Vornado's Restructuring Initiative Shows Potential - Analyst Blog


Vornado Realty Trust ( VNO ) is riding high on portfolio streamlining efforts to focus exclusively on the office assets in the New York City and Washington, DC regions, including Manhattan street retail properties.

Last month, this real estate investment trust (REIT) raised its ownership stake in One Park Avenue in New York to 55% by making an additional investment of $22.7 million (Read: Vornado Raises Stake in One Park Avenue in New York ). Moreover, in April, Vornado disclosed the plan to spin off its shopping center business into a new publicly traded REIT and has filed the initial Form 10 registration statement with the SEC on Jun 26 for the same, while the transaction is targeted to be accomplished by the end of 2014 (Read: Vornado to Spin Off Shopping Centers ).

In May, Vornado came up with first-quarter 2014 adjusted funds from operations (FFO) per share of $1.20, which missed the Zacks Consensus Estimate by a dime, but surpassed the year-ago quarter figure by 7 cents aided by notable portfolio repositioning and leasing activity.  In addition, the continued strong performance of the New York portfolio on the back of improving market fundamentals was the positive.

However, the Washington DC market is stressed and leasing activity remains slow. Also, increase in online purchases could hurt the demand for Vornado's retail properties. Additionally, the sluggish pace of office market recovery and stiff competition remain concerns.

To gain deeper insight into Vornado, you can refer to our updated research report, which was issued on Jul 7, 2014.

Over the last 30 days, the Zacks Consensus Estimate for 2014 FFO per share moved up by a nickel to $4.81. Also, for 2015, it increased by 3 cents to $5.21. The stock currently has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Investors interested in REITs may consider stocks like Chatham Lodging Trust ( CLDT ), Aviv REIT, Inc. ( AVIV ) and Terreno Realty Corp. ( TRNO ). 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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VORNADO RLTY TR (VNO): Free Stock Analysis Report

AVIV REIT INC (AVIV): Free Stock Analysis Report

TERRENO REALTY (TRNO): Free Stock Analysis Report

CHATHAM LODGING (CLDT): 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: VNO , AVIV , TRNO , CLDT



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