Welcome to the Q4 2013 Vornado Realty Trust Earnings Release Conference Call. My name is Vanessa, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. And I will now turn the call over to Cathy Creswell. You may begin.

Thank you, Vanessa. 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 to 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 may be accurate only as of today's date. The Company does not undertake a duty to update any forward-looking statements. On the call today from management for our opening comments are: Steven Roth, Chairman of the Board and Chief Executive Officer; David Greenbaum, President of the New York division; Mitchell Schear, President of the Washington, DC division; Joseph Macnow, Chief Administrative Officer; and Stephen Theriot, Chief Financial Officer. Also in the room are Wendy Silverstein and Michael Franco, Executive Vice Presidents, Co-Heads of Acquisitions and Capital Markets. I will now turn the call over to Steven Roth.

Thank you, Cathy. Good morning, everyone. Welcome to Vornado's fourth quarter call. I'd like to begin by again affirming our commitment to our strategy of simplifying, pruning and focusing the business. We have made significant progress in that regard, and there is more that we will do. Here are some of the specifics. We have sold down the Mart business, retaining only the 3.6 million square foot Chicago Mart building. We will continue to create value here by converting underperforming showroom and trade shows space to conventional office tech space, anchored by Motorola Mobility’s Google 600,000 square feet. We have made great progress exiting the Mall business. Green Acres and Kings Plaza were sold in prior periods for an aggregate proceeds of $1.25 billion. We closed the sale of Broadway Mall for proceeds of $94 million. We have trimmed non-strategic strip shopping centers, single tenant retail assets, and other non-keepers, by selling 28 properties for $415 million. We have exited J.C. Penney. We have exited LNR. We have strategically combined all of our Manhattan assets, including our office in street retail and Hotel Pennsylvania at Alexander's properties, into one focused best-in-class operating segment. We have completed in the fourth quarter the sale of 866 UN Plaza for $200 million, hall in Parkland for $66 million and exited the Cleveland medical mart. We have, in total so far, sold 44 assets for $3.6 billion. We have about $1.1 billion in the market for sale, much of which is now under negotiation and we have more on deck. As I said before, in this market, we will buy carefully and again this year likely sell more than we buy. We will continue to build cash reserves for opportunities that will undoubtedly present themselves in the future. We have used 1 billion of…

Thank you, Steve. Yesterday, we reported fourth quarter comparable FFO of a $1.33 per share, up from a $1.11 in the prior year’s fourth quarter, a 19.8% increase. Full year 2013 comparable FFO was $5.01 per share, up from $4.18 in the prior year, a 19.9% increase. Fourth quarter comparable EBITDA was 424.9 million, ahead of last year’s fourth quarter by 38.4 million or 9.9%. Full year 2013 comparable EBITDA was a 1.66 billion, ahead of last year by 159 million or 10.6%. Our New York business produced 246.1 million of comparable EBITDA for the fourth quarter and 942.8 million for the year. These amounts are ahead of last year’s fourth quarter by 30.3 million or 14.1% and ahead of the full year 2012 by a 132.6 million or 16.4% primarily driven by strong same-store increases of 6.7% for the quarter and 5.5% for the year and property acquisitions. Our Washington business produced 83.3 million of comparable EBITDA for the quarter ahead of last year’s fourth quarter by 2.6 million. For the full year, our Washington business produced 341.2 million of comparable EBITDA behind last year by 14.3 million primarily due to the effects of BRAC move outs and the sluggish leasing environment in Washington. These results were in line with our revised guidance of down 10 million to 15 million. We expect that Washington's 2014 comparable EBITDA will be approximately 10 million to 15 million behind 2013. To give a little color on the expected Washington results during 2014, while we are expecting a slight increase in occupancy in Washington during 2014, the lag between the signing of leases that we expect and the contribution of these leases to our earnings will push the full effect of the expected benefit to 2015. In addition, more than offsetting the reduction…

Steve, thank you, good morning everyone. Before I turn to our results for the quarter, I want to spend a couple of minutes recapping the overall market’s performance in 2013 and what we’re expecting for 2014. I am sure many of you on this call read the various market reports produced by the brokerage community. Let me pick out some of the highlights. The most recent headline was ”market stays warm amidst the January chill”. A yearend market report described 2013 as a year with a "surge in leasing" where tech and media continued to be the primary driver of the market. Other reports highlighted the improving sentiment and the continuing momentum in the market. These headlines sum up our view of where we are in the marketplace. In New York City economy, added 93,000 private sector jobs in 2013. Since the recession, the city has gained 330,000 private sector jobs which puts total employment at 200,000 more jobs than prior to the financial downturn. Office using jobs are up 102,000 since the recession having fully recovered but the rate of growth slowed in 2013 with 8,700 office jobs added. The tech sector in general was the strongest accounting for nearly half of net new jobs in 2013. Anecdotally we hear that Google alone is planning on adding 1,000 new jobs in New York in 2014. I read an interesting article the other day that captured the technology sector perfectly. Tech effectively has stopped being an industry and is turned into a way of life for all of us, permeating all aspects of urban culture. Within our portfolio technology, advertising, media and information companies TAMI accounted for some 25% of our 2.4 million square feet of leasing activity in 2013, with names such as Facebook, Rocket Fuel, Symantec, IPG, Sapient,…

