After “years and years” of balking at stock repurchases, Vornado Realty Trust CEO Steven Roth said he’s had a change of heart.

He said the New York real estate investment trust, the owner of prominent office properties around the United States, will buy back as much as $200 million of its common shares outstanding while it suspends paying dividends until later this year.

The move comes as office stocks have fallen out of favor amid uncertainty about space needs in light of hybrid work schedules that have become a norm as a result of the pandemic that began more than three years ago.

“We are going on offense,” Roth said on a first-quarter earnings conference call Tuesday with analysts, adding Vornado’s stock has declined 35% between declaring a dividend reduction in January and the announcement last week of the dividend postponement. “The best value [of capital] is in buying back our stock.”

Even when the price of a building for sale may dropped 25%, Roth said, “that pales in the value of what we see in our stock.” Vornado plans to fund the repurchase with either asset sales or cash retained from potentially paying dividends in stock, Roth said, adding the REIT also will consider using capital to pay down debt.

Vornado’s shares have lost about 80% of their value to about $14 a share since a peak of about $68 in February 2020, before the pandemic drove U.S. workers to remote sites in March of that year. The S&P 500 Office REITs index has lost more than two-fifths of its value in the past year alone.

Public REITs’ stock prices over a 30-year time frame have topped private value, Guy Metcalfe, Morgan Stanley managing director and global chairman of real estate, said last month at the annual REIT symposium hosted by New York University’s Schack Institute of Real Estate. While 23 of the 25 largest U.S. REITs are expected to report higher cash flow this year, their stock has on average slumped 30%, he said.

Higher interest rates have seized lending activity and sent some office loans into default or special servicing, a phenomenon that some analysts fear could intensify against the backdrop of the recent fallout of regional banks such as Signature Bank that’s been a key real estate lender. Worries about a looming recession that have led to layoffs and office space cutbacks from tech giants including Meta and Amazon have also compounded the sector’s woes.

“We are clear-eyed and realistic about near-term challenges,” Roth said on the call Tuesday, adding the macroeconomic headwinds may not be “bottoming” yet. He said the REIT has $2.2 billion in liquidity to help it weather the downturn “with all [central business district] office stocks having been crushed and great concern about the future viability of offices.”

He said the company doesn’t have any debt maturity this year and has a limited amount next year.

“Markets are extremely hostile,” he said. “If you have to refinance, you are at a disadvantage. There’s very little we have to refinance. … The best [move] is to just stay out of it.”

Vornado’s first-quarter net income attributable to common shareholders dropped to $5.17 million, or 3 cents a share, from $26.5 million, or 14 cents a share, a year earlier. Funds from operations, a key industry performance metric, also dropped, led by higher interest rate expenses. Michael Franco, Vornado’s president and chief financial officer, said the company expects a decline in FFO this year, hurt also by higher rate expenses.

The REIT has been saddled by a heavier exposure to floating-rate debt than many of its industry peers. To mitigate that, Vornado has cut its variable-rate debt as a percentage of total debt to 27% from 47% last year.

On the leasing front, Vornado’s first-quarter office occupancy rate in New York fell to 89.9% from 91.2% a year earlier. In Chicago, theMart, billed as the world’s largest commercial building and design center, the rate slid to 80.3% from 88.9%. In San Francisco, 555 California St. was a bright spot with the rate inching up to 94.9% from 94.2%.

Franco also said reports that 555 California may be in default risk are “dead wrong,” adding the loan on the building it took out two years ago has five one-year extensions. “There’s no issue with the loan,” he said, adding 555 California “continues to be the best performing in San Francisco.”

In Chicago, while the leasing pipeline is “good” with a couple of tenants looking to relocate their headquarters within theMart, “the market is tough” with not a lot of tenant demand, Glenn Weiss, Vornado’s executive vice president of office leasing and co-head of real estate, said on the call.

In New York, the company is seeing demand in the area surrounding Penn Station as part of its major Penn District project, where Meta’s Facebook has occupied 730,000 square feet at the Farley Building, as well as in the Plaza District in midtown Manhattan, with demand led by financial services and law firms.

Citadel, which agreed to master lease Vornado’s 585,000-square-foot tower at 350 Park Ave., made up the majority of the 777,000 square feet of New York office space leased last quarter. Mark-to-market rent on previously leased space rose, in a sign of improved demand even as “concessions remain stubbornly high” industrywide, Franco said.

Outside of the Citadel lease, Franco said Vornado continues to “experience good momentum at the Penn District with steady stream of new leases at Penn 1,” which has been renovated. At Penn 2, above the Penn Station transit hub, “tour activity” is picking up as renovations are expected to be completed this year.

Vornado said it has more than 400,000 square feet of leases in negotiations and another 1.4 million square feet in its leasing pipeline in another sign of improved demand.

Roth said the REIT is operating at “full speed” on projects over 5 million square feet in the Penn District, adding reports that it’s stopped work are “incorrect and just plain silly.” He also said the next ground-up development the company will plan in the area will likely be an apartment project.

“We think we’ve seen a peak of work from home,” Roth said. “More CEOs are requiring employees back to the office. … New York seems to be leading the country. … We’ll go back to the normal. It’s very clear people want to be in the city. The apartments are full. The restaurants are full. The streets are full. There’s a reluctance [from] a certain demographic that’s resistant to coming back. That’s changing. … Time is our friend.”