Alexanders Inc Q3 FY2023 Earnings Call

Good morning, and welcome to the Vornado Realty Trust Third Quarter 2023 Earnings Call. My name is Rocco, and I will be your operator for today's call. This call is being recorded for replay. All lines are in listen-only mode. Now I will turn the call over to Mr. Steve Borenstein, Senior Vice President and Corporation Counsel. Please go ahead.

Welcome to Vornado Realty Trust third quarter earnings call. Yesterday afternoon, we issued our third quarter earnings release and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. These documents as well as our supplemental financial information package are available on our website, www.vno.com under the Investor Relations section. In these documents and during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release, Form 10-Q and financial supplement. Please be aware that statements made during this call may be deemed forward-looking statements, and actual results may differ materially from these statements due to a variety of risks, uncertainties and other factors. Please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2022, for more information regarding these risks and uncertainties. The call may include time-sensitive information that may be accurate only as of today's date. The company does not undertake a duty to update any forward-looking statements. On the call today from management for our opening comments are Steven Roth, Chairman and Chief Executive Officer; and Michael Franco, President and Chief Financial Officer. Our senior team is also present and available for questions. I will now turn the call over to Steven Roth.

Thank you, Steve, and good morning, everyone. I begin by joining with the citizens of the free world by saying that we are shocked and saddened by the ongoing wars in Ukraine and Gaza. The loss of life and infrastructure is heartbreaking. But the importance of the outcomes of these hostilities to our way of life cannot be overestimated. The President of the United States issued an elegant and simple one-word warning to potential combatants: 'Don't.' Domestically, we support Macron in his fight to rectify the situation at the University of Pennsylvania. Many American college campuses have similar issues. The economy has held up better than expected in the face of the Federal Reserve's historic interest rate increases. But make no mistake, ultimately, they will slow the economy and will win the battle against inflation. Real estate capital markets remain challenged, effectively frozen, which makes it extremely difficult to finance or sell assets. Capital is scarce and prohibitively expensive. While these circumstances will cause pain in the short term, they lay the groundwork for recovery in fundamentals and values in the future. The direct consequence of the lack of financing availability and exorbitant financing costs is that nearly all new building will cease. If history is our guide, as demand recovers, the market will tighten, and Class A rents and values will benefit enormously. We've seen this scenario before. Despite the challenging markets, our business continues to perform well and is on plan for the year. Michael will cover the numbers in greater detail in a moment. As we enter the fourth quarter, we are excited that the construction phase of PENN 2 is nearing completion. Tenant interest is picking up in this unique development as we approach delivery. Over the next several quarters, we will launch many new food and beverage offerings in the Penn District and will open a new three-line public plaza on 33rd Street, all of which will significantly enhance the tenant experience. Demolition of Hotel Pennsylvania is now complete. Our focus now is on leasing, especially PENN 1, PENN 2 and the remainder of the Farley retail, all of which will drive our near-term growth. We remain committed to protecting our balance sheet and extending maturities. In terms of current events, three weeks ago, Wegmans opened their 90,000 square foot supermarket in the West Village at our 770 Broadway property. This is their first store in Manhattan, and New Yorkers are appreciating the unique offering, crowding the store with lines around the block. It's a terrific success. In August, we contributed our Pier 94 leasehold to a joint venture with our partners Hudson Pacific and Blackstone and in return, we will own 50% of the venture. This will be the best studio facility in New York City and the only purpose-built one in Manhattan. We appreciate the support of the Mayor and New York City EDC in completing this important public-private partnership. We broke ground last week and expect to deliver the project by the fourth quarter of 2025. We believe in the project's potential and expect it to generate at least an attractive 10% incremental cash yield on our investment. To conclude, as I have said before, we believe in the great American cities and especially New York. We believe that the future of work will predominantly be in the office; I cannot envision millions of American office workers working at home alone at their kitchen tables. We observe that New York City is back, with usage in our office buildings reaching 65%. You can feel the energy when you walk the streets and stand in our lobbies. The restaurants and stores are bustling, and our buildings are nearly back to normal Monday through Thursday. The key point is that talent wants to be here. New York remains the number one city for college graduates from nearly every region of the country. Now, I will hand it over to Michael to discuss our financials and the market.