Thank you David and good morning everyone. All in all, in the Washington market 2013 as we expected it to be, the already weakened real estate market was further stymied as the federal government struggled to put its house in order. We survived sequestration, 16 day government shutdown and a debt ceiling deal finalized in the 23rd hour. Now with the newly approved two year federal budget deal and with the debt ceiling raised, we are hopeful for a smoother road ahead. Despite the turmoil of 2013, the Washington economy remained resilient. We grew by 25,800 jobs last year and the unemployment rate remains the lowest in the nation at 4.6%. Towards the end of 2013, we began to see a thawing of the office market and activity has picked up. We are optimistic that it will carry on throughout 2014. For 2013, the brokerage reports show positive net absorption at 1.8 million square feet. While this is lower than the 10 year average of 4.4 million, it is substantially better than the negative 2.6 million square feet in 2012. All in all, we'll take it. Now turning to the performance of our Washington division. In 2013 we leased over 2 million square feet office and retail space in 232 deals at average office rents of $39.91 marginally down from the $40.55 in 2012. Government activity accounted for 26% and private sector leases accounted for the remaining 74%. Renewals accounted for 60% and new tenants accounted for 40%. Our 2013 leasing performance included some of the largest transactions in the market. The 183,000 square foot Fish and Wildlife lease of Skyline to 384,000 square foot [indiscernible] renewal at 1501 K Street where we own 5% and 247,000 square feet renewal of Family Health International at 1825 Connecticut Avenue. In addition…

Thanks Mitchell. Let me first touch on our strip shopping centers and malls, both of which had a strong quarter. Strip shopping centers’ occupancy was 94.3% at quarter end, equal to the third quarter and up 30 basis points from last year’s fourth quarter. Occupancy at the remaining malls was 94.3%, also up 30 basis points from the third quarter and up a 160 basis points from last year’s fourth quarter. We leased 200,000 square feet at the strip shopping centers with a positive mark-to-market of 17.4% GAAP and 10.7% cash. We leased 137,000 square feet at the malls with a positive mark-to-market of 9% GAAP and 1.7% cash. Now turning to capital markets, earlier this month, we completed a $600 million financing of our 220 Central Park South site, a long bears interest at LIBOR plus 2.75% floating, matures in January 2016 with three one year extensions. In November we refinanced the mortgage on 11 Penn Plaza. The new $450 million loan bears interest at 3.95% fixed to seven years and replaces a $343 million loan, which bore interest at LIBOR plus 2.35% floating. During the quarter, we also repaid the $87.9 million loan on Universal buildings in Washington and the $52.8 million loan on the Las Catalinas Mall in Puerto Rico, un-encumbering both of these assets. As of today, we have $3.8 billion of liquidity comprised of 1.5 billion of cash and liquid securities and 2.3 billion of undrawn revolving credit facilities, overall $1.3 billion better than at the start of the year. Our objective has been to build liquidity as we continue to sell non-core assets and finance core assets. Our consolidated debt to enterprise value is 30.3% and our consolidated debt to EBITDA is 6.2 times. Our debt mix is balanced with fixed rate debt accounting for 89% of the total with a weighted average interest rate of 4.73% and the floating rate debt accounting for 11% of the total with the current weighted average interest rate of 2.01%. 2014 maturities are just $142.3 million. At this time, I will turn the call over to operator for Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question is from Michael Knott with Green Street Advisors.

Hey guys, just curious if you can give us just a little more color on the EBITDA decline for DC. It sounds like I know you still had some BRAC expiries this year. What part of the year were those? And then it sounds like Mitchell you thought occupancy were actually in the year higher. Can you just kind of walk through the components a little more?

Good morning Michael. Well, you remember that last year we had a settling fee of $2.4 million, that’s not reoccurring in 2014. Real estate taxes, the portion that's unreimbursed by tenants is increasing in 2014 versus 2013 by 1.3 million. As Mitchell mentioned, we’re preparing a building at 2221 South Clark Street, so we work, that building is coming out of service, that’s costing us $2.2 million in comparable EBITDA. And then Michael, as you talked about while Mitchell said that he expects occupancy to tick up by the end of the year, during the year it’s actually going to be down by about 100 basis points plus-minus. That lower occupancy during the year will reduce EBTIDA versus last year by $5.5 million, which will tick-up again by the end of the year, so our projections are accurate and reasonable. And so 2015 should be much-much stronger.

