Vornado Realty Trust's Management Presents at 2013 Citi Global Property CEO Conference (Transcript)

Mar. 4.13 | About: Vornado Realty (VNO)

Vornado Realty Trust (NYSE:VNO)

2013 Citi Global Property CEO Conference

March 04, 2013 2:15 pm ET

Executives

Michael D. Fascitelli - Non-Independent Trustee and Member of Executive Committee

Joseph Macnow - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance & Administration

Steven Roth - Chairman and Chairman of Executive Committee

Michael D. Fascitelli

Analysts

Michael Bilerman - Citigroup Inc, Research Division

Joshua Attie - Citigroup Inc, Research Division

Michael Bilerman - Citigroup Inc, Research Division

So this session is for investing clients only. If media is on the line, please disconnect now. We are very pleased to have with us Vornado Realty Trust CEO, Steve Roth. Well, I guess, Mike, you're technically CEO, April 15. So Chairman and CEO Steve and Mike, as well as Joe Macnow and Cathy Creswell.

Steve? I'll turn it over to Mike for opening remarks, and then we'll kick it off for the Q&A.

Michael D. Fascitelli

Well, anyway, I think most of you are familiar with Vornado. Obviously, it's -- excuse my voice, I've got a cold. I'm not dying, by the way. So just in case anyone's wondering, my health is fine. So Vornado is obviously a large company with $30 billion of assets focused in New York and Washington, D.C., and that's where 85% to 90% of our assets are. We do own a few other office buildings like the 555 California and the Merchandise Mart in Chicago and a couple of retail assets that are beyond those borders. But for the most part, that's the company. It's a collection of office and retail and a little bit of residential in those markets. We've had a very good year, I think, in terms of performance. We've sold -- we obviously run a simplification program, and we're still on that. We've sold just about $2.7 billion of assets. If you take out really Kings Plaza, which we only owned 1/3 of, so that would take that down to below $2.5 billion. But still, quite an active year in selling, and I think we continue to plan to do that as we go forward through 2013 and 2014.

I think, Joe, anything to add to that overview?

Joseph Macnow

No, I'm pretty good.

Michael D. Fascitelli

I think with that, Steve, anything to add to that? Michael?

Michael Bilerman - Citigroup Inc, Research Division

We've been asking everyone, every company the same question to start off. And Steve, this actually came up [indiscernible]. You responded to a question I had on the call. So hopefully, you've had time to [indiscernible] an answer. But what we've been asking every company is, what do you think is the most value-creating opportunity that you currently have in the company that the market is not giving you value for? And if you remember, on the call, I asked you about stock buybacks. And you said that's not the value -- that's not -- I have value creator 1 and 2 ahead of that so...

Steven Roth

I think in my mind, it's a draw between the Penn Plaza district -- improving the Penn Plaza district and the Hotel Pennsylvania and realizing value from 220 Central Park South, the best residential condo site in Manhattan.

Michael Bilerman - Citigroup Inc, Research Division

It's a draw?

Steven Roth

It's a draw. Maybe a little bit biased towards the Penn Plaza district because I think the numbers might be much larger. So just think about it for a second. We own -- how many feet of office space there? Just office space. 7 million feet of office space. If we can influence the area through developing the hotel and redeveloping all of the retail on the streets, and the head of the street is Macy's, Herald Square's store unit, which is 930 -- let me say it again, $930 million of volume. That's equivalent to 20 department stores anywhere else in the country. So there's an extraordinary opportunity to create value, change the culture in the retail and in the Hotel Pennsylvania. If we could get through our efforts, our transformative efforts, the market value for office space in Penn Plaza to go [indiscernible] $5 a foot, that would be $30 million on 6 million feet, okay; and capped at $5, that's $600 million. And that $600 million, this is all theoretical speculative kinds of thinking. It doesn't take any capital to create on the office space side. A minute about the Penn Plaza district. It's interesting that New York, as in the rest of the country, tick and that kind of office user are booming, they're on fire. As I look around, the way I describe that is people who come to work without wearing ties, they like different kinds of space than the big conventional Fifth Avenue financial floor plate kind of space. And Penn Plaza has become -- has been integrated into that culture. So Midtown South is expanding into Penn Plaza. So Penn Plaza's performance last year in Manhattan was the best subdistrict in Manhattan. Events went up the highest in Penn Plaza, at 9%; and the occupancy rate is the highest in Penn Plaza and we are full. 220 Central Park South, I think most people know we have a couple of skirmishes on that site to get it so that it's liquid. But it will, whenever that's all done, be an extraordinarily-valuable site that we could either sell or develop.