Thank you, Steve, and good morning, everyone. The financial results for the quarter were down from last year due to items that we previously forecasted. Our core office and retail businesses continue to demonstrate resilience with long-term credit leases. Third quarter comparable FFO as adjusted was $0.66 per share compared to $0.81 for last year's third quarter, a decrease of $0.15. This decrease was driven primarily by the following items: $0.06 from a one-time real estate tax accrual adjustment recorded in Q3 2022, $0.04 from higher net interest expenses resulting from increased rates, $0.03 from additional stock compensation expenses related to the compensation plan implemented in June 2023, and $0.02 from other items, primarily lower FFO from sold properties. We have provided a quarter-over-quarter bridge in our earnings release and in our financial supplement. Despite the challenging environment, our outlook for comparable FFO for 2023 has not changed since the beginning of the year, other than the additional G&A expense that we discussed on last quarter's earnings call related to the share-based awards granted in June. Our New York office same-store cash NOI for the quarter was up a healthy 3%, and our New York business overall saw an uptick of 2.1%. Now turning to leasing markets: Manhattan continues to lead the way nationally in the office sector. New York City's private sector job growth outpaced the national average, and Manhattan leasing volume was a strong 6.5 million square feet this quarter, driven largely by large headquarters leases in Midtown and downtown, indicating tenants committing long-term to the city. The tech sector continues to dominate leasing volume, accounting for 31% of third quarter activity, with the government and professional services sectors closely following, each at 22%. Leasing velocity remains steady, concentrated in small- to medium-sized leases. Focusing on our portfolio, during the third quarter, we completed 17 leases totaling 236,000 square feet at average starting rents exceeding $93 per square foot, highlighted by a new 101,000 square foot lease with the law firm Selendy Gay at 1290 Avenue of the Americas, where we are seeing robust activity. Overall, through the first three quarters of the year, we have signed 1.3 million square feet of leases at an industry-leading starting rent of $98 per square foot. Notably, 65% of these leases have starting rents over $100 per square foot, representing more than one-third of all triple-digit leases conducted in the market this year. We consistently perform above our market share in this category, reflecting the top-tier quality of our portfolio. As we have stated for the past several quarters and as the statistics confirm, there is a clear trend of tenants demanding space in superior buildings located around the primary transit hubs in the city, where our portfolio is situated. Despite the market-wide Class A vacancy being in the high teens, the best submarkets are at equilibrium, which is why you're seeing rents trending upwards here. Our recently signed leases and pipeline of future leases at 1290 Avenue of the Americas and 280 Park Avenue, as well as in PENN, reflect these dynamics. Heading into the fourth quarter, our current pipeline remains robust at 1.8 million square feet. This includes 750,000 square feet in four deals expected to close in the fourth quarter, which would put us over 2 million square feet for the year, consistent with our historical activity. The pipeline consists of a healthy mix of tenants across a wide variety of buildings in our portfolio. In Chicago, while the market remains challenging, we completed 68,000 square feet of leases during the quarter at $55 per square foot average starting rents and have a solid pipeline of 400,000 square feet, including two leases in negotiation totaling 100,000 square feet. Our new amenity package has generated very positive interest in the marketplace and increased leasing activity. We are also benefiting from the fact that we are a strong sponsor with no debt on the asset, while many of our competitor buildings are facing financial stress. Turning to retail, we mentioned a few quarters ago that retail had bottomed, and recent statistics support this with vacancies decreasing and asking rents increasing year-over-year in most submarkets. In our portfolio, we have observed a noticeable pickup in leasing activity over the past three months, with nearly all our assets experiencing tenant interest, particularly on Fifth Avenue and Times Square and in the Penn District. We have a healthy pipeline with numerous leases currently in negotiation. During the third quarter, we signed eight leases totaling 29,000 square feet at a positive 33.5% cash mark-to-market. Transitioning to capital markets, the financing landscape remains quite difficult, particularly for office properties, driven by the volatility stemming from the Fed's sharp rate increases and the pressure on banks to reduce their office exposure. Even in these challenging times, we remain in solid shape. We have no significant maturities until mid-2024 and are actively engaging with our lenders to extend the maturities on our loans, which mature in 2024 and beyond. In this respect, we are pleased to welcome Jason Kirschner as our new Head of Capital Markets. Jason is a well-known, trusted industry colleague with all of our banks, and he's off to a strong start. As always, we continue to prioritize maintaining balance sheet strength. Our current liquidity stands at a robust $3.2 billion, including $1.3 billion in cash and restricted cash, and $1.9 billion undrawn under our $2.5 billion revolving credit facilities. Lastly, kudos to our sustainability team, which continues to position us at the forefront of the industry. We just received GRESB's Green Star distinction for the 11th time in GRESB's 5-star rating. With that, I'll turn it over to the operator for Q&A.