Okay, thanks. So it sounds like ’14 is the bottom for your EBITDA there?

That’s what we think.

Okay. And then second question, can you guys just talk generally about your plan sources and uses of capital and maybe it sounds like you’re going to be funding development still and maybe not buying a whole lot. Can you just maybe touch on where you think we should all think about development or redevelopment yields for the projects you’re working on?

So let’s see, there is multiple questions there Michael. In terms of our sources and uses, we are highly liquid, we are getting more liquid as we continue to simplify and sell assets. We are using that liquidity to -- we have encumbered some assets and paid over hundreds of millions of dollars of debt which is not a long-term strategic imperative, it’s principally pay them off as early as we can and assets before we sell and what have you with. So, we are lowering our debt levels, paying off debt. We are also funding a lot of our development out of our balance sheet as opposed to with loans. So that’s sources and uses. With respect to development returns, do we publish that? We haven’t published development returns and so I will just comment about one, just for interest. We are building 699, let me call it 700 units of apartments on top of Whole Foods in Pentagon City. We have had some people comment about gee, the residential market is a little soft, why are you doing that? Well, the answer is that, if you -- the cost of land is sunk, we own that, we own it free and clear. And if you take the incremental dollars that we are going to spend on that project, and by the way the delivery -- that project was delivered in mid-16 and the market will be we think different and better than we are getting a mid-7% and even higher return on the incremental dollars. So, in that kinds of products, we think that that’s a first-class return, so we think that’s a good investment. We think that that building will finance at much lower rates than that and would sell if we decided to sell at a very favorable spread.

And our next question comes from George Auerbach with ISI Group.

Great, thanks. Steve and Mitchell, you both mentioned the lease opportunity in DC, I am interested in how you see the economics of the lease up. Where do you think the rents are today in PI packages and how do you see the timing for lease up today versus how you would have underwritten it maybe 12 months ago?

I will take a little bit of that and then Mitchell will chime in. So, our internal budgets show that we will get to stabilize, meaning we will get back to where we were probably and hopefully in the beginning of 2017, that’s a very specific statement which is not to be relied on. It’s a budget, so the decline in EBITDA that we suffered, if it goes back to where it was, that’s about an $80 million increase in our EBITDA from where we are today. So, if you put a cap rate on that and you deduct the capital that we will get that we will expend to get there that can give you some idea of value. And so, I will let you do the calculation because I am not in the business of doing those kinds of projections but it’s an extremely -- it’s a large number. And so, if you look at it, you can look at it glass is half empty or glass is half full, you can say that our Washington business is struggling, it’s under stress, we believe that our Washington business has bottomed. And if you look at it that it has now a vacant space that we will lease over a period of time relatively, hopefully predictable period of time, our Washington business now becomes a high growth segment. So, that’s an interesting way to look at it which is actually the way I think the optimist looks at it because we don’t believe that we have any credit for that empty space in our stock, you would never sell those buildings getting zero credit for that space. So, we believe that Washington is a growth business from here out. Mitchell you have anything to add, my friend?

Yes, what I was just said specifically to George’s question and if you remember from my opening comments, our rents were down about $0.50 in terms of the total volume of leasing year-over-year from 2012 to 2013. I think that generally speaking the market is at a point where we don’t expect concessions to deepen dramatically further. We don’t expect rents to drop dramatically further, so I think we're seeing a pickup of both activity and the activity is at reasonable leasing levels in terms of what we are accustomed to doing.

Let me track onto that just a little bit, I have said that I am very pleased that the rents in Washington are holding notwithstanding the source market. Notwithstanding that, our mission in Washington is to fill up that space. Mitchell is aggressive, his team is aggressive. We are fighting in the trenches for every deal and we are prepared to compete aggressively, economically for every deal. Remember that every square foot that we fill down there is incremental increase to our EBITDA. So, our objective is to make deals, be aggressive and fill up the space. A dollar to one way or the other is, well it may look in the statistics, our objective is to be aggressive and we have been and we will be.

That’s helpful. I guess second question for me, Steve, the team has done a nice job over the last two years improving the portfolio. As you look into 2014, what do you see as the next two or three steps you would like to see take place?

