Good morning and welcome to the Vornado Realty Trust Fourth Quarter 2015 Earnings Call. My name is Cynthia and I'll be your operator for today' call. This call is being recorded for replay purposes. All lines are in a listen-only mode. Our speakers will address your questions at the end of the presentation during the question-and-answer session. [Operator Instructions] I will now turn the call over to Ms. Cathy Creswell, Director of Investor Relations. Please go ahead.

Thank you. Welcome to Vornado Realty Trust's fourth quarter earnings call. Yesterday afternoon, we issued our fourth quarter earnings release and filed our annual report on Form 10-K with the Securities and Exchange Commission. These documents as well as our supplemental financial information package are available on our Web site, 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-K 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 for more information regarding these risks and uncertainties. The call may include time sensitive information that maybe 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 of the Board and Chief Executive Officer; David Greenbaum, President of the New York Division; Mitchell Schear, President of the Washington, D.C. Division and Steven Theriot, Chief Financial Officer. Also in the room are Michael Franco, Executive Vice President and Chief Investment Officer; and Joseph Macnow, Executive Vice President and Chief Administrative Officer. I will now turn the call over to Steven Roth.

Thank you, Cathy. Good morning, everyone. Welcome to Vornado's fourth quarter call. I am eager to chat with you this morning about Vornado's performance and about the markets and the world in general. Our prepared remarks have been long, but be assured we will leave plenty of time for Q&A. Yesterday we reported very strong financial results for the fourth quarter and the full year. Our fourth quarter comparable FFO was $1.27 per share, 10.4% better than the fourth quarter of 2014. Our full year comparable FFO was $4.83 per share, 10.5% better than 2014. If we were to exclude our real-estate fund the increase over 2014 would have been 16.3%. Our earnings growth was driven by our flagship New York business and as David will cover shortly our New York business will continue to produce strong growth in 2016. Companywide in 2015 we leased 5.381 million square feet and 483 transactions with overall positive mark-to-markets of 14% GAAP and 12% cash. In New York we leased 2.276 million square feet for the year and 610,000 square feet for the fourth quarter at positive GAAP mark-to-markets of 22.8% for the year and an even higher 25.7% for the fourth quarter. These are great numbers. Mitchell and David will give you details of their businesses shortly. Washington is now a tale of slow recovery being dragged down by Skyline. With respect to Penn Plaza we are delighted that Governor Cuomo has shined a bright light on the importance of Penn Station as New York City's busiest transportation hub and the crying need for improvement. Vornado will be a full participant in this process. The Penn Plaza district where we are the dominant owner with 9 million square feet is a great opportunity for us. We are knee deep in planning multiple…

Thank you, Steve. Yesterday we reported fourth quarter comparable FFO of $1.27 per share, up from $1.15 per share in the prior year's fourth quarter, a very strong 10.4% increase. Our full year comparable FFO was $4.83 per share, up from $4.37 per share last year. Also a very strong 10.5% increase. The increase in our comparable FFO in 2015 versus the prior year was clouded by lower gains in 2015 from asset sales and mark-to-market fair value adjustments of our real-estate fund. Excluding this effect our comparable FFO for the year would have increased 13 -- I'm sorry 16.3%. Nor surprisingly our growth comes from our large and strong New York business. Total FFO for the fourth quarter was $1.37 per share compared to $1.22 per share in the prior year's fourth quarter. Total FFO for the full year was $5.48 per share compared to $4.83 per share for the prior year. Non-comparable FFO items aggregated 19.4 million of income for the fourth quarter compared to 13 million of income for the fourth quarter of last year. 2015 non-comparable items aggregated 123.7 million of income, consisting primarily of a $90 million reversal of an allowance on deferred tax assets of our taxable REIT subsidiaries and 46.4 million of FFO from the operations of 20 Broad and 750 Pennsylvania Avenue which we sold. Please see our press release or the overview on MD&A on Pages 37 and 38 of our annual report on Form 10-K for a detailed summary of non-comparable items. Fourth quarter comparable EBITDA was 400.7 million ahead of last year's fourth quarter by 9.6%. Our full year comparable EBITDA was 1.533 billion ahead of last year by 5.9%. Excluding the effect of our real-estate fund our full year comparable EBITDA increased by 8.9%. Our New York business…

