Catherine Creswell - Director, Investor Relations Steven Roth - Chairman of the Board and Chief Executive Office David Greenbaum - President, New York Division Mitchell Schear - President, Vornado/Charles E.

Smith Washington DC Division Stephen Theriot - Chief Financial Officer Michael Franco - Executive Vice President and Chief Investment Officer Joseph Macnow - Executive Vice President, Finance and Chief Administrative Officer.

Jamie Feldman - Bank of America Merrill Lynch Manny Korchman - Citi Steve Sakwa - Evercore Vance Edelson - Morgan Stanley Ryan Peterson - Sandler O'Neill John Bejjani - Green Street Advisors Brad Burke - Goldman Sachs Vincent Chao - Deutsche Bank Ross Nussbaum - UBS Michael Bilerman - Citi.

Good morning, and welcome to the Vornado Realty Trust second quarter 2015 earnings call. My name is Richard, and I'll be your operator for today's call. This call is being recorded for replay purposes. [Operator Instructions] I will now turn the call over to Ms. Cathy Creswell, Director of Investor Relations. Please go ahead..

Thank you. Welcome to Vornado Realty Trust second quarter earnings call. Yesterday afternoon, we issued our second quarter earnings release and filed our quarterly report on Form 10-Q 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-Q 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; and Stephen Theriot, Chief Financial Officer.

Also in the room are Michael Franco, Executive Vice President and Chief Investment Officer; and Joseph Macnow, Executive Vice President and Chief Administrative Officer. I will now turn the call over to Steven Roth..

Thanks, Cathy. Good morning, everyone. Welcome to Vornado's second quarter call. Business is actually terrific. As David will tell you in a minute, in New York we are enjoying robust demand from all manner of tenants, led by financial services and creatives in all of our submarkets and at record rents.

Ditto for our largest and best-in-class Manhattan street retail business. Here are some headline numbers from the quarter.

Eight office deals in four separate buildings, totaling 223,000 square feet at rents over $100, actually $110; $82 average starting rent on new leases at 20% mark-to-market; 300% and 400% mark-to-market on several large street retail leases with more to come; a handful of Penn Plaza deals at over $70 a foot; and 220 Central Park South is breaking all records.

In New York, we are basically full. In Washington, as Mitchell will tell you in a minute, green chutes are beginning to sprout. Washington has clearly bottomed. It's beginning to come back. It's just a matter of time. I'd like to begin this morning by mentioning that in Penn Plaza, we are the dominant owner with 9 million square feet.

We have taken an important first step in the redevelopment of this district, with a test closure of 33rd Street between Seventh and Eighth Avenues.

The idea here is to create a large public pedestrian plaza, where the street had been, which will provide amenities to the public, improve circulation and access to Penn Station, and connect our One Penn and Two Penn properties, which comprise 4.2 million square feet.

This is an important first step in neighborhood change and creating a sense of place, being made possible by the support of government and the community. Now to acquisitions. We are increasing our exposure to the thriving West Chelsea submarket.

This quarter we entered into a joint venture, in which we have a 55% interest, which will develop 173,000 square foot Class A office building on the high line at 22nd Street. We are also developing a 130,000 square foot new build at A Venture, in the same part of town as 61 Ninth Avenue at 15th Street.

Yesterday, we announced the acquisition of 260 Eleventh Avenue, a 235,000 square foot office property, currently leased to the City of New York through 2021, plus a 10,000 square foot contiguous adjacent parking lot and adjacent development rights.

This Eleventh Avenue property runs the entire block front from 26th Street to 27th Street, and is directly across from the Starrett-Lehigh building. Total consideration here was $190 million in the form of a ground lease with a fixed purchase option and $80 million of our partnership units.

This off-market acquisition was facilitated by our long-term relationship with the same sellers from whom we acquired 770 Broadway. As you know, the 1.1 million square foot 770 Broadway is now the premier building in its submarket, and serves as headquarters for Facebook, J.Crew and AOL.

The plan for 260 Eleventh is much the same, it will undergo a redevelopment and expansion to attract creative class and TAMI tenants. So with 260 Eleventh Avenue and including 85 Tenth Avenue, 61 Ninth Avenue and 510 West 22nd Street, we will be one of the largest owners in the important West Chelsea market. Continuing with acquisitions.

In June, we completed the acquisition of 150 West 34th Street, a 78,000 square foot retail property leased to Old Navy through May 2019, which came with 226,000 square feet of additional zoning air rights. The property is located directly across the street from Macy's, and adds an important piece to our dominance in the Penn Plaza district.

The purchase price was $355 million. At closing, we completed a $205 million financing on the property. With regard to dispositions. We are under contract to sell our 50% interest in the Monmouth Mall in Eatontown, New Jersey, to our joint venture partner at a value of $229 million. Proceeds to us will be $37 million.

The financial statement gain of $30 million will be recognized in the third quarter. With this disposition, we have essentially completed our exit of the mall and strip shopping center business, representing roughly $7 billion of assets. Let me recap, what we have accomplished here.

In January, we completed the tax-free spin-off of Urban Edge properties to our shareholders. This $4 million Northeast-centric shopping center REIT is led by CEO, Jeff Olson and COO, Bob Minutoli. We recruited Jeff, as seasoned best-in-class shopping center CEO, and Bob is a long-time alum of ours.

Also this year, we completed the transfer of Springfield Mall to PREIT for $486 million.

In the prior couple of years, to complete our exit, we sold Kings Plaza for $751 million, our share being $243 million; Green Acres for $500 million; Beverly Connection for $260 million; Broadway Mall for $94 million; and 36 other smaller retail assets for an aggregate of $360 million.

Excluding Urban Edge, which was spun-off, aggregate net gains were over $450 million. Now to operations. We had a very strong second quarter, and I'm very pleased with our financial results. Our second quarter comparable FFO was $1.30 per share, 5.7% higher than last year's second quarter.

As Steve Theriot will tell you shortly, excluding income in last year's second quarter from asset sales of our real estate fund, asset sales really shouldn't be included in FFO at all. But excluding those fund asset sales, comparable FFO per share would have increased a whopping 20%.

Company-wide, in the quarter we leased 1,169,000 square feet in 126 transactions. In Manhattan we leased 605,000 square feet of office space with positive mark-to-market of 19.8% GAAP and 10.9% cash. In our Manhattan street retail portfolio, we leased 36,000 square feet in the quarter with positive mark-to-market of 245% cash and 65% GAAP.