Well George we’re getting there, we have more to do. As I said in my opening remarks, we have a $1.1 billion out in the marketplace. Much of that, well more than half of that is actually in documentation now. So we -- our first objective is to complete that, we have more sales coming. And then let me give you a feel for the way we see it. We will have completed a house cleaning. Toys "R" Us is winding down, J.C. Penney is gone, some of the other assets that we don’t want are gone, the Merchandise Mart is gone, LMR is gone. And then -- so we will have by and large clean house. What we will be left with is the New York business, the Washington business and the strip shopping center business, so let me say a little bit about each of those. In New York, the hot part of the market now the active part of the market is retail and for sale residential. Those are the businesses that are really white hot. We think we’re in very interesting shape, we have by far and away the strongest most important street retail business, the performance of that business is terrific, it will continue to be terrific as we roll over spaces. And as David said and I said, for the last three quarters we have had triple digit mark to markets, meaning the rents have doubled. So the hottest business in town is retail. Retail rents have grown at very strong compound rates over the last five or 10 years. And so we’re very, very well positioned there better than anybody. In terms of for sale housing, we have the single best site by far, our 220 Central Park South side. Now we remind…

Less than 8.

So that building is worth 10 times what our cost is, just to give you a feel for the dynamics. In addition, as I said before the Penn Plaza district is where -- everything seems to be tilting towards the Penn Plaza district. That’s a combination of what’s going on at Midtown South, it’s a combination of what’s going on at the Hudson Yards and what have you, and so the Penn Plaza district with respect to its orientation et cetera will be likely the single most important focus of our business. In Washington we have two things going for us; number one, is the vacancies we look upon as an opportunity and as we fill up those vacancies our earnings will rise and rise aggressively. We also have a huge development pipeline all of which is closing at Arlington County. So we think and the interesting thing about everything that I just mentioned, all of this is on balance sheet now. We don’t have to go out and make an acquisition, we don’t have to go and pay 3 -- pay a 3 cap for some office building and hope the rents go up. These are growth opportunities which are on balance sheet now, and our job is to realize these, focus on these, focusing the business is really important and sprinkle some CapEx, some development capital into it. Our strip shopping center business, which is the third leg of our three legged stool is we’ll be shrunk down to basically the Northeast; we are exiting California I guess. And if you look at the statistics of that business in terms of household incomes and populations and what have you, density of populations, it is right up there at the very tipping top of the strip shopping center competitive set. So there you have it and that’s what our program and our strategy is. I will not comment any more on what we might do beyond that.

Thank you. Our next question comes from Alex Goldfarb with Sandler O'Neill.

Steve maybe just continue on the strip center theme, if we look in your K on the planned CapEx spend for this year, you have an excess of 200 million allocated for New York City in DC, yet only 12 million for CapEx for the strip centers. Just lifting to your -- this shopping center peers, there is a lot of focus on repositioning, redevelopment, maximizing tenants right now as landlords have the leverage given a lack of supply, is the 12 million really all that there is to spend or this is just sort of releasing money and there is additional money that are being or potentially allocated towards the strip center to take advantage of the current environment?

First, happy birthday.

Thanks.

Second, the beauty of the strip shopping center business is that it is a cash cow of the highest order, it requires very little or no maintenance CapEx. I think your observation is correct, in fact we made a tour recently where we visited in one day 12 assets and we noted that one of the assets really needs a face-lift and a repositioning. So I think that you’re right. We need to spend more money on the strip centers and we will, right. But we don’t have enormous embedded repositioning and redevelopments in that portfolio. So we will spend more money and you’re correct to point it out, but it’s not as if we can -- I don’t expect we’re going to have total knock downs and tail downs and rebuilt, I mean the portfolio is fairly well positioned now. It’s very stable. It requires very little maintenance CapEx, but we will spend more on that portfolio and happy birthday.

I appreciate the well wishes. Thanks, Steve. Second question is on the Crystal tech fund. If I heard you right, it’s a $50 million fund that exceeded by Vornado, if you could just talk a little bit more as far as if you look at this fund is sort of like TI marketing type spend to try and spur tenants to as you reposition Crystal City and if there are any limits like Vino agrees to give up to 5 million or 10 million to this fund or because I don’t think you guys are planning to do like another J. C. Penney type toys side investment, so just want to get better color how we should think about this and that it won’t become another side investment like those two?

You’re correct. Our seed investment in that fund is $10 million out of a $50 million fund. The way we look at this is our job is to transform Crystal City and Mitchell is doing a terrific job. The first and most important thing is the location of Crystal City. I mean it’s contiguous to national airport, it’s on the shores of the Potomac, you can see the national buildings and the monuments from our building. So the location is superb. It had been historically basically at government location, that’s changing, it’s changing because of the dynamics of the marketplace. Our job is to attract private sector tenants to Crystal City as well as other holdings. And the best way to do that and this is all Mitchell’s hard work and innovation, is to see Crystal City with the type of tenant that we seek. So we’re doing that with rework, we’re doing it by putting in micro-apartments, we’re doing it by this tech fund and we’re doing it by numerous other initiatives. And so if we can attract these tenants by hook or by crook and we look upon this seeding this fund as part of the bait if you will, to improve the surround, improve the neighborhood and to transform Crystal City which we are very-very excited about by the way.