Steve, thank you and good morning to everyone. Before I jump into a review of our business for 2015, I want to step back and spend a few minutes talking about market conditions. It's really to give you some perspective on where we see the real estate market in New York. In a nutshell I would say that business has been and remains good. Overall leasing activity in Manhattan in 2015 was strong. 28.2 million square feet transacted the third highest in a decade. At a 9.4% availability rate in Manhattan the rate was 80 basis points lower at yearend 2015 than 2014. In 2015, 4.5 million square feet of space was absorbed in Manhattan with midtown accounting for some 75% of the positive absorption 3.3 million square feet. We are now six plus years into this growth cycle with availability rates having come down by over 340 basis points from 12.8% to the current 9.4% and during that time period it was a total absorption of more than 20 million square feet of space in the market. Absorption and employment of course are directly linked. New York has been an amazing magnet for job growth. From the trough in 2009 August, through year-end 2015 private sector employment in New York has gained over 600,000 jobs over four times the number of jobs lost in the recession and is now at an all time record high. In our business of course we focus more closely on New York City's office using employment number which also has continued to expand gaining 31,000 jobs in 2015. Since office using employment bottomed in 2009 New York City has added over 200,000 office using jobs double the number of jobs lost and again is at an all time high. While the City's office of…

Thank you, David and good morning everyone. In 2015 the Washington region experienced sustained economic expansion and all economic indicators signaled that the market will continue to strengthen. Job growth more than tripled from 20,800 new jobs in 2014 to over 68,000 new jobs in 2015. Importantly 48% of this growth was in office using sectors with 32,900 new jobs. The passage of the two year federal budget has had a broad stabilizing effect on the local economy and on the ground the green shoots are sprouting a bit we saw pick up in leasing activity and tours throughout 2015. Specifically in our Washington portfolio as we expected our 2015 comparable EBITDA was down about 3.5 million from 2014. As Steve Theriot have said earlier in 2016 we expect EBITDA from our core Washington business will be flat to 4 million higher than 2015. However that growth will be offset by two items. First we expect the occupancy of our Skyline properties to decline further which will decrease EBITDA by approximately 6.5 million. Second, we will be vacating and taking 1726 M and 1150 17th Street out of service which will decrease EBITDA by approximately 4.5 million. This spring we would demolish these two obsolete buildings in preparation for the development in the future of a new state of the art Trophy Office Building 1700 M in the heart of the central business district. So summing it all up we expect that Washington's 2016 comparable EBITDA will be approximately 7 million to 11 million lower than 2015. Let me take a minute now to review our 2015 results. In 2015 we leased a lot of space. Over 2.1 million square feet in 2016 deals at initial average cash rent of $40.20 per square foot. About one third of our 2015…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Manny Korchman with Citi. You may begin.

Good morning Steve it's Michael Bilerman. I wanted to go back to something you said in your opening remarks which was that Vornado is focused simplified and ready for battle and then you should update it us a little bit in talking about Urban Edge saying the concept of laser focused smaller entities may well be a template for the future and so I'm just curious as you proposed those two statements of you got everything done you've pruned you are ready but yet maybe you sort of brought up this idea again of splitting up into multiple pieces and I'm just curious can you just expand a little bit on where you are within that spectrum and have you are thinking about the various entities?

