Good morning, and welcome to the Vornado Realty Trust Fourth Quarter 2016 Earnings Call. My name is Adriana and I’ll be your operator for today’s 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’ll 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 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-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, including our Form 10-K 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; Michael Franco, Executive Vice President and Chief Investment Officer; and Stephen Theriot, Chief Financial Officer. Also in the room are Mitchell Schear, President of Washington, D.C. Division; and Joseph Macnow, Executive Vice President and Chief Administrative Officer. I will now turn the call over to Steven Roth.

Thanks, Cathy. Good morning, everyone. Welcome to Vornado’s fourth quarter call and Happy Valentine’s Day. Let me start this morning with a brief update on our Washington spin and merger with JBG. On January 23, we filed a 405-page Form-10 with the SEC. This admittedly took a little longer than we anticipated from our UE experience, principally because we had to deal with two companies rather than one, and the second company was not an SEC filer. We are targeting JBG Smith to launch at the end of the second quarter subject, of course, to final SEC approval. The Form 10 and our initial investor presentation, which was put up on the October 31, announcement date are available on our website at www.vno.com. The JBG Smith management team will make a fulsome presentation to investors describing JBG Smith’s assets, balance sheet, business prospects, et cetera, in the weeks just before the launch. It’s worth repeating from our last quarter’s earnings call how strongly we believe that this is a great deal for our shareholders. This transformative transaction was very carefully constructed and it accomplishes all of our important goals. It creates too highly focused pure plays in Washington and in New York, each with its own stock price, which I view as a report card. And each will be the largest and leader in its market. Investors will be free to invest in New York, or Washington, or both as they choose. The main event for us is our flagship New York business, which is more than four times the size of Washington. Separating Washington from New York will daylight New York’s treasure trove of assets and superior performance, and it’s the big fix for Washington. The JBG Smith will be the market-leading powerhouse with an unrivaled portfolio and substantial…

Steve, thank you and good morning everyone. I’m going to begin with some perspective on the New York real estate market over the past 12 months. 2016 was quite a year, one in which we came to expect the unexpected, from a China slowdown and concerns of a disorderly decline in China’s currency to continued stresses in Europe to the surprise Brexit vote and finally to the equally unexpected outcome of the US presidential election. In the face of such uncertainty, the response to the New York market in 2016 was a testament to its continued strength and resilience. Overall leasing activity in Manhattan exceeded 35 million square feet on par with the 10-year average. Let me give you some perspective on the strong beat of our marketplace in New York. The comparable annual leasing activity number is about 7 million square feet in Chicago, the second largest office market in the country and about 10 million square feet in London. Coming back to our hometown New York, asking rents for the year were up modestly and net absorption was a positive 2.6 million square feet. Available sublease space remains low by historic standards and at less than 2%, tenants are clearly not looking to shrink and give back space. Among the various submarkets in 2016 Midtown showed its continued strength capturing 25 of Manhattan’s top 37 leases in excess of 100,000 square feet and 11 of 18 new relocation leases in Manhattan in excess of 100,000 square feet. Perhaps the biggest story of the New York market in 2016 was the divergence of performance between new and recently renovated buildings on the one hand and commoditized office space on the other. Fully half, a disproportionately large percentage of the top 20 leases signed during the year were for new…