Our next question comes from Jamie Feldman with Bank of America.

So you’ve just commented that Crystal City or that Penn Plaza will be the single most important focus of your business going forward, can you talk a little bit more plans there? And what we should expect over the next several years?

The answer to that is no. I don’t really think it’s appropriate to get specific until we are really able to get specific, but generally speaking, as David said in his remarks, Penn Plaza is full all the time. Penn Plaza is 97% occupied today over a 15-year period through ups and downs valleys and what have. We have averaged over 96% occupancy. When you think about it, that’s an extraordinary statistic and I might even -- we did some homework, maybe even that’s the best of any submarket in town that's just a guess, I have no idea. The next thing is, I think that we said two quarters ago or whatever that it’s the lowest vacancy submarket in town. I don’t really know whether that’s still true but it was a couple of quarters ago. So the demand is there. It’s now at the crossroads of where the action is of the island as I said before is tilting towards us. So if we use the analogy, I mean I think what's going on around us is, you can almost use the London analogy, what's going on around is to the west we have Canary Wharf, and an enormous development which will be successful and whatever but it creates an environment for us. So we are in board on that, we are on the other side of Manhattan South, and we think that we can change the dynamics of that marketplace by spending a fair amount of capital on the Hotel Pennsylvania and on our office buildings and on the streetscape and on the retail and on the restaurants. So we are about to get up to our LIBORs in that and we are extremely excited about it. We think it’s the highest return opportunity that we have in terms of investing capital. Now just to give you an idea of what could happen, we have average rents in the district about $55 a foot. The competitive set marketplace is $25 or $30 or even more higher than that, so if you want to get space at Brookfield, if you want to get space at Related and if you want to get buildings that are rentals in 70s and 80s, so we are the low cost producer which is good. But if we can get the marketplace, and then the market rents to go up by $10 a foot, on 7 million feet of office space, that's $70 million a year. That’s something to work very-very focused and hard for. So there is a big payday and we’re very excited about our position.

Okay and how should we think about hotel Penn? Do you think you keep it hotel or is it too early to tell?

The answer is while we are zoned through a 3 million foot tower of financial services headquarters tower, and you know as I tell my children, you know you have to look at the deals that almost happen, so that was a deal that almost happened. We had two huge investment banks on that at one time in any event. It looks to me like the mass does not support the tower today. We are nothing, if not realistic, and our plan is, I wanted to say our current plan, I’m going to take out the word current, our plan is to redevelop the hotel Pennsylvania. Our objective there is multiples. Number one, we’re not building for in the low hundreds of millions of dollars, its worth six times that or more. So our first objective is to get majestic hotels to be an asset in the neighborhood, not so much to make money in the hotel but to improve the neighborhood so that the value of our 7 million square feet of surrounding office space goes up. So that means we have to focus very hard on the lobby experience, on the restaurant experience, the nightlife experience what have you in that. The second is to make money on the hotel and we believe every dollar that we put into that hotel and then the renovation will be rewarded with very-very significant double-digit financial returns. Our third objective is to harvest some of the capital that we have in that building because the building is worth a lot of money, will become worth a lot more and we have no debt on it, and what have you. So that’s our financial objective and our environmental objective if you will, with respect to that hotel.

Okay thanks, and then just finally, I guess just thinking through this simplification plan, as you think about long-term holds for the business or are saying strip shopping centers, you think will be a long-term hold, are you considering selling those off?

Now you’re getting into a slightly fancier question Jamie; and so the issue of spits, spends, splits, dividing the company, all of those kinds of issues which I think you are alluding to, let me attack that head on, and that is we are aware of all of the strategic and financial options that we have. We feel that we are well blessed by having a business that is performing wonderfully, obviously subject to cleaning up, but performing wonderfully, has a great future. We are considering every one of the potential financial and strategic options that you can think of, at the board level, at the management level and including some third-party advisors. So we have nothing to say now. I’m not alluding to anything. I’m not hinting at anything. I just think it’s important that you know because you asked the question that this is something that is very high, on our thought pattern, we are thinking about and focusing on these kinds of issues very hard. We are unable to predict and it would be inappropriate to predict what’s going to happen, but we are certainly thinking about it hard.