Michael, good morning, thanks for the question. You are absolutely correct we are very frustrated by our stock price. We have pursued various strategies to begin to close the gap we think the gap is demonstrable so we are having said that so that's our objective our objective is to move the stock price to what where the fair value of the Company is. And by the way if you just play with numbers if you take Green Streets’ NAV and our current stock price I mean that's a -- and I can't…

Why would I take Green Streets’ NAV wouldn’t I take my NAV?

Let's take Green Streets’ okay. In any event the discount is very significant so that's the background to all this. The second thing is, is that we exited the retail the non-Manhattan retail business for a variety of reasons we noted several years ago a secular not a cyclical a secular change in retailing patterns we acted upon that, we exited the mall business entirely swapping many of the assets for what we thought were better assets but really and then what we decided we did not want to sell the strip retail business, the Northeast business which by the way had the Bergen Mall in it and two Puerto Rican malls in it so it was a little bit of a hybrid we thought that was a grand business and we thought that the right move was to deconglomerate the business and have a very focused laser focused management on a smaller business. We see that the business with a great balance sheet, enough cash to succeed and a very, very engaged Board and we couldn’t be more pleased as I said the stock price is appropriate obviously it could be a little bit higher but it's appropriate nowhere near the discount of Vornado and we think it has a great future so that is a very, very interesting template, is that speculation about that we might do a similar thing with Washington we’re up to our eyeballs in considering that. So that is not that is something that is absolutely on the table and we are absolutely considering. We think that was interestingly enough. If you take our Washington business and I also did say at the beginning of my remarks that Washington is in a slow recovery being dragged on by Skyline and we do believe that and our numbers show that by the way. If you look at Washington as a separate segment which has been beaconed up immediately and you project out a four-five-six year growth back to normalcy it is a very high growth very interesting business.

And how would you think about New York in terms of a great street retail business as well as a great office business abutting residential investments that you have there is some element of being a New York specialist and you think about what you have to do at Penn Plaza mixing and matching a lot of different things would that be something that would be on the table or less interesting to split New York up into various pieces?

My, my, my, you are very provocative. The answer is as you could take in every building and you’d have a separate company from 44th Street to 49th Street we could have a separate one from 59th to 60th Street. We don’t want to speculate on what we might do I've already said very clearly that we are in deep consideration of doing something appropriate with Washington. If you do that then what we have left is a grand New York business pound for pound just a marvelous business with marvelous assets both on the retail side and the office building side we believe that the opportunity we have for value creation in the Penn Plaza Penn Station area is truly unique and is enormous. So, that's a unbelievably interesting, exciting business. The strategies of what we might do with it in terms of capital strategies, venture strategies or anything like that, we don't want to -- I don't want to speculate now, although it is extremely -- and it is a just grand business. The other assets that we have where we -- I mean Michael this is a wonderful asset which is in the middle of its value creation career and 555 California, so the two assets that we have that are outlying New York are the best quality in each of those cities. So, other than what I've already said, I don't think we should speculate although we couldn't be more excited about the quality and the opportunities of the business we have.

And our next question comes from Jamie Feldman with Bank of America/Merrill Lynch. You may begin.

I guess sticking with the same topic, how are you guys thinking currently about the pros and cons of spreading up the balance sheet as well, I mean you talk about Penn Plaza where you have major redevelopment projects, DC also -- just what are your related thoughts in terms of that part of the process?

I probably was pretty expansive with Michael I don't know what you mean about splitting up the balance sheet further. I mean we have still cash, we said a year ago that these were -- that the right strategy was to push away from overpriced acquisitions to build cash et cetera, we've done that, we're very pleased with the condition of our balance sheet. And I don't really understand your question.

Well I guess you started the call, talking about 4.5 billion of potential liquidity positions you to do larger things if you split the company into I guess two thirds, one third or something along those lines, each of the entities will just have less capital to work with and then your development project’s regenity would obviously be a larger part of the balance sheet?

