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Jun 30, 2025
Vornado Q2 2025 Earnings Report
Vornado Realty Trust reported its second quarter 2025 financial results, highlighting a significant increase in net income primarily driven by a master lease transaction with NYU.
Key Takeaways
Vornado Realty Trust experienced a substantial increase in net income for Q2 2025, largely due to an $803.2 million gain from the 770 Broadway master lease with NYU. While GAAP EPS saw a significant rise, non-GAAP FFO per diluted share slightly decreased compared to the prior year's quarter. The company also reported varied performance across its property segments, with strong occupancy in New York Office and 555 California Street.
Net income attributable to common shareholders surged to $743.8 million, or $3.70 per diluted share, primarily due to an $803.2 million gain from the 770 Broadway master lease with NYU.
Funds From Operations (FFO) attributable to common shareholders plus assumed conversions (non-GAAP) was $120.9 million, or $0.60 per diluted share, a decrease from $0.76 per diluted share in the prior year's quarter.
Occupancy rates remained strong in key segments, with New York Office at 86.7% and 555 California Street at 92.3%.
The company completed several financing activities, including a $450 million refinancing of 1535 Broadway and a $675 million refinancing of Independence Plaza, and repaid $450 million in senior unsecured notes.
Revenue by Geographic Location
Forward Guidance
Vornado expects to recognize an approximate $11 million financial statement gain from the sale of 512 West 22nd Street, which is expected to close in Q3 2025. The company also anticipates a projected incremental cash yield of 10.2% for PENN 2 and 10.3% for Sunset Pier 94 Studios upon stabilization in 2026.
Positive Outlook
- Expected $11 million financial statement gain from the sale of 512 West 22nd Street in Q3 2025.
- PENN 2 development project has a projected incremental cash yield of 10.2% upon stabilization in 2026.
- Sunset Pier 94 Studios development project has a projected incremental cash yield of 10.3% upon stabilization in 2026.
- Successful refinancing of 1535 Broadway and Independence Plaza, securing long-term fixed-rate loans.
- Qualified for a sustainability margin adjustment on unsecured term loan and revolving credit facilities, reducing interest rates.
Challenges Ahead
- Ground lessor filed a motion to vacate the PENN 1 ground rent determination, which Vornado intends to vigorously oppose.
- Litigation is pending regarding a separate point related to PENN 1 ground rent, with a potential increase to $20.22 million annually if the fee owner prevails.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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