Vornado Realty Trust
) reaped around $241 million as net proceeds from the sale of LNR
Property LLC, a company in which Vornado owned a 26.2% stake. The
deal that LNR Property penned was disclosed in January and saw
Starwood Property Trust Inc.
) and Starwood Capital Group acquiring LNR Property for $1.05
Notably, LNR Property LLC was the former investment arm of the
homebuilder Lennar Corp. and was spun off by Lennar in 1997.
Starwood had acquired the property from affiliates of Aozora Bank
Ltd., iStar Financial and Vornado Realty Trust.
Vornado is focused on improving its core business and is making
strategic sale outs. Recently, the company announced that it will
realize a net gain of $69 million in the second quarter from the
sale of two assets located in San Jose, CA and Philadelphia, PA.
The San Jose property - The Plant - is a power strip shopping
center while the other one is a retail property in Philadelphia
that is part of the Gallery at Market East. We expect the
strategic sale outs to add to Vornado's financial flexibility and
hence we remain encouraged.
Notably, in February, Vornado reported fourth-quarter 2012
adjusted FFO (funds from operations) per share of $1.22, beating
the Zacks Consensus Estimate by 7 cents. Moreover, the earnings
exceeded the year-ago adjusted FFO of $1.03 by 18.4%. The strong
quarterly results were attributable to the company's successful
execution of strategic initiatives.
Going forward, we believe that Vornado's portfolio repositioning
through upscale asset acquisitions and strategic sale offs would
poise it well on the growth trajectory. Moreover, the company's
healthy balance sheet and liquidity position facilitate it to
take advantage of distressed selling as asset values of office
and retail properties continue to drop in the aftermath of the
recession. We expect all these factors to provide upside
potential to the company going forward.
Vornado currently has a Zacks Rank #3 (Hold). REITs that are
performing better than Vornado include
Agree Realty Corp.
Simon Property Group Inc.
), both carrying a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
AGREE RLTY CORP (ADC): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
STARWOOD PROPRT (STWD): Free Stock Analysis
VORNADO RLTY TR (VNO): Free Stock Analysis
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