Vornado Realty Trust
), a leading real estate investment trust (REIT), disclosed its
share of the first-quarter 2014 financial results of Toys 'R' Us -
a global retailer of dedicated toys and baby products. Vornado
currently owns about 32.6% of Toys 'R' Us.
Vornado's second-quarter 2014 results will include a loss of
$57.6 million or 29 cents per share on account of Toys 'R' Us,
comparatively wider than the loss of $36.9 million or 19 cents per
share reported in the year-ago quarter. Consequently, Vornado will
record negative funds from operations (FFO) after income taxes of
$51.9 million or 26 cents per share, compared with negative FFO
after income tax of $25.1 million or 13 cents per share in the
As a matter of fact, the Toys 'R' Us business is extremely
seasonal. Its previous performance revealed that the company's
fourth quarter accounts for over 80% of its fiscal net income owing
to the strong holiday sales.
Vornado is scheduled to release its second-quarter 2014 results
on Aug 4, after the market closes. The Zacks Consensus Estimate for
FFO per share for the quarter is pegged at $1.14 per share,
reflecting a year-over-year decrease of 8.80%.
Despite the impact of the negative FFO in Vornado Realty's
second-quarter results from its share in Toys 'R' Us, we believe
that its strategic portfolio repositioning activities and leasing
efforts would help reduce the overall impact. Further, the
company's decision to spin off the shopping center is expected to
aid its focus exclusively on the office assets in the New York City
and Washington, DC region and the Manhattan street retail
Vornado currently carries a Zacks Rank #3 (Hold). Investors
interested in REITs may consider stocks like
Chatham Lodging Trust
The GEO Group, Inc.
Terreno Realty Corp.
). All these stocks hold a Zacks Rank #1 (Strong Buy).
Note: 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.
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