-market increase of 44%.

President and Chief Financial Officer Michael Franco said New York office occupancy rose 60 basis points from the prior quarter to 92.2%, compared with a trough of 84.4% in the first quarter of 2025. The company expects occupancy to exceed 93% by year-end, with further gains thereafter. Vornado’s New York office pipeline included more than 2.2 million square feet of leases under negotiation at various stages, including Citadel’s planned 1 million-square-foot lease at 350 Park Avenue and more than 500,000 square feet in the PENN District. Franco said physical office occupancy has historically operated in the 95% to 96% range. Economic occupancy, however, remains lower because of signed leases that have not yet commenced. Roth said the company has approximately $180 million of revenue from signed but not-yet-commenced leases, representing more than $150 million of FFO.

Franco attributed the year-over-year increase in comparable FFO primarily to lease commencements at PENN 1 and PENN 2, the prior-year impact of the NYU master lease at 770 Broadway, and higher signage revenue. Higher net interest expense partially offset those gains. New York of...