Whatever we do in terms of hiving off a business or splitting up or separating or de-conglomerating the -- each business will have appropriate balance sheets to accomplish their missions, we did that very carefully with UE we know how to do that, it's crucial to the success of the businesses, the way we look upon it we are still an owner -- the way I look upon it we are still an owner of UE, we kept our shares, and we need you -- we want UE to thrive just like we want Vornado to thrive and any children, or grand children that might come out of Vornado will be at a similar condition. And by the way we do have the mother ship balance sheet to do it almost anything that we want to. I would tell you that while we do have an enormous amount of liquidity intentionally we consider our silly stock price to be our number one target. I would also tell you just to comment about the balance sheet, I mean Steve Theriot said that our consolidated debt to EBITDA ratio was 7…

5.

7.5 I look at it slightly differently. The way I look at it if you normalize our cash, so saying that we would always have $500 million of cash so that's a $1.5 billion of excess cash so to speak. And you take Skyline which is grossly over levered it has almost $700 million of debt with negligible income. If you take those two out, the number is -- the debt to EBITDA number goes down 6.2.

6.1

I'm sorry 6.1, I'm corrected, which is a wonderful indicator of a really fortress balance sheet.

And then from my follow-up, I think you said you're over 50% sold at 220 Central Park South, last quarter I think you said 53% to 54%, can you just give us an update on where you guys are on actually sale?

We chose not to, I have said that the market is slowing it's slowing for everybody, it's slowing a little bit less for us, but of course it's flowing for us as well. For competitive reasons I mean what we have said is we have 53 or 54 whatever from last, we're not going backwards from this quarter of course. We are well more than half sold, we've covered our costs, we're fully financed, we're going to -- with two light years away from delivery and I -- it's a cyclical business and for competitive reasons I don't think it's good for our business to give the kind of details minute details, it doesn’t help us, it hurts us competitively in the market. So, we're in great shape, it's a premier project, everybody in the marketplace knows it's the premier project, we're in great shape and we're totally and completely out of financial risk.

And our next question comes from Alexander Goldfarb with Sandler O’Neill. You may begin.

Steve, just first question is going to Skyline, can you just remind us of the historic tax perfection and what Vornado has as far as there's a recourse on the 700 million, I mean it would seem as far as just quick banks with a buck, if Skyline is the drag and that's been clearly an issue over the past number of years just sending the keys back with be a win not only for the market cap of Vornado but also just the or I should say in reverse but for the fundamentals of the D.C. portfolio which in fact would help the market cap so can you just remind us what the ability of it for Vornado to just walk away from that asset?

Good morning, Alex. I won't comment on your comment about walking away from the asset I'll just give you the facts the facts are that Vornado has no recourse what so ever on the loan number one and number two is there is no longer any tax protection on the asset.

Okay. And so can we fill in the blank or should we not fill in the blank?

We are not filling in the blank and if you can think about anything you want to.

I have a very creative mind.

Alexander please it's not appropriate let’s get off this topic.

Okay.

I can tell you that we consider every options about everything in our business including this and everything is upon the table always.

Okay. The second question is for David on the New York portfolio. You answered a bunch numbers on the NOI offer for ’16 but just so we can get it straight the same-store NOI is up over 5%. Can you walk us through what the incremental leasing is from new stuff that is coming in that would be over and above the same-store portfolio?

I think most every -- everything is in a same-store.

Could you just repeat it one more time Alex I'm not sure I understood you?

Sure. So you guys did a bunch of leasing as Victoria’s Secret, Swatch and a bunch of other stuff and that was either stuff that was vacant or you guys acquired and got tenants out so I'm not sure if that's in the same-store pool or not so when you guys talk about the same-store pool being up north of 5% I just want to make sure that it's are we jump modeling up that north of 5% or there are other leases or other non same-store properties that we should be thinking about coming in and adding NOI in 2016 in the New York portfolio?

Effectively Alex once the redevelopment properties that were taken out of service cycle back into service all other assets in New York are recycled back into a same-store.