Today's first question comes from Steve Sakwa with Evercore ISI. Please go ahead.

Michael or maybe Glen, could you just expound a little bit on the New York City leasing pipeline as it relates to both the existing portfolio? I know you've got a fair amount of square footage coming due in Q4, but also, as Steve talked about, PENN 2's nearing completion. And just how does the pie break out between the existing assets and the developments?

Hi, Steve, it's Glen. So pipeline overall, we're squarely focused on addressing the current vacancies with emphasis on PENN 1 and the upcoming PENN 2, as well as integrations in '24 and '25 approaching. Many of our leases are centered on expiring space that will come available in the next two years. A large portion of it is in PENN. So if you think about the PENN story, we said two and a half years ago, it would be a chapter-by-chapter leasing program, which is exactly what's happening. Over this period, we've leased 2.5 million square feet in the Penn District at starting rents of $94 per square foot, primarily from Farley, PENN 1, and PENN 2. Activity has markedly strengthened since our last call, with projects set to open in about 30 days. We have proposals actively in the works that have received excellent feedback. The best part of the news for us is that every tenant touring is also exploring all the new buildings from our competitors. Competing with them has always been our intent, and we are succeeding at this point. As these new food and beverage programs open and the public plaza becomes operational, the neighborhood will become more vibrant for us, leading to increased activity.

Maybe, Steve or Michael, could you just touch on the dividend and the share repurchase program? It didn't seem like you were very active in the quarter. I'm not sure if the economic uncertainty and Fed tightening is keeping you on pause there. But just any thoughts as we approach the end of the year on taxable income, the dividend and share buybacks? Thank you.

Steve, grab a pencil. Here's where our projections are for the income and the dividend. We expect our FFO this year to come in at about $2.55. We're anticipating our recurring taxable income to come in at $0.68. Now that's a reduction from $1.13 due to the accounting treatment for how we depreciate our assets. So recurring taxable income will be around $0.68. We paid $0.375 in cash in the first quarter. That leaves approximately $0.30 for the fourth quarter to true up the entire year. We expect to distribute somewhere between $0.10 to $0.20 and potentially $0.30 in cash during the fourth quarter. That's the dividend. As for stock buybacks, I have been quite opportunistic in the past. We have a $200 million authorization and so far, we have executed $30 million. We have $170 million remaining. We will carry that out depending on stock price, among other factors, in the near future. Please remember, with the buyback program, our aim is to benefit not the selling shareholder, but the remaining shareholders.

And just one more. Michael, you mentioned the challenging debt markets. As you consider your mortgage expirations for next year, how far in advance can you begin discussions with the banks on refinancing? And what’s the current refinancing pricing look like?

Steve, as I mentioned on last quarter's call, the existing lender is often the most favorable option. There's perhaps only one lender available, given the lack of capital for real estate in general, and especially distressed office properties right now. U.S. banks are particularly challenged. It’s difficult or often impossible to refinance most assets. The lenders understand the situation. Thus, for each situation, depending on the maturity, we initiate discussions with our counterparts. The banks and servicers begin by evaluating if they have the right sponsor—someone who they believe will maintain or enhance value during this tough period and can navigate to the other side. Given our history, that answer is always a yes for us. We have extended several loans over the past couple of quarters and are addressing 2024 maturities, even some extending into '25 and '26. Each case is unique. Our preference is not for temporary arrangements, but for term extensions. Ideally, we seek three to five years on each extension. We are ready to support the asset if the economic terms are reasonable, whether that’s through a paydown or by investing in capital to lease or maintain the building. It’s a situation-by-situation basis. Rest assured that we are actively discussing each loan maturing in the next couple of years with our lending partners.

And our next question comes from Camille Bonnel with BOA. Please go ahead.

Just following up on the lines of questioning regarding the balance sheet. Can you update us on your latest thoughts around this interest rate environment? How do you think about your revolver now that spreads are tighter than some of the long-term instruments you can raise?

Are you referencing our usage of the revolver?

Yes.

Look, we’re not interest-rate forecasters. If we were, we wouldn't be in the positions we're in currently. I'm not sure anyone is. All we can do is respect the forward curve and model our business with conservatism. So that's how our cash plan is structured. You know our company has consistently maintained a healthier cash balance than nearly every other company, especially in our sector, and that serves us well right now. It provides us flexibility for dealing with our bonds or anything else that arises. We're accumulating plenty of cash, as you’re aware. It appears the Fed is finished with rate hikes or very close to it. However, it doesn’t imply that rates will fall within the next year. Eventually, we expect they will. We must continue to manage our business while rates stay at these levels. We are fortunate to have a strong cash balance. You’re right; we do have two revolvers which provide us flexibility in managing our financial commitments. If needed, we'll utilize them, whether that involves our 2025 bonds or pursuing other options apart from revealing secure financing with respect to our unsecured bonds.

