Catherine Creswell Steven Roth - Chairman, Chief Executive Officer and Chairman of Executive Committee Stephen W. Theriot - Chief Financial Officer and Principal Accounting Officer David R. Greenbaum - President of New York Division Mitchell N. Schear - President of Charles E Smith Commercial Realty Joseph Macnow - Chief Administrative Officer and Executive Vice President of Finance Wendy Silverstein - Executive Vice President and Co-Head of Acquisitions & Capital Markets

Michael Knott - Green Street Advisors, Inc., Research Division George D. Auerbach - ISI Group Inc., Research Division Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division James C. Feldman - BofA Merrill Lynch, Research Division John W. Guinee - Stifel, Nicolaus & Company, Incorporated, Research Division Michael Bilerman - Citigroup Inc, Research Division Ross T. Nussbaum - UBS Investment Bank, Research Division Vance H. Edelson - Morgan Stanley, Research Division Vincent Chao - Deutsche Bank AG, Research Division David Harris - Imperial Capital, LLC, Research Division

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. [Operator Instructions] 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 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 supplements. 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, D.C. 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 show space to conventional office tech space anchored by Motorola Mobility/Google's 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 -- for aggregate proceeds of $1.25 billion. We closed the sale of Broadway Mall yesterday for proceeds of $94 million. We have trimmed nonstrategic strip shopping centers, single tenant retail assets and other non-keepers by selling 28 properties for $415 million. We have exited JCPenney. We have exited LNR. We have strategically combined all of our Manhattan assets, including our office and street retail and Hotel Pennsylvania and Alexander's properties, into one focused best-in-class operating segment. We have completed in the fourth quarter the sale of 866 U.N. Plaza for $200 million, Harlem Park land 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 $1.33 per share, up from $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 $1 billion -- $1.66 billion, ahead of last year by 149 -- $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 $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'm 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 year-end market report described 2013 as the 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. The 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 all 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 I thought captured the technology sector perfectly. Tech, effectively, has stopped being an industry and has 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, Mitel,…

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, a 16-day government shutdown and a debt ceiling deal finalized in the 23rd hour. Now with the newly approved 2-year federal budget deal and with the debt ceiling raised, we are hopeful for a smoother road ahead. Despite the tumult 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 point million -- 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 at Skyline, the 384,000 square-foot Sidley 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 to…

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 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. The loan bears interest at LIBOR plus 2.75% floating, matures in January 2016, with 3 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 7 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 the 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 6.2x. 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 a floating-rate debt accounting for 11% of the total, with a 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 the operator for Q&A.

[Operator Instructions] And our first question is from Michael Knott with Green Street Advisors.

Just curious if you can give us just a little more color on the EBITDA declines for D.C. It sounds like -- I know you still have some BRAC expiries this year, what part of the year were those? And then it sounds like, Mitchell, you thought occupancy would actually end the year higher. Can you just kind of walk through the components a little more?

Joe will -- Michael, Joe will start with that and Mitchell can chime in.

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's coming out of service, that's costing us $2.2 million in comparable EBITDA. And then Michael as you talked about, well, 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 EBITDA versus last year by $5.5 million, which will tick up again by the end of the year if our projections are accurate and reasonable, and so 2015 should be much, much stronger.

Okay. 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 developments 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?

Well, let's see. There's 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 unencumbered some assets and paid off hundreds of millions of dollars of debt, which is not a long-term strategic imperative, it's principally paying off as early as we can, and assets in -- before we sell it, what-have-you. So we're lowering our debt levels, paying off debt. We're 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, did we publish that? We haven't published development returns and so I'll just comment about one, just for interest. We are building 699, let me call it 700, units of apartments on top of the Whole Foods in Pentagon City. We've 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 the 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 will deliver in mid-'16, and the market will be, we think, different and better then. We're getting a mid-7% and even higher return on the incremental dollars. So in that kind of product, 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 it, at a very favorable spread.

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

Steve and Mitchell, you both mentioned the leases opportunity in D.C. I'm interested in how you see the economics of the lease-up. Where do you think net rents are today in TI packages? And how do you see the timing for a lease-up today versus how you would have underwritten it maybe 12 months ago?