And our next question comes from Steve Sakwa with Evercore ISI. You may begin.

Thanks, good morning. Steve I was wondering if you can just elaborate a little bit on the One and Two Penn Plaza projects and I realized you haven’t cemented specific dollar figures but can you kind of help us frame out the capital cost that would be needed in order to as you said kind of double the rents on those buildings?

It's pre-mature but it's certainly a fair question. So first off when you just think about it those two buildings are giant one is 1.5-1.6 million square feet the other one is 2.567 million square feet so in total they are really they are sort of like kissing cousins and they comprise of 4.12 million square feet in total so it's massive number one. Number two is they sit right on top of the busiest train station in North America so that's unbelievable. There are no other buildings that share that honor so to speak. And number three is, is that the -- they are right in the center right at the bull's eye of what we call and the marketplace calls the new west side so it's a tremendous opportunity. Now having said that one of the real opportunities is, is that the buildings are sufficiently large so that the owner of the building and they are in one ownership so there is lots of benefits to that we can move tenants back and forth between the two buildings. If a tenant needs overflow space or a financial space and we don’t have it in the building that they are in we can move we can fit that up in adjacent building although that's interesting because the buildings historically are always full. The second thing is we can afford to put a amenity complex into those four plus million square foot buildings that are not economic even for a half a million or a million foot building which are also large buildings and the population of those buildings that will be coursing through this spaces is also enormous and we can put food offerings and even delivery of food into the complexes so there is lots of different ideas…

I guess the second question follow-up just any comment on Hotel Penn? I know you've obviously said that the hotel market saturated with supply. This is kind of a low RevPAR hotel. Just as you think about transforming that marketplace, how far off in the future is the renovation of Hotel Pennsylvania?

I don't know the hotel business soft, we're taking our lunch at the Hotel Pennsylvania, it's very cyclical and very volatile and over the years of our ownership it's gone up and down repeatedly, we're in a down cycle now. So, that's step number one. Step number two is, is that we have not been able to land a tenant that would justify raising the building -- an office tenant -- and building an office building and I don't know whether we even think that that's likely or not. So, the answer is, is the Hotel Pennsylvania's time will come, right now we are focusing more on One Penn and Two Penn across the street. And so I think that's my answer. I know you guys -- you have been focused on the Hotel Pennsylvania for a while and we have not yet resolved what the right business plan is for that.

And our next question comes from John Guinee with Stifel. You may begin.

First, congratulations on an industry leading 55 minutes of prepared comments -- a lot more than some of your peers earlier in earnings season. And also an incredibly impressive summary of all the value creation opportunities, you had something in there about SL Green and putting together $125 NAV on you -- I don't really understand that, but maybe you can get me that offline. But what I'd like to know from David and from Mitchell is…

Hi John, first of all you have all of us smiling in here, that's the first thing. And the second is the $125 NAV is Green Street.

Okay. I'm not familiar with them, but okay, alright.

Now you have got us all laughing.

Sorry. So anyhow, so then I'm looking at Page 32 and Page 36 on your sup. And you have a line here and a line there on all this value creation. David, I think where can I find in your public documents more information on seven repositioned assets; three retail locations generating 70 million of EBITDA; two ground-up developments on the Highline? I don't even see them listed on Page 32 or 36. One redeveloped office I'm not sure where that is at all. Mitchell, you've got two demos and a ground-up office building. I don't see that anywhere in the sup. Bartlett, I think there's one line saying that it's a 620,000 zoned square footage. 2211 South Clark, I can't find anything on that, can't find anything on the redevelopment of 770 Crystal Place or 1751. Bell, looks like you have 5.3 million square feet of zoned square footage on Page 36, with a 273 million our basis, is there any information anywhere on any of this stuff at all?

I don't know how to answer that.

Well, the answer is no. But could you…

If you start at the beginning we'll try to answer you one by one or if you want…

No, no just put it in writing so people can look at it. It wasn't meant to be a question to answer.

