Vornado Realty Trust (NYSE:VNO) Q4 2022 Earnings Call Transcript

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Vikram Malhotra: Good morning. Thanks for taking the question. So just first one, going back to sort of your view of the dividend or the board’s view. If you can just give us some more color what are you baking in terms of occupancy for the core portfolio, just the business as it stands in terms of street retail? I asked that because it sounded like the four key explorations you outlined, am I correct and that they’re all move out? I just want to understand, like what is baked into the core portfolio relative to where the dividend is. Just some big picture metrics or guideposts would be helpful.

Steven Roth: Well the dividend is based upon a minimum of taxable income. Our taxable income allows us to reduce or I like to use the word right size our dividend. I mean, our dividend was 9.5% on our stock price, which everybody knows is kind of like, miss price and mistake. And we felt that it was inappropriate to overpay the dividends substantially over a taxable income. And we felt, the board felt also that it was appropriate to retain the extra 130 odd million dollars of cash. So that’s what happened with the dividends.

Vikram Malhotra: Okay, and then if my just follow up, if I can dig into street retail. Two parts to it. First, I think you have a couple of key explorations in Times Square in ’23. And I’m wondering the latest on renewal there. And then second part of that is just, I think there were two big leaves, if I’m not wrong Swatch and Levi’s that have early termination rights in ’23, and ’24. They don’t expire to 31 but I believe they have the option to terminate. Any updates of color, you can give on those two as well, it would be great, thank you.

Steven Roth: We are, as you would expect, we are in active negotiations with those clients, those tenants as well as all the other tenants. We are hopeful to retain all of the tenants, but the rents will be lower than the in place rents. The market is lower than it was years ago when we made those links. So you can assume that we will retain the tenants, but at lower rents.

Vikram Malhotra: Okay, I just thought because Swatch and Levi thought they would have had to give you notice if they were going to terminate, but if it just sort of like a rolling, like they can elect anytime in the year to give you that notice.

Michael Franco: So just to fill put a finer point on Swatch had to exercise their notice in fall of ’21 and they did. And we have, as Steve alluded to, we finalized a grant for them to stay at a lower rent. So they at the time they exercised determination, we didn’t know what they’re going to do, but that agreement has recently been finalized. So they will stay. And Steve said lower rent, and with respect to Levi’s they as well have a termination option. I believe that comes up in ’24 not this year. And so we’ll see what they do. But again, Steve alluded the likelihood is that just a Swatch did that they may exercise that and our hope expectations will keep them albeit at a lower rent. The other leases that expire in 2023 some of those are, those have been I will call shorter term leases, which we’ve continued to keep those tenants in place.

I think we’ll continue to do that. And beyond that, I think there’s probably only one substantive expiration in 2023 and Times Square and that happens middle the year. And that’s an active discussion right now.

Operator: The next question is from Dylan Burzinski with Green Street. Please go ahead.

Dylan Burzinski: Hey, guys, thanks for taking the question. I’m just curious on the overall strategy of the company. I think in the past he has mentioned about possibly doing a tracking stock. So just curious that’s on the table. And if so, can we see that happen in 2023?

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