Michael D. Fascitelli

Okay. I think one -- maybe an easier one to execute that people are really negative on and oversold is a Washington, D.C. [indiscernible] Everybody in this room is aware of the diminution in EBITDA we're suffering, which is worth $55 million last year -- -- $60 million. You look at what that could be in 2 or 3 years, 4 years, whatever time it takes to lease up that vacant space, that's another $60 million. I believe most of the people in this room that are trading our stock price, that's been basically given 0 credit -- that vacancy. And that vacancy will be very valuable. It will lease up. It will come back, just a question of when and what rates. I think that's a very easy thing for us to pick up for an opportunity internally.

Michael Bilerman - Citigroup Inc, Research Division

If you think about investing capital, Steve, you said on the call it's hard to invest money, hard to make money, stocks are flatlined. And the company's going to be sitting with 0 line of credit, $800 million, almost $1 billion of cash in a couple of weeks. How do you think about investing or you just keep that for -- one thing is dislocate again? Or is there opportunity to put that capital to work?

Steven Roth

As I said on the call, I haven't changed my mind in 4 days. Investing today is difficult, asset prices are high. I think in my belly that asset prices will get higher. I said publicly I think we're on the foothills of a very large and important economic expansion in America. It's easy money, it will catch. But I think the real estate markets had discounted a lot of that and especially low -- 0-bound interest rates that had an enormous effect. Asset prices are high. It takes a lot of courage to buy at these prices, okay? So now in terms of cash, Michael, I don't know how you run your family, but cash is good. It's a very good thing to have in volatile times, okay? And the companies that win are the companies that have their balance sheets prepared to buy when the time is right, when there is distress and when assets can be bought at good prices. We don't ever want to be caught short. And so building cash for the future opportunities is a good thing. If you overpay for a building and you buy it at a 3.8% cap rate at $1,300 a foot, you never recover from that. I mean, you just never recover from it. So we're very cautious in terms of acquisitions. And once again, we're very, very enamored with having lots of cash.

Michael Bilerman - Citigroup Inc, Research Division

The last 2 times you were here in '08 and '09, you had 2...

Steven Roth

Wait, you have a history of when I was here last?

Michael Bilerman - Citigroup Inc, Research Division

Yes. I didn't...

Steven Roth

I didn't think it mattered.

Michael Bilerman - Citigroup Inc, Research Division

Well, no. But you had 2 -- had a lot of foresight because in '08, you said interest rates are going to 0. There was giggles in the room, but you said they're going to 0. And then in '09, you said we're only going to find -- a precondition to finding the bottom was stupid, stupid, stupid asset values. And...

Steven Roth

No, I said -- I think I said when the bottom will be made, when asset prices go to stupid, stupid, stupid prices and you started quiveling with me about what is the first stupid venue, what is the third stupid venue...

Michael Bilerman - Citigroup Inc, Research Division

But we're pretty damn close to the stupid, right?

Steven Roth

Right.

Michael Bilerman - Citigroup Inc, Research Division

So as I'm just curious, where we sit today, what sort of view do you have, I guess both of those were contradictory. We ended up hitting that bottom that week, right? But I don't think a lot of people thought that was going to be the end of it...

Steven Roth

Just trying to say a nice thing that I was right?

Michael Bilerman - Citigroup Inc, Research Division

Yes, I answered you. You had great foresight in both of those years...

Steven Roth

You could say this a lot simpler if you get to the point...

Michael Bilerman - Citigroup Inc, Research Division

Now I'm looking for the next. That is what I'm so excited for. I'm looking for what the next insight is into the marketplace.

Steven Roth

No.

Michael Bilerman - Citigroup Inc, Research Division

No?