So, I can only tell you that if what you're saying is, is that the -- our documents need to be enhanced that maybe but we think that our documents so maybe I think we think our documents are extensive and have enormous disclosure in them so maybe you and Steve Theriot and Joe Macnow should have a little conversation.

Will do, thank you.

Okay.

All right.

But you do point out one thing John which I think is important we have an enormous amount of stuff in the pipeline all of which is has significant value creating opportunities. Thank you.

And our next question comes from John Bejjani with Green Street Advisor. You may begin.

Good morning, guys. David from your prepared remarks it seems pretty clear that you are still seeing robust leasing activity today I expect you've heard concerns and commentary from your New York peers regarding job and rent growth later this year and noncore properties maybe re-pricing lower I'm just curious are you expecting those kind of changes yourselves down the road and I guess related to this Mitchell do you have similar concerns with respect to asset valuation and the D.C. metro?

First, John and good morning how are you? Now listen as it relates to New York I think Steve has said that we haven’t really seen any real co-hiccups at this point in time and I think that's absolutely accurate so the pipeline that we have is extraordinarily full. We have seen what I'll call is in one or two very, very limited instances on some small deals companies effectively as Steve mentioned hit the pause button and generally I will tell you as we looked at fourth quarter of the actual activity as well as everything that were working on here in the first quarter, I think I used the word that our pipeline remains strong it does I have got my leasing guys today in least negotiations round the clock on some very big deals and what's interesting is a number of those deals that we we’re working on once again and I think this is really important represent expansions by companies in New York it is not just the musical chairs business as I said last year some 750,000 plus square feet of our deals were real growth to the city what's fascinating is not withstanding some of the climate on the financial markets we really have continued to see the guys that have good businesses good business platforms continuing to look to grow in the city.

John we are very constructive we believe that business continues to be good we as I said in my remarks we’re looking over our shoulders because we are seasoned warriors and we know that this kind of volatility makes decision makers and counter parties just pause for a second and say what's going on here which is only natural and only expected okay. So, the first thing is we see no deterioration in the New York Offices that's step one what's going to happen nine months or a year from now that's another question and we see no basis upon which to believe that nine months or a year from now the New York office business will be any different than it is today. So that's step one I think obviously if there is a huge deterioration in the economy all bets are off okay so that's step one. Step two is, is that New York passage from an enormously diverse business community and there are any given time certain sectors which are expanding and certain sectors are contracting we see no signs that people like Amazon or Facebook or their ilk are doing anything other than full steam ahead and expanding aggressively so a lot of what happens to the individual companies is a function of the mix of their assets and to which segment of the office market they cater to so I can only tell you that we stand by our remarks that we think business is good and we believe that it will continue to be good for the foreseeable future.

That's helpful. Thanks. And I guess just the second piece of my question, with respect to asset valuations, are you guys -- are you cautious on that front looking forward or any reason to expect any movement in cap rates?

The answer is sure. The first thing is, is I think some secondary assets I can't vouch for what the pricing is on secondary assets. For prime assets we see no diminishing in pricing we do see that there are fewer bidders than at the hysterical top of the market maybe whatever that was a year ago or whatever and so we think that the big thing is, is that and I sort of said this in my remarks this sworn I'll call it a sworn for the moment for want of a better word and the volatility in the capital markets I believe and most commentators believe will cause an extension of the low interest rate, easy money environment that we have found ourselves in for years and years now. And it's very hard to understand how with the treasury of 1.8 today that cap rates could go above -- go into the -- go above 4.5 let's say into the fives and sixes. So, the interest rate environment and the wall of liquidity which still exists, is an anchor on keeping pricing firm. The next part of it is, is that it's not random that we and our colleagues operate in New York City which we consider to be the magnet for both domestic and international capital to invest in real-estate and also it's when volatility -- history has shown that when there's volatility in the capital markets after the initial jitters are over this real-estate becomes an extraordinarily important store of value and has over decades and decades. Michael Franco is in the room who's our Chief Investment Officer, do you have anything else to answer that?