In Washington, we leased 411,000 square feet of office space with negative mark-to-market of 6.5% cash and negative 4.2% GAAP. As Mitchell will tell you shortly, overall occupancy is up 80 basis points from the first quarter. And importantly, Crystal City office occupancy is up 240 basis points this quarter to 89%.

Our 220 Central Park South super-tall luxury condo project continues to set records. As of today, we have $1.6 billion sold, all but one unit of which is signed with deposits. The market continues to recognize this extraordinary product and its super location. We expect to reach our cash target of $2 billion by the end of this year.

The flood of capital, both equity and debt, from all over the globe, seeking to invest in our type and quality of assets in New York and Washington continues to be very robust, very robust, at record-breaking prices. On acquisition side, we continue to be very selective. Let me leave you with a final thought, which bears repeating over and over again.

Vornado and its management team are one of only a handful of firms who have the track record, have talent, relationships and trust in the marketplace to lease, acquire, develop, finance and manage million-foot towers and billion-dollars Fifth Avenue retail assets. It's a complicated business. Rookies need not apply.

Now, I will turn it over to Steve Theriot to cover our financial results..

Thank you, Steve. Yesterday we reported second quarter comparable FFO of $1.30 per share, up from $1.23 per share in the prior year second quarter, a 5.7% increase. After a deeper dive, you will see that our true performance is clouded by the inclusion of gains from asset sales and mark-to-market fair value adjustments of our real estate fund.

Some might say, and Steve certainly did a minute ago, that FFO should exclude these gains, just like gains on sales of other depreciable real estate. If we were to treat earnings from the fund as not comparable, and maybe we should, comparable FFO per share this quarter would have increased 20%.

Not surprisingly, most of the 20% growth comes from our very strong New York business. Total FFO for the second quarter was $1.71 per share compared to $1.15 per share in the prior year second quarter.

Non-comparable FFO items this quarter were positive $76.9 million or $0.41 per share compared to negative $15 million or $0.08 per share for the second quarter of last year.

This quarter's non-comparable FFO items include $90 million of income from the reversal of an allowance against deferred tax assets of our taxable REIT subsidiary, partially offset by $4.5 million of impairment losses and $4.1 million of acquisition-related transaction costs.

Please see our press release or the overview in MD&A on Page 37 of our Form 10-Q for a detailed summary of non-comparable items. Second quarter comparable EBITDA was $400.2 million, ahead of last year's second quarter by 1.5%. Excluding the effect of the fund, our comparable EBITDA increased 9.5%.

Our New York business produced $274.7 million of comparable EBITDA for the quarter, ahead of last year's second quarter by $29.5 million or 12%, driven by redeveloped properties coming back into service, primarily 7 West 34th Street, 330 West 34th Street, 280 Park Avenue and Marriott Marquis retail space at 1535 Broadway, and acquisitions such as St.

Regis retail and Center Building. Our Washington business produced $85.6 million of comparable EBITDA for the quarter, ahead of last year's second quarter by 1%. We continue to expect Washington's full year 2015 comparable EBITDA will be flat with 2014. Now, turning to capital markets.

In April we completed a $308 million refinancing of the RiverHouse Apartments, a three building, 1,670 unit rental complex located in Pentagon City and realized net proceeds of approximately $43 million. The loan is interest-only at LIBOR plus 1.28% and matures in 2025.

The property was previously encumbered by two loans, a 5.43% $195 million mortgage maturing in April 2015 and $64 million mortgage at LIBOR plus 1.53%, maturing in 2018.

Last week we completed a $580 million refinancing of 100 West 33rd Street, the 1.1 million square foot property comprised of 851,000 square feet of office space and the 256,000 square foot Manhattan Mall. The loan is interest-only at LIBOR plus 1.65% and matures in July 2020. We realized net proceeds of approximately $242 million.

As of today, we have $3.1 billion of liquidity comprised of $700 million of cash, restricted cash and marketable securities, and $2.4 billion undrawn under our $2.5 billion revolving credit facilities. Our total debt-to-enterprise value is 35.5% and our total debt-to-EBITDA ratio is 7.3x.

Our consolidated debt mix is balanced with fixed rate debt accounting for 73% of the total, with a weighted average rate of 4.34% and a weighted average term of 5.1 years, and floating rate debt accounting for 27% of the total with a weighted average interest rate of 2.02% and a weighted average term of 4.8 years.

We have already handled all of our 2015 maturities and are working on the 26 maturities, all of which are secured debt. I will now turn the call over to David Greenbaum to cover our New York business..

Thank you, Steve. Good morning. I'm going to begin with a brief overview of the market here in New York. The New York City economy continued to grow at a solid pace in the second quarter. Total employment in New York City reached an all-time high of 4.2 million jobs. The unemployment rate now stands at 5.9%, down from 7.3% just one year ago.

Importantly, office using employment also reached a new high of 1.3 million jobs, up 32,000 in the last 12 months. While TAMI, technology, advertising, media and information, tenancies have been fueling the recovery, financial services tenants once again have become a leading factor in the city's economy.

And over the past two years, they've added 22,000 jobs and now approach pre-recession levels. We now have a highly diversified local economy with both TAMI and the FIRE sector, financial, insurance and real estate, the two main engines driving the strong job growth in the city.

Our portfolio of properties is well-positioned across product types and submarket, and enables us to compete for tenants in both of these key sectors. Be it Facebook at 770 Broadway, Amazon at 7 West 34th Street, Neuberger Berman at 1290 Avenue of the Americans or Guggenheim Partners at 330 Madison Avenue.

The leasing market in the second quarter was highlighted by positive absorption, higher average asking rents and declining availability. And while overall Manhattan's leasing velocity is down slightly from the 2014 historic levels, it is still 11%-plus above 10-year rolling averages.

Asking rents have now increased for nine successive quarters, the longest interrupted period since 2004 to 2008. Similar to the first quarter, leasing in the FIRE sector has been particularly strong for Midtown's top-tier assets, with Midtown outperforming the general marketplace, accounting for 62% of leasing activity year-to-date.

Let me now turn to our portfolio. In the second quarter, we completed 40 office leasing transactions, a total of 605,000 square feet. Average starting rent this quarter was a very robust $82.21, the highest starting rents we have ever achieved with very strong positive mark-to-market of 19.8% GAAP and 10.9% cash.

Continuing the trend we have seen in our portfolio over the last 24 months, in this quarter 31% of our leasing activity represented tenants new to or expanding in New York; real expansion, real growth.

As expected and as I discussed in our first quarter call, our second quarter office occupancy was 96.4%, down 90 basis points, reflecting the scheduled lease expiration of the space formerly leased by Sterling Winthrop, STWB, and Sanofi at 90 Park Avenue.

