Vornado Selling Manhattan Asset - Analyst Blog

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Vornado Realty Trust ( VNO ) penned a deal to sell a 360,000 square foot office building in Manhattan for $200 million. The sale of the building - 866 United Nations Plaza - is anticipated to close in fourth-quarter 2013 and is currently subject to customary closing conditions.

Through this deal Vornado will reap around $146 million in net proceeds (after repaying existing debt and closing costs). While the move will result in a tax gain of around $166 million, it will be postponed in a like-kind exchange as part of the company's prior disclosed 655 Fifth Avenue Manhattan property buyout.

We expect these concerted efforts to add to Vornado's financial flexibility and aid in profitable investment opportunities. These would help strengthen its Class A office properties portfolio that is concentrated in select high-rent, high barrier-to-entry geographic markets, which usually fare better amid challenging economic conditions.

Last month, Vornado acquired a 92.5% stake in a retail and office property, measuring 57,500 square foot located in Manhattan for $277.5 million. Further, the company completed the assemblage of 220 Central Park South site in Manhattan by acquiring the land and air rights of the area measuring 137,000 zoning square feet for $194 million. On the other hand, Vornado sold its property - Harlem Park - in New York City for $66 million and reaped approximately $23 million as net gain from the sale.

Vornado currently carries a Zacks Rank #3 (Hold). Some better performing REITs include Chatham Lodging Trust ( CLDT ), Getty Realty Corp. ( GTY ) and Sabra Health Care REIT, Inc. ( SBRA ). All these stocks hold a Zacks Rank #1 (Strong Buy).



CHATHAM LODGING (CLDT): Free Stock Analysis Report

GETTY REALTY CP (GTY): Free Stock Analysis Report

SABRA HEALTHCR (SBRA): Free Stock Analysis Report

VORNADO RLTY TR (VNO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CLDT , GTY , SBRA , VNO

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