Thank you, David, and good morning, everyone. I’m now going to spend a few minutes on the investment in capital markets in New York. After a record level of investment sales in 2015, Manhattan sales volume fell by roughly 30% to $42 billion in 2016, still a pretty hefty number and the second most active year since 2007. This reduction reflects both the shortage of high-quality offerings brought to the market and also widening of expectations between buyers and sellers. Overall, we think the investment sales market of 2016 can best be characterized as one of thinner bidding pools with buyers cautious about the fundamentals across property types, including even apartments, the threat of rising rates, and the possibility that we are in the latter stage of the economic cycle. While the appetite in pricing for highest-quality core assets, particularly trophy office and retail remain quite strong. Pricing for commodity assets has come off as much as 5% to 10% and more significantly for land and hotels. Foreign capital continues to be a primary driver of investment sales, making up almost 40% of the activity last year and remains a strong underpinning going forward. Foreign investors continue to have a strong desire to invest in the U.S. with New York City as the number one target. Most are still in the early stages of doing so, and assets like Vornado’s are their favorite investment. We expect the investment sales market in 2017 to be a continuation of 2016, a healthy though not robust market with values for stabilized assets remaining strong and those with leasing and other challenges suffering. Just as in 2016, we will remain disciplined in our approach to acquisitions. We are prepared to buy quality with vacancy, if priced right. Turning to the financing markets. After periods of volatility in 2016, we are now open and liquid, especially for blue chip sponsors like Vornado. While the 10-year Treasury is up 60 basis points since the election, CMBS spreads have tightened and risk retention has been the Y2K of real estate finance, a non-event on large loans. Overall, we are seeing active bidding from all types of financing sources. CMBS lenders, life companies, balance sheet lenders and foreign capital all of which is good for borrowers. On the other hand, the construction loan market has gotten quite a challenge for all, but the best sponsors, which we expect will help reduce supply going forward. In 2016, we completed $3.8 billion of financings in 10 transactions, all at very competitive rates, as well as extended one of our two $1.25 billion revolvers at lower pricing. We appreciate the support of all of our line lenders and capital relationships in accomplishing this activity. And with that, I will turn the call over to Steve Theriot to cover our financial results.

Thank you, Michael. Good morning, everyone. As Steve mentioned, our core business was up 10.9% over the prior year’s fourth quarter. While Steve highlighted certain of the non-comparable items in his remarks, I’m going to repeat them here, because they mask the very strong running rate improvement of our financial results. Net income in the fourth quarter of 2016 was $3.43 per share, up from $1.22 per share for the fourth quarter of 2015. Net income for the fourth quarter of 2016 includes $648.7 million of income comprised of a $487.9 million gain from Skyline and $160.8 million of income from 85 Tenth Avenue. Net income for the fourth quarter of 2016 and 2015 also include other items that affect comparability, which were highlighted in our earnings release in our Annual Report on Form 10-K. After adjusting for all of the items that affect comparability, adjusted net income per diluted share for the fourth quarter is $0.30, or $0.16 below the prior year’s fourth quarter. The decrease in adjusted net income for the fourth quarter primarily results from a $41.4 million, or $0.20 per share unrealized loss on the mark-to-market of our real estate fund’s investment in the Crowne Plaza, Time Square Hotel. FFO as adjusted was $1.13 per share for the fourth quarter, or $0.13 below the prior year’s fourth quarter, also primarily due to the $0.20 per share mark-to-market unrealized loss on the Crowne Plaza, because prior year income from the fund was included in our comparable results, so is this non-cash loss. Going forward, however, for all the reasons Steve mentioned, we will exclude the fund from our core as adjusted financial results. Income for the full-year of 2016 was $4.34 per share, up from $3.59 per share for 2015. FFO as adjusted was $4.66 per share…

Thanks, Steve. Thanks for the last four years. Congratulations on your last Vornado earnings call and get down to Washington and give them hell.

Thank you.

Cathy.

We’re ready for Q&A at this point.

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And our first question is Manny Korchman from Citi. Please go ahead.

Good morning. Steve, just had a question on NAV and sort of the – you mentioned you’ll be doing this now every year on an annual basis. You had started putting some NAV disclosure over the past couple of NAREITs and the last NAREITs had given a data table or a range of different NAVs. And so I’m just curious on two fronts. One, what is sort of the rationale behind doing it and putting out an actual NAV per share? And then secondarily, at least, relative to November, it appears as though the NAV per share went up about $7 from, call it, 128 to 135 using the same cap rates on New York in – and for office and retail. It looks like there’s some adjustment for 666. And I’m just wondering if you can walk through that that increase?

Well, Michael, good morning. So somebody tell me the different parts of that question. So I can handle it.