I'll take a little bit of that, and then Mitchell will chime in. So our internal budgets show that we will get to stabilized, meaning we will get back to where we were probably and hopefully in the beginning of 2017. Now 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'll let you do the calculation because I'm 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 the glass is half-empty, the 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 is now -- it has now a vacant space that we will lease over a period of time, a 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 0 credit for that space. So we believe that Washington is a growth business from here out. Mitchell, do you have anything to add, my friend?

Yes. What I would just add 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 leasings 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 tack onto that just a little bit. I have said that I am very pleased that the rents in Washington are holding notwithstanding the soft market, okay? 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 full -- 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 or two, one way or the other, is what it may look in the statistics. Our objective is to be aggressive, and we have been and we will be.

No, that's helpful. I guess, second question from me. Steve, the team has done a nice job over the last 2 years pruning the portfolio. As you look into 2014, what do you see as the next 2 or 3 steps you'd like to see take place?

Well, George, we're getting there. We have more to do. We have -- as I said in my opening remarks, we have $1.1 billion in the -- out in the marketplace. Much of that, well more than half of it, 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 housecleaning. Toys"R"Us is winding down, JCPenney is gone, some of the other assets that we don't want are gone. The Merchandise Mart gone, LNR is gone. And then so we will have, by and large, cleaned house. What we will be left with is the New York business, the Washington business and the strip shopping center business, and 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 3 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 5 or 10 years, and so we are 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 site. Now we remind you that residential housing, for-sale…

That's an 8.

Okay. So that's -- that building is worth 10x what our cost is, just to give you a feel for the dynamics. In addition, as I've said before, the Penn Plaza District is where -- is -- 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 2 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 close-in in Arlington County. So we think -- and the interesting thing about everything that I've 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 all -- but -- what our job is, 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 -- will 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 population, it is right up there at the very tippy-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.

Our next question comes from Alex Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Steve, maybe just continuing on, on the strip center theme. If we look in your K, on the planned CapEx spend for this year, you have in excess of $200 million allocated for New York City and D.C. yet only $12 million for CapEx for the strip centers. Yes, just listening to your -- this shopping center peers, there's a lot of focus on repositioning, redevelopment, maximizing tenants right now as landlords have the leverage given the lack of supply. Is the $12 million really all that there is to spend? Or this is just sort of releasing money and there's additional monies that are being or potentially allocated towards the strip center to take advantage of the current environment?

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 1 day 12 assets, and we noted that 1 of the assets really needs a facelift and a repositioning. So I think that you're right, we need to spend more money on the strip centers, and we will, okay? We have -- 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 that out, but it's not as if we can -- I don't expect we're going to have total knockdowns and teardowns and rebuilds. I mean the portfolio is fairly well positioned now. It's very stable, it requires very little maintenance CapEx, but you're -- we will spend more on that portfolio. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Second question is on the Crystal tech fund. If I heard you right, it's a $50 million fund that is seeded by Vornado. If you could just talk a little bit more as far as if you look at this fund as sort of like TI-marketing-type spend to try and spur tenants out to as you reposition Crystal City, and if there are any limits like VNO 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 JCPenney type, Toys side investments. So I 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. The -- 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, most important thing is the location of Crystal City. I mean it's contiguous to the national airport. It's on the shores of the Potomac. You can see the national buildings and the monuments from our buildings. So the location is superb. It had been historically basically a 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 and to our other holdings. And the best way to do that, and that's -- 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 WeWork. 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 feeding 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 had 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 about 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, the -- 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 you, we have averaged over 96% occupancy. And when you think about it, that's an extraordinary statistic, and I might even -- if 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 1 -- 2 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 you 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 us is, to the west, we have Canary Wharf, I mean an enormous development which will be successful and whatever, but it creates an environment for us. So we are in board of 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 eyeballs 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, I mean we average -- we have average rates -- rents in that district of $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, if you want to get that building, rents are in the 70s and 80s. So we are the low-cost producer, which is good, but if we can get the marketplace and 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's a big payday and we're very excited about our position.

Okay. And is this -- I mean 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 for a 3-million-foot tower -- a financial services headquarters tower, and as I tell my children, you have to look at the deals that almost happened, so that was a deal that almost happened when we were -- we had 2 huge investment banks on that at one time. In any event, the -- it looks to me like the math does not support a tower today. We are nothing if not realistic, and our plan is -- I wanted to say our current plan, I'm going take out the word "current." Our plan is to redevelop the Hotel Pennsylvania. Our objective there is multiples. Number one, we own that building for -- in the low hundreds of millions of dollars. It's worth 6x that or more. So our first objective is to get the hotel to be an asset to 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 hotel -- 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 in terms of 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 the hotel.