Sanofi and STWB, both pharmaceutical companies, moved out of their space at 90 Park Avenue over a decade ago and subleased their space to multiple tenants. In anticipation of getting this space back, we commenced a redevelopment program at 90 Park Avenue, which is now well underway and expected to be completed by yearend.

The market has responded very favorably to our dramatic new lobby and state-of-the-art mechanicals systems, similar to our recent redevelopments at 1290 Avenue of the Americas and 280 Park Avenue.

Of the 475,000 square feet of space we are getting back at 90 Park Avenue, we have already leased 230,000 square feet at cash mark-to-market of better than 25%, and leasing activity for the balance of the available space is very strong.

Our activity in the second quarter has been particularly strong with financial service tenants representing 8 of our top 10 leases.

At 888 Seventh Avenue, we completed a 100,000 square foot renewal and expansion with TPG Capital, one of the country's leading private equity firms, which first took space in 888 with one floor in 2005, and now calls 888 its New York headquarters.

At 330 Madison Avenue, we completed a 41,000 square foot lease with American Century Investment Management and at 640 Fifth Avenue we completed five leases totaling 60,000 square feet, all with boutique financial services companies.

At 280 Park Avenue, we signed a 43,000 square foot lease expansion with Blackstone's investment banking advisory business, soon to be spun-off to its shareholders, which now leases 142,000 square feet in the building.

At 280 Park Avenue, we also signed a 42,000 square foot lease with the government of Singapore Investment Corporation, one of the world's leading sovereign wealth funds, and a 39,000 square foot renewal expansion with Harvest Partners. With the resurgence of boutique financial services tenants, the triple-digit rental market is really active.

In the second quarter alone, we signed a total of eight leases with household names aggregating 223,000 square feet in four of our trophy buildings, 650 Madison Avenue, 640 Fifth Avenue, 888 Seventh Avenue and 280 Park Avenue, with starting rents averaging $110 a foot.

In Penn Plaza, at our recently redeveloped 330 West 34th Street, we completed a new headquarters lease with Foot Locker for 145,000 square feet. Foot Locker joins our impressively diverse tenant roster of Deutsch, Yodle and New York & Company. With this deal, the building is already 77% leased.

I want to pause to spend a minute here on the New York office same-store numbers. Historically, we have been an industry leader in our same-store results and over the past two years we have achieved same-store increases of 5%-plus GAAP and 8% cash. Our same-store office numbers for the second quarter are a positive 1.9% GAAP and 1.8% cash.

Good, but not reflective of the real growth in our operating results. Let me try to explain. Accounting conventions do not always reflect economic reality.

On our last two conference calls, I discussed how our growth this year will be coming not only from same-store, but even more importantly, from placing 7 West 34th Street and 330 West 34th Street, two redevelopment properties aggregating 1.2 million square feet, back into service.

Since both of these buildings were taken out of service for redevelopment, the leasing we have completed in these buildings does not factor into our same-store numbers or into our leasing activity mark-to-market percentages. Prior to the redevelopment, rents in 330 West 34th Street averaged $29 per square foot.

With new lease starting rents after the redevelopment averaging $60 per square foot, better than a 100% mark-to-market, we are taking the EBITDA of 330 West 34th Street from $6.6 million to better than $25 million upon stabilization. The same story is true at 7 West 34th Street.

The old rents averaged $36 per square foot and after the redevelopment and landing Amazon as a tenant for the entire building. The new office rent is $62.80 per square foot, a 73% cash mark-to-market. Here we're taking the EBITDA from $9.5 million to $26 million upon stabilization.

If you were to include 7 West 34th Street and 330 West 34th Street as same-store in both the second quarter of 2014 and the second quarter of 2015, same-store New York office EBITDA for this quarter would have increased dramatically to 6.7% GAAP versus the 1.9% we reported. Let me now turn to the street retail business.

In the second quarter, we completed eight retail leases, a total of 36,000 square feet, with positive mark-to-market of 245% cash and 65% GAAP. Our Manhattan street retail platform is the largest in New York City. We have the best collection of street retail assets in only the best corridors.

Up and down Fifth Avenue, Times Square at the bowtie, Madison Avenue, SoHo, Union Square and Penn Plaza. I would encourage you to take a look at our website. When we acquired the premier St.

Regis retail property on Fifth Avenue and 55th Street, what made this property so attractive to us was the short-term nature of the in-place leases, enabling us to get to the market rents quickly and the configuration of this space allowing us to create multiple smaller units.

We achieved record-breaking execution here, having completed in just four months from first showing to signed documents, two very significant 15-year leases with the Swatch Group for all of the St. Regis retail space at a cash mark-to-market of 304%. These leases are for Swatch's luxury brands, including Harry Winston.

At 1535 Broadway, the bowtie of Times Square, we recently completed another major lease with Swatch for the 45th Street corner and signage above. At 1535 Broadway we also signed a lease with Laline cosmetics, which will now be joining Invicta, T-Mobile and Swatch at this premier asset.

We are in active discussions with multiple tenants for the remaining two retail stores and signage. At 650 Madison Avenue, we bought Crate & Barrel out of a below-market lease, which was scheduled to expire in March 2019, and are undertaking a repositioning of that 61,000 square foot three-level space to a allow for multiple tenants.

This quarter we signed a 9,000 square foot lease with Moncler, for a portion of that space at a cash mark-to-market increase of 461%. Think about the value creation here. The Moncler rent is more than 5.5 times the prior Crate & Barrel rent. Let me now turn to Chicago.

The Mart, our 3.6 million square foot asset, remains the hottest building located in the center of the River North market. Over the last two years, we have transformed the tenant makeup of the building, bringing in tech tenants, Motorola Mobility, PayPal, Yelp, Matter and 1871.

Just last week we completed a 72,000 square foot lease expansion with Yelp, more than doubling their space. We also completed a 40,000 square foot lease expansion with the prominent tech incubator 1871. 1871 now leases 116,000 square feet at the Mart.

Continuing the transformation of this unique asset with extraordinary floor plates, we have now taken back the entire 200,000 square foot underperforming 13th floor at the building from the giftware showroom tenants.

It's actually similar to what we did here in New York with the conversion of 7 West 34 Street from a showroom building for giftware tenants to Amazon's New York headquarters. Market interest for this 13th floor at the Mart has been unprecedented. We are oversubscribed and have leases out in the Mart for over 250,000 square feet.

In San Francisco, at our 1.8 million square foot 555 California Street property, the single best building in the single hottest market in the country, we also signed just last week two market-leading leases at $100 starting rents, an 18,000 square foot relocation with Alliance Bernstein and a 6,000 square foot expansion with a mobile video game company, which you now occupies 23,000 square feet on the entire 52nd floor.

