Michael J. Franco
President and Chief Financial Officer at Vornado Realty Trust
Thank you, Steve, and good morning, everyone. As expected, the financial results for the quarter were down from last year due to items that we previously forecasted.
First quarter comparable FFO, as adjusted, was $0.55 per share compared to $0.60 per share for last year's first quarter, a decrease of $0.05. This decrease was primarily driven by lower NOI from higher net interest expense and no move-outs, partially offset by lower G&A expense. We have provided a quarter-over-quarter bridge in our earnings release in our financial supplement. Our overall New York business same store cash NOI was down 5.1%, primarily due to the aforementioned expirations.
As we indicated on our last earnings call, 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 impact of known vacancies at certain of our properties, primarily at 1290 Avenue of the Americas, 770 Broadway, and 280 Park Avenue.
We anticipate the impact of these expirations in 2024 to be roughly $0.25 to $0.30 per share. We expect this impact to be temporary, as we have already leased up a good chunk of this space, but the GAAP earnings from these leases won't begin until sometime in 2025. We then expect earnings to increase, as income from the lease-up of PENN and other vacancies comes online and as rates trend down.
Now, turning to leasing markets. The New York office market continues to show signs of strengthening. While first quarter office leasing in New York took a bit of a breather from the strong year-end, there is a healthy backlog of activity with a number of large deals in the works. Overall, tenant space requirements continue to trend upward, sublease space continues to fall, best-in-class renovated and amenitized product located in transit hubs continues to dominate leasing and the new supply pipeline is close to zero. These dynamics set the table for continued improvement in conditions in the upper tier of the market, which we are already experiencing in our best-of-class portfolio.
Overall, asking rents are stable, even rising in the top-tier properties, but concessions remain stubbornly high across all submarkets. The financial services and legal sectors are continuing to drive the leasing activity, as both are in growth mode. We are also seeing the first signs of life in the tech sector again after a couple of years of being on pause or downsizing. And our experience is, when they grow, they tend to lease big chunks of space.
The Midtown and New West Side markets are outperforming, as leasing activity in Midtown is strong, not only on Park Avenue, but also on Sixth Avenue and the Fifth Avenue, Madison Avenue corridor. On the West Side, tenant demand continues apace. If you walk from Seventh Avenue to the Hudson River, you will see why.
Turning now to our leasing activity. After completing a slew of large leases in December 2023 and finishing last year with a market leading 2.1 million square feet of deals, we expected a more muted first quarter of completed transactions, given where our deal pipeline stood in the negotiation process. In the first quarter, we leased 291,000 square feet at a healthy $89 per square foot, reflecting the overall quality and premium locations of our properties.
The highlight of the quarter was our 125,000 square foot headquarters lease with Major League Soccer at the new PENN 2. MLS had been in the market for some time, looking mainly in the Midtown core until late in their process when they toured PENN 2 and were wowed by what we've done with the building and the district. The project is now complete and really shows terrifically. Our new town hall events space is open.
By the way, we hosted our first event just two weeks ago, attended by 300 people, and the rooftop pavilion and park are truly spectacular. Tenants are responding positively to everything that we've done and what's still to come. We have a significant pipeline at PENN 2 and are busy negotiating proposals with tenants across a variety of industry sectors.
In addition to the significant Bloomberg lease renewal of almost 1 million square feet we just completed, our leasing pipeline is strong, with 370,000 feet of leases in negotiation and another 2.5 million feet of proposals out on the street in different stages. Much of this activity is not only addressing current vacancy, but also forward-looking expirations.
As discussed on the fourth quarter call, we foreshadowed an occupancy decline due to the known Q1 move-outs at properties such as 1296 Avenue and 280 Park. We are pleased to report that we have already taken care of half the 2024 and 2025 expirations in these properties, with more activity on the horizon at each.
Turning to retail, the retail leasing market continues to recover. As we discussed on our last call, Prada's and Kering's blockbuster retail deals on Fifth Avenue that occurred in December demonstrated their long-term commitment to Manhattan and has further energized the market, and there are other potential sales rumored to be in the works. Vacancy rates are now below pre-pandemic 2019 levels in most Manhattan submarkets, and retailers are willing to pay top dollar for the best locations.
Our retail leasing activity has picked up meaningfully in the last couple of quarters, with almost all our assets seeing significant interest. As evidence of the rebound, this quarter, in addition to signing many leases in the PENN District, we completed an important long-term renewal at one of our Times Square assets at the highest annual dollar rent we've achieved in our portfolio since pre-COVID, over $15 million per year.
Turning to the capital markets now. While the financing markets still remain challenging, we are starting to see some stability for high-quality product. The CMBS market has begun to selectively reopen for office, lending at conservative metrics on quality assets with long weighted average lease term.
Unsecured bond spreads for office continue to tighten. The market is much more open for high-quality retail. That being said, coupons are still high. Banks remain on the sidelines and generally in workout mode, and there's more pain to come for all lenders, given the volume of office maturities in the next few years. This will create opportunities for us.
We have been and continue to be very active on the capital markets front. In addition to the recent extensions on 280 Park and 435 Seventh, we're also in the process of extending our other 2024 maturities, which we expect to complete soon.
Finally, and importantly, as Steve mentioned, just a few days ago, we finalized the recast of our revolver that was scheduled to mature in 2026 for $915 million. Completing this refinancing solidified a key portion of our liquidity through 2029 and gives us significant runway to deal with any challenges over the next few years. It also highlights the continued support of our key banks in this challenging environment. We thank them for their support.
Our balance sheet remains in very good shape with strong liquidity. Pro forma for the new revolver size, our current liquidity is a strong $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.