No, like I think the only thing I would say is that buyers that are more driven by financing as Steve alluded to earlier where the cost of borrowing has gone up and more impacted and so those transitional assets, I think we'll see a little bit of near term softening but in terms of Class A assets, the demand for that and the pricing -- I don't think is going to change much.

Also John I put into my remarks the example of what we did in financing 770 Broadway intentionally because I think it's an extraordinary execution. So, let me just discuss it again. What we did there was it's a 1.1 million square foot building which has extraordinary tenants, by the way it's a mature building which is my way of saying it's -- basically it's a Wanamaker's department store, so it has enormous floor plates, high ceilings, great windows, it's a terrific building and a terrific spot. Although it is not anywhere -- it is not by any stretch a new steel and glass building, anyway. So, we financed it, we refinanced the $350 odd million loan in the 5s for a $700 million and we did it on a floating rate basis and it floated at LIBOR 1.75% and then we swapped the floating rate to six. So, we have an extensive capital markets team here and we analyzed every different option in terms of both the duration of loan and floating fixed et cetera. And the -- so we basically have borrowed a -- made it a five year fixed loan, it's actually technically four and a half year fixed which is another whole tale. We swapped it for four and a half years and the rate is 2.56, now it's -- that's an extraordinary rate for a high quality building, it's really hard to see how cap rates rise with that kind of finance available that in fact and this may sound crazy to you cap rates may well decline a little bit. So, there you have it.

Thanks. That's very interesting. I guess just one last question. There have been rumblings in the press over the last handful of months that you guys are exploring repurposing the office space at 666 Fifth. I was just wondering if you guys could comment on this, whether such a plan is in the works or anything you could say?

The answer is it's premature, 666 and I -- this same exact question came up last call and basically what I said last call still stands for this call. The asset is a grand asset, it's right in the heart of 5th Avenue, it is the -- we own the retail strip which is Uniqlo and Hollister which is three quarters of the block front. We do not own the Zara store, which is their flagship store which is owned by Zara. So, we own the retail, the office building we own half the retail together with a co-venture partner.

Office.

I’m sorry half of the office building together with a co-venture partner, the building has a very hefty loan on it, so it's basically almost a -- let me leave it that way it has a very hefty loan. So the partners have been exploring options which center around the concept that the land unencumbered by building is worth more than the existing assets that are on the building -- on the land. Said another way the highest and best use for that property is not at an office building. So, there's been lots of exploratory thinking about what is the right thing -- the right business plan with that asset and I think that's -- it's premature, it's an unbelievable asset and location and I think that's what I have to say.

I apologize to everybody for the duration of this call, but we certainly had a lot of things that we wanted to say.

And our next question comes from Michael Lewis with SunTrust. Your may begin.

Thank you. So I'll keep the call going, I guess. So you delivered on your goal to end the year with nearly $2 billion in cash. Good leverage and liquidity. But if you had to guess, do you think some of that dry powder eventually gets used to fund opportunistic acquisitions? In other words, maybe values are peaking or opportunities will shake loose. And I feel like I'm kind of getting mixed messages on that, not just from you. Or do you think that capital eventually gets driven into opportunities in your existing portfolio, which we've talked a lot about?

