Vornado Realty Trust Earnings Beat Estimates in Q1

Vornado Realty Trust posted better-than-expected earnings results for the first quarter of 2025, and provided more details on its massive 70-year lease with New York University (NYU), sending its stock higher by more than 3 percent on Tuesday afternoon. 

The real estate giant reported quarterly funds from operations (FFO) of $126.2 million, or 63 cents per diluted share, above the 55 cents per diluted share reported for the same period last year and topping the Zacks Consensus Estimate of 52 cents per share. Net income for the first quarter was $86.8 million, or 43 cents per diluted share, above the net loss of 5 cents per diluted share for the first quarter of 2024. 

Revenue was $461.5 million for 2025’s first quarter, exceeding the $436.3 million reported for last year’s first quarter. It also beat the Zacks estimate by 3 percent. 

Vornado attributed its strong quarterly performance to the $350 million sale of a portion of Japanese clothing retailer Uniqlo’s flagship store at 666 Fifth Avenue in Midtown, the ground rent at its Penn 1 building being set nearly $11 million lower than Vornado expected — although at a price which is still under litigation — and strong leasing activity in Manhattan. 

“Manhattan continues to be the best real estate market in the country, especially so for office, but also for apartments and retail,” Steven Roth, CEO of Vornado, said on the company’s earnings call. “In the 180 million-square-foot Class A better building market in which we compete, demand continues to be robust.” 

On Monday, Vornado announced the completion of the 1.1 million-square-foot, 70-year master lease at 770 Broadway with NYU, which it first mentioned in November. The university made a prepaid lease payment of $935 million to Vornado and will make annual lease payments of $9.3 million for the entire life of the lease, Vornado said. 

Vornado was facing a hole in the property after Facebook parent Meta said it would drop 275,000 square feet once its lease expired, but NYU swooped in to take over the entire building.

“We use a portion of the prepaid rent payment to repay the $700 million mortgage loan, which previously encumbered the property, and $200 million to increase our cash balances,” Roth said on the call. “Though, this transaction is a lease … it is treated as a sale.”

Vornado had an active quarter of leasing activity across the retail and office space for the 2025 first quarter. The company leased 1.04 million square feet across its portfolio — 709,000 square feet of that in New York City — and commanded starting rents of $95 per square foot, Roth said. That includes the 337,000 square feet Universal Music signed at Penn 2.

At the start of the earnings call, Roth acknowledged that the current macroeconomic environment is very different from its fourth-quarter earnings call in February. Still, despite political and economic uncertainty surrounding President Donald Trump’s tariffs, Roth has a positive outlook going forward, saying tariffs could “make a big dent in getting our federal budget deficit under control.” 

“Notwithstanding the tactics, reducing government bloat has to be a good thing,” Roth said. “I am agnostic, whatever the outcome. I believe that this global kerfuffle will be resolved more quickly than you think.”

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.