Well, the first part was just the rationale and thought behind including this as an annual component at our supplemental?

Well, the – there has – first of all, many of our peers do it. Second of all, all of the analysts have their own NAVs, including you and your sister analysts. So everybody must be making a similar kind of a calculation. Third, many of our investors would like to know what our version of NAV is. So we thought that and we had sort of legged into it. As you said, over the last six months or nine months at various industry gatherings, we had published NAVs – partial NAVs, or at least the framework of how you would go about calculating it. So we thought that we had and we had – we thought that this was an appropriate time to actually sit down and put out a framework for what the NAV is. It is merely a calculation of income at a cap rate. ,: With respect to the change between an NAV that from several months ago and today, we didn’t put out an NAV several months ago. So what is Michael – what’s Michael referring too.

Yes. Well, what he’s referring to Steve is the data that we did in the NAREIT deck that included certain NAV component information and the approach we’re taking here had some differences to it. The approach here was to do exactly what you said, which was reconcile all the numbers in this schedule back to our published numbers, including a reconciliation on the debt balances. We had a different logical organization to the NAREIT deck, as it relates to one investment, in particular, 666 Fifth the office piece of that. In that we back out the non-cash EBITDA from that investment in this calculation, and therefore, logically should take the debt associated with that investment out, which we have. That has the effect of being a positive impact on NAV by roughly $3.5 because of the amount of the debt the way the math on that calculation works. So by taking out the roughly $700 million of debt related to that investment. There were some other logical differences, but that was the biggest one. But this approach though of taking the numbers and reconciling them back to our published results is the approach we intend to take. There were some other offsets driven in part by changes in some of the individual investments and NOI increases from the third quarter to year end that are the difference.

Damn, you’re a good CFO. Another point that I would make is that, one would hope that the NAV rises, because the main component of it is the income and one hopes that the income building by building rises. So we would expect the NAV to rise each year.

Okay.

Okay, Michael?

Yes. The only other follow-up was just on the dividend, you put out a press release a couple of weeks ago, which sort of laid out the various components of your dividend between 220 Central Park South. JBG, or the D.C. portfolio and some gains. And I’m just wondering, how you’re thinking about after 220 sort of stops and that has been sold out. How we should think about that annual dividend? And obviously, there has been good growth in core income, which led to effectively over a 20% increase in that core dividend outside of D.C. and the residential. How should we think about that run rate going into when 220 stops?

Okay, I got it. So two things. First, normally, we and others put out a dividend press release, it’s two lines. This one was a full page of various explanations, because we thought that that was appropriate and we thought that it was important that we get the disclosure into the market. So our dividend, it obviously includes JBG Smith that allocable to our Washington assets until the spin. Our dividend always includes a capital gain portion if we have sold the building, or what have you. So the unusual thing about the dividend is an inclusion of a section – of a segment of the dividend that comes from the 220 Central Park South development. Now and we thought that it was important to get disclosure into the marketplace as to these facts. So the 220 Central Park South development is for sale condos. That is, as the tax folks call it dealer property, dealer property is subject to a 100 excise tax. And so, therefore, the protocol is that, we and others do that kind of an investment in our taxable REIT subsidiary. Our taxable REIT subsidiary is basically a shell. It has no employees and it has a very limited balance sheet. So therefore, all of those services would, as you would expect, come from Vornado. Vornado charges the TRS entity, which is the owner of the project, market rates for capital for guarantees and for development fees. Those payments result in a – an amount of money, which then constitutes taxable income on Vornado’s financials, which is then paid out. So we thought that explaining that to the market was appropriate and we did so.

Okay. Next question.

And your next question comes from Jamie Feldman from Bank of America. Please go ahead.

Great. Thank you, and good morning. Sticking with, Steve, I was hoping you could discuss your latest thoughts on a succession plan now that the simplification plan is nearing an end with the JBG Smith transition? And then also maybe talk to us about the infrastructure council what your role will be and what it will mean in terms of a time commitment?