We've covered a lot of ground today, let me just reiterate a couple of our significant leasing statistics.

Starting rents for the office portfolio of $82.21 on 605,000 square feet of activity, the highest starting rents we have ever achieved; 223,000 square feet of boutique financial services deals at starting rents of $110 per square foot; two retail leases on Fifth Avenue at four times the prior rent; a retail lease on Madison Avenue at 5.5 times the prior rent, all pretty stunning.

To conclude my remarks, let me say that we continue to be very constructive on the New York marketplace. Our activity is strong and our pipeline of leases is robust. We continue to realize double-digit mark-to-market on our leasing activity and the market acceptance of our redevelopment projects has been nothing short of spectacular.

We are excited about delivering our two new ground-up office developments over the next couple of years. 61 Ninth Avenue at 15th Street, immediately adjacent to the Apple Store and across the street from Chelsea Market and Google's New York headquarters and 510 West 22nd Street, directly on the high line.

We are also excited about the total redevelopment of the newly acquired 260 Eleventh Avenue. And with that, I'll turn the call over to Mitchell Schear to cover Washington..

Thank you, David, and good morning, everyone. In Washington, the economy continues to improve. Unemployment now stands at 4.8%, which is down from 5.3% a year ago and below the national average of 5.5%. A recent headline in the Washington Post read, the job market is heating up in Washington summer.

The employment story in Washington continues to be very positive. According to the Bureau of Labor Statistics, the Washington area added 68,500 jobs between June 2014 and June of 2015, the strongest period of year-over-year performance since the economy stalled.

Important for us, the most significant job growth in Washington occurred in office-using professional services, where the number of jobs grew by 16,000. According to Steven Fuller, Director of George Mason University's Center for Regional Analysis, and I'll quote, it looks like we've come to terms with the consequences of sequestration.

We haven't overcome it yet, but there is at least an early sign that economy has repositioned itself. The region is figuring out how to add higher value jobs on its own. With regard to the real estate market in the D.C. Metro area, while we're not out of the woods, the news is turning positive.

For example, JLL's second quarter report on Northern Virginia reads, market posts strongest net absorption since 2010. As Steve mentioned, we can now see the green chutes. Specifically, in our portfolio, while the leasing landscape is competitive for sure, we are encouraged by the activity and by the volume of deals we are winning.

In the quarter, we leased 430,000 square feet of office and retail space in 56 transactions, bringing our year-to-date total leasing to 1.2 million square feet in 111 transactions. Specifically, we're filling our space in Crystal City. In the second quarter alone, we completed 300,000 square feet of office leases.

And thus far for the year, we have signed over 800,000 square feet in Crystal City. Our office occupancy in Crystal City is now 89.1%, up 240 basis points from Q1 and up 390 basis points so far this year.

An encouraging amount of our leasing this year represented new deals, about 200,000 square feet consisting principally of new private sector companies coming to Crystal City. Notably, associations and non-profits are migrating to Crystal City in force.

In the second quarter alone, we completed nearly 100,000 square feet of new transactions with this sector. The combination of Metro, proximity to Capitol Hill, adjacency to Reagan National Airport, and abundance of hotels and amenities plus overall value have made Crystal City their location of choice.

And we continue to attract first-class eateries, whose foodie brands cater to our new urban millennial demographic. We just signed leases with Sweetgreen and Taylor Gourmet for new locations on Crystal Drive.

We're also making great progress downtown at the Warner, having signed four new leases this year, totaling 107,000 square feet, including a lease with Hewlett-Packard just signed last week, bringing the occupancy up to 86.1%.

Our overall downtown portfolio, with 12 buildings and about 3.45 million square feet is solidly leased at 93% as of the end of the second quarter. Our second quarter TIs and leasing commissions were 12.4% of initial rents or $5.02 per square foot per annum.

While still higher than our historic average, we are trending down from last quarter and all of 2014. For Q2 2015 versus Q2 2014, we reported positive same-store EBITDA of 0.8% on a GAAP basis and negative 3.3% on a cash basis, both improving over last quarter's comparison, which was negative 0.2% GAAP and negative 5.5% cash.

Overall occupancy, including residential and Skyline, was up by 80 basis points from Q1 to 85%, and up by a total of 150 basis points from Q2 2014. Office occupancy, including Skyline, was up 120 basis points to 82.7% and 220 basis points above Q2 2014.

And remember, a few minutes ago I said that our office occupancy in Crystal City is now 89.1%, up 390 basis points so far this year. Skyline's occupancy is now 53.5%, a continuing drag on our overall performance. Without Skyline, our overall occupancy, including residential, is now over 91% and our office occupancy without Skyline is 89.7%.

On the residential side, we continue to show strong results. Our occupancy ticked down at quarter end to 95.4%, a short-lived blip at that moment in time. We kept our rents strong, increasing by 2.3% over Q1, and we are already back up at 96.1% occupancy as of last week. Crystal City continues to be our greatest focus in Washington.

In addition to the influx of associations and non-profits that I mentioned before, we continue to cultivate our creative cohort, and are seeing incubators, makers and startups taking root in Crystal City. We expect the changing face of Crystal City to be enhanced even more by our new project with WeWork at 2221 South Clark Street.

This former outdated office building will soon be home to more than 200 new collaborative living, community style apartments, as well as two floors of WeWork space. If you drive by today, you will see the building's exterior has already been transformed, as we get ready for this exciting new incarnation.

We are super excited about this new residential concept and look forward to its opening at the end of this year. In addition, as we discussed last quarter, we have an exciting new partnership with 1776, a global startup incubator and seed fund that has opened a campus in our rapidly growing innovation hub in Crystal City.

Their focus here is on connecting their extensive startup community to agencies and major corporations, especially in the areas of defense, aerospace and cyber. As we've said over and over, we have tremendous value in D.C. that can be unlocked by re-leasing our vacant space as well as harvesting our robust development pipeline.

We are in high creative gear on the development front. We are finalizing our redevelopment plan for 1750 Crystal Drive. As discussed on the last call, this is a prime building in a bull's eye location that we are recapturing by moving the U.S. Marshals down the street through our recent lease.

Located on Crystal Drive, right at the Metro, the building will go out of service next year, as we reposition it with a brand new skin, new lobby, new system and new spaces for delivery in 2017. This will not only introduce fresh office product, it will be flanked by new destination retail on that block that is currently in the planning stages.