Our next question is from John Guinee with Stifel. John Guinee - Stifel, Nicolaus & Company, Incorporated: Just thank you, very insightful comments guys. Just a kind of cleanup item, it looks like towards Toys "R" Us is unfortunately being valued by everybody at zero. What’s the nature of the debt, is that 1.86 billion? Is any of that recourse or is all of that fully non-recourse to Vornado?

Toys "R" Us, there is no recourse debt to Vornado. Vornado has no intention of investing any more money in Toys and Vornado has no liabilities or surprises that will come out of Toys back to the mothership. John Guinee - Stifel, Nicolaus & Company, Incorporated: Excellent, and then second, I guess Steve or Joe, Stephan or maybe Mitchell, 7 million square feet of FAR, extremely well located in the DC area, is there a way that we can find that FAR easily on your balance sheet or your 10-K and get a better sense for your basis so we know what the incremental value is, say it’s $50 or $60 per FAR.

There is a new page, brand new on the supplemental which is page number 37. The bottom half of page number 37 I think directly answers that question, those are GAAP book numbers which in terms of what their fair market value of those assets are is, I hate to say this with all my accountants in the room, meaningless. So what you will have to do is to take those item by item and apply your own concept of what each FAR is worth.

John, as you remember though, 4 million square feet is the incremental density permitted in Crystal City, so there’s no land, vacant land to find any place that’s taking the buildings and making them taller.

No, no, no, hang on, let’s go into that for a minute. So Mitchell did a spectacular job in getting a re-, what do call it Mitchell, a rezoning?

You’re talking about in the where Steve, in Pentagon City?

The Crystal City plan.

The re-sector plan.

So the sector plan allows us to build building by building 4 million feet more than the existing buildings are. But in order to realize that 4 million feet you have to tear down the old building, so if you will, I think we’ve already talked about 1900 Crystal Drive, which is a building which is approved which involves a teardown of a 300,000 foot building and a reconstruction of a 700,000 square foot building. So from a cost point of view and a value point of view, you are basically, the cost of the land will be the market value of the 300,000 foot building. That would be the land cost if you look at it, so it’s not for free. John Guinee - Stifel, Nicolaus & Company, Incorporated: Is that different from 1851 Bell's?

No that’s the same project.

Mitchell has a tendency of confusing the readdressing his buildings every two or three years.

Thank you, our next question is from Josh Eddy with Citigroup.

Hi good morning, it’s Michael Bellerman here with Josh, Steve I was wondering if you can just provide a little bit of granularity to the 1.1 billion of sales which I think you said most of them are or a good portion of them are actually in documentation but half were, I assume that total includes Beverly Connection, but maybe you can just give a little of granularity in terms of what's sort of in there, how much is non-income producing versus income producing. Is there a lot of debt on that 1.1 billion at all and then maybe just talk about the size of the future pipeline, you know you sort of said in your opening remarks we got more on debt, just so we get a sense of sizing.

Yes, it includes Beverly Connection which is free and clear, beyond that I don’t -- a lot of this is in for hopefully final stages of negotiation, I’m really not -- I don’t think it’s appropriate to go through the list of what’s in that packet while we’re negotiating these, the lion’s share of it has no debt on it, but it does include One Park, our proportionate share of One Park Avenue in Manhattan which we've announced is for sale, by the fund, it includes our proportionate share which does have debt on it. The balance of it is, help me here, I think the balance of it is debt free.

Correct.

Now with respect to returns, just let me look through this, One Park is income producing now, there’s another large asset in there which is non-income producing, Beverly Connection is being sold at a very, very low current cap rate because it’s in ramp up and stabilization so that if you look at it from what our earnings will be penalized by the sales proceeds of that, it’s probably in the low 4s, so that’s not a relevant number because the earnings will grow just from executed leases. So I hope that satisfies you Michael.

That’s helpful and then in terms on the Deck Circle in terms of potential sizing as you think about the next stuff that you start to bring in to the marketplace and the execution of that, I’m just trying to get a sense of what else is out there after this 1.1.

We’re starting to huff and puff a little bit, we’re running out of toys to sell, so we do have more and obviously in the hundreds of hundreds of millions of dollars, but not in the billions of dollars.

Okay that is helpful.

Hopefully we’re getting to the end of the house cleaning and then we’re going to really focus on the main event which is the assets that we own.

Well, certainly overall the financing environment in New York is very robust and for our assets and one that we have in the marketplace right now that we’re working on the loan for was very-very competitively bid. And so I have to say overall it has robust as I’ve seen it certainly in the last several years. With respect to the Alexander's assets in particular 731 Lex, not surprisingly given the quality of that asset, we were able to achieve what will shortly be announced as a very-very competitive financing. It was the owners of that assets' decision to keep it very modestly leveraged, so essentially what’s being executed against that is a AAA financing which is you would imagine as I said a very low priced deal. With respect to going forward on the retail financing again, it’s a little bit further out but the quality of the assets, the nature of the tenancy, the productivity of the stores I will again expect that to be extremely competitively financed.

