Vornado Realty Trust Earnings Call Nuggets: Non-Core Assets and Dispositions
Michael Bilerman – Citigroup: Josh Attie is on the phone with me as well. Steve in your opening comments you talked about prices equalizing across the different submarkets in New York. I’m just curious as you think about your disposition plans, you’ve obviously had a great success on a lot of the non-core sales generating significant proceeds over the last 18 months. Would you entertain as you sort of look at pricing, sales of – more office and retail assets in New York and D.C., given your sort of views on pricing around the city?
Steven Roth – Chairman of the Board and CEO: Sure, although that’s not our highest priority. Our highest priority continues to be to divest non-core assets of which we have more than we should, and so our hands are full on that. With respect to core asset, our thinking is as follows. If an asset has, is mature, and has gotten to the point where we don’t think it’s going to grow appropriately, it is a candidate. The second part of that is tax considerations are extremely important especially with these very large assets and the third part of it is the age old question of what do you do with the proceeds. So, the answer is short. We look at every asset in our portfolio very carefully every year and we look at selected assets more frequently than that, but in terms of your future expectations, our focus is to work very hard on the non-core assets and that’s our immediate focus.
Michael Bilerman – Citigroup: Just as a follow-up, you also talked about mining the portfolio for a lot of the opportunities, you have to create value versus going out and buying. One opportunity that you didn’t talk about in the Chairman’s letter or on this call is 220 Central Park South. Can you just sort of provide an update where you stand with that and where things are with Extell?
David R. Greenbaum – President, New York Division: Not really. Let’s talk about that asset just a little bit. First of all, it’s a wonderful asset. It’s arguably in consensus the best residential development site in town, and it is for sale condos, which really is not our business focus. We are an income producing primary business. So, we’re very happy to have bought it. We think we have a profit in the land, which is a multiple of our acquisition price. We are obviously, in a dialog with our neighbor, and beyond that I don’t think that it’s appropriate right now for me to comment, although we love the asset.
Steve Sakwa – ISI Group: Steve I just wanted to kind of maybe follow up on Michael’s comments and some of your early comments about great time to kind of be a seller, prices may continue to even go up as you say cap rates may continue to compress. Can you just kind of help us think through what inning you are in and kind of the disposition of these non-core assets if you kind of go back to the Chairman’s letter from last year? You have ticked off a lot of those things but there is still a few to come. So maybe can help us frame kind of the size of what’s left and are we in the fourth inning, seventh inning, top of the nine, how do we think about that?
Steven Roth – Chairman of the Board and CEO: Yes. Let me – my baseball is a little rusty. Let me focus on dollars as opposed to innings for a minute. Here is what I think. We have sold the better part of $3 million already over the last 18 months or so, we are very happy with that progress. We have teed up now either in contract or in the sales process somewhere over $300 million. We will easily get to $500 million and likely $1 billion of dispositions this year. That’s what our internal budget is. That does not include what I’ll call now for a moment, the main events, which is Toys, JCPenney, or assets like that, nor does it include anything having to do with 220 Central Park South. So, our expectation is $500 million for sure this year and $1 billion is possible. There are other assets beyond that, but that’s what we’re focused on for this year…
Steve Sakwa – ISI Group: Then I guess given the liquidity you mentioned, I think you said $1.3 billion, it obviously seems very difficult for you to put cash to work at these levels and you are likely to build up more liquidity as the year unfolds. Kind of how do we think about you deploying that capital either through acquisitions, share repurchases, special dividends, just raising the regular dividend, how do we assume you use that capital?
Steven Roth – Chairman of the Board and CEO: Well, the first thing is cash is good. We like cash. We have $1.3 billion and that’s a fairly large swing if you look at our year-end balance sheet. So, the changes in our year-end balance sheet to our current balance sheet which we predicted at year-end of course happened exactly right on the money. We expect to build cash fairly aggressively with asset dispositions and what have you. So, now your main question is what do we do with the money? Well, the first thing is, is investing today is very difficult and as I’ve said, several times, we believe that we will be selling more than we will be buying in this market. That’s not because we are not looking very hard and we are not trying, but it’s very difficult. Pricing is very aggressive for us. By the way, our peer group is in the same condition. There’s not a lot of publically traded blue chip REITs that are aggressively buying right now. So that’s step 1. Step 2 is, the first public enemy number one, in terms of what to do with our cash, for example, is to pay down some of our overpriced debt. So we have a $400 million, I think that the VNODs, is that correct? The VNODs they’re open to be prepaid, they are a 30-year instrument, with the 7.875%. I think it’s almost 8% and so as soon as we can get our hands on those, we are going to use our cash which is earning nil to retire those. That’s $400 million at the better part of 8%. That’s a $32 million increase in our earnings, and we can’t invest money at anywhere near 8% today. There are other incidences like that we’ve got preferreds which are callable. So in terms of the first thing we do with our cash is to focus on balance sheet, which will actually be, interestingly enough a delevering of our balance sheet and so what we would hope is a double whammy where our earnings go up aggressively from the use of that cash which is earning right now, nil and the second is that our multiple may please the heavens, expand in relation to the fact that the recognition on the part of the market that our balance sheet is really strong, getting stronger and we are a very low levered Company. In terms of share repurchases, we’ve said, multiple times, that that’s not a large focus for us, unless there was a very wide discrepancy between what we thought NAV was and the trading price. So, for that, that’s not imminent right, I don’t believe Steve. In terms of acquisitions, we’d love to find productive places to put capital as I said, we’re having trouble with it. So, I’m not happy with that answer, but that’s the way we are, that’s the facts. Love to be able to put out money aggressively in our core business if we could.
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