Vornado Realty Trust
), a leading real estate investment trust (REIT), has recently
announced its share of second quarter 2012 financial results of
Toys 'R' Us - a leading global retailer of dedicated toys and baby
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Vornado Realty currently owns about 32.5% of Toys 'R' Us. Vornado
Realty will record its share when it reports its third quarter
results for the quarter ending September 30, 2012.
Vornado Realty's third quarter 2012 will include a loss of $8.6
million or 4 cents per share on account of Toys 'R' Us, compared to
a loss of $9.3 million or 5 cents in the year-earlier quarter.
In accordance with the second quarter results of Toys 'R' Us,
Vornado Realty will also record negative FFO (funds from
operations) before income tax of $2.8 million or 1 cent per share,
compared to negative FFO before income tax of $6.5 million or 3
cents in the year-ago quarter.
The business of Toys 'R' Us is highly seasonal with fourth quarter
historically accounting for over 80% of the fiscal net income,
primarily due to strong holiday sales. For the quarter ended July
28, 2012, Toys 'R' Us reported net sales of $2.55 billion compared
to $2.65 billion in the year-ago quarter.
New York-based Vornado Realty acquires, owns and leases office
properties, retail space and temperature-controlled logistics and
refrigerated warehouses. Besides its properties, the company also
has investments in other REITs, industrial buildings and Toys 'R'
Vornado Realty has a strong asset portfolio in two of the best
long-term office markets in the U.S. - New York City and Washington
DC. This provides the company with a competitive advantage to
continually increase rents. The company also has a healthy balance
sheet and adequate liquidity.
We maintain our long-term Neutral rating on Vornado Realty, which
currently has a Zacks #3 Rank that translates into a short-term
Hold recommendation. We also have a Neutral recommendation and a
Zacks #3 Rank for
Boston Properties Inc.
), a competitor of Vornado Realty.
Note: FFO, a widely used metric to gauge the performance of
REITs, are obtained after adding depreciation and amortization and
other non-cash expenses to net income.