This is one of several place-making concepts that we are pursuing, ideas that will not only be transformative for Crystal City, but connect to our significant assets in adjacent Pentagon City. Our new Bartlett apartment project has topped off and is on track to be delivered in mid-2016, with a 37,000 square foot Whole Foods at the base.

With 699 units, we're using our scale to create a very unique product with differentiated amenities and services. We own over 15.4 million of existing and developable square feet in Crystal City and Pentagon City, a huge swath of value creating opportunity, sitting on the shores of the Potomac.

And downtown, early in 2016, we will be demolishing two older contiguous buildings, where we will develop our new 335,000 square foot corner trophy office building, 1700 M Street. The building will be located right off Connecticut Avenue in the heart of the Central Business District.

On balance, we are pleased with our second quarter and hopeful about the improving market conditions in D.C. Thank you very much. And I now turn the call over to the operator for questions..

[Operator Instructions] Our first question on line comes from Mr. Jamie Feldman from Bank of America Merrill Lynch..

I guess just sticking with Washington, D.C. for now, you you've given guidance for 2015 that you still expect EBITDA to be in line with '14.

Given the leasing activity and the ins and outs of the portfolio, would you say 2016 EBITDA at this point would be higher, lower or in line with '15?.

We are not going to give guidance, Jamie. Good morning. We are not going to give guidance for 2016..

I was just thinking in terms of the leases that are signed, though. If you didn't do anything else at this point..

I'll say it again. We don't give guidance -- we're not going to give guidance for 2016. Obviously, from my remarks and Mitchell's remarks, we are constructive, we think Washington has bottomed. We think that it will recover. It's just a matter of time. But we're not going to do the math..

And then for my follow-up, you had mentioned the street closure at Penn Plaza. Can you just give some early read on the feedback and how you think it's going so far? I know it hasn't been that long, but just some early sentiment..

It will open at the end of the week. But I can tell you that lots of people are very excited about it. We will have food offerings, et cetera. So we're actually very excited about it..

Our next question on line comes from Manny Korchman from Citi..

Mitchell, in D.C. the leases pending balance is now just 7,000 square feet in Crystal City.

Can you talk about your shadow pipeline of leases? And are we going to look at some leases that are going to be signed shortly or what does that look like?.

Sure. What you're focusing on is the metric with respect to the specific BRAC space. So if you lump all of my space together, the BRAC space and the non-BRAC space, it just so happens that that particular metric in this particular quarter was low. But as I discussed, we leased a lot of space in Crystal City and our pipeline is good.

It's been as good as it's been over the last, say, two or three quarters and we're pretty constructive on the leases in the pipeline..

And Steve, given your comments on capital flows for New York, can we see you selling some more core assets or assets that you've already redeveloped and captured some of that rent upside?.

We have sold some assets in New York. I mean, we sold 1740 Broadway a couple of quarters ago for $1,000 a foot. So we consider each asset in our portfolio each quarter. So while we have nothing to announce now, it would not be unthinkable that we will have some capital transactions in the future.

I'm not making a prediction, we have nothing in mind now, but we review everything here all the time..

Our next question on line comes from Steve Sakwa from Evercore..

Steve, I guess I'm just trying to square your comments from the last couple of quarters about just asset values being extensive. You guys have obviously put a decent amount of money to work, and I'm just trying to sort of get your views on whether you see these as kind of next cycle deals or some of these developments kind of being near term.

And if you can provide any kind of all-in costs or ranges for what you think some of these assets may be and the kind of yields you're looking for?.

I'm not sure I understood your question, Steve. But just to talk generally about it, we have said over the last few quarters that we think asset prices are high. I have said that I think the easy money has been made in this cycle. I have said that this is a time when the smart guys are starting to build cash.

I've had a handful of very, very smart guys jump on top of that comment and say they agree with me. And I have said repeatedly that we do acquisitions very carefully at this point in the cycle. In each quarter we announce one or two acquisitions. If you look at the nature of what we're doing, they are generally what I would call bolt-on acquisitions.

They are right in the neighborhoods that we are targeting. For example, in Penn Plaza or for example in West Chelsea and multiple retail acquisitions, which we are in the market for at all times. So we are always hunting. We are always looking. We are always tasting. But elephant hunting in this market is really difficult, because prices are really high.

So I don't know if that responds directly to your question, but those are my thoughts which put it into context from the last -- actually these are valid thoughts for the last year or of so or even more..

I guess just kind of add on to that, I was just trying to get a sense, some of these where you talk about like the 260 Eleventh Avenue, you say the lease with New York goes to 2021. There's a parking lot next to it.

I presume that you're sort of land banking, if you will, for the next cycle or can you see that maybe lease be bought out and something kind of more near-term be done.

And just what kind of returns are you looking for on these deals when you're stabilized?.

We don't publish our target returns. With respect to -- if you think about it, the asset is perfect. It was acquired for a ground lease, which is a non-cash transaction plus some shares. The income on the building covers the carryon that. We have carried from the tenant for five or six years.

We will not discuss whether we can get that tenant out early or not. That's just not something that's appropriate for a call like this. We have a record of getting our hands on assets when we want them, by the way. And we are very excited about that asset.

The mark-to-market on that asset in terms of the in-place rent from the existing tenant to the market rent is way more than a double. So we love the asset. It's in a great spot and we're very constructive on it..

And then I guess just as a follow-up, can you just maybe talk a little bit more about 220 Central Park South. And obviously you had the disclosure in the 10-Q about the sales in the 40%. Obviously, we don't know which units have been sold within the building and how maybe representative it is of an average price throughout the building.

But is there any sort of information you could share at a high level, as to how to think about I guess the $1.4 billion or $1.6 billion of sales done for 40% of the space so far?.

The sales are actually extremely well. I don't know what the word is, up and down the building. There is not one concentration of any apartment product type that has been hotter than the others. So the sales are very evenly disbursed up and down the building..

Our next question on line comes from Vance Edelson from Morgan Stanley..

With all the Amtrak and Jersey transit issues recently and talk of 100-year-old tunnels being the issue getting to Penn Station.

Not to get into the politics or the potential solutions, but do you have any thoughts on the impact these issues have on the appeal of the Penn District and the impact of a new tunnel? Especially, if it led to a new destination in Manhattan, the impact that could have on the west side.

So any big picture thoughts on Hudson River transit, as it relates to the Penn district?.

Vance, that's a little over my pay grade. But nonetheless, that hasn't made me bashful in the past. Look, Penn Station is the real McCoy. It's the largest transportation hub in the United States. It is the largest obviously serving Manhattan. And it's inconceivable -- I mean, Penn Station is the dominant transportation facility in the city.