Steven Roth

Apparently, everybody made a big deal of that on the call. I mean, I loved -- I'm famous as gold. I gave a one-word -- I had a -- like this, a rambling long question and my answer was yes. And that made -- sorry, my answer to that was no. I have no prediction for you right now.

Michael Bilerman - Citigroup Inc, Research Division

Well, maybe by the end of the session, we'll have more.

Steven Roth

Okay.

Michael Bilerman - Citigroup Inc, Research Division

Maybe we should turn to a corporate governance question. We talked a little bit about it on the call on the staggered board and plurality and we can sort of push those aside, you answered them. One of the things you didn't answer -- let's see if I can say this in the right way. Mike staying on the board lowers the average age. And so I don't want to become -- I'm not trying to be an ageist or say that older age...

Steven Roth

Bring in the picture from the outside about the before and after of Mike. By the way, I think that was an awfully nice thing you did, very good. Mike won't say it, but you honor him by his attention. Your attention honors him.

Michael Bilerman - Citigroup Inc, Research Division

Well, that's good. And everyone should sign it when they leave the room. I'd only say nice things. I saw some - there are some swear words already on there, go figure. So I'm curious [indiscernible] you brought down, but there has been some shareholders that feel like there should be more youth on the board. And turning around, how do you feel about -- put the staggered self aside, I understand your answers there. I may not agree with them, but I understand where you're coming from. Maybe talk a little bit about...

Steven Roth

Let me finish your question. Stop. Let me get to your question. I think the older I get, the more that I value youth in every way, okay? And so at the start is that in the management of the business, youth is really important. Youth has a different outlook. By the way, youth lives in a totally different place in New York than the rich people do, okay? And they live on the cutting edge and that's -- so we need to have young people and even middle people involved in the day-to-day operations of the business, especially, not so much on the number grinding and analyst side, but in the real estate side as to where the neighborhoods are going, where people want to live, where people want to work and where people want to play. So we believe in youth, okay? And we believe in talent on the inside of the business. And we -- I mean we have a talent coach in our business. And I don't know how many other real estate companies do that, and that's the way we think. In terms of the board, we worship several things. First of all, we worship wisdom, okay? It's really important. Wisdom is sort of an ageless kind of a thing, although there is some thinking that it sort of grows with age and grows with experience. So we have a great deal of respect for the older folks who are -- not because they're old, if they're wise. If they're old and dumb, we don't want them, okay? And so -- but we do believe that there is a place for youth. We're happy to have Mike stay on the board and be our youthfulness person. But Mike is a little long of tooth, too, okay? So we're going to add people...

Michael D. Fascitelli

You should not be throwing stones on this.

Steven Roth

But I can. And so, no, we acknowledge that. We're going to seed our board with some -- a couple of fresh faces. And hopefully, they'll be younger than the average age.

Michael Bilerman - Citigroup Inc, Research Division

That's for this proxy season or next year?

Steven Roth

Oh no, not in the next 2 weeks.

Michael Bilerman - Citigroup Inc, Research Division

Okay. Is there questions from the audience?

Unknown Analyst

Where are you in the process of Penn Plaza retail redevelopment and the Hotel Penn redevelopment? And what's your best guess in terms of what the timing of that is?

Steven Roth

With the Hotel Penn, we did something -- we began a process to, in a very orderly way, talk to the marketplace with -- of experienced hotel operators. Okay? We analyzed our internal capabilities. And while we are managing that hotel today, it is not our main business. And while we may be okay at it, we're not brilliant at it best in class. So there's lots of things that we're trying to accomplish with the Hotel Pennsylvania. A, we're trying to make a lot of money on having a great hotel that's full all the time at very high rates; and as important as that, we're trying to make an amenity to the area where we have billions of billions of dollars of assets surrounding it. So we are -- I think we're getting close to the end of a process to talk to the best-in-class operators and developers to solicit ideas and with the hopeful result that we will invite somebody in as being a partner and probably the principal developer there. Okay? That's the hotel. With respect to the retail, we're in the process of turning over and buying out a lot of the retail tenants on the streets so that we can populate them with better, more contemporary, more exciting tenants and restaurants all over the place.

