Vornado Realty Trust (VNO) saw its stock price plummet 5.51% in Tuesday's trading session, as investors digested the company's second-quarter 2025 earnings report. Despite a significant headline profit beat, the underlying performance metrics failed to impress the market.

The real estate investment trust reported a surge in net income to $3.70 per diluted share for Q2 2025, compared to $0.18 in the prior year. However, this dramatic increase was primarily due to a one-time GAAP gain of $803.2 million from a new 70-year master lease with New York University at 770 Broadway. Core profitability, as measured by funds from operations (FFO) per share, as adjusted, remained nearly flat at $0.56, compared to $0.57 in the previous year. More concerning for investors, revenue declined by 2.0% year-over-year to $441.4 million.

Occupancy rates continue to be a challenge for Vornado, with New York office occupancy at 86.7% and retail occupancy at a low 67.7%, both well below the company's long-term targets. While management expects comparable FFO for 2025 to be "flat" with 2024, this guidance may not have met investor expectations, especially given the ongoing redevelopment projects in the PENN District. The company's indication that significant earnings growth is only anticipated by 2027 may have further dampened investor sentiment, leading to today's stock price decline.