Well, my main thought about succession plan is, I’m absolutely thrilled to get the 71-year old Macnow back into the saddle. So basically, look, we have a very deep management team here. We hate losing Steve. But we are delighted that his talents will go into making us all money at JBG Smith remember that our Vornado shareholders will own 74% of JBG Smith, so it’s a very important investment to it. Joe, of course, was – we – actually I said jokingly over the last four years, it’s actually not a joke, it’s probably more factual that we really had to CFO’s that we did. So now we’re very happy to have Joe back. With respect to me, we have – our Board, as you would expect, our Board has a robust succession plan if I get hit by a bus and has a robust succession plan when my time has come. And so when it’s appropriate to announce and to make the transition from me and Joe, I guess, are the two most senior members of our management team. We will tell you then when it’s appropriate. But be assured that if either Joe or I get hit by a bus, this company will not miss a beat. The second question was about the infrastructure, give me that again, Jamie?

Just the announcement that you’re going to be active on the infrastructure council under – for President Trump, and what that means in terms of your activity and a time commitment? And how should we think about that compared to your role at Vornado going forward?

I mean, my role at Vornado is my day job. It’s my night job, It’s my passion. I know President Trump. I know him for a very long time. We have had dealings together. We know each other. I’m honored that he has asked me together with Richard LeFrak to be an advisor to him and the administration with respect to infrastructure matters. Infrastructure matters are not political. Everybody – every citizen of America wants interest – our infrastructure to be robust to be in a good state of repair to be good. So that we can be competitive and we can have the right quality of life, et cetera. So this is – I’m honored to be involved in it I think I can contribute. I’m an advisor. I’m not a line executive. I’m not in anyway an employee of the government. And so this is something that we do when asked. Just as we serve on hospital boards or university boards when asked. So that’s it. I will hope that this President, I know this President means business, and I would hope that I and Richard LeFrak can make a difference.

So do you have a sense of just the time commitment? Is it days per week, or is it calls every once in a while, or do you not know yet.?

The answer is that the time commitment to do this activity on behalf of the United States will not impair my ability to function as the Chief Executive Officer of Vornado. If I have to work a little harder, I surely will.

Okay. All right. Thank you.

And our next question comes from Steve Sakwa from Evercore ISI. Please go ahead.

Thanks. Good morning. David, I just wanted to try and expand on some of your comments about the demand that you’re seeing in the marketplace. And just try and maybe understand kind of the discussions that you’re having with tenants in the marketplace today about kind of their needs for expansion, new requirements in the marketplace, kind of offset with some of the new supply that’s coming in the city, and kind of rising concession levels? And just trying to really understand when you kind of look at your own portfolio, how much of the downsizing that’s maybe taken place over the last five to seven years, do you think a sort of complete and how much is left to be done?

Steve, good morning. Listen, I guess, the first thing I would say is, we have an incredibly diverse multi-tenant portfolio. I think, we have somewhere about 1,300 tenants in our portfolio. And even if you look at the largest tenants in our folio, which are listed in the supplement, once you take out of the U.S. government, which obviously is not going to be become part of Vornado once the spin is completed. The top 30 tenants of the company represent less than 25% of revenue. So I think, the first thing, I’d say is, incredibly diverse portfolio. Second thing, I’d say is, as it relates to the rightsizing, downsizing, and I think I’ve said this in the past. As we look at the financial sector that rightsizing really has taken place as you look back to 2008, as compared to where you are today. So if you take account of the bold banks, their platform back in 2008 was about 45 million square feet, that’s down today to about 32 million square feet. So I will say most of what we’re seeing these days actually is net expansion. I think I gave you a statistic, which is on a net basis, once you took account of tenants who contracted last year versus tenants who expanded, as it related to all the deals that we did, the 2.2 million square feet, 2.3 million square feet of activity fully 20% of that net was growth in New York. So I would say, as we look out, the key obviously is job growth. We saw some tempering of that office sector job growth after we went at a blistering pace for the better part of five or six years, if in fact, we do begin to see some greater activity in the financial services in terms of jobs. And as I said anecdotally, we’ve been very busy in that financial services sector over the last really three, four months in some great space in 280 Park, 90 Park, 888 Seventh Avenue. If we see some growth in the financial services sector, I think, that can have an enormously positive impact on the overall job growth. I think the basic math is to absorb the space that’s coming online over the next couple of years, around numbers we need somewhere around job growth of, call it, 10,000 to 12,000 jobs a year. We went from a pace averaging 35,000 jobs over the last five, six years to obviously a reduced number last year of 5,000. But we continue to see very good demand, and in fact, growth by tenants.