That's helpful context. Specifically around the swaps and caps set to expire next year, are you planning to let those roll? And what potential headwinds should we anticipate related to that?

Yes, I believe we've done a commendable job at hedging over the past couple of years. We weren't perfect, but I think we've executed well. Right now, the fair value of our hedges stands at approximately $300 million, which shows they are indeed quite profitable for us. Unfortunately, that also indicates we've been quite effective at hedging. It’s crucial to note, however, that maturity risk cannot be hedged away. The loans roll over until we determine the assets' plans. Hedging also becomes complex; for floating to fixed conversions, if we don’t need to roll that hedge, we're still subject to interest rates upon execution. So, we face exposure on some expiring or maturing loans tied to caps or swaps at rates lower than the existing SOFR rate and others where the swaps, like the one at 555, have higher rates than the previous ones. As such, there may be some reduction in 2024 from those loans rolling over and a few expiring swaps, but we will replace them. We will persist in hedging our portfolio; however, given rates have risen, shifting from one hedge to another will create some impact on three or four assets.

Okay. And for my last question, could you discuss sublease activity across the portfolio? How has that changed compared to a year ago? Additionally, how does it compare by region?

Hi, Camille, it's Glen. Regarding the sublease activity in our New York portfolio, I would say the situation has not changed much since last year, in terms of spaces on the market within our portfolio. In fact, some spaces have been fully leased or taken off the market. For instance, PwC at 90 Park is now called for. So, no significant updates to highlight over the past 12 months. In Chicago, there seems to be more sublease space available generally, and likewise in San Francisco, where Microsoft has announced the sublease of their space at 555, which is under long-term agreement. So that's the overall insight. However, if you look at the statistics specifically for New York, they appear to be in line with last year.

And our next question today comes from Michael Griffin with Citi.

Maybe just another question on leasing for Glen. Are you noticing office users taking longer in deciding whether or not to lease space and if you could update us on where TIs and free rents have been trending in the market, that would be great.

I think the concessions, TIs and free rents have stabilized. As Michael indicated in his remarks, we are even witnessing rent increases in certain buildings such as 280 Park, 1290, or PENN 1. So the concession landscape has stabilized. However, generally, it seems that the decision-making processes for deals are taking longer compared to historical trends.

That's helpful. And then just on the dividend policy moving forward with 2022, given how it was handled in 2023, could you provide any expectations for the upcoming year regarding the dividend?

Your inquiry, Griffin, pertains to 2024, correct?

Yes.

At this juncture, we don’t have specific comments. I provided a fairly detailed overview of our situation regarding 2023. The environment continues to shift, as we indicated earlier this year, and we remain uncertain about how asset sales could affect our future plans. The same logic holds for next year, so we will address the 2024 dividend and provide more context as we enter 2024.

It's possible we might wait until the end of next year, similar to what we did this year.

And our next question today comes from Alex Goldfarb with Piper Sandler. Please go ahead.

Good morning, Steve, and thanks for your comments at the start of the call. I appreciate it. I have two questions. The first concerns politics, which has become quite heated lately, particularly around real estate. One of your peers made a government hire. Reflecting on the Robert Moses era and Jackie Kennedy's efforts to preserve Grand Central, politics has always played a major role in New York. Given the recent headlines, especially concerning the Penn District, would you say this time is different in terms of political involvement in development and zoning, or is this essentially the same situation we would have seen had we been here in the 60s, 70s, and before?

It’s challenging to answer that question. I think the times today are not significantly different from what we've experienced over the last decade. The political landscape in the United States has always been intriguing. The growth of cities in the U.S. has been quite aggressive. Most cities, including New York, fall in that category.

My second question concerns your efforts to reduce G&A, which were initiated a few years ago in light of the company's downsizing and various spin-offs. Currently, FFO sits at approximately half the level it was eight years ago, yet G&A has only decreased by maybe 15%. As you consider increasing shareholder returns in light of the previous question on dividends for the upcoming year, what are your thoughts on corporate overhead reduction and how it could influence earnings and dividend growth?