And in terms of rate and term on the 300 million on the office piece and sort of how you think about leverage on that?

The office piece as I said is going to be a AAA financing, so it’s very modestly leveraged. It will be done in such a way that there will be enough built in flexibility because the proceeds on that could probably be easily tripled from where we’re going to execute the financing at still relatively attractive rates but at this point Alexander’s, which has very liquid balance sheet with cash on the balance sheet and now a lot of activity which they’re using to deploy that cash is really not looking to sit on expensive cash balances. So at this point, it’s going to be modest leverage but flexible enough so that if the ownership wants to change the strategy, they’ll be in a position where they will be able to do so easily.

In terms of upside [Multiple Speakers].

Michael, this is [indiscernible] for Alexander’s. So Michael, Wendy said it all, let me just say it in a slightly different way, okay. Number one is I dribble with the word downsizing. We are going to do $300 million for $314 million loan, so I’ll let you decide what that is. As Wendy said we're doing, the $300 million is totally all AAA at a very, I mean it’s 25% of the appraised value of the stat that it is the collateral, the office back that's collateral. It will bear interest at the lowest rates that's in the marketplace which is very low. The savings between the loan that’s being paid off to the loan that’s being taken is extremely large plus this is an interest only loan as opposed to an amortizing loan, so the change in the cash flow of Alexander’s is a very significant number. It’s a floater, so that the main purpose of it being a floater is that we can pay it off basically when we want to. So that if we decide we want to get higher leverage or less leverage we have total flexibility in that balance sheet. I look upon Alexander’s as an income producing security and I believe Alexander’s common stock should trade based upon the dividend yield and so if we’re able to save a dollar of interest and you cap that and pick a number 4% or whatever the entry to dividend is, that creates value for our shareholders, the largest one of which I guess is Vornado. So our strategy there is to refinance. We don’t want to keep huge balances of cash on our balance sheet with huge negative arbitrage, we want to reflect the interest savings through to our shareholders and create shareholder value. We want to retain flexibility on that balance sheet so that if we do decide we want to invest, we can refinance quickly.

Right. No I was just thinking about it from a perspective of being able to tap significant mortgage and then maybe even effectively distribute the proceeds to its owners of which Vornado is a large piece, but I understand sort of the rationale that you’re talking about, I'm just trying to make -- get an understanding the market. But thank you for the comments.

And thank you. Our next question comes from Ross Nussbaum with UBS.

Hi. Good morning everyone. Michael just asked my Alexander’s question, so Steve I think the only big topic that hasn’t been discussed is you in terms of just an update on timing CEO succession, your thoughts around that topic.

Thanks Ross. I think no change. This is something that I and the Board think about all the time. Our plan is to clean up the Company, simplify the Company, focus the Company, make the decisions that need to be made and when we get through that then to basically take care of me.

Makes sense. You in an earlier comment before, when you are talking about thinking through alternatives where you said you have been working with advisors, is that something new or has that been the case for quite some time now?

Quite some time now.

And our next question comes from Vance Edelson with Morgan Stanley.

Good morning. So, first a follow-up on the development returns, even though you don’t publish the numbers, could you comment directionally as you make progress, any notable movement based on construction costs or pre-leasing activity, are there any projects that might standout as likely to be better or worse than originally contemplated without sharing the absolute levels with us?

Yes, I mean I can talk around that a little bit, I mean for example the deal that we are doing in Times Square on the Marriott motel side which is across the o street from our Forever 21 side or Virgin side whichever you might call it, will yield extraordinary returns on capital and create enormous value but this not a ground-up development. We are not talking about building in suburbia; I mean this is right in the heart of Times Square in Manhattan. Our 220 Central Park South for sale condominium project will yield extraordinary returns on the capital that we have invested in it, if in the end there is any capital invested in it. What am I missing? In Hotel Pennsylvania, we will add, we have double-digit returns on capital, whatever capital we put into the Penn Plaza district we expect will yield high returns. We can’t quantify them now because basically there is two elements to the return and invest there, there is the actual return on what we're doing and then there is the knock on effect of the return and improving, enable and transforming enable and carrying onto the office buildings. Our investment in Springfield Mall is principally an investment to regain the sunk cost of our land. So, our incremental dollars that we're spending there will have double-digit returns that when you calculate the return based upon a 100% of the sunk cost of a land and the incremental cost, we get to a market rate of return. The money that we are spending on 280 Park Avenue, as any building on Park Avenue, it’s a single-digit return and it basically creates what we believe together with our pals at SL Green, will be a transformative and best-in-class Park Avenue building. I have already talked about the 700 unit residential project in Pentagon City and the incremental returns on that and I think that just gives you some color.