Okay, thanks. And maybe my second question, I don’t know for you, or for Steve. Could you just comment a little bit more about the redevelopment of one and two Penn and through the comments on Farley, and just kind of help us understand sort of the timing and when we may get more details kind of on that sort of project officially kicking off?

I think with respect to Farley, as I said in my prepared remarks, and I think David said, we’re working hard together with our partners and together with the state who is the seller to close that transaction and get started. The – so we’re targeting towards a spring to summer closing, and so there you have it. The plans are pretty clear. The public portion, the civic space, the grand Trade Hall are actually pretty amazing. The – though – and that will be basically paid for by government and constructed by Skanska. The – our portion, which is of 750,000 feet of office space and a couple of thousand square feet of retail will be funded by us and we’re very excited about the space. The location is a bull’s eye. It fits right into our strategy of Penn Plaza, it fits right into our strategy of the west side and the – it sort of marries up with the siblings, the three developments we now have – process in West Chelsea. Our partner related, of course, is a natural, because they – they’re doing all the work immediately west of it. With respect to one Penn and two Penn, we’re very excited about the prospects of those buildings. We’re very excited about tenant demand and we’re even more excited about the prospects for bringing to market product, which will come in at higher rents. We have nothing specific in terms of budgets, or timing to announce right now about those buildings.

And next question comes from Alexander Goldfarb from Sandler O’Neill. Please go ahead.

Good morning. And just two questions here quick. First, Steve, you mentioned, you highlighted theMART, you highlighted 640 Madison has tremendous mark-to-markets. How many buildings do you think you have in the portfolio that have those big mark-to-market, or should we think about it that there are a few of those little gems, but for the most part the portfolio is – the buildings are pretty much where they should be as far as the right tenants or the right positioning within the market? Just trying to get a sense of how many guess, or 100% type increases there are in the portfolio versus just regular 10%, 15% type spreads in the portfolio.

Well, first of all, 10%, 15% spreads are pretty good. Second of all, we have been – we have said repeatedly that we believe one Penn Plaza and two Penn Plaza are assets, which with tender loving care development – redevelopment, et cetera have enormous financial potential, and we expect to harvest at and our hard work at that. There are other assets in the portfolio that we think have the potential to reward our shareholders, and that’s about as specific as I think I can get out.

Okay, and then – that’s helpful, Steve. And then the second question is…

By the way, the month is not done yet by a long shot.

Okay, that’s good. That’s good to hear. The second question is, on the fund, just sort of curious, you said that the Crowne Plaza and the Lincoln Road asset are going to stay as long-term holds. But my understanding is, a fund has a set life and that needs to be harvested. So is Vino going to be buying out its partners in those, or is Vino gotten the partners approval to hang on to those two assets longer?

Neither of those. What I said was, I did say – what I said was, we’re going to hold those buildings longer-term, because their business plans are still in process. So the – we had – we started out with 12 assets in this entity. We’ve already harvested, or sold six. We have four more on the – in the queue to be sold, and the two remaining assets will take a little while longer. There was no implication in my remarks that we’re going to buy out partners, or do anything of the sort.

Okay. Thank you for that clarification, Steve.

Thanks for the question. Thanks, Alex.

And next question comes from Nick Yulico from UBS. Please go ahead.