First of all were in a great position intentionally so, so having cash in this times of an environment is -- having cash in any environment is good having cash and this kind of an environment is even better so number one is we are delighted with it with our balance sheet we are delighting with our cash position and our financial flexibility we think it's a very important strategic competitive advantage to have. Having said that the options for our cash and liquidity are as you just said internal or external now, external is acquisitions so and what have to be a hell of an acquisition to be a better buy than for example our stock price so having said that, although unique acquisitions will get our attention even at a silly stock price so we have external opportunities we have nothing in mind and I would be -- it's a stress to even think what would make us weight into this marketplace with heavy cash. Now we turn to internal. Internal there is two things our stock and the best array of internal capital opportunities we have to invest capital and we believe high returns in our existing portfolio and with our existing assets and inventory so those are the options. It's premature to say what we will do clearly we are going to invest internally every single internal project that we have on our place Penn Station, the Chelsea buildings some development in -- limited development in Washington every single one of those will get its fair share of capital and will be done anything else is discretionary and it's premature.

Okay, thanks. My second question is about DC, and you touched on this again a little bit. As far as Skyline, assuming you don't put back the keys, the occupancy is already quite low. What does kind of the future hold for those assets to kind of turn those around? And then in Crystal City, I realize the occupancy is up, but maybe you could talk a little bit about the economics there and if you are really making money on those leases? And is that kind of where that zero to $4 million of core DC EBITDA is coming from; or is that elsewhere?

Mitchell you want to take that?

Sure. So with respect to Skyline, Skyline is in a challenged position today historically Skyline has attracted certain government agencies and have had significant follow-on in terms of government contractors and there has been obviously been some dislocation in that market so I think that Skyline is going to take some time to recover the vacancy is going to drop another 500 basis points or so this year through some schedule explorations particularly of contractors who won't renew so occupancy I'm sorry occupancy will decline and so I think that's basically the situation and it's really a it will take time to really to find the right engine or the right growth engine that will occupy space there that we are having a follow on effect will return to the situation that it was in just obviously very close proximity to the proximity to the Pentagon and will make sense over the long run we just can predict at this point how long it will take and given some of the other vacancies in the marketplace. With respect to Crystal City I think we’re constructive on Crystal City and we’re happy with the progress that we've made in terms of leasing it's obviously a competitive market but down the less we are constructive with the progress that we've made in terms of moving a significant amount of the inventory at this point in time we’re not moving our rents up we certainly think that the rents and concessions have bottomed so we will keep close eye and see how that moves off into the future and with respect to the core business increases I think it's sprinkled around the whole portfolio I can't give you a specific answer on the phone today.

And our final question comes from Manny Korchman with Citi. You may begin.

I was almost ready to say good afternoon, guys. But good morning, so just a couple quick follow ups here, I hope.

You've to have got us smiling.

If we think about your lease rate versus occupied rate and I think that's what's causing some questions on the numbers both in ’15 and going into ’16. What were those numbers at year-end ’14 and then yearend ’15? I think that will help us get to where you might go excluding any sort of new leasing and we can think about that separately into '16?

That sounds to me a sufficiently technical question that although a valid question, that I would ask that my financial guys get a hold of you off-line because I don't think that we can get those numbers accurately within a ten second answer.

The second one, which is still technical -- less so -- and I hope you have this one. Steve, you said that the line of credit was undrawn. At 12/31, it looks like there's 550 million drawn there as well as some draw on the term loan. Can you just walk us through the mechanics of how it was paid down? Because I don't think you got enough out of the refis to get there?

Let's say well the term loan -- the $550 million that was outstanding on the revolver at year-end was repaid in early January out of proceeds of cash plus transactions that closed in January. It would be a struggle for me to actually match for you the sources and uses but we can do that for you offline if you like. But the term loan which is a separate and distinct facility which was taken which is $750 million which was taken out for the specific purpose of matching against the capital requirements for 220 Central Park South is in the amount of $750 million and we had $187 million drawn at the end of the year. Okay I'm advised that we have no further questions. I appreciate everybody -- how many people are still left on the call?

100.

Wow, so I appreciate all of you sticking with us. And we had a lot -- we felt we had a lot to say and so we appreciate your attention, we appreciate your interest in Vornado and we'll sign off and see you at the next call.

And ladies and gentlemen, this concludes today's conference, thank you for your participation. You may now disconnect.