Michael Bilerman - Citigroup Inc, Research Division

Do you think that...

Steven Roth

That's going to be a multiyear activity, which hopefully will bear fruit and take a lot of energy and internal focus on our company.

Michael Bilerman - Citigroup Inc, Research Division

What do you think has changed in that whole process from the years where you were going to have to redo the garden and probably then Moynihan in terms of that redevelopment and then you're going to develop Hotel Penn's office building? So there's -- I guess there's been a lot of talk on Penn Plaza and that rejuvenation for...

Steven Roth

Sadly, we've had 2 stupendous ideas and transactions that were on the verge that didn't happen, not for want of enormous effort and energy on our part. The first is, is that we had a deal papered to create a 3 million square foot headquarters building for Merrill Lynch. And at the board meeting that it was supposed to be approved, the result of that board meeting, which lasted 2 days, I guess we should've known something was wrong when it didn't, but it didn't end in the first day. I mean the result was they said we're not going to do this new headquarters and we're not going to do Stan O'Neal anymore. Okay? So that was -- I don't know, how many years of work? At least 2 -- it was at least 3 years of work. We decided to continue -- and that building was designed -- we decided to go through a Euler process, which is the zoning process in the city of New York to get approvals to build that building or a close facsimile of that, which we have, and it's now on the shelf. So it's an interesting option to have. But it's not possible today. The rents are not -- this is not something that we would build today or we could build today. And so we've admitted that that's not something that's feasible. And we're not going to tear down the hotel. In fact, we're going to invest in it aggressively and try to make it into a really profitable, really good hotel for our purposes. Okay? So that's that. We had a deal to move Madison Square Garden from its current site on top of -- we're going over this history, but we'll do it because -- we do it because you asked, to move them to Moynihan Station across the block. It was an incredible deal. It was something that everybody in New York, all of the planners, all of the civics, all of the politicians and all of the real estate community thought was one of the great things for New York and for us would've been a great thing for our company, and we just couldn't get it to go. We tried -- and by the way, the most -- everybody thought it would fall down on not being able to corral the ownership of Madison Square Garden. We had a signed deal with them. So it just didn't work, it couldn't work politically and that's too bad. So those 2 things -- they're old news, we're gone with that, okay? We're now going to redouble and re-triple our efforts. And by the way, the Penn Plaza district is better today than it's been -- than it's ever been in our history.

Michael Bilerman - Citigroup Inc, Research Division

Well, in terms of getting that rental upside, is that the market moving or you think you can push existing tenants up to get that -- we talked during the session of about $5 a foot on your square footage, obviously, it's a meaningful upside from a value perspective. What needs to happen in the marketplace or you're specifically...

Steven Roth

We need to do our work and the marketplace has to recognize it. And the market -- by the way, it's happening without us. The market rent in One Penn Plaza is $60 a foot today, okay? The market rent on many buildings on Park Avenue is not that much higher.

Michael D. Fascitelli

When we bought Penn Plaza, the average rent was $26 a foot. And the average rent today is in the 50s, and that building is over $60. So something is going to happen just to do with the market. I think what Steve is saying, if we improve and do some things that are I think well within our control, you get another $5 on to whatever the market is right now. So it would be another $5 bump, depending on wherever the market goes. But the market is quite good in Penn Plaza, the best it's been since I've been there.

Steven Roth

And we've gotten a lot of comments this morning from investors who are curious about the West side railyards and what effect that will have on our holdings in Penn Plaza. So for those of you who don't know, basically, the West side of Manhattan, the railyards, have been identified by all the planners in New York as being the future growth area. And the related companies, friends of ours and partners of ours, have a plan to build I think it's 7 million square feet -- and these are enormous buildings. But those buildings go out at $90-plus. So that creates a very, very comfortable umbrella for our price point. And so we think it just focuses -- culturally, everybody in New York is focused on that district as being a fine district for office buildings, whether they be new or ours. So I think that's all positive.

Michael Bilerman - Citigroup Inc, Research Division

Can you talk about the asset sale pipeline for 2013 and which sort of assets we could see you sell this year?