And then just finally, I guess, sort of just thinking through this simplification plan. As you think about long-term holds for the business, are you saying strip shopping centers you think will be a long-term hold, or you're considering selling those off?

Now you're getting into a slightly fancier question, Jamie. And so the issue of spit -- spleen -- splits, dividing the company, all of those kinds of issues, which I think you're 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 advisers. 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'd be inappropriate to predict what's going to happen, but we're certainly thinking about it hard.

Our next question is from John Guinee with Stifel. John W. Guinee - Stifel, Nicolaus & Company, Incorporated, Research Division: Very insightful comments, guys. Just a kind of a cleanup item. It looks like Toys"R"Us is unfortunately being valued by everybody at 0. What's the nature of the debt? It's about $1.86 billion. Is any of that recourse? Or is all of that fully nonrecourse to Vornado?

There is -- 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 mother ship. John W. Guinee - Stifel, Nicolaus & Company, Incorporated, Research Division: Excellent. And then second, I guess, Steve or Joe, 7 -- or maybe Mitchell, 7 million square feet of FAR [ph] extremely well located in the D.C. area. Is there a way that we can find that FAR [ph] easily on the your balance sheet or your 10-K and get a better sense for your basis so we know what the incremental value is, say, at $50 or $60 per FAR [ph]?

There's a new page, brand-new, on the supplemental, which is page number...

Page #37.

The bottom half of Page #37, I think, directly answers that question. Those are GAAP book numbers, which in terms of what that 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 the -- take those item by item and apply your own concept of what each FAR [ph] is worth.

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

No, no, no. Hang on. Let's go into that for a minute, okay? So Mitchell did a spectacular job in getting a -- what do you call it, Mitchell, a rezoning?

Are you talking about in the -- where is this, in Pentagon City?

The Crystal City plan.

Three-sector [ph] 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 W. Guinee - Stifel, Nicolaus & Company, Incorporated, Research Division: Is that different from 1851 Bell?

No, that's the same project. John W. Guinee - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay, that's what we thought. Okay.

Mitchell has a tendency of confusing me by readdressing his buildings every 2 or 3 years.

Our next question is from Josh Attie with Citigroup.

It's Michael Bilerman 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, or half were. I assume that total includes Beverly Connection, but maybe you can just give a little bit 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've sort of said in your opening remarks we got more on deck. Just so we get a sense of sizing.

Okay. Yes, it includes Beverly Connection, which is free and clear. Beyond that, I don't -- it will be -- a lot of this is in, 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 is -- has no debt on it, but it does include One Park -- a proportionate share of One Park Avenue in Manhattan, which we've announced is for sale by the fund. So it includes our proportionate share, which does have debt on it. The balance of it is -- help me here, I think the balance of this is debt free.

Yes.

Correct.

Now with respect to returns, just let me through -- look through this. One Park is income producing now. There's another large asset in there which is not income producing. Beverly Connection is being sold at a very, very low current cap rate because it's in ramp-up in stabilization, so that if you look at it from what our earnings will be penalized by the sale proceeds, so that is probably in the low 4s. Although, 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 of on -- the on-deck circle in terms of potential sizing as you think about the next stuff that you start to bring into the marketplace and the execution of that. I'm just trying to get a sense of what's -- 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, they are obviously in the hundreds and hundreds of millions of dollars but not in the billions of dollars. 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.

And then just a question. You said Wendy was in the room. I just wanted a question on the financing market. And you're in the process now of refinancing the office piece at 731, downsizing the loan modestly, but just talk about sort of how you're sort of thinking about total proceeds that were available in the overall financing market and as you think about the retail piece on that asset that comes due next year as we just think about overall the financing environment, especially in New York.

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’s as robust as I've seen it certainly in the last several years. With respect to the Alexander's asset 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 asset's decision to keep it very modestly leveraged. So essentially, what's being executed against that is a AAA financing, which as you would imagine is, 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 a very liquid balance sheet with cash on the balance sheet and not 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 their strategy, they'll be in a position where they'll be able to do so easily.

In terms of upside to their loan until they get money...