That’s very helpful, thanks. And then secondly on the retail side, there is a fairly significant portion of leases coming up for renewal in 2015, just wanted to give you a chance to comment on the mark-to-market outlook on that portion, is it too soon to tell or are you willing to say that there is strong signs that this is going to be very favorable situation next year?

With respect to the street retail expertise, we continue to be extremely pleased and extremely optimistic about the results we will achieve.

Thank you. Our next question comes from Vincent Chao with Deutsche Bank.

Hey everyone, just a couple of clean-up questions here. Just on the 2.3 million of EBITDA that’s coming offline that was mentioned early in the call in DC, when does that actually come out and is that an annualized number or is that the amount for 2014?

Vincent, I am sorry, can you repeat the question, I didn’t get it?

Sure, just a question on the 2.3 million of EBITDA that’s coming offline out of DC some time in 2014, early in the conversation, you were talking about the, why or what will be the components of the $10 million to $15 million reduction. Just curious when that is coming out in the year and if that was an annualized number if that was the 2014 number?

That’s a great question, it's too technical for me. Joe or Steve?

Well, it is not an annualized number, it’s a comparative diminution on EBITDA between ‘13 and ‘14 and the bellman is going to come offline pretty soon.

Okay. And then just going back to the CapEx side of things, I know you give a lot of color on a by project basis in terms of what you expect to spend in ‘14 and beyond on a by project basis. Just curious if there is much more on top of that you expect to spend in 2014 for projects that may be are in earlier stages, so maybe said another way, what would you think the total development budget is for ‘14?

We said that the information is in our supplemental and our K that’s filed, other than that I don’t think I am prepared to go further than that on this call.

Thank you. Our next question comes from David Harris with Imperial Capital.

Steve, it’s been over a year since you raised the dividend, could you talk about potential for further increases and particularly with regard to the fair book cover seems to be fairly tight?

David I think as you know our policy with respect to the dividend, and by the way this seems to be the policy of most of the blue chip REITs that I follow is that our dividend will track our taxable income. And so as our taxable income rises, our dividend will rise. And so I mean I think that’s the answer.

Well at least core have been such fine over the last 18 months or so, I am just wondering whether you might take the next step and provide us earnings guidance particularly as the focus now is so much of core ex- Toys "R" Us.

I think we’ll take that under advisement, but I think that -- I think we’ll take it under advisement. But right now we’re pretty happy with our policies and I’ll give you just an indication of the way our management team thinks. The volatility in Washington and the noise around Washington was something that we thought we needed to have to provide to you all and our friends guidance for that. Because we thought it was volatile, it was something that everybody was, was the eye of the storm everybody’s focused on. So we voluntarily provided guidance on that and we will continue to provide updates and guidance on that until we get to our objective. With respect of the balance of our business, as we simplify our business, we understand your point of view, we think it’s a -- we understand your point of view and we will certainly, we will talk about it and think about it and thank you for raising it.

Yes, I just wonder how much simplification; achieving the simplification goal is compatible with exceptionalism.

David I didn’t catch that, can you give me that again please?

Well, I was saying the achievement of the goal of simplification, is it truly compatible with exceptionalism?

The answer to that is that that’s a metaphysical question of the highest order, but the answer to that is, that if we simplify and you just take our New York City business, that’s an extremely complex business. So while simplifying that -- what that might mean is we’re going to be in just a few geographies, but on New York City business which has a best-in-class office portfolio, a best in class street retail portfolio, a hotel or two, the Alexander’s assets and what have you is an extremely complex business, our Washington business is similarly complex with all the development and all of the moving parts there. So by simplification, I think that just means focusing, I prefer that better than simplifying. And I can tell you that the word exceptionalism is not a word in my vocabulary, but I love it and we will adopt it from here on.

Well I mean the complexity of a business I think actually makes a powerful argument, the management should be giving a steer to the investment and the market generally that about future guidance particularly now that you removed some very big elements of exceptional volatility. Anyway that’s a whole debate we can perhaps have another time.

Thank you. We have no further questions at this time. I will now turn the call over to Steven Roth for final remarks.

Thank you everybody, we spent hour and half on this call. Our policy as you know is to answer questions until they are finished and so we appreciate your attention. We appreciate your interest in our company. We appreciate your coverage and we’ll see you on the next call. When is the next call by the way?

May 3rd, 4th, 5th.

We’re stumbling over that answer. I shouldn’t have asked it.

May 5th.

May 5th. So we’ll see you then, thank you all very much. Have a good day.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.