Michael D. Fascitelli

Well, I mean we're in the market right now. We've signed a contract on the plant. We've signed a contract on a sale of a Philadelphia asset. And that's a little less than $300 million. We have some smaller assets for sale, but that we're trying -- another $30 million, $40 million. And then there's a series of assets coming behind those that we are in various stages and preparing. We're going to be selling -- we're going to continue to sell some of the retail malls. We have a retail asset going to market soon in our area, another one in California. So over the next 6 months to 1 year, there still are going to be another, as I said, $1 billion to $2 billion of assets that we're going to look at selling or repositioning. Some are simplification, some are asset recycling, some are improving the quality and some are pruning. All of that is continuing.

Michael Bilerman - Citigroup Inc, Research Division

Can you remind us -- I think you decided to keep the Mart asset in Chicago after you leased it up. Can you remind us the rationale for keeping it as opposed to selling it this year or soon?

Michael D. Fascitelli

I'll take the first part, Steve. First off, all of the Mart has been cleaned up except for that. Everything else has been sold -- the design centers -- Chicago -- I mean Los Angeles. You have the Washington -- in Washington also, all the shows that were not in the building except for one show, which is about $12 million, that's not a lot of money, and that leaves us with the Mart. And the Mart, the income going down to $45 million. The Mart income is going well north of $60 million, maybe even to the next -- because the Google, Motorola leases are signed and will begin in midyear. And we think that's a great -- has a great halo effect on the building in the area. So the Mart asset now has been very much skinnied down. It's over 50% office now, not showroom, so that -- and the showrooms are tighter with no vacancy. So the Mart asset has got a great year or 2 in front of it for continuing NOI growth. And I think the cap rate has compressed dramatically on that asset because of what we've done. So the Mart business is just that. Now the Mart -- so the Mart is like basically 555 California with a little bit of specialization at running the showroom business within it. I think it's got a good future the next couple of years. I don't know if you want to add to that?

Joshua Attie - Citigroup Inc, Research Division

Well, people would say that keeping one asset in Chicago doesn't sort of make a lot of sense in this interest rate and this cap rate environment, that selling it and taking the proceeds and reinvesting into the core business or bringing it in on cash...

Steven Roth

Don't agree. Don't agree. That one asset in Chicago is a $1 billion asset with 3.5 million feet. So it's like the size of a company to some of these companies, okay, number one. Number two is, we look upon it now, it's no longer the Mart business. Okay? It's now a single asset. So we look upon that single asset based upon what its future is. It's our judgment that the future for that asset, which is now ground 0 for the tech industry between the 2 coasts of the United States at the exact right spot endorsed by Google, is an asset that we think has a great 2 or 3 years of growth in front of it, both in terms of higher income, lower cap rate. And we expect to mine that value, that's our job. And by the way, we don't intend to buy and create a platform in Chicago. We don't intend to add more assets. We just want to maximize the value and the performance of that one huge asset.

Michael D. Fascitelli

When I mentioned -- to Josh's question, assets like that, 555 California, which we've gotten questions on, they could be candidates in the future for disposition, joint ventures, et cetera. They're not in the dollars I talked about or in the sales program. Those are in addition to the basic what I think is really the continuing asset sale program. Those are very lumpy, very big assets.

Joshua Attie - Citigroup Inc, Research Division

Mike, I think on the conference call, you mentioned a balance sheet opportunity at Toys? Can you...

Michael D. Fascitelli

Yes, I think Toys [indiscernible] between us, KKR and Bain, we would have expected to get liquidity out of Toys by now. And we have not been able to, and that's been frustrating. And Wendy is on the board also. And we've sort of refinanced the Toys balance sheet over the last couple of years, extending maturities where we can. And we've done that with one financing that's pending. That should be done [indiscernible]. The Toys balance sheet will largely be 2016 or longer. I think the cost of debt is above market. And if you look at some of the opportunities to do a lot of things at Toys to seek liquidity, which we're going to try to do, I think there's an opportunity in that balance sheet as opposed to a negative. We financed that at one point perfectly for a real good profitable OpCo. And then that market went away. And so now the opportunity to finance with a high-level junk-bond credit with lower rates or with more flexibility is probably more today true or towards [ph] than it was when we did the initial deal. So I think that's what I was referring to.