But Michael -- is this call FD [ph] for Alexander's? Yes? Okay. So Michael, let me say that all -- let me just say it in a slightly different way, okay? Number one is, equivalent to the word downsizing, we're going to do $300 million for a $314 million loan, so I'll let you decide what that is. As Wendy said, we're doing -- the $300 million is fully all AAA at a very -- I mean it's 25% of the appraised value of the stack that is the collateral or the office deck that's the collateral. It will bear interest at the lowest rate 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. The -- 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 $1 of interest, and you cap that at, pick a number, 4% or whatever the dividend is, that creates value for our shareholders, one of -- 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 the perspective of being able to tap significant mortgage and then maybe even pay -- effectively distributing the proceeds to its owners, of which Vornado is a large piece, and -- but I understand sort of the rationale that you're talking about. I just wanted to get an understanding of the market.

Our next question comes from Ross Nussbaum with UBS.

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 had an earlier comment before when you were talking about thinking through alternatives, where you said you had been working with advisers, 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.

So first, to 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 stand out 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're doing in Times Square, on the Marriott motel site which is across the street from our Forever 21 site or Virgin site, whichever you want to call it, will yield extraordinary returns on capital and create enormous value, but this is not a ground-up development. We're not talking about building in the -- in suburbia. I mean this is right in the heart of Times Square in Manhattan. Our 220 Central Park South, a for-sale condominium project, will yield extraordinary returns on the capital that's being invested in it, if in the end there is any capital investment in it. What am I missing? In -- the Hotel Pennsylvania will add -- will 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's 2 elements to the return in -- of every dollar we invest there. There's the actual return on what we're doing, and then there's the knock-on effect of the return in improving the neighborhood, transforming the neighborhood, carrying onto the office buildings. Our investment in Springfield Mall is principally an investment to regain the sum cost of our land. So our incremental dollars that we're spending there will have double-digit returns, but when you calculate the return based upon 100% of the sum cost of the land and the incremental cost, we get to a market rate of return. The money that we're 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've 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.

And then secondly, on the retail side, there's 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 are strong signs that this is going to be a very favorable situation next year?

With respect to the street retail expiries, we continue to be extremely pleased and extremely optimistic about the results we'll achieve.

Our next question comes from Vincent Chao with Deutsche Bank.

Just a couple of cleanup questions here. Just on the $2.3 million of EBITDA that's coming offline that was mentioned earlier in the call, in D.C., when does that actually come out? And is that an annualized number, or is that the amount for 2014?

Vincent, I'm 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 D.C. sometime in 2014, when early in the conversation, you were talking about why or what was 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 or that was the 2014 number.

Okay, that's a great question. It's too technical for me. Joe, or Steve?

Well, it is not an annualized number. It's the comparative diminution in EBITDA between '13 and '14. And the building is going to come offline pretty soon.

March 31.

Okay. And then just going back to the CapEx side of things. I know you gave 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's much more on top of that you expect to spend in 2014 for projects that maybe are in earlier stages. So maybe said another way, what do you think the total development budget is for '14?

The -- to the extent that the information is in our supplemental and in our K, that's fine. Other than that, I don't think I'm prepared to go further than that on this call.

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, particularly that the -- 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.

Okay, okay. Well, these calls have been such fun over the last 18 months or so. I'm just wondering whether you might take the next step and provide us with earnings guidance, particularly as the focus now is so much on core x Toys"R"Us.

I think we'll take that under advisement, but I think that -- I think we'll take it under advisement, but I -- right now, we're pretty happy with our policies. And I'll give you just an indication of the way our management team thinks: So 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 -- it 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 to 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. Thank you for raising it.

Yes, I just wonder how much simplification -- achieving the simplification goal is compatible with exceptionalism. I'll leave that thought with you.

David, I didn't catch that. Can you give me that again, please?

Well, I was saying, if the achievement of the goal is 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, okay, and you just take our New York City business, that's an extremely complex business, so by simplifying, might -- what that might mean is we're going to be in just a few geographies, but our New York City business, which has a best-in-class office portfolio, a best-in-class street retail portfolio, a hotel or 2, a -- 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 in.

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

Yes, well, we got you. 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 1.5 hours 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 3, 4, 5...

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

May 5.

May 5. 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. And thank you for participating. You may now disconnect.