Alex, it’s Michael. I think we were perhaps the only company in our sector, and in the industry as a whole, that made a major reduction during the height of the pandemic nearly three years ago. It was a tough reduction, but it was a responsible decision. The company has performed steadily since then, and we've promoted some talented young leaders who have excelled. We take pride in what we accomplished, even in hindsight. We're constantly reviewing our operations in terms of efficiency—looking at personnel and systems. As we reach year-end, we’ll continue assessing. However, I don’t foresee dramatic cuts; I believe we're already quite efficient. Yes, earnings have dipped for various reasons, but the business does not contain much inefficiency. Additionally, senior management has kept their compensation flat for the last four to five years, which reflects our dedication to responsible stewardship.

It’s important to note that overhead does not decrease in proportion to a shrinking business. It is more efficient to grow rather than cut. We acknowledge that our G&A has not decreased in line with the top line of our business. We continue to evaluate it, but we believe our operation is relatively efficient; however, you're right about the ratios.

And our next question comes from Dylan Burzinski with Green Street.

I appreciate your comments on the challenging capital markets environment, particularly regarding office space. As you think about the portfolio and your capital allocation strategy moving forward, do you plan to continue to take advantage of potential disposition opportunities in the near future?

Good morning, Dylan. The answer is yes. We've sold some assets throughout the year and are currently considering additional opportunities. I would say these opportunities are often bilateral rather than broadly marketed options, as this strategy seems more prudent in this environment. We're working on a select few potential transactions. I’m not committing to any being finalized, but there's a possibility that some could materialize. Essentially, we aim to be opportunistic in either selling or recapitalizing assets if it aligns with positive pricing. Our strong cash position, with over $1 billion on hand, allows us flexibility; we don’t feel pressured to act but are open to pursuing advantageous opportunities.

Given the current state where overall debt financing is scarce in the sector, do you have any appetite to offer seller financing for any future dispositions? How do you approach that?

Of course. If you’ve followed our company, you’ll know we tend to favor creativity. If seller financing can facilitate a transaction and we believe the overall deal makes sense, we will certainly consider it.

And our next question comes from John Kim at BMO Capital Markets.

Can I ask about leasing activity? It appears somewhat light compared to the 508,000 square feet in negotiations reported last quarter. I’m curious whether this difference stems from timing related to closings or deals that may have fallen through?

John, it’s Glen. It’s all timing-related. Our previous expectations for leases were set for the end of Q4 versus Q3. We anticipate reaching 2 million square feet by year's end, based on both our current activity and the status of leases in documentation. You’re correct, it’s purely timing-based.

Could you provide further details on the anticipated 750,000 square feet of leases expected to close in Q4? I understand you mentioned 280 Park and 1290 Avenue of the Americas, but is The Mart part of this? Can you also provide insights on the kinds of tenants you're signing?

The leases we referenced are related specifically to New York—280 Park, 1290, and 650 PENN 1, which cover financial, legal, and fashion sectors. Separately, at The Mart, there’s another 100,000 square feet in lease documentation that we expect to finalize this quarter. The previously mentioned deals will contribute meaningfully to our New York figures.

At 280 Park, with mortgage debt due in about a year, based on your recent extension of debt at 150 West 34th, do you think it’s likely that mortgage will be reduced?

John, that's an active discussion at this moment, and I don't want to elaborate just yet. However, I reiterated in my earlier comments, particularly in response to Camille's question, that this matter involving 280 is included in ongoing discussions with our servicers regarding 2024 maturities.

And our next question comes from Anthony Paolone with JPMorgan.

Hotel Penn has been taken down. I noticed you have put up some large signage there. It’s a significant site. I’m curious if there are any opportunities to generate meaningful cash flow from that location while we await a longer-term plan.

We are currently evaluating that, Anthony. I believe there are opportunities. We are exploring a few ideas, but it’s still early to identify the specific actions we will take. Your observation is valid; it’s an excellent location in the middle of the city. We anticipate opportunities for temporary uses that could generate cash flow until the site is ready for development.

Understood. As a follow-up, I believe there was some back and forth concerning the ground lease at Penn. Any updates or final resolutions on that matter?

That matter is still in process.

Lastly, regarding The Mart, it can be a bit tricky to account for taxes and adjustments there. Can you provide an idea of the current run-rate EBITDA for that asset?

Yes, Anthony, I think it’s likely in the low $60 million range at the moment, especially given the occupancy drop. Over time, as we bolster that back, we expect that figure could reach between $90 million and $100 million.

And our next question comes from Julien Blouin with Goldman Sachs.