Now, it's not the only one obviously, but it's the dominant one. The growth of the New Jersey side and the other arteries that come into Penn Station are obviously everybody knows that. The fact that the infrastructure that services Penn Station is a little bit tired, which is maybe an understatement or an overstatement, is nothing new.

All of the infrastructure in New York is kind of in the same condition. So the fact that there is a bright light on the issue of expanding Penn Station is probably a good thing. And the dominance of Penn Station is an essential element in the growth and development of the west side of Manhattan.

And the fact that we own all the buildings on top of Penn Station and surrounding Penn Station, we think it is absolutely a spectacular opportunity. So I don't know whether that responds to your question, I hope it does.

Now, obviously, if there is a $5 billion, $10 billion, $15 billion construction project, which augments the dominance of Penn Station and the ability to get increasing volumes of commuter traffic into that facility, that will cause short-term disruption, but long-term enormous gain.

So we couldn't be more delighted that there is a focus on this piece of infrastructure. By the way, we believe that our political leadership and government leadership should be focusing on all of the infrastructure in New York..

And then sticking with that area on the 260 Eleventh Ave purchase, are you viewing Hudson Yards and what that will eventually become as a net positive and brings more vibrancy to the entire area? And if that's the case, what about the element of competition in coming years with all that space coming online as it relates to 260 Eleventh side, how does that work into your thinking on the acquisition?.

I've said publicly before, and we are obviously partners and friends with Related. I've said publicly before many times that we think that the advent of the Hudson Yards development is not a good thing for Vornado, it is a great thing for Vornado.

So basically the Hudson Yards development which is now I mean in the tenth or twelfth year of this thing, this is not a new event, has put the west side of Manhattan on the map. So since we are the dominant owner in that region and since we think we have wonderfully located assets in that region, we think it's enormously to our benefit.

Well, let me get to 260, okay. We had an interesting thing happen about a year ago and that is a very important tech firm, a very important tech firm named Facebook, came into New York and wanted to expand and enlarge their New York headquarters.

They started with a small space of 50,000 feet, and they wanted to expand greatly which is appropriate, because they need a large presence in New York. Now, these guys are really efficient. And they came into town with a team. They surveyed the marketplace. In like one week they selected their top two candidates for their new, New York headquarters.

One of which was ours 770 Broadway, which is a wonderful building with 77,000 square foot floor plates, high ceilings, lots of glass and a traditional -- it was a department store, which David and his team converted into a first class office space.

In any event, so the choice was down to 770 Broadway or a new steel and glass building in a very similar neighborhood and they selected our building and we're finding that kind of thing happening all through the city.

So it's not by chance that the buildings on Park Avenue South and the 260 Eleventh Avenue type buildings are in incredibly high demand by the class of tenant that doesn't want to work in a class building with a lot of old guys that wear ties of which I am one, by the way. So we relish the competition.

Now, if you talk about the new space that Related is going to be bringing to market, that's a totally different kind of space than we offer. They're looking for 0.5 million and 1 million foot tenants. They need those tenants to fill those big, giant buildings up with those big giant financial services floor plates and the city needs them.

We can operate wonderfully under the umbrella of their pricing and we will draft from what they do. So we think they're coming into the market -- this is going to sound a little silly, coming into our neighborhood is a great thing, and we couldn't be more pleased about the future.

Well, that was a little too much, not my style, a little too much propaganda, but there you have it..

Our next question online comes from Ryan Peterson from Sandler O'Neill..

Just a quick question on 260 Eleventh. So you purchased that on a ground lease.

Does fee simple still pencil in this environment or will we continue to see ground lease deals?.

Basically the ground lease was a surrogate for the passage of time. We have a fixed price purchase option that is locked out until the happening of certain events, which I'm not going to mention here, but we will in the future buy the fee, which is what our intention is..

And then one other quick question. The DTA, you recognized $90 million of $95 million.

Is there any reason in particular that you didn't recognize the whole $95 million?.

Steve Theriot will take that one..

The reason there is there was a recent change in the New York state law around utilization of net operating losses that limit our ability to use certain of those NOLs in New York State and that's what caused the $5 million not to be recognized currently. We hope to realize that in the future, but it will not be realized through the 220 development..

Our next question online comes from John Bejjani from Green Street Advisors..

Steve, there has been talk recently of slowing New York City tourism in light of currency and other global economic issues..

I'm sorry, say that again, John, I didn't hear you..

Sorry, I was saying there's been talk recently of slowing New York City tourism in light of currency and other global economic issues.

So on the street retail front, are you seeing or do you expect to see any change in behavior from either potential tenants or landlords and the rents they're looking for?.

Some of our colleagues have already opined on that with a negative answer. I'll be a little bit different. We don't have yet the tourism statistics recently, but I believe that there is a slight, I'm talking about really slight diminution in tourism.

Now, you have to remember that there's 55, I think million tourists that come into New York last year at the running rate 80% of which are domestic tourists. So those are not affected by the change in, by the strength or weakness of the dollar. So it's 20% of that tourism cohort, which would be, let's say, 11 million or 10 million individuals.

And so at the margin, it's not going to be that significant. We do know that tourism is still continuing to be on the rise, because the wonders of New York continue to attract people from all over the world. So while sort of my belly tells me there's going to be a diminution, it's going to be at the margin I think very slight. That's step number one.

Notwithstanding that, I've said this before on prior calls, I think retail rents have gotten to be very high and I think that landlords will -- and the number of tenants cruising, looking for spaces at these very highest in cycle rents are starting to decline. So I know we're recognizing that and we're making deals.

And the deals are, as David said, in his mark-to-markets and what we're doing, the performance and the results and the financial value creation is still acceptable to extraordinary. So the answer is, is we are realists. We understand what the markets are.

We don't hang out asking rents that are not obtainable in the marketplace and our job is to take this wonderful street retail portfolio and keep it rented at rents, which in relation to our costs are nothing short of extraordinary.

Now, in my letter to shareholders, the most recent one, which went out in the spring, there were two very dense pages on the street retail business, which had a lot of words and also a lot of numbers.

We traced out over a 10 or 15 year period what the increases in street retail rents had been by submarket and they are high-double digits and they are just extraordinary. Just for fun, we put in what the similar statistics were for office space by submarket and they were obviously much less than retail.

We also put in, in that same letter that I'm referring to, lots of data on recent transactions on Fifth Avenue, just to get an idea of the math, and so we think that we benefit enormously from being early with large and important assets on Fifth Avenue and in other submarkets. So that's where we have extraordinary value.

