Michael J. Franco
President and Chief Financial Officer at Vornado Realty Trust
Thank you, Steve, and good morning, everyone. Our overall second-quarter FFO was $0.76 per share. This excludes $0.19 of non-comparable items, mostly our share of the gain from the discounted debt extinguishment related to the re-financing at 280 Park Avenue and gains from additional 220 Central Park South unit sales.
Second quarter comparable FFO as adjusted was $0.57 per share compared to $0.72 per share for last year's second quarter. This decrease was attributable to the known items we previously discussed and consisted of $0.07 of lower NOI from known move-outs, net of rent commencements, $0.07 of termination income in 2023 from a former tenant at 345 Montgomery Street in San Francisco, and $0.03 of higher net interest expense, partially offset by $0.02 of higher NOI from signage and the net impact of other items. We have provided a quarter-over-quarter bridge in our earnings release and in our financial supplement.
On our last earnings call, we stated that we expect our 2024 comparable FFO to be down from 2023 comparable FFO of $2.61 per share, primarily due to higher projected net interest expense of about $0.30 per share and the temporary impact of known vacancies at certain of our properties, primarily at 1290 Avenue of the Americas, 770 Broadway and 280 Park Avenue of roughly $0.25 to $0.30 per share. This is still a good assumption as these items are expected to have a larger impact during the second half of the year.
We already have commitments for about two-thirds of the aforementioned vacant space, assuming the 770 Broadway transaction is finalized, but the GAAP earnings from these leases won't begin until the latter part of 2025. Thereafter, we expect earnings to increase as income and the lease-up of PENN and other vacancies come online and as rates trend down, partially offset by the reduction of capitalized interest.
Now turning to the leasing markets. The overall trend of the New York office leasing market continues to be upbeat as we enter the second half of the year, particularly in Midtown. Private sector employment has reached a historic high, reinforcing that New York remains the leading magnet for talent in the US. Tenant demand for Class A properties is strong, outpacing 2023 and the mix of leasing is well-balanced between financial services, legal, and technology companies.
Given the lack of available quality blocks of space in Midtown Manhattan, a dearth of new supply for the foreseeable future, slowing sublease additions, and office conversions gaining momentum, many industry analysts are predicting a tightening of vacancy rates across the city in well-capitalized Class A properties as we head into the second half of 2024 and into 2025. A spike in rental rates, much like what we have seen on Park Avenue and the New West Side should naturally follow. All this bodes well for Vornado's best-in-class collection of high-quality repositioned assets within New York's most coveted submarkets on the New West Side, Park Avenue, and Sixth Avenue.
Our 2024 leasing activity reinforces that tenant demand for top-of-market properties near transit and which provide the type of space and amenities companies desire for employee retention, recruitment, and flexibility remained strong. During the first two quarters, we leased a total of 1.6 million square feet at market-leading average rents of $130 per square foot. This includes our second quarter lease renewal of Bloomberg for the global headquarters at 731 Lexington Avenue, where they will continue to occupy all 947,000 square feet of office space in the building. Excluding the Bloomberg renewal, our transaction volume for the first half of 2024 is 666,000 square feet at starting rents of $95 per square foot with a cash mark-to-market of 9.1%.
During the second quarter, we completed many important leases throughout the portfolio in addition to Bloomberg, including 11 leases at PENN 1 totaling 123,000 square feet at an average starting rent of $95 per square foot. The transformation of PENN 1 with its unmatched amenity program continues to attract tenants from all industry sectors who were previously occupying space in other city submarkets and at rents above our original underwriting. We continue to attract leading financial services companies to 280 Park, where this quarter we completed a long-term transaction with Elliott Management for 149,000 square feet in the base of the building. The addition of Elliot to our tenant roster, where they joined PJT Partners, GIC, Antares, and Invescorp, [Indecipherable] Park as one of Manhattan's premier financial services properties. Importantly, we have now leased 225,000 square feet of space at 280 during 2024 at an average starting rate of $124 per square foot.
Looking forward, our pipeline is roughly 2.6 million square feet, which consists of 1.6 million feet of leases in negotiation and well more than 1 million square feet in some stage of proposal negotiation. The pipeline consists of substantial activity at PENN 2, where we have seen a significant pickup in tenant tour activity and proposals during the second quarter following the recent completion of the project, the opening of our new pedestrian park at Plaza 33, and completion of our expansive district-wide new sidewalk program.
Our total pipeline of deals is a 50-50 mix of new tenant deals vying for our current vacancies and important renewals as we continue to work hand-in-hand with our tenants expiring during the next few years. In San Francisco at 555 California Street, we completed a 10-year lease renewal with Jones Day for 62,000 square feet and are currently finalizing a 46,000 square-foot renewal expansion with one of our leading financial services tenants in the building. Additionally, we are in late-stage letters of intent with several of our major tenants comprising a total of 250,000 square feet with upcoming lease expirations in 2025 and 2026. All these deals have positive mark-to-markets on the ranch, reflecting 555's trophy nature.
And finally, in Chicago [Indecipherable], we completed a long-term expansion and renewal lease in July with one of our major tenants, which tripled in size to 160,000 square feet. While the Chicago market is challenging, we are benefiting significantly from the quality of our assets with our market-leading work-life amenity program and rock-solid sponsorship and have a strong pipeline.
Turning to the capital markets now, while the financing markets remain challenging for offices and banks remain out of the market, we are beginning to see some early signs of improvement with the CMBS market open again for selective high-quality assets and even ones that are less straightforward. Rates are beginning to moderate and the SOFR forward curve is projected to come down meaningfully over the next year, which should help borrowing rates. We continue to be very active on the capital markets front.
In June, we refinanced the loan at 645th Avenue in our street retail JV, eliminating the $500 million recourse obligation to the company. While the rate is higher than we'd like, this financing demonstrates that the markets are open again for high-quality retail and office assets. At 731 Lexington Avenue, with the Bloomberg renewal now complete, we're in the process of refinancing this loan as well. We will have then taken care of all of our significant 2024 maturities and are in the process of addressing our 2025 maturities. Our balance sheet remains in very good shape with strong liquidity of $2.7 billion, including $1.1 billion of cash and restricted cash and $1.6 billion undrawn under our $2.17 billion revolving credit facilities.
With that, I'll turn it over to the operator for Q&A.