Thanks. First question on the Street retail segment, there has been some talk about rents weakening in parts of Manhattan. Can you remind us where your in place rents are for your portfolio versus market? And then for explorations in coming years, do you still see a positive mark-to-market opportunity for the segment?

Let’s see. First of all, I have said on the – on calls for the last year or maybe even longer that retail is soft. It continues to be soft. Rents are not rising asset. And in many instances, rents are falling. And as I’ve said before, we are in the – we are in the realism business and we will meet the market and rent our space. Interestingly, if you go back over history and the best couple of years, we made the Victoria’s Secrets deal. We made the Swatch deal at the St. Regis. At our neighbor, Jeff Sutton made the Nike deal, which was a whole drama. All of those – those three deals were the biggest deals done recently. They were all with the first digit of a three. There is a slew of other deals on Fifth Avenue, where the first digit is a one, a double-digit number and then there are other deals that were made where the rents were in the 20s. So this market is still location sensitive and the great locations are still in demand by retailers. Now, having said that, David, do you have any specifics about the response to the next question?

The space that – first of all, the space that we are coming up the balance of this year is, what I’ll call, much closer to commodity retail space than the high ticker space, Steve, that you were talking about in the high-street corridors. We’ve continued to see in Times Square some very good activity at 1535 Broadway. We are working hard in completing a significant lease, which would basically leave us one additional piece of space at 1535. And we have now buttoned up everything that we have on Fifth Avenue with obviously the Dyson’s deal. So, if Madison Avenue, for example, is soft, we do have a impending vacancy coming up in 2018 in the Westbury Hotel…

That’s recently…

Oh, yes, and in the Westbury Hotel, that’s a very shallow space. We will cut it up into very small stores and so we’re not concerned about it. And we – so we think that that will be flat to our – that will be a flat mark-to-market. We have a nominal piece of space at the quarter of 57th Street at Madison Avenue and Fuller Building 595 Madison, where we have a Coach in the corner and Prada on the store, which is contiguous to the Four Seasons Hotel. Prada expired at the end of 2016. So we have that space available. Coach chose for marketing reasons and other reasons to relocate the store to Fifth Avenue. So now many people think that that’s a vacancy, it is not a vacancy. We have the high credit coach on the lease for another approximately 10 years. So from a financial point of view, that’s all fine. And we believe we will have great success in reletting the product store and maybe even recapturing the coach store we will see how it goes. And then, as David said, we have other availabilities that come up here and there. But basically, we’re pretty well buttoned down.

Okay, that’s helpful. Just going back to the commentary earlier by David on better financial sector sentiment in New York since the election. Wondering how you think this could potentially play out in the leasing market since larger banks have mostly committed to space needs in the last several years. Is this more that incremental space needs would come from boutique banks, asset managers, what are your thoughts on that?

I used to think of boutique banks as having five tenant and 15,000 square feet. And last year, I guess, we completed the transaction with PJT Partners, which obviously is a Blackstone company, Paul Taubman. We’re involved in a discussion right now with another financial services company, which is effectively a new, what I’ll call, FinTech/trading company that out of the blocks is looking at potentially as much as a 90,000 square feet or 100,000 square feet. So, the word boutique in the context of the bold bank, which might have a couple of million square feet, these banks in terms of some of the growth that we’re seeing, I think, are still very substantial players.

Thanks. It’s helpful.

I think the amazing thing about New York is the resiliency. So whereas 20 years ago if the financial services industry had a cold, the real estate market was in desperate shape. Today, the real estate market especially in the better buildings, better quality assets is thriving and has grown with all manner of Media Tech and many other kinds of industries taking up the gap. I can tell you that we’re seeing in the marketplace that animal spirits are at play that it has been a longtime since the depths of the great reception. Financial services companies are innovative – innovating and growing. There’s an enormous amount of liquidity in the world that needs to be invested. And so, we are – we believe that New York is at the epicenter of all this activity in many different industries, and we’re very, very constructive.

Thanks to, everyone.

And our next question comes from John Guinee from Stifel. Please go ahead.