So anyway, that's a long-winded answer to say basically that I sense in my belly that rents have gotten to the top of the market and we are in the business of realism, not hoping, and we are in the business of making deals. The deals that we're making have extraordinary mark-to-markets so they're pretty darn good..

And then, Mitchell, can you please discuss the traction Crystal City's getting as a tech hub versus other submarkets like the Mt. Vernon Triangle. It seems the bulk of leasing this year has been nonprofits and associations, which seems it might be a little at odds with creating a tech ecosystem..

The way that I think about the Crystal City market is it really has four legs to it. So we continue to be a strategic location for government. We continue to be a strategic location for government contractors. We think that the not for profit and 501C3 cohort is another leg, and finally, the innovative and creative type.

So I think they all intermix with one another and particularly if you focus on some of the start-ups and the innovative companies that are working with the big, big government prime contractors as well as the big government agencies, there really is natural synergy amongst and within those groups.

So I think that the four pieces sort of fit within one another and then when you think of some of the 501C3s and nonprofits, many of them have youthful and millennial cohorts who are doing research and other kinds of work for the organization.

So when you add them all up, I think you get a good and robust mix of tenants and there's synergies amongst the groups as well..

Our next question online comes from Brad Burke from Goldman Sachs..

I was little surprised with the cash balance at the end of the quarter. I know you have previously spoken about ending the year with about $2 billion in cash.

So I was just hoping for an update on how you're thinking about ending the year in terms of cash now and how we should think about you getting there from where you're at, at the end of the second quarter?.

We ran down our cash to handle, for example, the St. Regis acquisition, which was $700 million, which we basically bought for cash and we have no financing on it. So that asset will be financed shortly and there are several other assets that are similar. So basically we ran down our cash. We will run it back up again. We are on track..

What would be a level that we should think about you being comfortable at this kind of a run rate?.

Gee, I don't know. I could tell you kind of perversely, as the cycle continues and gets more and more, where prices get more and more, I don't want to use the word bubbly, but I will, then we feel that there maybe more opportunities coming for the well-capitalized cash heavy, very liquid firms on the other side of that.

So that's not an answer, but it is in a kind of a funny way an answer. But we have no target. We have no budget for cash. We believe that having liquidity to be able to take advantage of the opportunities that will undoubtedly be here, we don't know when, is a very important part of the strategy of how a firm such as ours should be run..

And then I had just another question on 220 Central Park South. It still looks like you have over $800 million to complete the project, which seems like a lot to do between now and the end of 2016.

So just wanted to get an update on how you're thinking about timing of completion and whether there's any downside to the expected completion cost, and also if you can tell us how you're thinking about funding the construction from here on out..

The completion date of the project remains unchanged. The construction market in New York is very, very, very, very tight. People are experiencing shortages, which causes price disruption all the time. We have bought more than 50% of the project and so we're very respectful of what might happen in terms of the costs of the remainder of it.

Not concerned about it, just attentive to it. We will finance the project out of the existing loans we have on it, plus a new loan that we are going to take to finance the remainder of it..

Is that the mezzanine loan that you've talked about previously or was this something new beyond that?.

I'm not going to comment on that..

Our next question online comes from Vincent Chao from Deutsche Bank..

Just a couple of quick questions here.

Just on the WeWork's project in DC, I know it's going to start delivering here in the end of the year, but when do you think WeWork's will be able to start leasing the residential units?.

So the units are going to deliver late this year, very early next year, and will be immediately in the market to lease them at that juncture..

But at this point they're not being marketed as of yet?.

Correct..

Just another quick one on WeWork. They've been in the news quite a bit. You and many of your peers are leasing space to them.

I guess, if that is directionally where the office market or some portion of the office market is heading, obviously you don't want to create conflicts of interests with your own tenants, but just curious if that's something you would ever consider doing on your own separate from WeWork, some kind of space similar to that..

The question that, are we considering doing a look alike to WeWork ourselves in our own --.

Well, would you ever consider something like that, I guess, yes, that is the question..

We would consider it, but we likely wouldn't do it. We're very comfortable with leases from important tenants with credit, et cetera, as opposed to leasing out the space desk-by-desk. And so we think that WeWork is very, very competent at it. That's a different business.

That's not to say that WeWork might not attract a handful or two handfuls of competitors. But it likely would not be us..

Our next question online comes from Ross Nussbaum from UBS..

Can you talk a little bit about the multifamily business? As I strategically think about it you've got about 4,000 apartment units between New York and DC, and back of the envelope we're probably talking somewhere around $2 billion or north of $2 billion asset value.

Where does that fit in as you think about this company going forward? We spent an hour and 15 minutes on the phone here, and multifamily maybe got a minute of time from Mitchell.

Is this something that's still on the plate for, I would say, strategic disposition or how were you thinking about that?.

We are an accidental participant in the residential business, if I can use that word. So what do I mean by that? In New York, we have two large, I mean, really large and important projects that are basically, what do you call it assistant housing kinds of projects where we bought, together with a partner who was the original owner of this inventory.

Independence Plaza is the main one, which is, what is it 1,500 units, how many units is it, 1,328 units in Tribeca on the water, with high rises directly across the street from -- what's the name of Di Niro's restaurant? [multiple speakers] See, they don't let me out very often. So a spectacularly well located project.

And we bought it at, I don't know, $0.25 on the dollar for per square foot per pound, and so what we're doing there is over time the rents will rise, et cetera. Enough said about that. So we invested in a residential product, but we did what we frequently do. We were very price sensitive, et cetera. So that's said enough of that.

We also have an apartment project on 86th and Lexington, which is an important piece of property, which we bought because it was on top of the retail that we sought. So I'm saying this is sort of incidental into this business.

We also have a couple of handfuls in New York again apartments in places like SoHo where they came along with retail assets that we acquired. So that's the current nature of our residential business in Manhattan. Would we get larger in Manhattan if the opportunity came up? Absolutely, yes.

We're also by the way building a 300 unit apartment project in Rego Park, Queens, which is an Alexander's asset on top of the large and very successful Rego Par shopping center. So we understand the apartment business. We understand it and have capability both from an operating point of view and a development point of view.

But we have entered it by being very, very, very -- looking for economic value as opposed to going in and paying 3 caps for assets. We also have in New York built the three condo projects, one of which was on top of the Ethical Culture School on Fifth Avenue. The other one of which is on Central Park West.

The other one of which of course is the Beacon Court project on top of the Bloomberg Tower, and then the third of which is the stunningly successful 220 Central Park South project, which is an interesting comment for me to make. It's four stories out of the ground and I'm saying it's stunningly successful and it is.