Glen, you mentioned the Microsoft sublease space at 555 California. Can you speak about your upcoming expirations at 555 Cal? I see that over 50% of ABR rolls through '26, including 274,000 square feet in '25. Do you have any insights into what those tenants are considering—might they downsize or give back space?

Regarding the lease rollovers, we recently extended Bank of America's lease by ten years, which now comprises 35% of the space you're referring to. I'm unsure if you're considering that in your analysis. Otherwise, we are formally negotiating with each tenant whose leases are set to expire between now and '26. I remain optimistic regarding our ability to renew leases, as our historical record has been strong.

Considering the earlier comments regarding the bilateral negotiations, are you currently planning to execute on the put option for 350 Park, particularly in light of the favorable redeployment opportunities in this higher interest rate climate?

It’s premature to address that. The transaction we have on the table provides various options for us and options for the counterparty as well. We will decide on these matters in due course.

And our next question comes from Vikram Malhotra with Mizuho.

I wanted to clarify, did you provide an update on the FFO run rate or your full-year FFO expectations? Given all the factors discussed, are there major items we should keep an eye on as we model for 2024?

As you're aware, we do not provide guidance, and I believe your question is essentially seeking it, so I cannot address that.

I understand. You mentioned several times that New York is back, but in earlier cycles, you've historically capitalized on opportunities at the bottom of the cycle by identifying attractive assets. With New York now performing well and debt market conditions tightening, can you provide some clarity on where we are in that timeline or what milestones you're tracking for potential capital deployment?

My assertion about New York being back refers to the levels of traffic, tourism, energy within our buildings and on the streets. Regarding the opportunities to purchase assets, it is significantly influenced by the fact that interest rates have effectively doubled. Assets currently encumbered by loans have likely decreased in value as a result. Therefore, this situation will primarily affect the debt market, which we are monitoring closely.

And our next question comes from Nick Yulico with Scotiabank.

I'm interested in understanding how the capital interest burn-off plan will develop for PENN 1 and PENN 2 over the next couple of years.

Nick, I can provide a general overview. We anticipate the number will remain fairly consistent this year. It’s projected to be a little over $40 million, and it should decrease slightly next year, with an estimated $25 million once PENN 2 is complete.

Regarding the dividend, your current strategy seems to be to align the dividend to taxable income. When you suspended the dividend earlier this year, I thought there was a chance for potential asset sales that could lead to a special dividend influencing your decisions. How should we view this strategy moving forward? Why exclusively pay a dividend that matches taxable income?

In the current environment, the company's policy is to preserve as much cash as possible. We view this preservation of our balance sheet as our top priority. Our goal is to provide a reasonable yet perhaps modest dividend to safeguard cash flow.

And our final question today comes from Ron Kamden with Morgan Stanley.

To begin with the cash flow statement, I noticed there was $62 million of cash from operations this quarter, which was somewhat surprising. Can you comment on whether there were any one-time impacts related to working capital that influenced this number?

Ron, we will need to follow up on that since I do not have the statement in front of me at the moment. Nothing particularly stands out, but we'll get back to you.

That would be very helpful. Additionally, switching back to 1290 Avenue of the Americas, last quarter, you mentioned some tenant interest and activity. Could you provide an update on the ongoing conversations and the overall progress at that property?

We signed the lease with Selendy Gay for 100,000 square feet, and we have another considerable lease currently in documentation that will be reflected in our fourth-quarter leasing activity. Tour interest remains robust, with the building being arguably the top asset in Midtown, showcasing its quality. This is a result of the renovations we undertook approximately ten years ago, combined with the new amenities we’re introducing. The sign of strong activity at 1290 is encouraging, and we anticipate more developments for next year as we retrieve spaces from other tenants.

I would add that our leasing activity reflects a demand trend, where tenants prefer high-quality buildings in well-positioned submarkets. Our current rental rates are trending upwards, given the quality of the buildings being sought by tenants. As we’ve seen, 1290 is experiencing strong demand and aligns well with the sustained tenant interest.

And our final question today is a follow-up from Steve Sakwa at Evercore ISI.

Could you provide any updates regarding the casino license that Vornado was potentially pursuing? Any thoughts on the status of that process?

It’s highly likely that we will not pursue the casino license.

Thank you all for joining us. We will look forward to talking to you on our next call, Tuesday, February 13. Hope everyone has a happy Halloween and receives plenty of candy. Take care.

Thank you, sir. This concludes today's conference call. We appreciate your attendance and participation. You may now disconnect your lines and have a wonderful day.