Great. Thank you very much. First, Steve and Joe, congratulations. It looks like a round trip for Joe.

Thank you, John.

Thanks, John.

John, [Multiple Speakers] how this old guy performs.

And now – he’ll do just fine.

I’m certain, you’re correct.

Yes, Joe, Steven mentioned that the JBG spin is going to provide daylight to a treasure trove of New York City value, not to really why it takes the spin to do this, but can you kind of tell us, I’m looking specifically page 39 of your supplemental, which talks about $5 billion or $6 billion worth of development – a redevelopment on one page. How you’re going to upgrade the disclosure and help provide more daylight to this treasure trove?

Yes, we’re sitting here with speechless.

I’ve answered the question, you doesn’t need to be answered.

Well, the first thing is that the investors from an award focused companies investors reward companies that are simpler that have a business plan that is understandable and executable and that have management that is laser like focus on a simple business. So we believe that our stock price is no secret that we were not happy with our stock prices. So we set about a program a few years ago to fix that by doing what we thought was the right thing, which was simplifying the business and separating the business into a couple of different segments actually three now – three separate companies, UE, Urban Edge and what we call RemainCo. So that investors could make their own decisions about each of those and we had really, really talented world-class management teams focused on those three separate businesses and we think we’ve accomplished that. Now, with respect to page 39, I mean, we have in process the developments that are listed there. The 220 and the three Chelsea assets, there is one asset that’s not shown there, which is 260 Eleventh Avenue, which is a great asset that will be – that we’re designing now and will be a 300,000 square foot closed plus creative asset on 26 Street and 27 Street on Eleventh Avenue, we think that’s great. And then in the Penn Plaza district, we intend to and aspire to do an enormous amount of activity, which we think will be great and will be financially rewarding to our investors. So that’s the story.

Okay.

By the by we don’t stop there. We’re in the market every day to continue to invest and continue to grow and we have the balance sheet that’s built for growth.

Okay. Second question reference to JBG having the ability to be very, very fast growing maybe the fastest growing in the country. So as we all know in D.C. as is bouncing along the bottom at best and usually REIT stocks do well and there’s a perception of great internal growth, which leads to high multiples, low NAVs, leads to high stock price and low cost to capital, how does JBG come out of the box with a low-cost of capital, given the underlying fairly weak fundamentals in the greater D.C. marketplace?

John, there’s two parts of that question. And the JBG management team will handle all of that in short order. But let me give you my version of it. Number one, JBG has $23 million – 23 million square feet of density of development rights in their portfolio that they will own at launch in all the best submarkets. So JBG. has its growth all set out for it in land, which will stand to double the size of its portfolio. So without doing a single external acquisition, this business can double and we are planning for it to double in seven, eight, nine years from internal growth from development on land sites that it already owns, okay. So we think that’s extraordinary and the sites are just incredible. Now, with respect to your comment about the what’s going on in the D.C. market, obviously, office development in D.C. is somewhat challenged because of demand, et cetera. So – and while there are a decent number of office sites in there, for example, 700 M Street and there’s many others, most of this 20-million-odd feet of development will be skewed towards apartments. Apartments are easier to develop. They rent better. They have a perfect elasticity of demand. They finance better and they create extraordinary values. So you can expect that over time, JBG will become the probably the most active residential developer in the city and surrounds and will do unbelievably modern perfectly designed product that we are very excited about.

Great. Thank you.

Now one last thing with respect to the cost of capital. Our job in launching JBG is to launch it, so that it is absolutely dressed for success. So we will launch JBG as we did with UE and as we run our own Vornado business with a balance sheet, which has the capital in place to accomplish its business plan, which is basically to perform that development that we just talked about over a finite and predictable period of time.

Great. Thank you.

There’s time for one additional question. Manny Korchman from Citi is on line for the final question please go ahead.