Joshua Attie - Citigroup Inc, Research Division

If your comment on the size of the Mart being the size of certain companies, it got me thinking of, is there an element...

Steven Roth

Careful now.

Joshua Attie - Citigroup Inc, Research Division

Pardon me?

Steven Roth

Careful now.

Joshua Attie - Citigroup Inc, Research Division

Well, is there a thought of saying with the value upside in -- you talked about D.C., New York and Penn Plaza, the retail portfolio, all the stuff that's core -- that eventually is core Vornado on one side and taking everything else that still has some value upside but is masking or is weighing down this side of the house, which is much more -- has much more value and is much larger, of taking that and just splitting the company in 2 and creating Vornado core and Vornado opportunity and the opportunity would hold JCPenney, Toys, Mart, all of these other variety of things that over time can find its own investor base and be a liquidating trust and the rest -- and then it's not hampering or not hanging -- it's not being a hangover at all on Vornado stock.

Steven Roth

There's something in the water because every investor that we met this morning asked that same question. Our board has studied that carefully and for the moment rejected it. Our preference is not to have a second company that will trade poorly with a separate management team and a separate board, et cetera. Basically, we intend to -- and this could change. We intend to liquidate those assets inside Vornado, have the cash that is resulting from that sit in Vornado. We need it in Vornado, not in some bad bank offshoot somewhere. The losses -- because most of those assets are lost assets, the losses are valuable in Vornado. They have no value for some offshoot. And it was our opinion that in the short term and maybe the long term that the sum of bad bank and a good bank would be less in the trading market than the one master company. So we studied it very carefully and as of right now, I can tell you I don't think it's going to happen. That doesn't mean that we don't think about it, talk about it once a week.

Michael Bilerman - Citigroup Inc, Research Division

You have a question over here?

Unknown Analyst

Maybe a little more broadly then, what does the management change -- how does that change the fixed income investor community or how we should consider the balance sheet and your outlook going forward? Or is there no change at all?

Steven Roth

I don't think the management change has anything whatever to do with the quality of our balance sheet. I think our business strategy is, is to have our balance sheet be a fortressed balance sheet, have enormous excess capacity to be used when the markets are right for investing. So I think the -- I don't think the management change has nothing whatever to do with our thinking about the quality of our balance sheet.

Michael D. Fascitelli

And I want to make a comment about the change of management because we've got a lot of questions obviously from the conference call to now that said, "What's going on? What changed in strategy? Are you going to sell less as a fixed income, unsecured market and be different?" Steve and I -- I come from McKinsey and Goldman. It was a partnership. Steve invited me in as a full partner back 16 years ago, and we've run the company, forgetting the titles as a partnership. And I also have treated, as I think Steve has, the people like Joe, Wendy and others as partners in the business. Plenty of you know David Greenbaum, Mitchell Schear. We have Michael Franco, who you don't know as well. He's the acquisition guy. And basically -- more than acquisition guy, he heads that area -- Wendy -- is that we run the company as a partnership. And there's no dramatic change in that. You change for the environment. So I think we're on a path that everybody sort of agrees with. And it's not that that's just any sudden change going on. We have 3 main things to do. First is -- and really is to continue the simplification of asset sale. The second thing is this huge opportunity of Vornado for the certain great assets to harvesting internal assets in a way that -- in a sense we've been a little bit tardy on and we will get great benefits in a way that's better than anything like I can see externally. And the third is really in the sense to get the D.C. business back up and fully humming. And those 3 things will create -- have great value for all the people in this room, including all of us who are shareholders of Vornado. So this is not -- it's an evolutionary thing in terms of the strategy. There's no big change in the fixed income market or any other market. And I just wanted to state that -- because we certainly got a bunch of questions about that this morning. And also the rest of the management here at Vornado is quite sophisticated and capable of doing any of these things and execute any one of these plans.

Michael Bilerman - Citigroup Inc, Research Division

This morning, SL Green gave a very bullish outlook for the New York City office leasing market, and just curious if you guys can give an update on your thoughts of the office market, how it's been in the last month and for 2013?