In Washington, most of the residential that we have fits into two categories, one, we acquired land in the Eighth Street acquisition, which was, I don't know, six, seven, eight years ago and that land came along with it and we got 1500 units, the River House Apartments in that acquisition.

We also got three or four land parcels, which are stunningly well located in Pentagon City, basically across the street from the Pentagon City Mall, which we own about 7.5% of.

And then we basically did two or three conversions of existing buildings in the Washington portfolio to create value and to engage in place making into the communities that we are. So we're in the business. You're right, we have 4,000 units on. We will build those units out over time.

We're building an important project now, which is the Bartlett, which has 700 units. We say in all our documents 699 units, which I think is kind of kooky, let's call it 700 units, plus the Whole Foods, et cetera. We know the business. We're successful at it. We know how to operate the buildings. We know how to develop the buildings.

We will do more of this and build out our inventory. What will happen -- by the way, we will do more place making and resi construction in Crystal City overtime. We will convert some of the office buildings into tear-downs or conversions and do resi. Will we go in and buy a big apartment company? No. Will we do acquisitions in the business? Maybe..

I guess we're not selling. The second question --.

The answer to that is, is we might sell. We might bring in -- we might likely bring in a JV partner to finance all of this, okay. But we won't sell raw land and low prices..

Second question is Hotel Penn. Obviously, hotel performance in New York has been a little weak lately.

Does that cause you -- plus your long-term plans with the plaza, how much longer is Hotel Penn going to be a hotel? Are we going to resurrect the architect plans from the Merrill building at some point?.

You know, we can't predict the future. We can only say that, yes, the hotel business in New York is soft. I think the folks tell me that New York is the only hotel market in the United States which has negative comps. I mean which is pretty startling, because it is the principal tourist attraction in the United States.

But what's going on in New York is just oversupply, oversupply, oversupply. And when new entries open up, they cut the prices to get to stabilization and so whatever. Our numbers are lower. They are not seriously lower. They are what 5%, 7% lower, something like that. So we understand what's going on.

So basically the Hotel Penn is either a hotel or a place saver as we see it. And as markets change, I can tell you that we have an enormous profit in the hotel now. We can tell the asset for an enormous profit. We believe that there is much more to come.

We are unable to make a commitment now as to whether it's going to go into a teardown or a renovation. We are also unable to make a commitment now, as to whether it's going to go for a hotel use or an office use or whatever. We have all kinds of different conversations going on.

I can only tell you one thing with incredible sincerity, it will be well worth the wait. Now, there is lots of things that we do that maybe take a while, where we have patience. It took eight years to assemble the 220 Central Park South site. And that will be well, well, well worth the wait. Hotel Penn fits into that category as well.

Let's take one more question..

Our final question comes from Manny Korchman from Citi..

It's Michael Bilerman. Just a question on equity. And I recognize for 260 Eleventh Avenue doing units was an advantage and necessary to get that deal done. But in contrast of your comment last quarter, I think when asked about the stock, and you said you hated your stock price.

How do you think about issuing at these levels, number one? And number two, more broadly about potential strategic things you may be thinking about to improve the stock..

First of all, I hate my stock price about $5 or $6 or $7 more than I hated it last quarter, number one. Number two is the shares that were issued in the 260 Eleventh Avenue acquisition had to be issued for tax purposes. It was the only way to make the deal. We have a long and deep relationship with this same group of sellers.

I think I said or David said, I don't remember who, that this is the same group that we bought 770 Broadway from.

And so while I hate putting out shares and won't put out shares at this price, $80 million of shares even if it's issued at a discount to what it's really worth in relation to the quality of the asset and the opportunity of creating that was we thought worth it, and it had to be in that transaction.

I can tell you that from a policy point of view and a discipline point of view, we have no plans, and I almost want to say we won't issue shares at these prices. By the way, I almost would say that we have an extreme aversion to issuing shares almost at any price. That's a little silly. I mean there is a price.

But understand that when we look at issuing shares is basically dilutive to our shareholders, and we don't look at the dilution in terms of what the current NAV is, we look at what the future NAV of the company would be two, thee, four, five, 10 years down the line. So issuing shares is not something that we think is a good strategy.

With respect to the fact that our shares, together with almost everybody's shares, sell at a pretty significant discount to the private market values, and what we're going to do about that, the answer is, is we together with every management team in our industry is trying to figure that out right now.

So we have shown -- our management team and Board has shown a willingness to do things, get out of the mall business, get out of the strip business, get out of the merchandise mart business, et cetera, et cetera, spin off our strip shopping center business to our shareholders.

We have been I think more active than any other management team I think in terms of restructuring our company. As I've said before, everything is on the table and everything continues to be on the table..

Would you have considered, and I recognize the units are tax benefit and were necessary for the deal. And I guess would you have considered just buying back $80 million of your common shares to effectively make it neutral and recognize.

I know the stock's not at a meaningful, meaningful enough discount to do a large scale buyback, but I'm just wondering with the cash balances, the refinancing proceeds, the asset sale proceeds, whether that was something you talked about and thought about of effectively keeping the equity base totally the same?.

Michael, I never thought of that. I never thought of it..

I guess you can do it now, if you want..

I'm not saying we're going to do it now, but I do say we never thought of it..

Just a question on retail. I think in your opening comments you said, you talked about the retail rents and said there was more to come. There's about 60,000 square feet of retail expiring in the back half or under month-to-month and another I think 90,000 next year.

Are you pulling forward some larger deals from future years or is there a certain volume that we should be thinking about relative to I think you've done about 40,000 square feet of retail leasing at obviously multiples in terms of spreads?.

I really wasn't focusing on the renewals or re-renting the expiries, as they come off. I was really thinking about some of the stuff. We have a couple of important assets that are currently treading water, I'm more focused on those..

And then just about one last comment. You forgot Independence is across from Citigroup's headquarters. We're investing some billions of dollars and moving a lot of employees that eventually will need a place to rent their apartment to be close to work. So that's it..

One of your guys at Citi approached me about taking down one of the buildings and building a hotel for them at bargain prices. And we didn't think -- I don't know. We couldn't be more aware of the fact that Citi headquarters is adjacent to our Independence Plaza. I think that's it..

At this time, I see we have no further questions in queue. I'd like to turn the call over to Mr. Roth for any closing comments. End of Q&A.

Thank you all very much. This was an-hour-and-a-half, so I appreciate you sticking with us for that time. Maybe next quarter we'll try and make it a little bit more succinct and be a little bit more cognizant of your time pressure. So anyway, thank you, we'll see you next quarter..

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