Hi, guys, thanks for taking the follow-up. Steve, you talked about liquidity for the opportunity set that’s out there in the past you’ve talked about targeting sort of a $2 billion cash balance on the balance sheet. It looks like you’re dipping below that, and I assume that there will be some amount of cash that will also go with the JBG spin. So A, could you help us figure out how much cash might go to JBG? And Billion, how should we think about the cash balance on the balance sheet going forward here?

My departing CFO says that, by the way, I guess, we call you now that CFO, Joe, the CFO-elect, what are you?

The designate.

So anyway. So we have $1.8 billion in cash in marketable securities, et cetera, on the balance sheet today. The $2 billion was not a red line in the sand. It’s just that – it’s a target. We could liquefy and add another hugely significant amount of cash at any time we wanted to. But there’s no purpose of that. So we’re loaded and we’re happy with where we are and it’s going to fluctuate a little bit and that’s okay. With respect to how much cash we are going to see JBG Smith with? The first thing to notice is that that we have seeded it with the – with all of our Washington assets. One of which is very interesting. It’s the Bartlett, which is a $400 million plus asset, which is free and clear. So the first move of the NewCo JBG Smith will be to finance that. And so that will produce a pile of cash well over $200 million. We and the JBG funds will seed it with cash. We are not announcing that number. That number will be announced when we get closer to the launch. And there are other financial arrangements that we will be making, so that JBG Smith has the and I said this repeatedly, I’ll say it again, because it bears repeating again. We’ll have the balance sheet, so that it – so that investors will understand, it has the capital in hand, in place to accomplish its business plan.

Thanks. And while I’ve got two CFOs in the room there, just going back to the NAV analysis that you presented. Just quick question on 555 cal, why was that sort of presented within NOI and a value, but no matching cap rate, is that’s just – is cap rate the wrong way to think about that asset…

It’s not – the asset is not stabilized, because there are the Cube and several other vacancies in the building. So we thought that it was a more appropriate. We used a $1,000 a foot as a rule of thumb and we used that. So that obviously, it’s not a cap rate metric, it’s a tonnage metric.

The incremental revenue that you guys have been talking about in the past $114 million left, how much of that comes on in 2017 and 2018 and thereafter?

It’s all by first quarter, second quarter of 2018, most of in 2017, a small residual in 2018.

And Steve final one for you, would you be willing to share – update a condo sells for 220 Central Park South?

As a policy, we have not done that for competitive reasons. We have just – we have said to the marketplace before, we’ll say it again. We have – sales are fine. Actually they’re extraordinary. The pricing is extraordinary and we have – the sales to-date exceed our cost.

All right. Thank you very much.

Thank you. One more question please.

We have Jamie Feldman from Bank of America. Please go ahead.

Great, thanks. Good, thanks for taking that. Just a quick follow-up. So just going back to Michael’s comment about high demand from foreign buyers for Vornado assets specifically, can you talk maybe talk more about what you meant and can we see more of a ramp up in asset sales here?

I’ll take the first part of that. On foreign demand like we can judge not only by the actual activity that’s occurred and what the source of that activity is over the last year or so and even beyond that, but also the income as we get interested in investing in New York. So the range of players continues to expand. There are many countries with sovereign wealth funds that are new or newish that are either not yet invested in New York, or barely invested with a huge desire to ramp that up. So I think, as we look at in totality all the Canadians have been active for a while. And so the Middle Eastern players and the Chinese are newer, we’re still really at the infancy in the overall trend with quite a number of new players they want to be here. In terms of asset sales, I think at this point anything we do comes from a position of offence, and I think would be more along the lines of a cap of a recycling upgrading, which we’ve done a very good job of and it’s a right time. There may be a couple of others that make sense to do that with, but nothing that’s imminent.

Okay. Thanks for taking my question.

Thank you.

Thanks, everybody. That concludes the call. We’ll see you next quarter. We’re very excited about where we are. We’re very excited about JBG Smith. We’re very excited about Joe Macnow. We sort of just about ready to start forgetting Steve Theriot. And I wish thank you all. Enjoy Valentine’s Day, don’t forget, and we’ll see you next quarter.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may now disconnect.