Michael D. Fascitelli

Who said it was bullish?

Michael Bilerman - Citigroup Inc, Research Division

SL Green.

Michael D. Fascitelli

Great, they're right.

Joshua Attie - Citigroup Inc, Research Division

They also said there's benefits to economies of scale, but...

Michael D. Fascitelli

We're bigger.

Michael Bilerman - Citigroup Inc, Research Division

That's right. That's what I said. Other questions from the audience?

Steven Roth

I would remind everyone, we did a 600 -- we announced a 650,000 square foot renewal lease with Macy's just last week. So leasing is going just fine.

Michael D. Fascitelli

Are you guys are waiting for -- are you done?

Michael Bilerman - Citigroup Inc, Research Division

You got a question for Steven?

Unknown Analyst

Coming back to New York City, how do you think about -- since we've got a mayor [indiscernible] it's been somewhat pro development within Manhattan and broader. How do you think about the next mayor can do that potentially and how that could change the landscape?

Steven Roth

There are a couple of candidates that we would hope would not get elected. There are a couple of candidates who we think will be maybe not as good as Mike Bloomberg but will be, as political leaders go, just fine. The responsible political leadership in New York understands the importance of business, understands the importance of being hospitable as a corporate headquarters and as a vibrant business center because that's where all the revenue comes from. So -- I mean these people are not -- they're not crazy, although there are a couple of crazy [indiscernible]. So we would be optimistic that a capable, experienced, seasoned political leader will be the next mayor.

Michael D. Fascitelli

I want to say one thing about New York. I wasn't trying to be flip about -- New York has been a very solid market but it's been in neutral. We haven't been able to push rents like we have in the past, but there's been quite a bit of activity. We did over 2 million feet of leasing last year. But the ability to get substantial markups to the contract rents has not been there right now. So hopefully, when you see the market tightening, you'll see that happening.

Michael Bilerman - Citigroup Inc, Research Division

Just like we had a question at the start, we have 3 short rapid fires to end. So what will same-store NOI growth be for your property sector in 2014?

Steven Roth

We don't give guidance.

Michael Bilerman - Citigroup Inc, Research Division

Not for you. What do you think the...

Steven Roth

We don't give guidance for ourselves. We certainly don't give guidance for the other guys.

Michael Bilerman - Citigroup Inc, Research Division

So what property sector other than your own would you invest in personally right now?

Steven Roth

What property sector other than our own would we invest in? I don't know. I'm not going to answer that. Do you want to answer it?

Michael D. Fascitelli

I don't have to answer anything I don't want. No.

Steven Roth

He's in the process right now of doing what we all love, and that's buying a palmist [ph] for his kids. Okay? So that's the answer.

Michael Bilerman - Citigroup Inc, Research Division

So we have nothing. All right. So the third one, then we'll go from this one. Do you expect to see more or less public companies in your property sector 1 year from today?

Steven Roth

The same.

Michael D. Fascitelli

Same.

Steven Roth

I don't see...

Michael Bilerman - Citigroup Inc, Research Division

Basically, do you see M&A or do you see IPOs?

Steven Roth

I understand the question. I understand the question.

Michael Bilerman - Citigroup Inc, Research Division

Just making sure.

Steven Roth

I don't see a lot of people going public and coming into the sector, and I don't see a lot of guys getting together and merging.

Michael D. Fascitelli

By the way, if anybody wants -- one guy is looking to going public, I told him to come to this conference beforehand and might give him some second thoughts. I do want to say one thing, I do want to say one thing, I want to say thank you to all you guys and gals. And it's been a great pleasure to come down here and get challenged, get probed, get suggestions. You've got full of ideas and we always appreciate them. And it's been a great honor to work with Joe directly with you guys. So Joe takes the lion's share, as you know, the investor job on, with Wendy's help and Cathy's help. It's been a great source for me, pride and joy to work in Vornado for 16 years. And I'm going to continue on the board. I have a huge financial investment in the company, a huge emotional stake. As I said, I have a great partner still in Steve, and I'm helping any way I can. But I just want to thank you all personally for your support. And I look forward to never seeing you again at a conference I'm doing this at, but continue to be good friends, so thank you.

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